Power to Truth: China, Power, and What We Fail to See

What can journalism reveal about the power we rarely see? In this episode of Power to Truth, Stanford GSB Professor and CASI Faculty Director Anat Admati sat down with New York Times investigative reporter Michael Forsythe to talk about the ways financial and political power influence decisions out of the public’s view.

Forsythe has spent much of his career “following the money,” particularly in China, where the country’s rising wealth has transformed both its internal systems and its global influence. He is also widely known for his reporting on the consulting industry and is a co-author of When McKinsey Comes to Town, an in-depth investigation into the reach and influence of McKinsey & Company.

Before joining The New York Times in 2014, Forsythe spent years reporting from Beijing and Hong Kong, first with Kyodo News and later with Bloomberg. During that time, he began closely examining the China Development Bank (CDB), a state-run institution established in the 1990s that operates very differently from the banks most people are familiar with. His 2013 book, China’s Superbank, co-authored with Henry Sanderson, traced how the bank quietly fueled China’s domestic growth while also financing its expanding ambitions abroad.

“People think that the World Bank is the world's largest policy bank,” he explained. “Not true, it's the China Development Bank, and so we wrote about its influence and power, both within China and around the world.”

Forsythe described how the bank became a major player in executing China’s economic strategy by laying the early groundwork for what would later become the Belt and Road Initiative, a major effort to finance infrastructure and trade links connecting China to countries across Asia, Africa, and Europe.

After the global financial crisis in 2008, the CDB increased lending to meet the demand for funding regional projects and large-scale investments inside China. As he explained, “The local government financing vehicles, which are these quasi-government institutions, were allowed to borrow money, and the main lender to them was the China Development Bank.”

The collateral for much of this borrowing was land, which according to Forsythe was “the real gold in China.” While this surge of lending helped fuel rapid growth, it also encouraged wasteful spending and masked a fragile system built on opaque lending arrangements.

From their offices in Beijing, Forsythe and Sanderson uncovered the scale of this shadow financial structure by analyzing Chinese-language bond prospectuses and tracing the flow of trillions of renminbi across the country. As Forsythe explained, the CDB functioned less like a traditional bank and more like an extension of the state itself. Their reporting showed how a single institution, largely unknown outside China, had become critical both to the country’s domestic development and to its expanding geopolitical reach.

The investigation revealed an important insight about power: the most influential actors are often the ones the public is least aware of, and their impact becomes visible only when someone is willing to dig through the documents and bring hidden dynamics to light.

Forsythe noted that “ten years ago, there was a lot more freedom for financial journalists to write really groundbreaking stories. Now, it's much more difficult.” Journalists face strict limits in their coverage of the Chinese economy, especially when their reporting might expose government-linked institutions or destabilize markets. Transparency is critically needed but the deeply interconnected financial system remains hidden and hard to scrutinize.

Admati noted that some of Forsythe’s reporting echoed former New York Times reporter David Barboza’s 2012 Pulitzer Prize-winning investigation tracing hidden wealth in China. For Forsythe, 2012 marked a turning point: while Barboza uncovered then Premier Wen Jiabao’s family wealth, Forsythe and his Bloomberg colleagues were investigating the assets of Xi Jinping, who was poised to become China’s next leader.

The two stories were published within months of each other, offering a rare look into the fortunes of China’s political elites. Although this highlighted the essential roles foreign journalists can play at a moment of major political transition, it also led to a ban on the U.S. publications’ digital properties.

“The Bloomberg.com website in China was taken off within seconds of our story coming out,” he said, “The same happened with the New York Times and they've never come back.”

Forsythe said he received death threats for his reporting, and in 2013, he left the country for good.  “It was a scary time,” he admitted.

Admati shifted the conversation to McKinsey, noting that the global consulting firm’s work in both autocratic and democratic countries operates largely out of view. Forsythe emphasized the firm’s deep secrecy, particularly around its public-sector work. Although confidentiality can be reasonable in private consulting, McKinsey extends that norm to taxpayer-funded government projects, fighting aggressively to limit disclosure.

“They fight very hard to minimize the amount of transparency in their government contracts,” he said. Unsurprisingly, the opacity is even greater in McKinsey’s private-sector engagements, where transparency requirements are almost nonexistent.

Forsythe described how secrecy requires intense investigative work. In Forsythe’s view, the U.S. has become “the biggest offshore” haven, a place where lax requirements and fragmented disclosures now make it harder, not easier, to see who holds power and how it is used. Reporters must find creative ways to uncover Limited Liability Company (LLC) ownership structures that are nearly impenetrable under U.S. law. He noted the irony that corporate disclosure is, in some ways, more robust in China than in the United States. Reporters can often trace ownership stakes and corporate ties in China that remain hidden under U.S. rules.

“We actually did this at the New York Times when we were looking into Hunter Biden's investments in China,” he explained.  “He used some Delaware corporations to invest in a Shanghai company, so we were able to pull the Chinese documents, and we knew who owned the Delaware companies from China.”

Admati added that the problem of U.S. corporate secrecy has grown as other states such as Wyoming and South Dakota compete to offer even greater secrecy. The U.S. has effectively created its own internal “race to the bottom,” she said, driven by state-level incentives to attract incorporation business. Transparency and accountability are being whittled away just as global risks are rising.

Forsythe noted that while the U.S. has some safeguards under the Bank Secrecy Act and mandated suspicious activity reports, the rise of cryptocurrency has undermined these. In March of this year, the U.S. Treasury Department lifted restrictions on Tornado Cash, a platform that enables anonymous transactions, making it easier for sanctioned actors, even North Korea, to route funds undetected.

The discussion ended with the hope being voiced that investigative journalism might one day be less urgently needed, even as institutions like The New York Times continue to invest heavily in it. Both agreed that the core task remains the same: uncover the truth and build enough power around it to ensure that truth matters.