Anti-Corruption Campaign Targets China’s State-Owned Enterprises

Investigations aimed at family of former paramount leader Jiang Zemin
February 20, 2015 Updated: February 20, 2015

Current Communist Party leader Xi Jinping wasn’t just bluffing when he called out the state-run companies and their executives for heavy bureaucracy, nepotism, and troublesome business practices at a meeting held by the Party’s disciplinary taskforce, the Central Committee for Discipline Inspection (CCDI) on Jan. 13.

About a month after Xi spoke at CCDI, it has issued reports on investigations of seven state-owned enterprises (SOEs), including the telecommunication giant China Unicom, the transportation company China Shipping, and the petroleum company Sinopec. Now, 26 central-government-owned SOEs have been identified for a new round of inspection by the CCDI, said its head Wang Qishan on Feb. 11.

It is a foregone conclusion that this investigation will bring down more ‘tigers.’

Companies that are controlled by local governments or through a state organ are all SOEs. Central-government-owned SOEs are a subcategory of state-run enterprises, generally companies that are run directly beneath the control of the State Council’s State-owned Assets Supervision and Administration Commission. They are often companies in crucial economic sectors.

The 26 companies targeted for investigation are from a diverse range of sectors, including, petroleum, nuclear, electricity, telecommunications, transportation, steel, mining, construction, and finance.

To echo what Xi said in January, the overseas edition of People’s Daily, a mouthpiece for the Chinese Communist Party (CCP), published an article with the title “Time for State-Run Companies to Tremble in Fear,” with its social networking account name, “Xiake Island,” on Feb. 12.

It is a foregone conclusion that this investigation will bring down more “tigers,” since the CCDI’s inspection teams have never come up empty before, stated People’s Daily. “Tiger” is jargon for a high-ranking CCP official.

A Warning from Xi

“The Party will intensify its guidance and supervision of executives working in state-run companies, and increase inspection and auditing of these state-run companies as well,” said Xi back on Jan. 13, while commenting that the campaign to root out corruption in China continued to be severe and complicated.

The state-run media has chosen a traditional Chinese holiday to pounce on a company controlled by Jiang Zemin and his family.
— Shi Shi, China expert

To provide an explanation to what Xi said, Gao Po, deputy secretary for the Center of Anti-Corruption Studies at the Chinese Academy of Social Science, said managers at state-run companies will be required to have a higher sense of responsibility, while establishing a lifelong accountability system, in an opinion article published by the regime mouthpiece Xinhua on Jan. 13.

To back Xi up by providing actual numbers, Xinhua also published an opinion article on Feb. 7 titled “State-Run Termites Can’t Be Allowed to Clean Out National Assets.”

In 2014, state-run companies generated an increase in profit by 3.4 percent compared to a year earlier, but together have accumulated a debt worth 66 trillion yuan (about US$10.6 trillion), according to Xinhua.

No Let Up in the Lunar New Year

China Unicom, the world’s third-largest telecommunications provider, was already buckling under the pressure of the anti-corruption campaign in December last year, when two of its top executives were sacked. In February, CCDI reported on the widespread practice of bribery, sexual favors, and corruption at the company.

The regime is keeping the pressure on China Unicom. Xinhua, two days before the Lunar New Year, announced that the telecommunication company would release a report at the end of March or early April on how to fix problems that CCDI has identified.

“The state-run media has chosen a traditional Chinese holiday to pounce on a company controlled by Jiang Zemin and his family,” said Shi Shi, a China expert based in the United States in an interview with Epoch Times.

“The purpose is to bring down Jiang’s arrogance while stepping up pressure on him and his family,” said Shi.

Jiang Zemin’s elder son, Jiang Mianheng, has wide-ranging ties in China’s telecommunications industry.

“China Telecom and China Mobile are among the 26 companies for the CCDI’s first round of inspections in 2015,” Shi said. “And it is expected that associates with ties to Jiang Mianheng will be purged, with the possibility that the younger Jiang will himself be purged as well.”

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