Category Archives: corruption

Wen Jiabao: As Corrupt As His Peers

NYT writer David Barboza tipped off a firestorm this week when he published a piece detailing the enormous sums the Wen family has accumulated recently:

The mother of China’s prime minister was a schoolteacher in northern China. His father was ordered to tend pigs in one of Mao’s political campaigns. And during childhood, “my family was extremely poor,” the prime minister, Wen Jiabao, said in a speech last year.

But now 90, the prime minister’s mother, Yang Zhiyun, not only left poverty behind — she became outright rich, at least on paper, according to corporate and regulatory records. Just one investment in her name, in a large Chinese financial services company, had a value of $120 million five years ago, the records show.

The details of how Ms. Yang, a widow, accumulated such wealth are not known, or even if she was aware of the holdings in her name. But it happened after her son was elevated to China’s ruling elite, first in 1998 as vice prime minister and then five years later as prime minister.

Many relatives of Wen Jiabao, including his son, daughter, younger brother and brother-in-law, have become extraordinarily wealthy during his leadership, an investigation by The New York Times shows. A review of corporate and regulatory records indicates that the prime minister’s relatives, some of whom have a knack for aggressive deal-making, including his wife, have controlled assets worth at least $2.7 billion.

The article is long but worth a read, as Barboza details how a Chinese politician known for his down-to-earth touch has become the center of a massive corruption vortex. None of this is surprising, as such, but the details have never been laid out so clearly and investigated so thoroughly before.

The blowback has been impressive, as the Times’ Chinese-language site was blocked in China within hours:

The episode is an extreme example of an enduring newspaper-world fact: journalism and business interests don’t always go hand in hand.

The Times did exactly what one would hope and expect: It published a great story without undue regard for the short-term business consequences.

Mr. Sulzberger said the publication of the article was preceded by “conversations with the Chinese government to discuss it.”

“They wanted to air their concerns – which I listened to, as I should,” Mr. Sulzberger said. “And eventually, we made a decision to publish.”

Joseph Kahn, the foreign editor, told me that he knew when the reporting on this story began – about a year ago – that it would be a “threshold issue” for the Chinese government.

“I expected it to test the limits of what they would tolerate from the foreign media,” he said. (In speaking with me, he emphasized that Mr. Barboza’s direct editor on the story was Dean Murphy, a deputy business editor.)

Mr. Kahn said that as recently as Wednesday, Mr. Sulzberger and the executive editor, Jill Abramson, met with Chinese government representatives at The Times. But the focus of that conversation was not about the journalism – it was about political and cultural differences.

In short, Chinese officials were making the case that The Times not publish the article.

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“China inequality causes unease – Pew survey”

Pew has a new survey out, asking Chinese about a whole lot of things. The results confirm what a lot of us have sensed about China:

A slowdown is particularly troubling for Xi because, as China prepares for its once-in-a-decade leadership transition, a Pew Global Attitudes survey conducted there this year finds that its citizens are also increasingly worried about a variety of other domestic issues, especially corruption, inequality and consumer protection.

In the economic realm, while standards of living have improved for the vast majority of Chinese, and the country’s middle class has expanded tremendously, there is nonetheless a widespread belief that not everyone is enjoying their fair share. And as consumers, many Chinese feel at the mercy of a system that cannot guarantee the safety of life’s basic necessities.

Half say corrupt officials are a very serious problem in China, up from 39% in 2008.

Second, there is a consensus that some people are being left behind by China’s rapid growth – 81% of those polled agree that today the “rich just get richer while the poor get poorer”. Nearly half (48%) describe the gap between rich and poor as a very big problem, up from 41% four years ago.

And in another sign that many do not see a level economic playing field, less than half (45%) agree with the statement “most people can succeed if they are willing to work hard”.

Roughly four-in-ten (41%) now consider food safety a very big problem, up from just 12% in 2008.

During that same time period, concerns about the safety of medicine have more than tripled, from 9% to 28%. Similarly, the percentage saying they are very worried about the quality of manufactured goods has jumped from 13% to 33%.

These are important points, and I think they’re very telling for the crisis of confidence the Party is facing. Xi needs to seriously change course if he wants these numbers to stop climbing.

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Filed under Communist Party, corruption, economy, inequality

“In the Current System, I’d Be Corrupt Too”

The NYRoB has a great interview with Bao Tong, who was kicked out of the Communist Party shortly before the Tiananmen Massacre and is followed by groups of police to this day (check out the picture in the article for a glimpse of this dangerous, dangerous man):

When you served in the government, in the 1980s, the older generation was really important. Veterans of the Long March tried to get Deng Xiaoping to reverse economic reforms and many of them supported the 1989 crackdown. What about now? Is there an older generation that still plays that role? Do you think people like former party secretary Jiang Zemin have influence behind the scenes?

There aren’t elders anymore like that. Jiang isn’t a real elder. In the revolution he was a nothing. He doesn’t have that kind of influence. The big difference is that in the past it was one person who decided: Mao and then Deng. Now a few people decide.

Is this good? Some people say the lack of a single strong leader explains why there have been no major economic reforms in the past decade.

Overall it’s a good thing. It’s terrible when just one person decides. You can talk about Deng’s reforms, but what about Mao? He could decide anything but he chose the Cultural Revolution and the Great Leap Forward. And Deng, well there was June 4 [the night of the 1989 Beijing massacre].

I think that group of men at the other table are watching us.

Forget them. They follow me wherever I go.

Why is the current system so corrupt? Are there too many interest groups?

No, it’s that too many things are off-limits. If you’re in that system, they’ll say, oh, your son should be a CEO. If you say, no, he shouldn’t, then they say, how can he not? If your son can’t be one then ours can’t be one either. Then they’d push you out of the boat. So if you’re in the boat, you’re corrupt. Everyone has a villa and they give you one. One in Beijing, one in Hangzhou, one in Suzhou, one in Shanghai. You say you don’t want it. What? But even the provincial leaders have villas, how can you not? It’s legal, take it. So if I can say I’m not corrupt it’s because I was an official in the 1980s when it was different. There wasn’t so much money and privileges.

I’ll walk you home.

No, don’t. You go directly into the subway. I’ll walk home. I won’t be alone.

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Filed under 2012 power transfer, Communist Party, corruption

“Rotting From Within”

People have been calling this piece ‘important,’ and given how much detail John Garnaut has provided, this might be the most in-depth look at the current level of corruption in the PLA we’ve seen recently:

“No country can defeat China,” Liu told about 600 officers in his department in unscripted comments to an enlarged party meeting on the afternoon of Dec. 29, according to sources who have verified notes of his speech. “Only our own corruption can destroy us and cause our armed forces to be defeated without fighting.” This searing indictment of the state of China’s armed forces, coming from an acting full three-star general inside the PLA, has no known modern precedent.

There is no way to independently verify Liu’s withering assessment of the extent of corruption in the PLA, but he is well-positioned to make it. His professional experience includes a decade in the government of the central Chinese province of Henan and a decade in the paramilitary, taking him beyond narrow lines of command and patronage. His logistics department is integrated with all other arms of the Chinese military and his status as the descendant of a high-ranking leader, or princeling, enables privileged informal networks across military ranks and the civilian side of the party-state.

The practice of buying promotions inside the military is now so widespread, Liu noted, that even outgoing President Hu Jintao, who also leads the military from his position atop the CMC, had vented his frustration. “When Chairman Hu severely criticised ‘buying and selling official posts,’ can we sit idle?”

PLA veterans told me they are organising “rights protection” movements to protest their inadequate pensions, which they contrast with the luxury lifestyles they observe among serving officers. Retired officers have told me that promotions have become so valuable that it has become routine to pay the equivalent of hundreds of thousands of dollars in bribes to even be considered for many senior positions.

The February address, the second and most detailed of Liu’s corruption speeches, suggests the problems run much deeper than anecdotal evidence suggests. “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,” he said.

In that scandal, widely covered in official media, Yuanhua used military connections to evade a staggering $6.3 billion in taxes by smuggling everything from cigarettes and luxury cars to fully laden oil tankers. The case brought down hundreds of provincial and military officials, including the head of a major PLA intelligence division. It also enabled Jiang to consolidate his grip on the military.

The outside world caught another limited glimpse of military corruption in December 2005, when the deputy commander of the navy, Adm. Wang Shouye, was detained for unspecified “economic crimes.” Official reports said he was brought down by a mistress, while Hong Kong’s Asia Weekly said he kept five mistresses and stole almost 20 million dollars.

In late January, Liu followed up his tough talk by ripping out one allegedly cancerous node, the deputy director of his Logistics Department, Gu Junshan, after a protracted internal struggle. Gu was the first military official of such a high rank to be toppled since Admiral Wang in 2005. A source with direct knowledge of the case described General Gu extorting county officials with threats of violence and buying his way up through the PLA hierarchy. The source, whose allegations could not be independently confirmed, said that Gu, together with friends, relatives, and patrons in and beyond the military, profited immensely from a property development in Shanghai, distributed hundreds of PLA-built villas in Beijing as gifts to his friends and allies, and generally ran his construction and infrastructure division like a mafia fiefdom.

Chen, the son of one of China’s 10 great marshals and son-in-law of a legendary commander, Gen. Su Yu, runs a successful infrastructure investment firm, Standard International. He opted out of the government and military system after the Tiananmen massacres. He told me the 1989 bloodshed left a vacuum of purpose and integrity within the PLA, which money has rushed to fill. “The problem has really got out of hand in the last 20 years,” he said. “After the June 4 movement, when ‘opposing corruption’ was the protestors’ slogan, some of the officers no longer cared about anything. They just made money and broke all the rules.”

A second princeling who has recently retired from a ministerial-level position told me discipline and unity in the PLA has deteriorated in the past decade. He said an unprecedented leadership vacuum has opened up at the top of the military because President Hu never consolidated his grip, even after more than nine years at the helm of the Communist Party and seven years chairing the Central Military Commission.

Few analysts believe the PLA can seriously tackle its own corruption problems without decisive intervention from the civilian leadership. Whether Hu or his likely successor Xi will have the political capital to spend remains an open question.

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Wukan: Holding Steady

The latest on Wukan from a few sources:

First, Tom Lasseter continues to report from the scene-

Locals say that after they fought off a police advance on Dec. 11 and closed off the town to village security forces and Chinese Communist Party officials, government boats chased the fisherman from open waters into a harbor of the South China Sea. While there’s no blockade to be seen, the fear of the unknown is enough to keep most of the boats moored.

The government of the nearby city of Lufeng “is scared that we’ll buy weapons and bring them in,” said a 49-year-old fisherman surnamed Lin, who requested that his full name not be used for fear of reprisals.

Two other fishermen quickly offered a different theory: Officials don’t want people fleeing to Hong Kong and Taiwan across the sea.

It’s unclear whether the standoff will end with crackdown or negotiation.

Perhaps owing to those anxieties, a notice appeared Monday morning outside a house where many journalists are staying that asked them not to use the words “uprising” or “revolt” to describe the situation.

One member of the group, surnamed Shen, suggested unease about things going too far.

“We’re afraid that if we go to Lufeng the police will shoot us, or detain people and beat them to death,” said Shen, a short man in baggy black pants who also didn’t want his first name used.

Organizers have painted a less dramatic picture: If the police don’t allow the procession to pass, they’ll just stage a sit-in.

Shen said that despite his misgivings he’d probably join the march.

“I used to go out to the sea and fish, and then come back at noon and tend my family’s land,” he said. “But now I can’t fish and our land has been taken away.”

What, he asked, is there left for him to do?

Next, from RFA:

In a mass meeting on Monday, villagers made a collective decision to stage a demonstration on Wednesday and march to the city government, local sources said.

“Basically the whole village is there,” said a resident surnamed Chen on Monday. “There are maybe 6,000 or 7,000 people.”

“They are at the main intersection.”

Officials are now threatening that several thousand armed police officers now stationed in a cordon around the village, and carrying out identity checks on all those coming and leaving, are being readied for an assault on the village, according to Zhang.

An activist surnamed Yu, who traveled to Wukan in a show of solidarity with local residents, said he was detained after arriving at one of the road-blocks set up by armed police.

Yu, who traveled with a group of 10 others, said he was held from Dec. 8-16, before being escorted back home to the provincial capital, Guangzhou.

“I and a lot of other netizens are being confined to our homes,” Yu said. “We can’t go out.”

Guangzhou-based lawyer Tang Jingling was taken away by police at the weekend, his wife said.

“It’s probably to do with the Wukan incident,” said Tang’s wife, surnamed Wang. “I called up the police station to ask, and they told me that he was being held on orders from the Guangzhou municipal police department.”

A resident of Shangdaimei village, also near Shanwei city, said hundreds of villagers had marched to local government offices in Xinan township on Sunday to protest the sale of their farmland.

“There were some officials from the Communist Party commission for discipline inspection who said they would come to our village, but they never came,” said one protester, Lao Zhang.

“So we went to the township to protest … We were also protesting and calling for an allocation of land,” he said. “They should give it all back to the villagers.”

And finally, from Bloomberg:

Protesters in the Southern Chinese village of Wukan have organized to distribute food to the poor as a nine-day police blockade left people short of supplies.

People in the village in Guangdong province have not been allowed to get food from the outside and are donating remaining supplies to the poor, Huang Rongbiao, a restaurant owner in Wukan, said in a telephone interview yesterday. Villagers are allowed to come and go from Wukan as long as they don’t bring in food supplies, Huang said.

“Maybe there’s enough food for now but I can’t guess how long that will last,” said Huang, who has kept his restaurant closed for 10 days. “Hopefully, the government will handle this and we are waiting for news.”

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“China’s rebel villagers in Wukan threaten to march on government offices”

Amazingly, Wukan is still holding stable- the Telegraph has the latest:

During another day of protests and marches, Wukan village representative Lin Zulian addressed a crowd of more than 6,000, pledging to fight with their lives against the corrupt system which has robbed them of their coastal land and of their village leader, Xue Jinbo.

“We give the local government and police five days to hand back Xue’s body. If not, we shall climb over our barricades and march on the [Lufeng] town hall to try and get his remains,” said Mr Lin.

Last week protest in the village saw the local party and police lose control and flee the area, for the first time on record. In retaliation police have mounted a seven-day blockade that is choking the village of food supplies.

As the protesters filed passed the now empty village administrative centre, they slid paper notes into a ballot-like box and gripped onto their banners demanding democracy.

“If they have 100 coffins, they can bury me in 99. But I will save one for the corrupt officials who have been working with business people to take away our rights and our friend,” said Mr Lin.

Among their angry chants, the villagers once more voiced support for the Communist Party and the central government – and called for top to bottom transparency among their leaders.

It is to the capital, Beijing, that the mainly peasant farmers and fishermen look for salvation – as well as justice and emancipation from the long reign of a crooked local government that has been chased out of town.

The Sunday Telegraph toured the village barricades yesterday. Sawn down trees, crudely tied trip wire, wood embedded with nails, strategically scattered broken glass and stockpiles of rubble projectiles are the main defence against any goon snatch squads who dare to enter the village.

But defiance and anger remain the most potent weapons against the increasing number of paramilitary police seen mustering at checkpoints on the main roads.

Some villagers have walkie-talkie radios but mobile phones remain the main means of communication.

Fearing the government will soon cut the lines and down the internet connection, gongs have been placed at the barricades and are to be sounded to summon the village to defend against attack.

“There is a lot of anger here. They have been robbing and lying to use for a long time,” he said.

The small fishing vessels are tied up – unable to be put to sea because of a small flotilla of marine police are blockading the small bay’s entrance, according to Chen. “They chase you back in,” he said.

A slogan adorning a government funded hotel which was due to be open next year reads: “Running along the seaside in the golden times!”

“They built it on our land. We want it back,” said Chen.

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Filed under Communist Party, corruption, housing demolition, local governments, protests

Wukan Protests: Dabian Hits the Fan

Wukan, the Guangzhou village which has slowly been getting more and more out of hand, seems to have crossed a handful of lines. There are a ton of good stories on this from all over the place- Malcolm Moore was in the village itself and filed this:

Wukan has been encircled by the police cordon since Sunday, after a failed attempt by 1,000 armed police to capture the village. No food or water is allowed in, and no villagers allowed out.

Villagers say that they have enough supplies to hold out for only 10 more days.

But the villagers were unbowed yesterday, and their leaders said they had seen signs that the government would “blink first”.

Trouble in Wukan has been brewing since September, after the fishing village revolted at an attempt to take one of its last parcels of farmland and give it to a major Chinese property developer, Country Garden.

However it was the death of 43-year-old Xue Jinbo, one of the village’s 13 temporary representatives, in police custody that pushed Wukan into its current fury, and saw the last of the village’s dozen Communist party officials flee. His family believes he was murdered.

Thousands of villagers have held daily protest meetings outside the village hall since the news broke on Monday.

He later left the village, explaining:

The first rule of journalism is never to leave a running story.

Especially when you are the only journalist in town.

So why did I pull out of Wukan, slipping back past the police cordon last night down a slip road?

The story in the village is far from over, although I believe the situation is unlikely to change in the next few days, as the two sides tentatively negotiate their way towards a resolution.

The siege continues and on Dec 16 the village will mark the seventh day since Xue Jinbo, one of its representatives, died in police custody, an important public day of mourning.

The reason we had to pull out is because we felt we were putting ourselves and the villagers in danger by staying.

Jonathan Watts of the Guardian once told me, in my first few months in China, that the problem with being a journalist here is that you are surrounded by a ring of fire – you stay safe, but everyone else gets burned.

Custer from ChinaGeeks has been writing about the implications:

I don’t think I need to explain the ways in which this event is amazing, and I mean that in the literal sense of the word. Anyone with a funtional brain and half an eye on the Chinese media is aware that local government land grabs are a huge source of discontent, but if you’d told me a few months ago that a Chinese town would band together, run the local officials out of town, resist a force of 1,000 police officers intent on entering the town again (but, thankfully, not willing to use lethal force to do so, at least not yet), establish their own makeshift government, and keep the whole thing running even this long, I would have told you you were nuts.

Before we go any further, I want to get this out of the way: no, this is not the first spark in some nationwide rebellion that will see the national government overthrown. In fact, it’s not even a rebellion against the central government, as you can tell from the pleas for help from Beijing in Moore’s article.

Still, it puts Beijing in an awfully interesting position. As I see it, they have three basic options:
-Come to the rescue of the down, declare the local government officials corrupt, put them on trial and restore order peacefully. This is, I suspect, exactly what the people in Wukan want.
-Come to the rescue of the officials and provide them enough manpower to completely crush the rebellion. This would be easy, but would attract a lot of negative attention internationally, and there’s a risk of it leaking online domestically, too.
-Do nothing for the time being, and see if the officials can regain control on their own, or if the rebellion spreads.

The last option seems by far the most likely to me, which is good and bad news for the protesters in Wukan. No help is coming from Beijing, but at least that means the PLA probably isn’t coming either.

Of course, the central government isn’t really doing nothing, as mentions of Wukan
are being scrubbed from the media and deleted online. As you would expect, searching for “Wukan” on Weibo gives you the classic “According to the relevant laws, these results can’t be displayed” message.

He also has some pictures that give a sense of the scale. Another post, here, has more pictures and a video from the scene. Meanwhile the WSJ has an article about Wukan which mentions the broader picture of the dangers of land grabs:

Mr. Yu estimates that local officials have seized about 16.6 million acres of rural land (more than the entire state of West Virginia) since 1990, depriving farmers of about two trillion yuan ($314 billion) due to the discrepancy between the compensation they receive and the land’s real market value.

China’s Land Ministry has also warned that misappropriation of farmland has brought the country dangerously close to the so-called red line of 296 million acres of arable land that the government believes it needs to feed China’s 1.34 billion people.

The Land Ministry, which uses satellite imagery to spot abuses, launched a fresh crackdown on illegal land use this year, targeting golf courses, hotels and villas in particular, and has announced several high-profile cases in which officials have been punished.

But the central government’s attempts to curb such abuses, and to draft new legislation that would protect against land grabs and give farmers a market rate for their land, have met fierce resistance from local authorities who rely on land sales to maintain growth, service debt and top up their budgets.

In 2010 alone, China’s local governments raised 2.9 trillion yuan from land sales. And the National Audit Office estimates that 23% of local government debt, which it put at 10.7 trillion yuan in June, depends on land sales for repayment.

Finally, China Media Project has a post about how Beijing is directing the censorship of this case:

Finally late yesterday, just minutes before midnight and after a uniform blackout in Chinese media through the day, we had two news stories on Wukan from China News Service, China’s number-two official newswire. The first reported that Shanwei city authorities revealed at a press conference on the Wukan incident (乌坎事件) yesterday that “preliminary investigations have ruled out external force as the cause of death” in Xue’s case. The news story also said that the city’s medical expert shared photos of Xue’s body during the press conference.

The second China News Service report, also based on the press conference, said that “various village officials” from Wukan had been detained for discipline violations.

Curiously, though, there seems to be no coverage of the press conference from other media. That suggests that these stories can be taken as an illustration of “public opinion channeling” tactics at work. The authorities, in other words, are selectively releasing partial information from an official perspective in an attempt to frame and re-direct public attention. Message 1: Xue Jinbo was not killed by police, an assertion that removes the immediate reason for escalated tensions in Wukan. Message 2: local Wukan leaders have been detained for suspected discipline problems, an action that (leaders undoubtedly hope) will remove the initial underlying cause of tensions, alleged dirty land deals.

More as it comes in.

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Filed under corruption, forced demolition, housing bubble, protests

“Beijing Police Tackling Interceptors, Black Jails”

I’m struggling to come up with an analogy here. It’s like the fox guarding the chicken coop… from dogs? And also all of the chickens are also foxes? Apparently someone is trying to get Beijing police to stop interceptors from preventing petitioners from reaching the government in Beijing… but the interceptors are also following orders from up top, so… what?!

Last year, Chinese media exposed the workings of one of China’s darkest industries: security firms that prevent citizens from filing complaints with central authorities, and resort to aggressive or violent tactics to detain them in black jails.

Reports at the time focused on how the Beijing-based Anyuanding Security Firm—at the behest of officials from other parts of the country seeking to hit state-mandated targets for social stability—manhandled and detained petitioners who had traveled to the capital to express discontent about their local governments. The firm made 21 million yuan in profits in 2008, and employed 3,000 people before media reports exposed its activities.

Now, Beijing police say they are cracking down on the informal business of “intercepting,” by strengthening regulations, requiring certification and levying fines for what they said is an illegal practice.

“We draw the line at interception,” said Beijing Public Security Bureau (PSB) official He Gang to Beijing Times. “This line cannot be crossed.”

“Security guard companies are a mess,” Zhang said, noting that some security guards resort to violence to catch and stop petitioners.

He Gang said no certified firms participated in intercepting this year. The new rules stipulate that firms will pay a penalty between 20,000 and 100,000 yuan for every illegal detention that occurs.

But if the petitioners reach the government and actually start petitioning, all hell breaks loose. Maybe this ‘increased regulation’ thing is just a way for Beijing police to extract bribes from interceptors without actually interfering in their intercepting? We’ll see what comes of this (likely nothing).

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Filed under bribery, corruption, enforced disappearance, intimidation

“Architect: Beijing airport damage not design flaw”

Remember all the incredible infrastructure projects and architectural masterpieces Beijing threw together for the Olympics? Someone should write a book about what’s happened to them since then, what with Bird’s Nest designer Ai Weiwei facing down the government and now reports of problems with Terminal Three of the Beijing airport caused by… wind. Yep:

One of the architects behind the busiest airport in Asia said Thursday that substandard materials or installation — not design flaws — are likely to blame for wind blowing parts of the roof off Beijing’s three-year-old Terminal 3.

The airport is the result of a frenetic Chinese building boom that has produced numerous architectural marvels, though some of the iconic new projects have been hit by quality and safety problems.

State media say passengers reported seeing bits of white and yellow roofing material blowing across runways and through parts of the $2.8 billion terminal on Tuesday. In statements issued earlier this week, the airport said no one was hurt and operations were not affected.

“If the products provided by the suppliers were not up to their highest standards, or if the individual items were not installed properly, then this kind of thing could happen,” said Shao Weiping, an architect with one of the firms that collaborated on the structure, the Beijing Architectural Design and Research Institute.

I don’t know anything about Mr. Shao, but given the constant flow of problems caused by poor installation that really wouldn’t surprise me. Some huge sum of money is blocked off for a project, put in a bag, and then passed from person to person until eventually arriving in the hands of the actual construction company, which barely has enough money for materials after skimming their own bit off the top. If the regulators come by at all, it’s just to pick up their bribe.

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Filed under architecture, bribery, corruption, regulations

“Iraq Loss Final Straw for China’s Soccer Lovers”

The Chinese culture of bribery and corruption has once again crashed hilariously into their sports culture, when the Chinese soccer team lost a World Cup qualifier match 1-0 against… Iraq. How could a country that barely exists as a country after decades of dictatorship, war, and occupation beat the newly emerging world power? Well (via Adam Mintner at Bloomberg):

The Chinese public’s passion for their national team’s history of mediocre soccer is a curious thing. In its history, China has qualified for only one World Cup, in 2002. China’s home-grown professional league enjoys pockets of popularity, but is often overshadowed by the misbehavior of its bratty stars — most of whom also play for the national team. This is despite the Chinese state — and companies seeking to curry favor with it — spending vast sums on the the Chinese Football Association, or CFA.

So how, then, did China’s loss to Iraq turn into one of the most angry and sustained popular discussions on China’s internet in recent months? Because, like so many other recent scandals in China, the national team’s World Cup failure is, in large part, a story about corruption.

For years, the Chinese public has been irritated by the self-serving bureaucrats who run the CFA, and a series of match-fixing scandals tied to them. In 2009, President Hu Jintao gave his support for police to conduct a thorough cleanup of the Chinese soccer system. Since then, more than a dozen soccer players, officials and referees — including one World Cup referee — have been arrested in an ongoing match-fixing investigation that has received intense media coverage. In March, a principal investigator on the case confirmed that “it was a common practice for football clubs to give bribes to referees.”

Despite government efforts to publicly come down on the Chinese soccer system, online commenters have adopted soccer corruption as a proxy for the wide-scale corruption that suffuses, and weakens, Chinese contemporary society.

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“The Chinese Government Spends As Much On Alcohol As National Defense”

On the funny side, a report about how much baijiu is used to grease the wheels of government here:

Business in China is always done at the dinner table, over food and drinks.

Lots of drinks.

Chinese officials drink so much that around 600 billion Yuan ($94.5 billion) is spent annually on alcohol, reported Global Times.

The complaint from Chinese citizens is that officials can write off these exorbitant banquets and business meals, getting a reimbursement from the government.

In other words, the Chinese government foots the bill for the officials’ drinks and parties, spending public money for these meals and celebrations.

There is so much binge drinking that Zhongnan Hospital of Wuhan University has reported that approximately 34 percent of officials now have liver problems.

If one were to try and have a serious take on this story, it’s worth remembering that government offices are frequently the biggest and grandest buildings in Chinese towns, enormous rambling structures that dominate the tiny place around them. Politicians haven’t learned the value of portraying themselves as humble servants here- think all the nonsense from American politicians about being a coal miners son or somesuch whenever election season rolls around. Here it’s more about getting the biggest, blackest car you can and enjoying enormous banquets nightly.

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“Why China Is Unhappy”

Building on that last post, the WSJ writes about growing criticism of the government here:

On the Chinese equivalents of Twitter, criticism of the government is exploding, despite fierce censorship. A recent poll by Tsinghua University and the magazine Xiaokang found that 40% of Chinese are unhappy with their lives, while another survey by the magazine Outlook and Peoples University found 70% of farmers dissatisfied, mainly because of land seizures. Some 60% of the rich are emigrating or considering doing so, according to a survey by the Hurun Report and the Bank of China. Even the People’s Daily warned last week that there is a “crisis of confidence” in government.

The crisis is real, but the Communist Party mouthpiece didn’t quite get it right. Chinese lost faith in local-level officials a long time ago, but until recently they continued to believe in their national leaders. They also largely accepted the post-1989 social contract in which the Party provided rising living standards in return for not questioning its monopoly on power.

This is changing as a result of two trends. The first is a growing awareness among the bottom strata of society that it is policy made at higher levels, not merely the incompetence or corruption of local officials, that is responsible for their woes. The second is the interest of the wealthy and the intellectuals in reform after two decades of being bought off by the Communist Party.

Beijing intellectuals are making pilgrimages to the remote Shandong town of Linyi where blind legal activist Chen Guangcheng is under house arrest. Since the tax authorities last week presented the dissident artist Ai Weiwei with a $2.4 million bill for fines and back taxes, a movement has sprung up to donate money, both electronically and in paper airplanes delivered to his house, to keep him out of prison. Anger over the government’s concealment of air pollution levels, even as the leaders in Beijing install air purifiers to protect their own health, has spawned another ad hoc campaign.

What seems to be turning the tide toward political activism is a realization that unless one is a member of the Party elite, upward mobility is limited and hard-won advancement can be taken away without due process. Since universities expanded enrollments in the early 2000s, many families have borrowed heavily to pay tuition for their children. But graduates without political connections have trouble getting on the career ladder, ending up joining the “ant tribe,” slang for educated young people living in slums. Meanwhile, the children of elites can street-race their Ferraris without fear of arrest.

The government response to all this unhappiness has been to increase the resources and power of the domestic security apparatus. This year the budget for security surpassed that of the military for the first time, and disappearances of dissidents have become commonplace. Instead of cowing the population, this is only creating more instances of official abuse that are publicized on the Internet, leading to greater anger and defiance.

Alarm bells should be ringing. The virtuous cycle of social stability and material progress that has persisted for two decades is going into reverse. This need not lead to disaster, as long as the Communist Party recognizes its mistakes and responds to the public desire for the rule of law and curbs on the power of the state. Otherwise there is more unhappiness ahead.

Couldn’t agree more. I’ve said it before, but the system barely seems to work now, and has no strategy for what to do in the future. As Susan Shirk said, China today is a ‘fragile superpower.’

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“China’s censors clamp down on watchblogger”

Funny? Sad? Both? From FT:

China’s leading online portal has shut down the microblog of a watch enthusiast who rose to prominence pointing out the excesses of Communist party officials by identifying and valuing their expensive watches.

A long-time timepiece aficionado, Daniel Wu began his accidental crusade when he noticed in a news photograph of the deadly high-speed rail crash in July that Sheng Guangzu, the railway minister, appeared to be wearing a Rolex Oyster Perpetual, which retails for Rmb70,000 ($11,000) in China.

Mr Wu, 33, said this inspired him to cast his net more widely. He searched for other officials and compared photographs of the wristwatches to pictures from official product catalogues. The number of people who followed his microblog on online portal Sina quickly jumped from 2,000 to more than 20,000 before it was shut down last weekend.

“That was when I got a bit addicted,” said Mr Wu, who added that his “watch evaluation” is now taking up most of his spare time when he is not running his software company.

Mr Wu stresses that he does not equate the possession of a luxury watch with corruption. But the fact that Chinese officials do not have to declare publicly their financial assets, and that some of the watches on display were believed to cost the equivalent of many months of the officials’ salary, has driven many of his followers to see him as a graftbuster.

The blogger says he tried to exclude the possibility of mistaking fake watches for expensive originals by using as high-resolution pictures as possible. Even so, he has used phrases such as “appears to wear” in most cases.

Mr Wu’s original post about the railway minister was soon removed by Sina’s in-house censors who monitor the chatter of their more than 200m registered Weibo users on behalf of the ruling Communist party.

Mr Sheng has never commented on Mr Wu’s revelations. The blogger says he has only ever heard back from three of the more than 100 officials he wrote about.

Mr Wu says he and the censors were soon testing each other’s limits.

“I had … the impression that we had achieved a tacit understanding: I would not touch the most expensive watches and the highest-ranking officials and I would get away with that.”

Earlier this year, censors closed down a flurry of websites on which citizens could report their encounters with corrupt officials, typically by reporting anonymously how they had bribed someone.

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“Escape from China”

Peking Duck is back with another great post, inspired by the ‘Liao Yiwu escaping from China’ story that came out yesterday. It describes the change many of us have noticed over the last year or so:

Which leads me to an observation I made in China last week. Somethings seems to have changed. Censorship, which my Chinese friends used to laugh at as a nuisance, has become a front-and-center national issue. As always on these trips, I talk to as many Chinese people as I can about their feelings toward the government. Granted, these spot interviews are thoroughly unscientific, but I have always found them revealing. In the past, most of the responses I got were along the same lines: We don’t really love the government, but it gets things done, and anything it sets its sights on doing will happen. In general, this is a good thing. We don’t love our government but we support it and are proud of our country.

During the run-up to the Olympics I heard more positive things about the government than ever before. People defended it aggressively in light of the riots in Tibet, and national pride seemed to be at its zenith, which wasn’t too surprising. Along with Tibet, this was when AntiCNN began its successful campaign to convince China it was the victim of a vast media conspiracy to make them look bad. Everyone seemed to close ranks and display their love of China, even placing a “heart China” alongside their names on MSN.

Has there been a sea change? Again, this is not scientific in the least, but all I heard this time, from taxi drivers to old colleagues to new friends, were harsh criticism. The one word that permeated each discussion was “Weibo.” Something about the Wenzhou train crash and its harmonization on Weibo seemed to have struck a nerve with many Chinese (and foreigners, too). Finally, suddenly, censorship moved from being a nuisance to outright repression.

The reaction to the cover-up was across the board: the government had lost the trust of its people, and all the glory they were claiming for its new high-speed rail system was built on sand. Some said they would never ride the fast trains now that they know they are unsafe, and they place the entire blame for that on the government. A government that pledged the trains were safe, and then covered up its flaws. And then censored all conversation about it. This was one whammy after another, and the Chinese people seemed to reach a breaking point. And I don’t see how their trust can be re-won.

This matters. Even in a completely authoritarian political system, having the vast majority the people support or oppose you makes a difference in what the government will do- and what they can do without inspiring real-life consequences. Despite their ‘the Chinese people are united behind the Communist Party!’ boilerplate statements, the CCP knows that the Chinese people have pushed out any number of governments historically, and have the ability to do so again today.

As always, I’ll point out that this doesn’t mean a new government by Monday. But destroying their base of support makes it more likely that China will have a turbulent future- especially if the economic golden age comes to an end.

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“China indebted to corruption”

The Australian has a piece on the rash of bridge collapses, which is being attributed to shoddy construction facilitated by the bribery system here:

In heavy, driving rain, Friday rush-hour and forced contraflow, traffic on the approach ramp to the mighty No 3 Qiantang Bridge in Hangzhou slows to a near-stagnant creep: plenty of time to take in the view.

There is the 10m gash left after the side wall abruptly fell off last month. Nearby is the 7m crack in the road, which a heavily laden lorry was swerving to avoid when it flew off the edge.

All along the bridge are 10cm scars where joints have slipped out of alignment and the shoddy concrete edges have eroded away. Finally, there is the 50-strong team of construction workers carrying-out the £6 million ($9.22m) emergency repair work that the whole debacle has triggered.

This, along with tens of thousands of other grand infrastructure projects across the country, is how the new China is being built. Not visible on the bridge are the various national engineering prizes won by the creator of this crumbling catastrophe: they sit proudly in the head offices of the Hunan Road and Bridge Construction Group.

The July accident was not the company’s first: in 2007, two more of its bridges collapsed, one at the cost of 64 lives. But what is starting to worry both the Chinese authorities and the general public is that the trouble is not restricted to HRBC and its flawed creations: in fact, the bridge collapses in China are starting to have the feel of a pandemic.

Between July 11 and July 19 this year, four bridges crumpled in different regions of China – all of them, in common with thousands of other bridges in the world’s fastest growing economy, started carrying traffic between 1997 and 1999.

Behind the accidents, say analysts, are features of the Chinese economy that could eventually become its undoing: huge corruption, an obsessive praise of construction speed over build quality, and the failure to realise the gnawing, long-term cost of both those issues.

Explanations for the various bridge collapses tend to focus on the way the contracts to build them are distributed. Via virtually non-existent tender processes, local governments hand out projects to companies they themselves own. The work itself, however, is sub-contracted down an often bafflingly long chain of smaller companies, with bribes paid at each level and successive layers of cash creamed from each strata.

By the time the first shovel of cement enters the mixer, the actual budget that remains allows for only the cheapest labour and often inferior materials.

Suggestions of corruption relating to the No 3 bridge are not new. Chinese media openly reported its failure to pass safety checks in 1997, with prominent engineers flatly refusing to have their names associated with any sign-off. A year later, a quality standard was miraculously granted, without any discernible changes being made to the bridge itself.

Looming over the whole scene is the increasingly troubling question of local government debt in China: economists are already exercised about how far dangerously high levels of indebtedness have been masked, how many of the estimated 14.2 trillion yuan ($2.09 trillion) of loans to local government entities will turn bad even if the global economy limps back to health, and how the world’s second-biggest economy will react if the brakes are suddenly applied to fixed-asset investment, currently accounting for around 70per cent of gross domestic product.

The concern is that, in the country’s unprecedented spree of infrastructure construction and other spending, local governments have already taken themselves close to the danger zone on debt: that line will inevitably be crossed if decades of shoddy work now require billions of yuan to put right.

And, unlike the money that can cheerfully be borrowed to finance projects such as bridges, stadiums, and high-speed rail lines in whose glorious light local party bosses can bask, raising the money to fix pre-existing venality and sloppiness holds zero appeal. The potentially colossal bill for repairing what China did not build right in the first place, say economists, could be the fault line on which the local debt problem starts to totter.

This is just another issue that makes me skeptical when people say the Chinese economy is invulnerable. It has huge strengths, sure, but also huge weaknesses. Would it survive a domino effect of problems like this setting each other off?

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“An Investor’s Guide to Buying Influence in China”

Ever wondered about guanxi? You hear about it constantly in China-related writings: the ‘relationships’ which exist to provide a vehicle for corruption. A Chinese writer is writing a guide to guanxi, which sounds pretty interesting:

“Some people are real masters at it, and some aren’t. Not everyone is an expert,” the novelist said by telephone from his home in Changsha, the capital of Hunan Province.

“I want to help the weak ones advance and take away the oxygen from the experts,” he said.

For Mr. Fu is no mere peddler of corrupt ideals, with a dystopic solution to a serious problem. His goal is to create a new kind of level playing field, where everyone benefits from an unfair arrangement by exploiting it equally.

In other words: Fight fire with fire, and corruption with … more corruption.

The approach reflects what experts say is widespread cynicism about the chances of curbing corruption, in the absence of independent monitoring agencies or free news media.

“Corruption is growing all the time, because people and the country are growing richer,” said Liao Ran, program officer for China and South Asia at Transparency International, a nongovernmental anti-corruption organization based in Berlin.

“The Communist Party can mobilize human and financial resources to do something. It has the institutional capacity to mobilize or to suppress,” Mr. Liao said by telephone. “If it wanted to control corruption, it could do it.”

Yet, far from fearing corruption, he said, officials and businessmen “are afraid if you are not corrupt. They want you to be corrupt. If you don’t join in, if you want to be a good person, then you highlight their badness.”

Mr. Liao’s quixotic conclusion: Because of government involvement, “corruption in China is very serious and very rampant. And under control.”

“A society that relies on guanxi to get things done is a scary place,” he said.

“When guanxi becomes stronger than rules, it’s dangerous to everyone. Why? Because if you use your guanxi, I’ll use my guanxi, and in the end the price of everything rises. When there are no rules, then everything is a competition, and those with more power win,” he said.

For now, absent real solutions, he says, the only hope is to publicize guanxi’s tricks. That way the socially skilled lose their advantage over the socially inept.

“Build a new set of rules,” he wrote. “Make these things more open, transparent, and, in this way, more free, equal and fair.”

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“Corruption may undo China’s economic miracle”

From Victor Shih, a great FT blog post about exactly how bribery figures into construction projects great and small here:

According to details released by the Chinese media, the Jing’an government invited bids for a project to insulate a teachers’ dormitory. Not surprisingly, a company wholly owned by the Jing’an District Government, the Jing’an Construction Company, “won” the bid, but then gave the Rmb30m project to its wholly owned subsidiary Jiayi Company, which had little experience in this kind of project.

After paying government officials bribes to obtain this contract, Jiayi proceeded to farm out various aspects of this project to sub-contractors who paid Jiayi management the highest bribes.

In some cases, the work was further sub-contracted to foremen, who also had to pay sub-contractors bribes. At every level, guanxi and the amount of bribes determined who received the contract, not quality, safety or track record. In the end, a welder, hired precisely because he was inexperienced and therefore cheap, accidentally dropped his torch, which set off the fire.

Given the dominance of the state at every level of government, government officials learned long ago that the best way to make some money on the side was to form their own companies, which “bid for” and often won lucrative contracts from the government and from state-owned enterprises.

In many cases, these parasitic companies do not do the contracted work themselves but instead farm out the work to the highest bidders. The owners of these connected companies, often officials themselves or their close friends and relatives, can make money without doing anything. It is rent-seeking in its most naked form.

As this “unspoken rule” way of business proliferates to every corner of the Chinese economy, quality, safety, and basic trust all go out the window, replaced by the subcontractors who could pay the highest bribes.

Although a small number of people are enriched by the system, the vast majority suffers from its consequences. This corrupt system of subcontracting may be partially responsible for the high-speed train crash last month; it is also responsible for the prevalence of radioactive material in China’s homes, as noted by an earlier piece on beyondbrics.

It likely is partially culprit to the thousands of industrial accidents and food and product safety issues that crop up in China every year.

Nothing a little transparency and rule of law wouldn’t (at least) partially clear up, but the Communist Party seems convinced that those are bourgeois imperialist concepts designed to destroy China, so they’ll continue to stalwartly oppose them for now.

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“How to deal with the CCP’s “fourth danger”?”

Chinese Media Project has a good post here, urging the Chinese government to embrace more transparent governance. After detailing other problems listed by Hu Jintao himself, they tie it all together:

But I would suggest that all of these recent scandals illustrate a fifth danger, one that in various ways is now being debated with deep ambivalence within the Party — and that is lack of openness and transparency.

The need for openness was of course a critical issue in the recent wave of public anger surrounding the July 23 train collision in Wenzhou. But the Party’s hesitancy was illustrated in chiaroscuro on July 28 and 29.

Visiting the site of the crash, Premier Wen Jiabao pledged to get to the bottom of the collision and its causes, holding those responsible to account. But Chinese media had scarcely begun to exploit the opportunity for openness afforded by Wen’s visit before the Central Propaganda Department came down hard.

Plenty of Party leaders have argued in recent years that openness of information is a key part of good governance and instrumental to stemming public opinion crises. In 2008, Wang Yang (汪洋), Guangdong’s party secretary, called for greater openness as he likened stifled public opinion to the dangerous “barrier lakes” forming along rivers near the epicenter of the Sichuan earthquake. He said leaders must listen to the words of the people, and not build up “language barrier lakes” (言塞湖) that might threaten to burst (arguably exactly what happened after the July 23 train collision).

But the more farsighted priority of pushing openness to tackle key issues and build legitimacy is most often frustrated in the shortsighted present by the need to maintain social and political stability by enforcing media controls, or “correct guidance of public opinion” (a lesson from June 4, 1989, that the CCP has never forgotten).

The failure to allow open information and debate on key issues like corruption and political reform is therefore a fifth danger facing the Party. In the face of continued controls on China’s press, calls for greater openness like the “Notice” announced by Xinhua, and Wen Jiabao’s pledge to get to the bottom of the July 23 crash, look very much like “openness” behind closed doors.

And that’s unlikely to appease the clawing crowd outside.

That tendency, to ignore the long-term consequences in pursuit of short-term gain, is a hallmark of Communist Party rule here. It’s also sadly one thing they refuse to reduce their reliance on.

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“Chinese people show frustration over corruption”

American Public Radio has an interview with a correspondent in Shanghai, whose conversations with Chinese citizens about the Wenzhou crash rings extremely true:

Ryssdal: What are people telling you, Rob? When you’re out and about, what do you hear?

Schmitz: Well, two days after the crash, I was in a taxi, and he’s listening to the radio report from the scene of the crash, and he got so angry that he started just yelling at the radio. You know, you have these moments maybe when you’re in the car when you yelled at the radio. That’s what he was doing; he sort of was ignoring that I was there. And then I sort of asked him, I said, ‘Are you OK? What do you feel about this?’ And he felt relieved to be asked this: he just vented to me for about 15, 20 minutes about how corrupt the government was, how this was the government’s fault. And by the time we knew it, we had stopped about five, 10 minutes ago but he was still venting. It was like one of these — as public radio folks like to say — one of these driveway moments.

Ryssdal: Driveway moments, that’s right, except different context. But hang on a minute, because corruption’s nothing new.

Schmitz: No, corruption’s nothing new, but people talking about corruption all the time on the street with each other; journalists challenging officials, state-run press running with stories about this — that is new. Two nights ago, I was chatting with a Chinese friend and he told me he just read the news that the chief engineer for China’s high-speed rail embezzled 2.8 billion. I said, ‘How? Well 2.8 billion renminbi — that’s about $400 million, boy that’s a lot of money.’ He corrected me, he tells me, ‘No, it was $2.8 billion.’ That’s incredible. Later on, I saw it was reported this guy had just stashed the money into Swiss and U.S. bank accounts. And this Chinese official reportedly has run off with the amount of money equal to the GDP of Fiji. So this type of corruption is really unprecedented.

Worth noting, though, that the journalists challenging officials seem to have been reined in. Whether or not their sudden ferocity was approved by other factions in the government seeking to cut the Rail Ministry down to size is up for debate.

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“Who Is the Guilty Party?”

Xujun Eberlein at InsideOutChina has translated a story from a friend, which reveals the omnipresence of bribery in everyday life here. The entire thing is definitely worth a read- here’s the beginning:

Two years ago, I bought a tiny flat from a stranger. While making some minor changes to the old interior, the electrician I hired found problematic wires, and that the electricity meter outside did not work. The electrician, who had more than 20 years of experience, concluded that the previous owner had messed about with the meter in order to steal electricity. He pointed to a jumble of wires and tried to explain – why this wire did not connect to the meter and that wire did not connect to ground – only to make me further confused. Finally I got the gist of what he was saying: the previous owner installed a very small switch inside the apartment, and reconnected the meter to the switch, which fully controlled the meter’s readings. As the result, if he had used 100 kwh of electricity, the meter would only read 10 kwh.

This was the first time I heard of such a thing, so I was at a loss as to what to do. I asked the electrician, “Could you please rewire the meter to its original design for me?” He teased me, “Why should I? Isn’t it better for you to save electricity cost?” I waved my hand and said, “Drop it, I’m a coward, I won’t be able to sleep if I steal. The money saved this way wouldn’t even be enough to buy me sleeping pills.”

The electrician fiddled with the meter, but in the end couldn’t do much to help, because there was a red seal in it that said, “Do not remove seal, Electricity Bureau only; otherwise bear full consequences.” He said he couldn’t take the responsibility.

I called the previous owner, who neatly denied everything. His voice was full of surprise: “Really? Really? I had no idea! How could it be?”

With no choice, I went to the housing estate’s property management, hoping they would help me solve the problem. The director was a young man who looked like he was just out of college. He patiently heard me out and calmly said, “Things like that are not our responsibility. We wouldn’t dare to touch that seal either. Why don’t you call the Electricity Bureau, perhaps they will send someone for you? But…” he hesitated a few seconds and then said, “For this kind of thing, you know, the Electricity Bureau is very hard to deal with…” He stopped again, his expression looked restrained.

Coming out of the property management office with a foggy head, I ran into Manager Zhou of the real estate agency. After listening to my story, he warned me against acting rashly. “I have heard things like this before,” he said, “the Electricity Bureau only holds the current owner accountable. Change electricity wires without authorization? Fine 5000 yuan. You don’t pay? They cut your electricity immediately.”

Do take a few minutes and read the rest.

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