Economy

Grafting away

Why no government bureaucrat wants to get promoted in Shanxi

coal mine cart

The root of Shanxi’s problems?

Purges can be brutal affairs. During Stalin’s Great Terror even his pet parrot perished after the Soviet leader whacked it on the head with his pipe because it was imitating his spitting.

In China today an anti-corruption purge has been sweeping the country since Xi Jinping came to power in 2012. And according to recent reports in local media, no province has been harder hit by the clampdown than Shanxi, the traditional coalmining hub.

Southern Weekend has been looking at the fallout, and it isn’t pretty. The consequences for Shanxi have included dramatically slower economic growth, a paralysis in local government decisionmaking and a consequent drop in investment approvals. Budgets in cities, towns and counties have been squeezed, leading to disruptions in services and unpaid salaries for civil servants.

According to Xinhua, the province punished 15,450 officials in 2014, including seven from the top leadership. So many officials have been purged in Shanxi that the local government has faced a serious personnel problem. In April it was announced there were 311 senior provincial level posts that were vacant. Southern Weekend reports that few, if any, of Shanxi’s mid-level bureaucrats want to risk seeking a promotion due to the subsequent investigation it might trigger. The same problem extends down to the cities too. For example, Luliang has been unable to fill the vacant post of city mayor (it was one of the major targets of the anti-graft campaign, which explains the reluctance to apply).

At the heart of the purge is the break-up of the so-called ‘Shanxi Gang’, described by the People’s Daily as a clique of officials engaged in a parasitic relationship with local coal mine bosses.

At the apex sat Ling Jihua, chief aide to former President Hu Jintao who was expelled from the Communist Party this summer pending corruption charges. His elder brother, Ling Zhengce, was also expelled in August and removed from his post as vice chairman of Shanxi’s political advisory bureau.

Then last month, their brother-in-law Wang Jiankang was removed from his post as deputy mayor of Yuncheng, a prefecture-level city in the province. Other high profile scalps include Du Shanxue, the province’s former vice governor.

In Shanxi today even being suggested for a new role can be a highly dangerous career move. When Wu Qingsong, deputy mayor of Taiyuan city was flagged as a potential candidate to head the province’s propaganda department, he was caught up in a probe. Instead of being promoted, he was removed from his original post.

As one unnamed official tells Southern Weekend, “Everyone’s worried they might be reported for something if they’re put up for promotion. So we’re all staying silent.”

Typical is the comment of a second unnamed official who tells Southern Weekend, “I don’t want to be more powerful. I don’t want to achieve great things. I just want to stay in the clear.”

Southern Weekend interviewed Zhang Gaohong, deputy head of the Organisation Department in Shanxi, the Party’s powerful ‘human resources’ department.

Zhang tried to allay their concerns about the authority’s ongoing investigations. “I understand some comrades are worried,” he said. “But they’re being oversensitive. They should view our screening process in neutral terms.”

To prevent further stress, Zhang got a dictionary out in front of the journalist and looked up the verb to screen. “What it means,” he added, “is that we will investigate those officials who’ve acted improperly. We will remove officials who’ve been underperforming and promote those willing to take on their responsibilities.”

The department has taken to drafting in officials from other provinces to fill some of the empty posts. Southern Weekend spoke with a deputy department level official. He related a recent chance meeting with an old acquaintance in the lift of the Shanxi Provincial Party Committee Building.

“Are you here for a meeting?” he asked. “No,” the man whispered back. “I’ve been transferred here.” The official notes that previously such a senior-level relocation would have warranted a lavish welcome banquet. In the newly straitened circumstances bureaucrats arrive more quietly and without much fanfare.

According to Feng Shourui, the secretary general of a Shanxi business union, whereas previously a welcome banquet would have netted a restaurant Rmb800 ($126) per official, government officials in Shanxi now have far fewer banquets and they are likely to spend Rmb800 for the whole table.

The economic impact is real. “In the past, there were many luxurious restaurants and most of them were seafood restaurants. Now, few of them survive, many have closed. And a lot of seafood chefs have left,” comments Feng.

Restaurants offer a crude proxy for the disruption to the economy as a whole. Back in the (more corrupt) boom times of 2010 Shanxi recorded GDP growth of 21%. In the first half of this year its growth was 2.7%, the second worst in China. Economic growth declined in eight out of 11 cities, and 86 counties experienced negative growth (many of these counties are now complaining that their lower tax base means they can no longer operate standard services or meet government wage bills).

Local officials remain divided whether this drop-off results entirely from the anti-corruption campaign. Shanxi Party Secretary Wang Rulin tells Southern Weekend it is because previous economic development was unbalanced and too heavily tilted towards coal.

So as to get promoted, local officials would consistently try to boost GDP by opening new coalmines, taking no heed of supply and demand dynamics. Now many of those mines are idle and Shanxi Daily reports that salaries at many mines have not been paid for six months.

In Luliang, many local coal barons were caught up in the graft purge, and as their operations were shuttered, overall production was badly curtailed. Cheap coal imports from abroad made matters worse for Shanxi’s coal industry, driving down prices and forcing many mines into the red. According to the Shanxi Daily the province’s coal mines posted a combined loss of Rmb4 billion in the first half.

Little surprise, then, that the central government thinks the answer to Shanxi’s problems is to wean its economy off an over-reliance on coal.

The Beijing News says that in late August a delegation of 58 state-owned enterprises visited Shanxi, signing a total of 48 non-coal related deals.

The total value of the investment contracts was Rmb155.5 billion, which the Shanxi Daily described as “the largest investment in recent years”.


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