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A Crackdown Of Sorts


International Business

A CRACKDOWN--OF SORTS

Zeng Lihua is an unassuming bureaucrat, a slight woman who prefers simple clothes. Yet as manager of the Shenzhen Construction Consultation Co., an engineering consulting firm, this low-profile executive stands at the center of a giant bribery scandal. According to the official Chinese press, Zeng confessed to using a safe-deposit box in Hong Kong to stash away more than $1.2 million in cash bribes from companies eager to get pieces of real estate deals she controlled.

Zeng is a symbol of the widespread corruption that now has Beijing alarmed. Such guandao, or profiteering by officials, helped trigger the prodemocracy protests that ended in the bloody crackdown in Tiananmen Square in 1989. To head off another Tiananmen, the leadership in Beijing is making the suppression of corruption a key part of its new campaign to regain control of China's overheated economy. The question is how far Beijing really wants to go. If officials ferret out large numbers of influence peddlers, the investigation could lead to the upper reaches of the party--and provoke a political crisis.

Beijing is certainly talking tough for now. In mid-July, Luo Gan, secretary general of the State Council, warned that over the next six months, the government would go after officials who "take advantage of their power and authority to seek private benefits for themselves." At the same time, Vice-Premier Zhu Rongji was dispatching investigators to the provinces, in part to warn bankers against corrupt lending.The corruption takes many forms, from the sale of stolen natural resources--oil, gas, timber--that are needed to fuel China's future economic growth to outright shakedowns of peasants for fines by thuggish officials. Meanwhile, the scams and secret deals have spilled beyond China's borders. Hong Kong shipping agents are increasingly miffed about regular detentions of their vessels--particularly when they are laden with a cargo of automobiles--and the subsequent cash demands made by mainland security forces to release the ships.

The banks play a key role in this wave of guandao. "Corruption now stems from those who have access to bank loans," says a Beijing academic. Zhu, who heads China's central bank, aims to stamp out many bankers' habit of ignoring credit standards and awarding loans to speculators with guanxi, or connections. In one case, eight bankers received stiff sentences, including the death penalty, for accepting bribes in return for loans.

BIG FISH. Even though several corruption cases are getting plenty of press, the authorities hint there are much bigger fish out there. In a report in the pro-Beijing Hong Kong newspaper Ta Kung Pao, an unnamed high-ranking Chinese official insists that "we must investigate some big cases" to win public confidence. So far, no well-known cadre has been formally charged with corruption in the latest crackdown.

General condemnations of high living, however, abound. The Beijing-controlled press routinely features scolding reports on costly dinner parties given by party officials. But Beijing will have to do a lot more than criticize dining habits before it succeeds in rooting out corruption--and solving its most pressing political problem in years.Joyce Barnathan in Hong Kong, with Matt Forney in Beijing


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