China Headlines: Falling stars illuminate China's path to reform

With the investigations of Xu Jianyi, chairman of FAW Group; of Qiu He, a senior official from Yunnan Province; and of Liao Yongyuan, general manager of the China National Petroleum Corporation (CNPC), China's anti-graft campaign is beginning to touch on the bedrock of many issues obstructing reform.

Xu is the second member of China's c-suite to be dragged under the anti-graft microscope recently. The chief of a centrally-administered state-owned enterprise (SOE), Xu's fall comes hot on the heels of that of Song Lin, former chairman of China Resources.

GOLDEN CHILD OR PRODIGAL SON?

The precise nature of Xu's transgressions remains unknown, but it can be assumed that his misconduct did not go unnoticed by the inspection team which audited discipline at FAW last year.

FAW is China's third biggest auto manufacturer, engaged in numerous joint ventures with some of the most prominent industry names worldwide, including Volkswagen and Toyota. FAW has a special status in Chinese hearts and minds, perceived as the country's firstborn domestic car maker.

According to reports on the Communist Party of China (CPC) Central Commission for Discipline Inspection (CCDI) website, inspections at FAW from July 29 to August 29 last year unearthed breaches of CPC regulations "happening from time to time" and "corruption problems" in sales and resource distribution.

The graftbusters reportedly found senior executives meddling in the approval of 4S stores. These stores -- sales, spares, service & surveys -- are effectively China's dealership network, and their efficient operation is one of the major drivers behind the enormous boom in car ownership over the last decade or so. Problems found included executives seeking personal profit from sales, purchasing and logistics. Irregularities were also found with personnel, use of funds and investment.

Xu was chosen by FAW to head up a team dedicated to investigating these problems and setting things right. The problems came to light just as the group began pursuit of an overall listing, with the strict auditing that entails. Previous audits reportedly found problems in the FAW financial system and with internal management, which, some believe, go well beyond finance and accounting.

Even before the axe fell on Xu, FAW was vexed by its executives' scandalous behavior. In 2014, An Dewu, deputy general manager, Li Wu, deputy general manager of FAW-Volkswagen and Zhou Chun, deputy general manager of Audi sales, were investigated. None are still in their posts.

The move against Xu, overall supremo of FAW, is a signal that cleaning up the group will not be a mere polishing exercise but a tough, deep overhaul.

With FAW's "firstborn" privileges, reform here could be talismanic for that of the whole SOE sector.

A STAR IS FALLEN

The investigation of Yunnan's Qiu He, announced on Sunday, promises to be no less emblematic.

A CCDI statement said simply that Qiu He, deputy secretary of the CPC Yunnan Provincial Committee, was under investigation.

Unlike Xu, Qiu is a very well-known figure, an official with a history of controversial remarks since he first emerged in east China's Jiangsu Province during the 1990s. There has always been speculation about some "secret capital" behind Qiu, but the biggest controversy surrounds his hard-line style. Regarded as something of a political "star", his indifference to the opinions of others and an overbearing manner ensured his decisions often made news. Until now the words most frequently associated with Qiu have been "steadfast", "practical" and "effective".

Qiu reportedly once issued local officials in various fields with a take-it-or-leave-it ultimatum requiring them to meet a minimum quota in attracting investment.

When acting as the Party chief of Kunming, capital of Yunnan Province, in an attempt to improve governance, Qiu published all senior officials' phone numbers, which led to some complaints from officials bombarded by citizens' complaints.

In another development, the CCDI announced late on Monday that Liao Yongyuan, general manager of CNPC, one of China's biggest oil companies, is also being investigated for "serious law and discipline violations".

Born in 1962, Liao became general manager of CNPC in May 2013.

REASONABLE POWER

Premier Li Keqiang told the annual legislative session last week that "it goes without saying that power should not be held without good reason."

Just two weeks ago, a list was published of 14 senior officers investigated or convicted in the military's most recent counter-corruption maneuvers.

It is clear that the fight against the corrupt and vested interest groups will continue unabated, with the country resolved to dig up the most deep-rooted of the problems that hold back reform. Endi