China’s corruption probe bares its teeth

By Jonathan Fenby
20 February 2015

Every Chinese republican regime and imperial dynasty has inveighed against corruption.

The impact has invariably been limited, with campaigns against graft scraping only the surface and being abandoned after a short period when a few big fish have been held up to public scrutiny and the immediate political aim has been achieved.

This time, it is different.

The anti-corruption campaign launched by China’s leader, Xi Jinping, after he took office at the end of 2012, will go on forever, says its chief implementation officer, Wang Qishan, head of the Communist Party’s Discipline Commission.

After starting in the traditional manner by gunning for some highly placed real or potential political foes, the purge has widened into provincial governments, state-owned enterprises, the military and the regime’s main broadcasting station.

It has brought in associates of the two previous Chinese leaders, Hu Jintao and Jiang Zemin. Mr Wang’s commission has sent out inspection teams to delve into local authorities and industries.

Nobody can feel safe from a body that can detain people for recurring six-month periods without charge in a secret location before deciding on their guilt without any public trial – and, only then, hand them over to the civilian courts.

‘Tigers’ brought down

The campaign has coincided with a steady accumulation of top-level authority by Mr Xi, who now holds seven major posts – starting with the most important, the general secretaryship of the Communist Party.

He is also state president and chairs the Central Military Commission, the National Security Council, the National Reform Committee, the cybersecurity committee, and the commission for military reform and modernisation. He also holds other Politburo jobs that are not publicised.

The anti-corruption campaign is his blunt weapon to try to remedy what he sees as inefficiency in the monopoly party and the state it runs.

Officials have been ordered to cut out excessive spending on banquets, luxury goods, motorcades and other extravagances. The salaries of top executives at state companies are to be cut, and their perks and foreign trips restricted.

The scale and duration of the campaign have surprised observers, who expected it to tail off after a while – as happened with similar high-level exercises under Mr Hu and Mr Jiang aimed at specific political enemies.

Mr Xi has brought down two notable “tigers” – the maverick, upwardly-mobile politician Bo Xilai and the former national internal security chief Zhou Yongkang.

‘Widespread fear’

A network of associates – more than 300 in Zhou’s case – has also been targeted. Mr Hu’s former political secretary and Mr Jiang’s favourite general are also in the campaign’s sights.

But the effects are also being felt by scores of thousands of “flies” – lower-level officials who benefited in the past from using their positions to offer favours to those who gave them cash and perks in return.

Anecdotal evidence speaks of widespread fear among such people, not only that they may be brought to book for past misdemeanours but also that their superiors may be attacked and that they will suffer in consequence from guilt by association.

Apart from its scale and duration, what marks out this campaign is how it has reached into industry during the past year. This suggests that Mr Xi and Mr Wang (previously vice-premier for economic affairs) see it as the best way of dealing with the inefficiencies of the big state-owned enterprises (SOEs), which absorb much of China’s resources while making a limited contribution to real growth and employment.

The heads of the big SOEs enjoy high political status and have been able to block reform in the past to protect their baronies, but Mr Xi and Mr Wang have been taking a tougher line, with 70 senior executives of SOEs accused of corruption last year.

The fall of Zhou, who had remained the “godfather” of the oil and gas sector where he began his career, resulted in extensive removal of executives at the biggest group, CNPC.

The power generation industry has been shaken up as well as big conglomerates. The big Shenhua coal group has been publicly accused of accepting bribes in the coal trade and officials of the China Unicom telecoms company have been said to have been “colluding with contractors or suppliers, using their power to seek money or sex”.

Star figures at the main broadcasting network, CCTV, have been held for questioning, mainly for allegedly having given positive coverage in return for cash.

The Discipline Commission last week reported buying and selling of official positions, entertainment at public expense and helping relatives illicitly at a broad range of organisations.

Companies being investigated include the China State Shipbuilding Corporation; China Huadian Corporation; Dongfeng Motor Corporation; Shenhua; the oil group Sinopec; and the mobile telephone company China Unicom, where the commission said executives “collude with contractors or suppliers, using their power to seek money or sex”.

The commission has set itself the target of inspecting all major SOEs this year, making combating corruption in them a priority for 2015.

The official Xinhua news agency said last week that “corruption and abuse of power in SOEs have raised operating costs, impaired the openness of the market, caused huge loss of state assets and hampered development of the firms”.

‘Grim and complicated’

Other state organisations that have been targeted this year include the culture and environment protection ministries, the China Association for Science and Technology, the All-China Federation of Industry & Commerce and China Radio International.

A Politburo meeting last week heard a report from the Discipline Commission that warned that the party should be aware of the “grim and complicated graft situation” that needed to be fought with “the most determined attitude and decisive measures”.

Another meeting chaired by Prime Minister Li Keqiang focused on the need for clean governance, strict management of public assets and combating misuse of power, including the “grey zone” of administrative examinations and approvals.

Corruption still plagued the government in some sectors, largely because a minority of officials had such power to grant approvals and mete out benefits, Mr Li said.

“Every single penny of government expenses should be subject to auditing supervision,” he said.

Xi Jinping China’s President, Xi Jinping, faces big challenges
“Supervision over state-owned assets and enterprises should be tightened to make sure no national property is pocketed by a small number of corrupt officials.”

There can be no doubt about the seriousness with which Mr Xi and Mr Wang are waging their campaign, and what it says about the condition of China’s party state after three decades of strong growth in a system that gives huge power to those with the ability to disburse favours, requiring payment in return.

The danger is that, as they continue the campaign, they will upset the system they are trying to strengthen. They are playing a very high-stakes game that goes well beyond the political score-settling that has dominated most reports of their approach.

The outcome will be vital for China’s future and, given its global importance, for the rest of the world as well.

Jonathan Fenby is author of eight books on China, including Will China Dominate the World?, The Penguin History of Modern China and Tiger Head, Snake Tails: China Today.

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