The once-bustling newsroom of Caijing, China’s premier business news publication, fell silent last month, when the star editor walked out followed by the editorial staff, who resigned en masse. Disagreements over censorship and money ignited as a long-simmering feud between editor Hu Shuli and her publisher, Wang Boming, came to a head in July and finally boiled over in November.

Photo: Dong Xin

Hu’s ace reporting and hard-hitting exposés of corporate fraud and government corruption, which have long stretched the bounds of Chinese press freedom, propelled Caijing to first place in influence and importance in the Chinese media and deserving of consideration among the best business publications worldwide.

“The most dangerous woman in China,” as BusinessWeek called her, was the soul of Caijing. Without her voice, China’s progress into modernity could be slowed by a triumphant regression to heavy-handed censorship. But if Hu succeeds in putting together her new publication, this moment may be only a stumble on the way to even more openness.

Hu comes from a line of journalists and intellectuals, though her own education was interrupted by the 1976 Cultural Revolution: Her mother, a prominent editor, was placed under house arrest, her outspoken father relegated to a position out of the public view, and Hu herself enlisted in the Red Guards. Hu traveled around the country, escaping into her books and teaching herself English, history and literature as the movement grew increasingly violent. She joined the army and was assigned to a remote rural area, where she worked in a hospital.

When classes resumed in 1978, Hu won admission to the university in Beijing, where she majored in journalism because it was the best department. Her first job was at the Worker’s Daily, China’s second-largest newspaper, the same one where her mother had been a senior editor. Winning an American fellowship in 1987 enabled Hu to spend five months in the United States, where she traveled and interned at USA Today. Although she had done investigative pieces in China, her exposure to American journalism was an epiphany.

When the Tiananmen Square demonstrations riveted the world’s attention two years later, Hu backed the demonstrators and even marched alongside them, together with many other journalists. When the crackdown came, Hu was luckier than her colleagues, many of whom lost their jobs, were arrested or banished to remote areas. She was suspended for 18 months, and made use of the time by writing about what she had learned in America: the critical role of the press in a democracy. She described its successful challenges to government authority in Watergate and the Pentagon Papers. Many Chinese journalists were inspired by her book Behind the Scenes at American Newspapers to remodel themselves and expand the boundaries of press freedom in their own country.

Returning to work in 1992 as international editor of the China Business Times, Hu interviewed all the top financiers in China. She scored many scoops, but more important to her future success at Caijing were the relationships she cultivated with this group of powerful men, many of whom were her contemporaries and who, like herself, had studied in the U.S. These select few were very well connected to the highest ranks of the Chinese hierarchy as sons of the men in power, and would eventually rise to top positions themselves. At Caijing, Hu would draw on these contacts not only for information but for protection, as they shared her goal of reforming the Chinese system of investment and financing, impossible to accomplish without recalibrating the relationship between government and free enterprise. Six years later Hu received a fateful call from one of these men.

Wang Boming, the son of a diplomat, had studied at Columbia University, worked at the New York Stock Exchange and experienced American journalism at first hand: In New York, he had worked as reporter and editor at a Chinese-language paper. Wang wanted Hu to head his foray into Chinese journalism with a financial news magazine called Caijing: cai means “finance,” and jing “economics.” The ambitious reporter accepted, but not without setting two conditions. Hu insisted on complete editorial autonomy and ample financial backing to cover all reporting expenses, as well as substantial salaries for the editorial department (as a hedge against the bribes customarily offered by Chinese companies to reporters for favorable coverage).

In 11 years Caijing grew from a monthly produced on two computers to a biweekly magazine, a conference promoter and an online news provider with two Web sites (one in Chinese and one in English). Its circulation of 200,000 is relatively small for China, but its readers are among the most educated, affluent and influential in the country. An English-language wire service on the level of Reuters was slated to go online in 2010, but now that Caijing’s future is rather dicey without Hu, the backer, Hong Kong tycoon Richard Li, is waiting to see how the crisis plays out. Since his primary interest is in Hu’s stories and those of her reporters, he’s likely to follow her in her expected new venture.

Hu’s combustible temper, coupled with unparalleled achievement in the Chinese media, compels the respect of her peers. The diminutive 56-year-old, described by The New Yorker’s Evan Osnos as “petite, voluble and pugnacious,” was once called a “female Godfather”:  always impeccably dressed in the latest fashion, and often blowing through the newsroom in bursts described by a former colleague as “as sudden and rash as a gust of wind,” the staccato clicking of her high heels punctuating the orders issued to her staff.

An inveterate muckraker, Hu has dedicated her career to exposing malfeasance in both the private and public spheres, acting as the loyal opposition in order to bring about reform. Her mentor, Wang, backed her until the regime under which they both labored noticed that her Caijing was illuminating parts of Chinese society that had long been left in the shadows of China’s march to “progress.” Then Wang was given little choice but to try to bring this firebrand to heel. Hu was writing exposés from the first issue, and she had repeated run-ins with the regime. Corruption was an old issue, but it took a new form in profiteering, insider trading and other ways for skilled folk to take borderline-illegal advantage of the new prosperity.

Wang had founded Caijing’s parent company, SEEC (Stock Exchange Executive Council), in the early ’90s to help set up the Chinese stock markets. His investors were the same small group of American-educated financiers that Hu had interviewed for the China Business Times. With Caijing, both Hu and Wang were committed to the reform of China’s investment and financing systems.

Caijing's December issue, focusing on "a crackdown on the city's crime gangs that exposed a country club casino and police officials on the take. "

Since its first issue in April 1998, when Caijing made waves with a cover story on corporate fraud and insider trading, the magazine has focused on revealing cover-ups of notorious and criminal wrongdoing. Caijing was the first Chinese publication to expose scandals in the securities markets. In 2003 Hu steered Caijing in a new direction. She entered untested waters with her reporting on the SARS virus, which lay outside the purview of a financial news magazine.

Caijing’s SARS coverage ultimately compelled the Chinese authorities to abandon their denials of the extent of the epidemic. It also tested the limits of journalistic freedom. After publishing weekly updates on the status of the infection, raising questions without naming names or criticizing the government directly, Hu intended to write an analysis of the epidemic and the lessons learned from the authorities’ handling of it, but she came up against a stone wall. Word came down to kill the story.

Press censorship in China is under the aegis of the Central Propaganda Department. Knowing the bounds of what CPD will allow is crucial, given the agency’s power to remove editors, suspend publication (deprived of their revenue, most publications can’t survive for long) and shut publications down. Unlike Russia, where pesky reporters turn up dead, China jails or muzzles writers considered too provocative. The Committee to Protect Journalists reports that in 2008 China had 28 journalists in prison—more than any other country, though it was overtaken by Iran in 2009.

The propaganda bureau operates under a veil of secrecy; it doesn’t advertise its address or publish its phone number. Though it does periodically recommend that certain topics be covered and others not, censorship on the whole is a subtle proposition, because editors are left to determine the bounds for themselves. The trick, according to journalists in the field, is in knowing how far to go. It’s apparent even from the outside that self-censorship is insidious, that the fear of overstepping an unclear boundary may lead to repressing information that might have slipped by. There are, to be sure, some definite no-no’s under the CPD, such as the military, religion and in particular the 3 T’s and an F that combine both: Tibet, Tiananmen Square, Taiwan and Falun Gong (the religious sect best known in the U.S. for its free paper The Epoch Times.) Disclosing the personal details of party leaders is also verboten: Hu Jintao’s hair dye, for example, is the “deepest state secret,” quipped a Beijing Youth Daily reporter, at once deadly serious.

After that first skirmish over SARS, Hu continued to refine her sense of how far she can go. Many also credit her guanxi — connections to officials in the right places— Time Magazine noted her skill at  “keeping her[self] out of jail as she score[d] repeated ‘edge balls,’ the Chinese term for a Ping-Pong serve that’s within the lines but just barely.”

These assiduously cultivated relationships, taken together with the prominence of Caijing, contributed to her authority. Largely because of her efforts, the bounds of what CPD will tolerate were repeatedly extended: “We know where the line is, and we walk right up to it,” Hu said in 2002.

In 2004 the first of nine reporters Hu sent to the scene of the earthquake in Sichuan was en route less than an hour after Hu received word of the disaster, and well before the CPD made the futile rescue efforts at the collapsed schools off-limits to news organizations. Her minions were amassing the facts that later substantiated a complete report of the neglect and corruption that led to shoddy school construction and ultimately resulted in the death of 5,300 children. Hu knew the government was angry, but Caijing emerged unscathed.

Hu, from Caijing's site, http://english.caijing.com.cn.

In those early years, Caijing focused on local scandals of corruption and malfeasance — never directly accusing Party leadership or criticizing its policy, but allowing the reader to make the leap that there is some systemic flaw that enables the criminality. When she does name names, the miscreants are local officials or officers of individual companies. “The strategy of acknowledging the authority of the system and then fighting prudently to improve it defines Caijing‘s brilliance and its limitations, “observed Evan Osnos in his New Yorker profile of Hu.

In 2007 Hu wrote that “the public’s top concern is the rampant corruption and an imbalanced power system,” adding, “Some argue that pushing forward with political reform will be destabilizing. Yet, in fact, maintaining the status quo without any reform creates a hotbed for social turbulence.”

That same year, Caijing published an exposé of corporate fraud that so angered CPD it ordered the magazine to recall the issues from the newsstands. Children of high Party officials were involved, and though they weren’t identified, it feared astute readers might be able to connect the dots. Hu told The New Yorker that that débâcle was Caijing’s “largest disaster.” Not surprisingly, Hu is an ardent defender of the press and its right to know. Before the 2008 Olympics, she denounced the police who were clashing with reporters.

Tune in later this week for Part Two, to see what super-forbidden territory finally brought Hu and Caijing into the crosshairs of the authorities. —Ed.