Inside Financial Markets

China’s Xi Purging Corrupt Officials

BEIJING (Reuters) – Chinese President Xi Jinping plans to use a purge of senior officials suspected of corruption to put his own men and reform-minded bureaucrats into key positions across the Communist Party, the government and the military, sources said.

Xi hopes that removing corrupt officials and those resisting change will allow him to consolidate his grip on power and implement difficult economic, judicial and military reforms that he believes are vital to perpetuate one-party rule, said the sources, who have ties to the leadership.

In the most far-reaching example of his intentions, Xi plans to promote about 200 progressive officials from the eastern coastal province of Zhejiang, where he served as party boss from 2002 to 2007, to senior positions across the spectrum in the years ahead, two of them said.

“The anti-corruption (drive) is a means to an end. The goal is to promote his own men and like-minded officials to key positions to push through reforms,” said one source.

To be sure, Xi is also tackling endemic corruption to try to restore public faith in the party, other sources said.

The seven sources interviewed for this article sought anonymity to avoid repercussions for discussing secretive elite politics.

The biggest investigation Xi has ordered so far revolves around retired domestic security tsar Zhou Yongkang, who is under virtual house arrest.

Reuters reported on March 30 that more than 300 of Zhou’s allies, proteges, staff and relatives had been taken into custody or questioned since late last year as part of China’s biggest graft scandal in six decades.

The government has yet to make any statement about Zhou, who retired in late 2012 from the Politburo Standing Committee, the apex of power in China, or the case against him. It has also not been possible to contact Zhou, his family, associates or staff for comment. It is not clear if any of them have lawyers.

Another source who met Xi in private this year quoted him as saying implementing reforms had been “very difficult” due to opposition from state-owned enterprises along with influential party elders and their children, known as “princelings”.

State-owned firms and princelings in business enjoy many privileges and virtually monopolize certain sectors, something at odds with China’s efforts to steer its economy away from a reliance on heavy industry and investment to one driven more by consumption and innovation.

On the judicial front, Xi has overseen reforms that limit the ability of the party to interfere in most court cases – apart from politically sensitive ones – but more still needs to be done to deal with frequent miscarriages of justice that outrage the public, legal experts said.

While Xi appears set on driving reform on many fronts, human rights activists have said major political change was not on his agenda. For example, authorities have increased controls over the local media and prominent bloggers in the past year.


In looking for people he can trust, Xi, 60, will also tap reform-minded officials from his alma mater Tsinghua University in Beijing and other provinces, one source said.

But his key recruiting ground will be Zhejiang, south of Shanghai. The province is seen as ideologically progressive and has long been at the forefront of economic reforms thanks to the concentration of private firms there that helped make China the world’s factory.

Besides promoting officials from Zhejiang to the party, the central government and the military, Xi would send them to other provinces, said the first two sources. Xi himself comes from northwest Shaanxi province.

Zhejiang party chief Xia Baolong, a Xi ally, is the leading candidate to take the challenging job of running the restive region of Xinjiang this year or next and then possibly becoming a member of the decision-making Politburo in 2017, sources said.

In addition, one of Xi’s closest aides, Zhong Shaojun, a native of Zhejiang, was likely to be further promoted in the People’s Liberation Army following a late start to his military career, said two sources who have ties to the military.

In an unusual move, Xi made Zhong, a civilian for most of his career, a PLA senior colonel last year when he appointed him deputy director of the General Office of the Central Military Commission.

That effectively made Zhong his point man with the military. The General Office sets agendas for meetings and trips to military facilities around China for Xi and the top brass. The commission is the military’s top decision-making body.

Zhong, 45, is likely to be promoted to major-general this year or next, the sources said.

The Defence Ministry’s spokesman declined immediate comment when contacted by telephone. Zhong could not be reached.

The party’s Organisation Department, which is responsible for promoting cadres, did not respond to requests for comment.


Since he took over the party in November 2012 and then became the country’s president in March 2013, Xi has often warned that corruption threatens the party’s survival.

Many party, government and military officials have since been living in fear, the sources close to the leadership said.

About 10 officials who held a rank equivalent to at least vice minister are under investigation as part of the Zhou probe alone, sources have previously said.

Among them are former top officials at state energy giant PetroChina and its parent China National Petroleum Corporation (CNPC) who were linked to Zhou when he worked in the oil industry.

Underscoring the challenge, more than 30 percent of party, government and military officials were found to be involved in some form of corruption, according to a previously unpublished internal party survey carried out in 2013, said one of the sources.

The source, who has seen a copy, did not say how the survey arrived at its conclusions.

While he is walking a political tightrope, the sources said Xi was not meeting much resistance, for now, to the crackdown from party elders or others who might fear they could be next.

But there is a limit to how many people he can purge.

“The government would be paralyzed if Xi went after all the corrupt officials,” said a source who has regular access to Xi.


The anti-corruption campaign has also spilled over into the 2.3 million-strong PLA.

Sources said last month that General Xu Caihou, 70, who retired as vice chairman of the Central Military Commission last year and from the Politburo in 2012, was under virtual house arrest while helping in the probe of Lieutenant-General Gu Junshan.

Gu, former PLA deputy logistics chief, has been charged with corruption, state media reported on March 31. This included accepting bribes to promote hundreds of officers, sources have said.

Xu was one of Gu’s main supporters in his rise through the ranks and hence is being implicated in ignoring, or at least failing to report, Gu’s alleged misdeeds.

Reuters has not been able to reach either Xu or Gu for comment. It is not clear if they have lawyers.

Under Xi’s orders, the military has clamped down on the doling out of PLA vehicle number plates, the illegal occupation of military housing and the selling of positions.

But Xi is unlikely to punish all the officers who bought promotions, the sources said, adding he would use this as leverage to make them agree to more reforms.

Xi has also not decided whether to prosecute Zhou or Xu, who is being treated for bladder cancer, they said.

“It shows that he can get to just about anybody if he can bring down a guy like (Zhou),” said David Zweig, a Chinese politics expert at the Hong Kong University of Science and Technology.

“It tells officials that if he’s making reforms that they may not like so much, then they better get on board.”


Using corruption to topple rivals is not uncommon in China.

Xi’s predecessor Hu Jintao went after two Politburo members – Shanghai party boss Chen Liangyu in 2006 and Chongqing party chief Bo Xilai in 2012. Hu’s predecessor Jiang Zemin purged former Politburo member Chen Xitong for corruption in 1995.

Some sources say one reason Xi put Zhou under investigation was to eradicate any lingering influence of Bo Xilai, one of the most charismatic but divisive Chinese politicians of his generation.

Zhou had opposed the ouster of Bo, who was jailed for life in September for corruption and abuse of power after a murder scandal involving his wife.

“There’s a risk of a backlash from elders if they believe the anti-graft campaign has gone too far,” said Bo Zhiyue, an expert on elite Chinese politics at the National University of Singapore.

“The issue for Xi is how to manage the whole campaign to make sure he himself remains secure.”

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

The Canadian Securities Institute


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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)