SOURCE:
( A) https://www.globalsecurity.org/wmd/library/news/china/2020/china-200424-rfa01.htm?_m=3n%252e002a%252e2852%252epm0ao0egkh%252e2mvl
( B ) https://www.globalsecurity.org/military/world/china/economy.htm
INDIA & CORONA-19 [ https://www.youtube.com/watchv=jnhaeUpOlL0&feature=share&fbclid=IwAR1YVbiMz7LCpfMRB9YvrqBa7p4ZOi29sL8LPEZ535TD7aKusWRroetZga0 ]
CHINA & CORONA-19
IN DEPTH STUDY
Preliminary data from China's National Bureau of Statistics released on 21 January 2019 showed that the growth rate of the world's second-largest economy expanded by 6.6-percent last year the lowest level since 1990. China's fourth quarter gross domestic product grew 6.4-percent, the slowest pace since the 2008 global financial crisis. Although the Chinese economy faced a downward pressure the statistics agency says the growth rate remained steady overall pointing to a near 6-percent on-year increase in industrial output, while retail sales soared by more than eight-percent in December 2018 compared to a year earlier.
( A) https://www.globalsecurity.org/wmd/library/news/china/2020/china-200424-rfa01.htm?_m=3n%252e002a%252e2852%252epm0ao0egkh%252e2mvl
( B ) https://www.globalsecurity.org/military/world/china/economy.htm
INDIA & CORONA-19 [ https://www.youtube.com/watchv=jnhaeUpOlL0&feature=share&fbclid=IwAR1YVbiMz7LCpfMRB9YvrqBa7p4ZOi29sL8LPEZ535TD7aKusWRroetZga0 ]
CHINA & CORONA-19
China's Economic Rebound Unlikely to Rescue Oil Market
[ ( A) https://www.globalsecurity.org/wmd/library/news/china/2020/china-200424-rfa01.htm?_m=3n%252e002a%252e2852%252epm0ao0egkh%252e2mvl ]
The world's largest oil buyer will struggle to achieve low single-digit economic growth in 2020 due to the COVID-19 crisis, leading to negligible or possibly negative growth of crude imports, an analysis by the Oxford Institute of Energy Studies (OIES) said.By Michael Lelyveld 2020-04-24 -- China's gradual economic recovery and available infrastructure are unlikely to come to the rescue of the world oil market this year, analysts say.
Although oil prices have plunged to record lows, China's demand "may not be as strong as some are expecting (or hoping). In fact, China's oil product demand could contract this year, for the first time in 30 years," said the analysis by the OIES China Energy Program.
"Even low oil prices are unlikely to change the outlook. This is because demand is recovering only gradually and product stocks are already high, so China has to destock before it can restock," the program's director, Michal Meidan, wrote.
Brimming storage levels and sluggish demand make it unlikely that China will be able to take full advantage of low prices, despite reports that the country would benefit from this week's historic descent into negative value.
"The really bad news is that even before the COVID-19 outbreak, Chinese refiners were probably already producing more petroleum products than the economy needed," The Wall Street Journal said in its "Heard on the Street" column this week.
The OIES commentary, released days before the National Bureau Statistics (NBS) reported a 6.8-percent drop in gross domestic product for the first quarter, cast doubt on official energy demand data for the first two months of the year.
Although the NBS and industry groups reported deep declines for the January-February period, OIES pointed to signs that the energy consumption slump may have been even worse.
In March, for example, the China Electricity Council reported a 12.9-percent loss in industrial power consumption for the first two months from a year earlier as the NBS reported that industrial output dropped 13.5 percent.
Daily tracking of the coal used by major power plants shows declines ranging as low as 40 percent in February, however.
Similar "high-frequency" readings also pointed to big inventory build-ups of refined products in the oil industry.
Lunar New Year
According to NBS data, China refinery runs averaged 12.1 million barrels per day (bpd) during the two-month Lunar New Year period, down 5 percent year-on-year. But throughputs in the first quarter were estimated at only 11.5 million bpd, according to independent reports.
While weakening demand for petroleum products outpaced the run reductions, China's refiners put additional strains on available storage by buying crude to take advantage of plummeting prices.
The report estimates that implied demand for fuels fell by considerably more than the 13 percent estimated from official sources for January and February, reaching 20 percent in the first quarter.
Questions about China's sectoral performance have been echoed in doubts about its economic data as a whole.
While a first-quarter downturn in gross domestic product of 10-11 percent was widely forecast based on the two-month figures, the NBS reported a milder contraction of 6.8 percent.
The conflicting estimates of China's declines in energy demand have taken place against the backdrop of a badly botched settlement of the oil price war between Saudi Arabia and Russia, along with uncertain forecasts of economic growth for this year.
In a desperate bid to support prices on April 12, the Organization of Petroleum Exporting Countries and cooperating producers, known as OPEC+, agreed to slash oil production in May and June by a mammoth 9.7 million bpd, cutting world supplies nearly 10 percent.
After the costly Saudi-Russian battle for market share, Russian Energy Minister Alexander Novak voiced hope that contributions from other producers including the United States would bring total cuts to between 15 million and 20 million bpd.
But despite the record reductions, the market remained unimpressed amid concerns that the global plunge in demand could be even worse.
Three days after the announcement, benchmark crude prices slid below U.S. $20 (141 yuan) per barrel for the first time 1998. On Monday, U.S. prices slipped below zero for the first time as a May futures contract expired without buyers, settling at negative $37.63.
The freefall in oil could be read as a vote of no confidence in world economic growth prospects.
'Extreme uncertainty'
At its spring meeting on April 14, the International Monetary Fund envisioned a sharp reversal in global growth this year to -3 percent, down from a 3.3-percent expansion in its previous forecast.
Recovery in the second half would allow China to achieve GDP growth of 1.2 percent this year, the IMF said. But that was down from an official growth rate of 6.1 percent in 2019.
Full restoration of growth would wait until 2021 when expansion was expected to climb 9.2 percent.
But IMF officials cautioned that the forecast was clouded by "extreme uncertainty," based on assumptions that the pandemic would wane in the second half of this year.
Even with partial recovery and low oil prices to spur the economy, China's demand is not expected to strengthen the world oil market as it has in the past.
Available storage will be a critical issue.
Onshore and offshore facilities are nearly maxed out around the world. The "tank top" situation in China is expected to limit oil buying, no matter how cheap prices may get.
"Currently, no more space is left for refined oil products and most crude storage facilities have been booked," the official Xinhua news agency said Friday, citing CCTV.
OIES estimates that China's refiners will be able to store about 300 million barrels of oil this year, combining available capacity of the country's strategic petroleum reserve (SPR) and commercial stocks. The volume would fall far short of that needed to offset the global glut.
"Given these limitations, (refinery) runs will struggle to exceed 2019 levels when throughputs averaged 13.1 million bpd," OOIES said. Even if recovery starts by midyear, demand in 2020 is expected to be 100,000 to 250,000 bpd lower than in 2019.
"This would be the first contraction in Chinese oil consumption since 1990," the report said.
Withholding Accurate and Timely Data
While China's role in the world oil market is critical, the country presents a challenge for analysts by withholding accurate and timely data on its strategic and commercial stocks.
Unlike member countries of the Paris-based International Energy Agency (IEA), China provides only sporadic and outdated information on the size and activity of its SPR, leaving analysts to guess when it is filling available storage and when it is not.
In January 2018, for example, the NBS reported the level of the "national crude oil reserves" and "some corporate facilities," but only as of the end of June 2017.
For nearly two decades, China has treated its progress on building an SPR to meet the IEA standard of 90 days of import coverage as a state secret. It is also unclear when or if it is using SPR stocks to influence prices, instead of solely for emergencies in case of supply disruptions.
China's lack of transparency poses problems for estimating China's demand and its effects on world markets, especially during such a volatile period.
"The challenges associated with the data and lack of transparent storage stats certainly complicate efforts to gauge the impact of COVID-19 on China's actual oil demand," Meidan said in an email.
In the absence of reliable official reporting, the market has turned to alternate sources of information including satellite data and high-frequency readings of coal consumption, but these have their own limitations, Meidan said.
The problems with reporting also go deeper than the government's reluctance to disclosing relevant and regular data on the SPR and commercial stocks.
"I think the challenge in China is systemic to the extent that Beijing relies on industry to report, and there are numerous incentives to misreport data up or down," Meidan said, citing several motives for manipulation.
Meidan said that independent refiners typically under- report output for tax evasion purposes, while oil companies may alter results for political reasons to show the government that they are following directives to focus on upstream exploration and development.
Distortions are also possible to show that economic activity is recovering, "which could lead refiners to report higher throughput data," she said.
IN DEPTH STUDY
People's Republic of China - Economy
Preliminary data from China's National Bureau of Statistics released on 21 January 2019 showed that the growth rate of the world's second-largest economy expanded by 6.6-percent last year the lowest level since 1990. China's fourth quarter gross domestic product grew 6.4-percent, the slowest pace since the 2008 global financial crisis. Although the Chinese economy faced a downward pressure the statistics agency says the growth rate remained steady overall pointing to a near 6-percent on-year increase in industrial output, while retail sales soared by more than eight-percent in December 2018 compared to a year earlier.
In a speech to opening session of the annual National People's Congress at Beijing's Great Hall of the People 05 March 2017, Premier Li Keqiang set the growth target for the world's second-largest economy at "around 6.5 percent or higher, if possible." That's down from 6.7 percent expansion last year but, if achieved, would be among the strongest globally. He promised more steps to cut surplus steel production that is straining trade relations with Washington and Europe. Li promised to eliminate 50 million metric tons of steel production capacity.
Research firm Sanford Bernstein, which keeps tabs on sales of movie tickets, cars, mobile phones and Alibaba online transactions in China, has argued that the world’s second-largest economy is actually weaker than it seems. The firm's estimate of China’s third-quarter 2015 growth was 4.1 percent.
Local officials and the central government both have vested interests in exaggerating their economic performance. Capital Economics, a London-based research group which monitors the Chinese economy, looks at five factors -- electricity output, freight shipments, construction, passenger travel, and cargo volume. They dispute China's claims to narrowly missing its growth target of 7.5 percent. According to these five indicators, China's economic performance closely tracked with official figures until mid-2013. After that, Chinese statistics diverged from the reality of these indisputable numbers. According to these calculations, recent annual growth is closer to 5.7 percent, far below the 6.5 percent which some say is the critical mass for political stability.
The government’s deleveraging campaign which aims to avert a potentially regime-threatening financial crisis has led to a sharp reduction in investment growth as companies access to credit is cut. In June 2018, China's stock market sank to its lowest level since January 2016. US$2 trillion has been wiped off share values in the first six months of 2018, making China’s stock market the world’s second worst performer after Argentina. This is not yet on the level of the 2015 market meltdown when China’s stock market lost half its value, US$5 trillion. An important difference between today’s bear market and the 2015 version, that this time the selloff in shares seems to be driven by big institutions rather than China’s army of small stock market investors.
The upsurge in the class struggle, despite workers conspicuously avoiding political slogans, is another major problem for Xi’s regime. While China’s economy is now slowing, many groups of workers have reached breaking point as their wages and working conditions have worsened over recent years.
Due to the government’s quasi-monopoly control over outbound investment, there is also evidence of coordinated outbound investment. In its 10th Five-Year Plan (2001-05), the government introduced the “go global” directive, which encouraged Chinese companies and funds to invest overseas to acquire resources, technology, and know-how. The directive gained further momentum during the global financial crisis, which provided a rare opportunity to buy undervalued assets in foreign markets. Since 2008, China’s outbound investment has grown steadily and has begun to outpace inbound investment.
China's economy grew at its slowest pace in six years in the first quarter of 2015, according to data released April 15, 2015, raising fresh concerns over the condition of the world's second largest economy. Growth declined to 7 percent in the first quarter of 2015, down from 7.3 percent in the previous quarter. That is the slowest quarterly growth rate since early 2009 during the aftermath of the global financial crisis. China's ruling Communist Party set a modest target of 7 percent growth for 2015.
The IMF April 2015 WORLD ECONOMIC OUTLOOK pegged China's growth at 6.8 percent in 2015 and 6.3 percent the following year, a far cry from its ten-year peak of 14% in 2007. These projections had been revised downward by ¼ and ½ percentage point, respectively, as previous excesses in real estate, credit, and investment continued to unwind. The Chinese authorities were expected to put greater weight on reducing vulnerabilities from recent rapid credit and investment growth, and hence the IMF forecast assumed less of a policy response to the underlying moderation. Ongoing implementation of structural reforms and lower oil and commodity prices were expected to expand consumer-oriented activities, partly buffering the slowdown.
Many analysts expected economic growth in the fourth quarter of 2014 to slow only slightly from 7.3 percent in the third quarter. The lower figures are a sign that what Beijing calls "the new normal" is here to stay. It meant full-year growth would undershoot the government's 7.5-percent target and mark the weakest expansion in 24 years. Economists advising the government recommended that China lower its growth target to around 7 percent in 2015. That is the slowest pace of growth China has seen since 1990, when the country’s economy was struggling under the weight of sanctions after the brutal crackdown on pro-democracy protesters in Tiananmen Square.
In late November 2014, the central bank unexpectedly cut interest rates for the first time in more than two years. It has also injected more funds into the banking system and relaxed restrictions to persuade risk-averse banks to lend more. More infrastructure projects were also approved.
By some measures 2014 was the year that China overtook the United States as the world’s biggest economy. It happened sooner than many expected. According to figures released by the International Monetary Fund, China's total output of goods and services pushed past the United States' total for the first time in 2014. China surpassed Japan to become the world’s second biggest economy in 2010.
China’s dramatic economic slowdown is explained in large part by the decline in global competitiveness of its manufactured goods as productions costs have increased for China’s facilities. These recent trade figures might be evidence of the irrelevance of the export-based growth model for China, underlining an urge for structural reform in the Communist nation.
Further Reading
CORRUPTION
Corruption costs China some 10 percent of its gross domestic product (GDP), according to estimates by Shanghai-based independent economist Andy Xie Guozhong.
The Communist Party of China (CPC) vowed 25 December 2013 to firmly fight corruption and maintain its "high-handed posture" in the next five years. "If the problems of work styles and corruption are not handled properly, they will critically harm the Party, and even lead the Party or nation to perish," said a five-year (2013-2017) plan on building a system to punish and prevent corruption, issued by the CPC Central Committee.
All cases must be investigated and miscreants punished more severely to deter others, the plan said. The CPC reiterated its pursuit of "tigers" and "flies" and the fight against harmful work styles, the hotbeds for corruption. The Party's work style campaign is fundamental to the fight against corruption, according to the document. "Corruption is still common. The soil that nourishes corruption still exists. The situation remains critical and complicated," the plan said.
The restrictions imposed on Chinese sovereignty in the 19th century were rendered inevitable by the inefficiency and corruption of the mandarinate of the empire. Whereas formerly it was China which dictated the conditions under which international relations were to be maintained, now it was the Western nations which imposed their will on China. To save appearances was the first rule of the Chinese official. But along with the constant outward profession of the moral platitudes of Confucius and Mencius, there existed a very shrewd selfishness which sought the greatest personal gain that can be reconciled with appearances. The cause for the divergence between the spirit and the practice of Chinese law is found in the notorious corruption of the Chinese magistracy and judiciary. With "reason" on their lips and the keen desire for gain in their hearts," their judgment was at the disposal of the long purse.
Dr. Sun Yat Sen wrote in 1897 that "There is, in truth, one and only one cause of ... all China's ills: that is the universal and systematic corruption which is directly responsible for famine, flood, and pestilence, no less than for the perennial flourishing of large hordes of armed robbers and banditti .... So universal and deeply rooted is the corruption from which all these evils spring, that partial and gradual reform is impossible and no change for the better can be hoped for except from a radical alteration in the administrative system. For under the present regime any official who wishes to be honest is, nevertheless, compelled to follow in the footsteps of the dishonest ones, or retire from public life altogether. He must accept bribes in order to pay the bribes exacted of him by his superiors; and he must connive at all kinds of corruption both in his subordinates and in those who hold higher rank or office than his own."
On November 30, 1951 Mao Tse-tung wrote that "The struggle against corruption and waste is a major issue which concerns the whole Party, and we have told you to give it your serious attention. We need to have a good clean-up in the whole Party, which will thoroughly uncover all cases of corruption, whether major, medium or minor, and aim the main blows at the most corrupt, while following the policy of educating and remoulding the medium and minor embezzlers so that they will not relapse. Only thus can we check the grave danger of many Party members being corroded by the bourgeoisie, put an end to a situation already foreseen at the Second Plenary Session of the Seventh Central Committee and carry out the principle of combating corrosion then laid down."
Corruption remains endemic in China. Sectors requiring extensive government approval are most affected, including banking, finance and construction. The lack of an independent press as well as the fact that all bodies responsible for conducting corruption investigations are controlled by the Communist Party hamper anti-corruption efforts. Senior officials and family members are suspected of using connections to avoid investigation or prosecution for alleged misdeeds.
According to Chinese law, accepting a bribe is a criminal offence with a maximum punishment of life in prison or death in "especially serious" circumstances. The maximum punishment for offering a bribe to a Chinese official is five years in prison, except when there are "serious" or "especially serious" circumstances, when punishment can range from five years to life in prison. It is currently not a crime under Chinese law to bribe a foreign official. A draft amendment to the Penal Code under consideration would make offering bribes to foreign officials or officials of international organizations a punishable offense, with punishment ranging from three to ten years in prison plus fines.
Four waves of official corruption were associated with different stages of the nation's economic reform. Each wave of corruption had different forms and targets. By 2010 the general trend was that as the nation's economic reforms move forward, official corruption in China is becoming more serious and pervasive with more money and higher ranked officials involved in corruption cases. This is raising a serious challenge to Chinese authorities who have shown a willingness and effort to control official corruption. In China, theauthorities are increasingly aware of the need for an independent and apolitical justice system tomeet the demands of the 21st century, but are still uncertain of how much power to cede.
Chinese officials have noted that most acts of corruption in China are closely related to economic activities that accompany illegal money transfers. Observers register increasing concern regarding underground banking and trade-based money laundering. Value transfer via trade goods, including barter exchange, is a common component in Chinese underground finance. Many Chinese underground trading networks in Africa, Asia, the Middle East, and the Americas participate in the trade of Chinese-manufactured counterfeit goods.
Although China has had some success at combating illegal underground banking, the country's cash-based economy, combined with robust cross-border trade, contributes to a high volume of difficult-to-track large cash transactions. While China is adept at tracing formal financial transactions, the large size of the informal economy--estimated by the Chinese Government at approximately ten percent of the formal economy, but quite possibly much larger--means that tracing informal financial transactions presents a major obstacle to law enforcement. The prevalence of counterfeit identity documents and underground banks, which in some regions reportedly account for over one-third of lending activities, further hamper law enforecement efforts.
The mainland Chinese stock markets have had serious problems with corruption, cronyism and lack of transparency. Euromoney describes these markets as "mired in corruption, dominated by moribund companies and manipulated by government and speculators alike." Corruption extends beyond the exchanges to include listed companies. The China Securities Regulatory Commission (CSRC), which regulates the securities market, reported in 2004 that 10 percent of its listed companies had doctored their books. The CSRC is also tackling corruption. It is investigating related-party transactions to stop the prevalent practice of shifting assets from listed companies to their unlisted state-owned parents.
Corruption is considered to be especially prevalent in remote branches and rural institutions: private businesses have complained that in order to borrow from rural banks and credit cooperatives, they are typically forced to bribe lenders with kickbacks of 10 to 15 percent of the loan value. The rural credit cooperatives are reportedly riddled with fraud and controlled by local government officials. Corruption appears to be a problem not just in rural banks or remote branches but also in the big four banks. The central bank recently reported that 40,000 CCB employees and 18,000 Bank of China employees had been disciplined for misappropriating funds and making unauthorized loans. Additionally, the chairman of CCB was forced to resign in March 2005 for taking bribes. Significantly, CCB had been considered the cleanest of the big four banks.
Chinese leaders acknowledge that official corruption in China continues to be a serious problem. Anti-corruption campaigns have led to arrests of many lower-level government personnel and some more senior-level officials. Most corruption activities reported in the press in the PRC involve abuse of power, embezzlement, illegal land confiscations, and misappropriation of funds. Payoffs to "look the other way" when questionable commercial activities occur are surely an important type of corruption as well. As in other countries, many perceive that a number of corruption cases are arbitrarily brought against political enemies or economic competitors, and against junior rather than senior officials, although this is difficult to verify.
In Transparency International surveys in the mid-1990s, China was listed by U.S. and European business people as one of the three most corrupt countries in Asia. Transparency International, a global corruption-monitoring group, rated China 2.16 in 1995 (a rating beneath 3.0 indicates rampant corruption). In 2005, the ranking improved to 3.4, placing China solidly in the middle in terms of corruption-71st out of 146 countries. A Chinese national survey revealed that Chinese citizens regard corruption as the most serious problem after inflation. But a review ofthe World Bank's annual World Business Survey indicates that overall corruption in China appears to be less than in other developing countries with similar per capita income.
The history of Chinese criminal law on corruption is divided into three period: the early period before economic reform (1950-1980), the period of early economic reform (1980s), and the later periods of economic reform (1990s). The criminalization of corruption in the private sector is also examined. The law against corruption has changed from the ordinance in the 1950s that regulated a compound of the criminal and administrative offenses to separate laws that provided independently for criminal offenses or administrative misconduct in the 1980s this trend of division of regulation started in the criminal law in 1979, and both jurists and practitioners view this as the correct direction for the development of criminal law. Compared with the offense of theft, punishment for embezzlement and bribery has been lessened. The scope of offenses of embezzlement, bribery, and misappropriating public funds has been reduced comparatively, possibly in order to limit the number of officials punished criminally for corruption.
In response to demands for a more fair and effective judiciary, the SPC issued a code of ethics in 2003 setting down 13 rules strictly prohibiting certain corrupt behavior. That same year the NPC joined the anti-corruption fight by embracing open trials, the separation of trials from enforcement and monitoring, evaluation of judges, and amendments to the criminal code that laid down a 10-year prison term for abuse of judicial power. Since then, thousands of judges and other court staff have been arraigned or prosecuted for corruption.
Some behaviors that arguably are grave enough in their social impact to merit criminalization have not been provided for in criminal law, although many criminal jurists suggested that they should be punished criminally. Hard evidence is scarce about the precise effect that both the reality and the national and international perceptions of corruption control have upon economic development, but the way that China approaches this challenge will have significant effects on the future of its legal system as well as upon its economic and political well-being.
China employs a comprehensive counter-drug strategy, dubbed "The People's War against Drugs," which includes prevention, education, eradication, interdiction, rehabilitation, thorough regulation on commerce in precursor chemicals, and increasing international cooperation. However, corruption in drug-producing and drug transit regions of China limits what dedicated enforcement officials can accomplish.
While narcotics-related official corruption likely exists in China, it is seldom reported in the press, but the fact that narcotics transit into and out of China and are trafficked and abused throughout the PRC suggests strongly that official corruption at all levels is almost certainly part of the problem. Official corruption cannot be discounted among the factors enabling organized criminal networks to operate in certain regions of China, despite the efforts of authorities at the central government level to prohibit and punish such activity.
Institutions of higher learning, as social organizations, rely on their administrations to harmonize their resources and coordinate relations. Meanwhile, institutions of higher learning are also important links in political socialization, and state forces intervene to a certain extent in school administration and regulate their developmental objectives. However, the long-term dependence of China's state-run universities on the government and the lack of a proper orientation for academic authority have limited the universities' overall efficiency and the individuals' initiative. The universities' lagging mode of administration during the reforms of the national economy and the political system has created discrepancies between the universities' interest orientation and the interests of society and given rise to academic corruption.
Since 1995, officials in China have been required to report their salaries to the party’s Central Commission for Discipline Inspection. Just a few years ago, that was expanded to include the assets of their family members’ personal income, investments and property holdings. That information, however, has never been made public, in part because of government concerns about how the release of such information could create social instability.
In the past, the results of amnesty programs was just the opposite of what was intended.”Those who did not come forward and reveal their acts of corruption managed to escape punishment, and those who did come forward willingly were punished.
On July 25, 2013 a court indicted disgraced politician Bo Xilai on charges of corruption and abuse of power. Bo was swept from office in April 2012 following one of China’s biggest political scandals and vanished from the public limelight. Chinese state media reports said Bo will face charges of abuse of office, accepting bribes and embezzling of massive amounts of public funds. Around the time that Bo was kicked out of the party, state media reported that his crimes stretch back more than a decade. In addition to corruption, Bo was also alleged to have engaged in illicit sexual affairs attempted to cover up his wife’s murder of a British businessman. The scandal was one of the Communist Party’s ugliest in decades and comes as public trust in the party is waning over concerns about corruption.
Bo was once one of China’s most well-known and popular up and coming politicians. He was one of 25 members in the Communist Party’s Politburo, and was widely expected to become one of China’s top leaders. But just as China was beginning its once-in-a-decade leadership reshuffle, allegations of corruption and murder swirled around his family. He disappeared from public view and was then ousted from his post as party boss of the southern megacity of Chongqing. His wife, Gu Kailai, was given a suspended death sentence following her confession to the murder of British businessman Neil Heywood. Bo’s former right-hand man, Chongqing police chief Wang Lijun was sentenced to 15-years in prison for initially covering up the murder and other crimes.
Most local leaders had "bought" their positions and wanted an immediate financial "return" on their investment. They always supported fast-growth policies and opposed reform efforts that might harm their interests. The central feature of leadership politics was the need to protect oneself and one's family from attack after leaving office. Thus, current leaders carefully cultivated proteges who would defend their interests once they stepped down. It was natural that someone like Xi Jinping, who maintained a non-threatening low profile and had never made enemies, would be elevated by Jiang Zemin and Zeng Qinghong. Xi would act to ensure that Jiang was not harassed or that Jiang's corrupt son would not be arrested.
Since becoming party chairman in November 2012, Xi and the head of the party’s disciplinary commission, Wang Qishan, had taken steps to crack down on corruption. Xi pledged to go after both high- and low-ranking officials, and the party said it would launch a major anti-corruption plan in 2013. But the anti-graft campaign focused largely on those rumored to be Xi’s adversaries in the party, reflecting a bitter power struggle behind the scenes.
China’s fight against the rampant problem of corruption had long lacked a tool that many believe could help shine a light on graft: a requirement from the central government that officials publicly disclose their assets. In early 2013 several new - albeit small scale - asset disclosure programs were initiated, one in the eastern city of Ningbo and three others in the progressive southern province of Guangdong. Some of the programs that already have been experimented with in the past, such as one in Xinjiang and the provinces of Hunan and Zhejiang, have had mixed results.
The government could set up an amnesty program to prod corrupt officials to come forward, and give them some guarantees that possible penalties could be lightened. The amnesty would need a legal basis and should be different from political movements the party has launched in the past to root out corruption. If amnesty is used again, it needs to have a legal basis. Some analysts in China said the amnesty could apply to acts of corruption prior to the 18th Party Congress of November 2012.
In October 2012 the government established a “frugal working style” rule barring government officials from spending public money on luxury items such as lavish banquets and luxury cars and from accepting expensive gifts. In September the government banned officials from using public money to send mooncakes as gifts and in December published regulations that banned dishes containing shark fin, bird nests, and wild animal products from official banquets. In December the government issued guidelines forbidding officials from chartering planes or flying in private or corporate jets overseas.
China's top leadership had carved up China's economic "pie," creating an ossified system in which vested interests drove decision-making and impeded reform as leaders maneuvered to ensure that those interests were not threatened. It was well known that former Premier Li Peng and his family controlled all electric power interests; PBSC member and security czar Zhou Yongkang and associates controlled the oil interests; the late former top leader Chen Yun's family controlled most of the PRC's banking sector; PBSC member and Chinese People's Political Consultative Conference Chairman Jia Qinglin was the main interest behind major Beijing real estate developments; Hu Jintao's son-in-law ran Sina.com; and Wen Jiabao's wife controlled China's precious gems sector.
China announced 29 July 2014 it was investigating a man who used to be one of the country's most powerful politicians, former domestic security chief Zhou Yongkang. The investigation was likely to boost already growing public support for Chinese President Xi Jinping's widening anti-corruption drive. The decision to go after Zhou was perhaps the biggest investigation since the Gang of Four at the end of the Cultural Revolution. Zhou is a close ally of former rising political star Bo Xilai, who was sentenced to life in jail in 2013. Xi Jinping is getting more and more powerful and is centralizing power in his own hands, for the better or maybe for the worse.
The investigation found that Zhou seriously violated the Party's political, organizational and confidentiality discipline. He took advantage of his posts to seek profits for others and accepted huge bribes personally and through his family. He abused his power to help relatives, mistresses and friends make huge profits from operating businesses, resulting in serious losses of state-owned assets. Zhou leaked the Party's and country's secrets. Zhou committed adultery with a number of women and traded his power for sex and money.
Zhou Yongkang was expelled from the Communist Party of China (CPC) and prosecutors have opened an investigation into his suspected crimes and decided to arrest him, authorities announced 06 December 2014. Zhou's expulsion from the CPC was according to a decision made at a meeting of the Political Bureau of the CPC Central Committee. The meeting also decided to transfer the suspected criminal case of Zhou, a former member of the Standing Committee of the Political Bureau of the CPC Central Committee, and relevant clues to judicial organs for handling according to the law.
Chinese authorities formally indicted former security chief Zhou Yongkang on 03 April 2015. A brief statement posted on the website of China’s top prosecutors office, said Zhou’s crimes of bribery, abuse of power and leaking state secrets stretched from his time as head of China National Petroleum Corporation - one of the world’s biggest energy companies - to his final post as a member of China’s powerful Politburo Standing Committee.
There was no reference to his son or his other relatives, as well as his cronies and former colleagues, numbering in perhaps more than 100 people, who were also members of the corruption gang led by Zhou Yongkang.
There was speculation that Zhou, Bo Xilai and others were plotting or somehow taking steps to prevent Xi Jinping from rising to power. In June 2015 Zhou Yongkang was sentenced to life in prison following a secret trial. Tianjin’s Intermediate People’s Court found Zhou guilty of corruption, abuse of power and disclosing state secrets. Although details of the trial released by the state media provided some information about Zhou’s crimes, they shed little light on the massive network he had allegedly built up over his years at the helm of China’s oil industry and in powerful state and party positions.
An alleged scam in which journalists at a prominent business news website extorted money from companies for positive coverage was under investigation in September 2014. The case involved eight people including journalists, media heads, marketing staff and public relations heads, all of whom had been detained by police. They include Liu Dong, president of 21cbh.com, Zhou Bin, the website's editor-in-chief, and reporters and employees of its marketing department, as well as heads of the two PR firms.
Together, they extorted money from more than 100 companies since November 2013, said police. Police said business news website 21cbh.com and two public relations firms collaborated to extort money from companies in return for favorable coverage and withholding negative news reports on the site. If companies refused, the website would purposely publish negative or malicious information about the company.
In 2016, Bai Enpei, a former senior lawmaker with the National People's Congress, was sentenced to death - with a two-year reprieve - for taking 246.7 million yuan and holding excessive assets from unidentified sources. Bai later received a life sentence, the standard practice for most such sentences.
More than 159,000 people were punished for corruption and violating the Party code of conduct in China in 2017, according to the Central Commission for Discipline Inspection of the CPC. Since the start of 2017, a total 1,300 fugitives have returned to China, including 347 Party members and State functionaries as well as 14 others listed on a red notice of corruption suspects.
Zhang Zhongsheng, ex-deputy mayor North China city of Lüliang, sentenced to immediate death for accepting bribes worth 1.04 billion yuan ($166 million) by a court in Shanxi Province on 28 March 2018. Zhang was sentenced to death for accepting bribes and seeking illegal benefits for others with a severe impact on the local economy, according to the Intermediate People's Court in the nearby city of Linfen. Zhang was "extremely greedy," it said. He "crazily took bribes from 1997 to 2013 and did not restrain himself after the 18th National Party Congress and caused extraordinarily great losses to the nation and its people and should be punished severely by law."
Further Reading
Corruption - Military
Graft in the armed forces could undermine their ability on the battlefield. It greatly affects the military's image and hinders the development of national defense. The number and seniority of officers detained or arrested for corruption raised questions about the combat potential of a military that had not fought a war in five decades.
China's military's has been a focus of Xi's ongoing anti-graft crackdown. Corruption has long been considered rife within the PLA, with top generals reported to have accumulated vast wealth. The scale of the graft fell afoul of Xi's objective of modernizing the military Critics say Xi's anti-graft campaign is partly a cover to purge the military and Communist Party to consolidate control.
In an unusually candid December 2011 speech, PLA Logistics Department Political Commissar General Liu Yuan, son of former Chinese President Liu Shaoqi (1959–1968) and potential friend of President Xi Jinping, reportedly said, ‘‘No country can defeat China . . . Only our corruption can destroy us and cause our armed forces to be defeated without fighting.’’ General Liu in a later speech reportedly explained, ‘‘Certain individuals exchange public money, public goods, public office, and public affairs for personal gain, flouting the law and party codes of conduct, even resorting to verbal abuse and threats, clandestine plots and set ups . . . They deploy all of the tricks of the mafia trade within the army itself.’’
Corruption in the military became widespread in the 1980s, as the PLA branched out into business, seeking opportunity in the new market reforms. Chinese leaders ordered the PLA to withdraw from commercial activities in 1998, but the proces took time. In the new century, graft flared anew, due in no small part to soaring value of land for development, including military land.
In July 1998 President Jiang Zemin ordered the military to shut down all its business enterprises as part of the country's current anti-smuggling campaign. The People's Liberation Army had become heavily involved in the civilian sector of China's economy over the previous two decades, and many analysts wondered if it was possible for the PLA to divest itself of this significant source of revenue.
The army was involved in just about every kind of business. They ran guest houses. They ran karaoke parlors. They ran motor bike manufacturing plants. And they also had been involved in coal mining, horse raising and making sewing machines. Although the Chinese government had been trying to rein in the commercial activities of the PLA for many years, and thus far without success, there was no supposition that just because the order is given it would actually be obeyed.
The revenue derived from these industries was very important to a large number of people in the Chinese military, from the very top people to the grass roots units. No one was precisely sure how much of the PLA operations depended on their income from business enterprises. But it was a substantial amount, that went toward making the difference between a very spartan lifestyle for the units at the bottom and having some of the amenities of life, like repairing barracks. And of course, at the top, it enables people to buy Mercedes sedans and establish foreign bank accounts and entertain lavishly, which is the prelude toward creating guanxi (contacts / relations), and going on to even better things.
The PLA become involved in "civilian sector" enterprises after they were actually urged to do so by none other than Deng Xxiaoping soon after he took over the reins of government in 1978-1979. The military wanted military modernization, and so did Deng. But he was very well aware that China could not graft a strong military onto a weak economy. So he told the PLA the best way to ensure military modernization is to help with the modernization of the civilian economy.
President Jiang Zzemin's announcement for the military to close down these operations was confirmation that the military businesses had been involved in smuggling and other illegal, corrupt activities. The top brass of the military has been worried about this since around 1985. They sometimes refer to the PLA as the "great steel wall," and they said, in so many words, that they worried that the great steel wall was rusting.
So widespread was the trade in ranks that there wre unofficial price tags. Promotion to general cost at least 10 million yuan ($1.6 million) and to senior colonel more than half that. Even just enlisting as an ordinary soldier could cost at least 10,000 yuan in bribes. By some accounts, the going rate to simply join the army, depending on “guanxi,” or connections, was as much as $16,000. If the applicants guanxi was really strong it would cost around 50,000 yuan [$8,000] per quota; if not, the price might be 100,000 yuan [$16,000] at least.
Most duty crime cases in the military occurred in the areas of construction, personnel and finance management, and materials and armament procurement. Logistics posts had become one of the most susceptible to corruption.
Nevertheless, empirical evidence of PLA corruption remains limited. Only two high-profile PLA corruption cases had become known since 2005. Admiral Wang Shouye was sentenced to life in prison in 2006 for embezzling approximately $20 million. General Gu Junshan was removed from his post in 2012, and the investigation apparently is ongoing. Both Admiral Wang and General Gu had served as the deputy director of the PLA General Logistics Department, suggesting officers in logistics positions may be more susceptible to corruption, or corruption charges, due to their involvement in infrastructure and natural resources.
In a meeting shortly after becoming the CMC chairman, President Xi urged senior PLA officers ‘‘to take a firm stand against corruption’’ and to maintain a ‘‘strict work style’’ and ‘‘iron discipline.’’ Since then, reducing corruption and waste in the PLA has been one of President Xi’s most consistent messages in his public speeches to the military. In addition to rhetoric, President Xi has announced stronger anticorruption regulations for the PLA, including restrictions on military personnel holding banquets, drinking excessive alcohol, and using luxury hotels.
President Xi’s focus on combating corruption in the PLA is part of the CCP’s larger national effort to boost its image to mitigate growing public disillusionment with politics and governance in China. He also is attempting to end practices such as paying for promotion and graft, which some observers have suggested reduces the quality of officers, perpetuates opposition to reforms, threatens PLA modernization and readiness, and undermines loyalty to the CCP.
President Xi Jinping launched a sweeping campaign against graft since becoming party chief in late 2012, vowing to take down powerful “tigers” as well as lowly “flies.” Xi Jingping's anti-graft campaign had the primary objective of stabilizing the Communist Party," he said. "He is using this anti-graft campaign to regain legitimacy and trust for the Communist Party in the eyes of the people. The larger goal of the anti-graft campaign was to try changing how power is exercised in China and remove the most blatant cases of tutelage and abuses.
The People's Liberation Army was reeling from the crackdown and had seen dozens of officers investigated, including two former vice chairmen of the Central Military Commission, Guo Boxiong and Xu Caihou. The 16th and 47th Group Armies were the power base of disgraced former CMC vice-chairmen Gen. Xu Caihou and Gen. Guo Boxiong. Guo was sentenced to life imprisonment for bribery, while Xu Caihou was charged with corruption but died in 2015 while under investigation. Xu Caihou was approved as vice-chairman of the Central Military Commission of the Communist Party of China (CPC) at the Fourth Plenum of the 16th CPC Central Committee, which ended in Beijing on 19 September 2004.
A system of bribery in exchange for promotions, for example, is thought to have been pervasive in the senior officer ranks. The practice was overseen by Xu Caihou. Lieutenant General Gu Junshan was accused of selling hundreds of positions in the armed forces, sometimes for extraordinary sums. If a senior colonel (not in line for promotion) wanted to become a major general, he had to pay up to 30 million yuan ($4.8 million). Lower ranking military positions were sold for hundreds of thousand of yuan.
Xu, previously a member of the CPC Central Military Commission, was born as a native of Wafangdian, Liaoning Province, northeast China, in June 1943. He joined the People's Liberation Army (PLA) in August 1963 and was trained from 1963 to 1968 at the Electronics Engineering Department of the Harbin Institute of Military Engineering. He joined the Party in April 1971. He was secretary and deputy head of the Personnel Division of the Political Department of the Jilin Military Area Command during 1972 and 1982.
Xu was appointed director of the Mass Work Section of the Political Department of the Shenyang Military Area Command during 1984 and 1985, and political commissar of the 16th Group Army of the Ground Force between 1990 and 1992. Xu served as deputy director of the PLA General Political Department during 1993 and 1996. He was made member of the CPC Central Military Commission and executive deputy director of the PLA General Political Department between 1999 and 2002. Xu was also a member of the 16th CPC Central Committee and of the Secretariat of the CPC Central Committee.
The allegations that retired General Xu Caihou, former vice chairman of China's Central Military Commission, took bribes in exchange for giving promotions marks the highest-profile corruption case since that of disgraced politician Bo Xilai in 2013. Xu was accused of accepting bribes and putting a price tag on military promotions as second-in-command of China's 2.3 million armed forces until his retirement.
Former CMC vice chairman Xu Caihou was the biggest "tiger" on the army's corrupt figures' list. Xu was found to have fraudulently promoted officers and accepted huge bribes. Xu Caihou had taken the military to be a market. He sold military positions for money for years. This situation went too far. Those military officers were only loyal to the person who provided the positions that they paid for. In China, whoever can control the military power can seize the whole power strongly.
Xu Caihou, China's former vice chairman of the powerful Central Military Commission (CMC), was taken from his sick bed at a military hospital in Beijing on 20 March 2014. His wife, daughter and personal secretary were taken into custody on the same day. The detention is linked to the probe of People's Liberation Army Lieutenant-General Gu Junshan, a former subordinate of Xu who has been detained since 2012.
Xu's detention sent shock waves through the Chinese military but China's top leader, President Xi Jinping, would not and could not punish the scores of high and middle-ranking officers who had bribed Xu to get their ranks and positions. Xi Jinping cannot investigate the greater part of all those military officers that bought titles or ranks from Xu Caihou because the Central Commission for Discipline had already detained nearly everyone connected to Zhou Yongkang that it can. But currently its said out of all those that are either close to Xu Caihou or gave him money, only a few had been detained. Furthermore, Xi Jinping needed the support of the military.
On 20 November 2014, Phoenix Weekly published one of the first in-depth reports on the Central Commission for Discipline Inspection’s ongoing corruption investigation into Xu Caihou, a former member of the CCP Politburo and former vice chairman of the Central Military Commission (CMC) under President Hu Jintao. In late June, Xu became the highest ranking PLA official to be purged from the CCP in nearly three decades.
The report detailed the enormous scale of assets confiscated from Xu’s property. A dozen military trucks were needed to haul away “more than a ton” of cash, hundreds of kilograms of precious woods, gems, and rare jade, as well as ancient paintings and antiques. Although the report was initially carried by several Chinese news outlets, the article since was censored within China.
According to a high-level source at the General Logistics Department of the CMC referenced in the report, the slow pace of Xu’s investigation and subsequent expulsion from the CPC was due to disagreements between factions within the government. Members of the CMC support Xu, whereas members of the CCP Central Committee have an interest in bringing down corrupt officials at the highest levels. Only after being confronted with the detailed list of confiscated items did Xu “admit defeat,” according to the report.
Guo Boxiong was sentenced 25 July 2016 to life in prison on bribery charges, a move that came as President Xi Jinping attempted to consolidate power and tighten his grip on China's military. Guo was also stripped of his rank and forced to give all of his assets to the government. The 74 -year-old Guo was once vice chairman of the Central Military Commission and a member of the Communist Party of China's Politburo, the party's main policymaking committee.
A former member of China's Central Military Commission has committed suicide in November 2017 after authorities opened a corruption probe against him. Zhang Yang was being investigated over his ties to two corruption-tainted generals. Zhang Yang was "suspected of giving and taking bribes" and the origin of a large amount of his assets was unclear, the official Xinhua news agency reported, citing the commission. "On the afternoon of November 23, Zhang Yang committed suicide at home," the Xinhua report stated.
The probe against Zhang, who was the director of the military's Political Work Department, focused on his suspected links to two corruption-tainted former generals. He allegedly had ties with Guo Boxiong, who received a life sentence for graft in July 2016, as well as Xu Caihou, who died of cancer in March 2015 while on trial. Both Xu and Guo were former chairmen of the Central Military Commission — which is chaired by President Xi Jinping.
Fang Fenghui, a former top Chinese general was sentenced to life in prison for bribery and having an unclear source of assets, state news agency Xinhua reported on 20 February 2019. He was abruptly replaced as chief of the Joint Staff Department of the People's Liberation Army (PLA) in August 2017 and placed under investigation for corruption. He was later expelled from the Communist Party and stripped of his rank in October 2018 ahead of his court-martial. It represented a quick fall from grace for a general who had accompanied President Xi Jinping on his first trip to visit US President Donald Trump in 2017. Xinhua reported that the military court also stripped Fang of his political rights for life and ordered the confiscation of all his personal assets.
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