China signals intent on tackling endemic graft

By Elisabeth Zingg

BEIJING (AFP): The unmasking of a vast smuggling scam reaching into the heart of the government shows China is serious about tackling graft, but corruption is so endemic it cannot be beaten without political reform, analysts warn.

Beijing's decision to send 400 investigators to crack the multi-billion dollar racket in southeastern province of Fujian is a positive move, said Joseph Cheng, professor of politics at Hong Kong's City University.

"The leadership has to demonstrate its will to fight corruption. An anti-corruption campaign is always popular among the people and it helps to establish the central authority over the provinces," he told AFP.

But Cheng warned the tough action, trumpeted by the state media and targeting senior government officials, did not go far enough.

"The root causes have not been tackled," he said.

The scam in Fujian is being described as the biggest corruption scandal to hit China since 1949 and involves billions or even tens of billions of dollars of smuggled goods -- mainly telecom equipment, fuel and cars.

So far around 30 people have been arrested, including senior police and customs officials.

However, up to 150 government officials have been implicated including the deputy mayor of Xiamen, who has reportedly fled the country. Rumors in Beijing have also persistently linked the wife of current Beijing Communist Party chief Jia Qingling to the scandal.

Jia was the governor of Fujian province until 1997 when he was summoned by President Jiang Zemin to the capital to replace Chen Xitong who was sentenced to 16 years in jail in 1998 in a US$2.2 billion corruption scam.

The eruption of the scandal comes just days after China's auditor general revealed that more than $15 billion was swindled from state coffers by corrupt officials during 1999 alone.

A Western diplomat based in Beijing said the move against the Fujian scam was significant.

"It's a good sign, it shows they are prepared to act against important people," said the diplomat, adding the probe went so high up the Communist Party's hierarchy that it must have been approved by President Jiang.

But he added massive corruption would continue as long as the Communist Party had no external checks and balances.

Most experts agree large-scale corruption is inevitable in China's hybrid economy which mixes state control of resources with the logic of the market and no independent judiciary capable of keeping the Communist Party in check.

Despite a high-profile anti-corruption drive which has taken down a raft of senior officials in Guangxi and Guangdong provinces in the past year, scandal after scandal emerges.

In taking the exceptional step of announcing $15 billion of corruption last year, the auditor general also revealed that $600 million from the Three Gorges Dam project had been embezzled by officials who poured the cash into the stock market and new homes.

On Monday the official media revealed that 924 corrupt officials had been uncovered last year in Beijing alone, and a further 372 in Zhejiang province.

Bob Broadfoot, of the Hong Kong-based Political and Economic Risk Consultancy (PERC), warned the series of scandals could well harm China's efforts to join the World Trade Organization (WTO) this year.

At the moment smuggling is depriving the state's coffers of billions of dollars of much-needed foreign exchange, and the central government is finding it increasingly difficult to control distant provinces.

"Although there is no legal framework, it (the campaign) could be enough to limit some abuses," said Broadfoot.