Officials at the level of department head or above are required to report their families’ businesses to the Communist Party of China and avoid the abuse of power, according to a newly issued regulation.
Officials have to report annually to the party about the business activities of their spouses, their children and their spouses, who will be asked to end these businesses if they have conflicts of interest, said the General Office of the CPC Central Committee.
Citing the corruption case of former Hangzhou party chief Zhou Jiangyong, who was expelled from the party in January, state media said it was necessary to strengthen the monitoring of officials’ family businesses. Zhou reportedly had close ties with Alibaba Group’s founder Jack Ma, who is now outside China.
Back in May 1985 when China had just started opening up its economy, the CPC Central Committee and the State Council issued a regulation to forbid senior officials’ spouses and children to run commercial businesses.
However, the requirement failed to prevent officials from abusing their power as it was not firmly implemented, Xinhua said in a commentary. After three decades, the Central Committee decided to tighten the rules by launching a trial scheme in Shanghai that required government department heads and state-owned enterprises’ executives to report their family businesses.
In a survey conducted in 2016, 2,133 officials and executives reported the business activities of their spouses, their children and their spouses, and 229 of them were ordered to limit their family businesses while 137 were ordered to exit these activities. As well, 11 officials were relocated, 10 were ordered to retire, one resigned and three were put under investigation.
Similar trial schemes were launched in Beijing, Guangdong, Chongqing and Xinjiang.
“Corruption cases are usually identified by the exposure of the assets of officials’ relatives,” Xinhua said. “It’s suspicious that someone could own a huge asset without any experience in doing business, someone could buy an extremely high-quality apartment below the market price or some officials’ relatives could always win infrastructure projects or tenders easily.”
In recent years, the trial schemes were extended to cover officials’ parents, siblings and spouses’ parents. Officials are also required to report the stocks that their spouses and children are holding if they want to be promoted.
Based on the experience of the trial schemes, the General Office of the CPC Central Committee on Sunday announced a set of new rules to regulate the family businesses of officials at the level of department head or above. The higher their positions, the stricter the rules they must follow.
The new rules cover commercial businesses such as investing in and operating companies, taking senior positions in private or foreign companies, operating private-equity funds, and charging fees for providing intermediary or legal services.
A commentary published by the Jiefang Daily, a newspaper owned by the Shanghai Committee, on Monday said the removal of Zhou Jiangyong from his position last August was a good example to demonstrate the government’s anti-corruption efforts.
It said some officials abused their power and made money through the companies of their children and relatives.
“The new rules are not aimed at interfering with the rights of officials’ relatives to choose their occupations,” the commentary said. “As citizens, they enjoy their rights to choose their careers and do businesses but at the same time these rights have to be restricted. For example, officials’ children can run businesses with their expertise, but not their parents’ power.”
Bai Yiyi, a columnist of Honggehui or Red Song Gala, a pro-Maoism website, said it’s good to tighten the rules to monitor officials’ family businesses but many officials could still find a way to bypass them.
Bai said Zhou had explained clearly in an ant-graft documentary in January about how he had abused his power and benefited from his brother’s companies. Bai said that as some officials used friends’ companies to receive bribes while others received benefits after retirement, it would be more effective for the public to monitor whether officials and their relatives disclosed their assets.
Last August, Zhou was removed from his official position after a disciplinary investigation. Chinese media said he had strongly promoted the digital economy during his term and vowed to transform Hangzhou into the biggest Chinese city for digital economy. They said Zhou’s family had allegedly bought shares before the initial public offering of a Hangzhou-based company, namely Alibaba’s Ant Group.
In January this year, Zhou was expelled from the party and was then arrested for corruption charges. China Economic Weekly, a unit of the People’s Daily, criticized Zhou for “colluding with capital and supporting the disorderly expansion of capital.” A Chinese columnist said Zhou was investigated because of his support for Jack Ma’s Ant Group.
The scrapping of Ant’s IPO plan in November 2020 was a political decision, as top Chinese leaders were shocked by the huge list of the company’s shareholders, which even involved some party secretary members on a city level, said Li Daokui, a former adviser to the People’s Bank of China, said in an online forum on June 3.
Read: Ant IPO revival may signal end of tech clampdown
Follow Jeff Pao on Twitter at @jeffpao