
No doubt about it, David Barboza of the New York Times has achieved a journalistic coup. His deep dive into the financial wherewithal of Chinese Premier Wen Jiabao’s family exposed a total net worth of a staggering $2.7 billion. Other journalists, of course, have investigated the family holdings of Chinese leaders: a team of Bloomberg reporters broke the secrecy barrier with reports on the wealth of Bo Xilai’s family, and last June published an in-depth look into the burgeoning financial holdings—almost $400 million—of soon-to-be Chinese President Xi Jinping’s extended family. Frankly, anyone who spends much time in China knows about the oligarchic nature of the Chinese elite, but the extent and distribution of the Wen family wealth is eye-opening.

The implications of the NYT article, moreover, go well beyond simply another story about the ability of another Chinese leader’s family to profit from political connections. The piece has the potential to significantly influence the broader near-term Chinese political landscape in a couple of respects.

First, the bad news. The political reformers have taken a serious hit. Unless Wen steps forward publicly to declare his family’s financial holdings, open their books to the public, and indicate the willingness of his family to face up to the legal consequences of any financial improprieties, his legacy will be tainted and the opportunity for him to shape future political events severely constrained. This would be a shame since Wen, alone, has been the torchbearer for political reform within the current leadership. Even more devastating, the fall of Wen could harm the political prospects of up-and-coming reformers such as Li Yuanchao and Wang Yang.

Thus far, Wen has reacted like any Western politician: hiring a law firm to fight back against the article’s claims; denying that his mother had personal wealth of $120 million; and arguing that his family’s business is its business, not anyone else’s. This strategy may help preserve Wen’s public face, but it won’t prevent the longer term political fallout within top political circles.

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Now, the good news. Shining a bright light on the intricate relationship between wealth and power in China ratchets up the pressure on the new leadership for real change in the political system. There have now been three significant investigations into the wealth of the families of three of the country’s most senior leaders, and certainly there will be more to come. Compounding the problem for the Chinese leadership, the annual 2011 Hurun report on the wealthiest Chinese reveals that the top seventy members of the National People’s Congress are worth a combined total of $89.8 billion; in contrast, the net worth of the top 660 U.S. officials is only $7.5 billion. Anti-corruption campaigns cannot address the political rot within the system—that will require far more fundamental political reform.

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Finally, there may also be some implications for U.S.-China relations. The emerging picture of China as an oligarchy—or worse, a kleptocracy—should help put to rest the notion that the United States needs to learn from the current Chinese political model. In recent years, Chinese officials, as well as some Western scholars, have taken to criticizing Western democracy and touting the advantages of the Chinese political system. In discussing the current U.S. election, for example, the Chinese journalist Ding Gang wrote , “History proves that the more mediocre a political system is, the more it relies on votes.” And when I was in Beijing this past summer, a senior Chinese official explained to me that the Chinese model was superior in part because of the absence of money in the political system. Oops. Certainly, the American system of governance has significant shortcomings, but in its current form, “socialism with Chinese characteristics” hardly seems to offer a way forward.

Elizabeth C. Economy is C.V. Starr Senior Fellow and Director for Asia Studies at the Council on Foreign Relations. She is an expert on Chinese domestic and foreign policy and U.S.-China relations and author of the award-winning book, 'The River Runs Black: The Environmental Challenge to China's Future.' She blogs at Asia Unbound, where this piece originally appeared.