HONG KONG - The investigation of China's Minister of Railways, Liu Zhijun, for
severe violation of discipline and his removal at the weekend from his post as
a senior member of the Communist Party highlights President Hu Jintao's efforts
to crack down on corruption while throwing a shadow on the leadership of the
global fast-train business.
Liu, 58, is under investigation for alleged "severe violation of Communist
Party discipline", Xinhua News Agency reported, citing the Central Commission
for Discipline Inspection of the
Communist Party of China. He was removed from his position as "Communist Party
Chief" and replaced by Sheng Guangzu, 62, head of the General Administration of
The position of "Communist Party Chief" is normally more senior than equivalent
government posts and as the government always follows the party's move, Liu is
likely to be stripped of his title as minister.
Liu, who served as a railway official for more than 20 years, headed the
railway system, the world's largest, since 2003, championing in particular the
development of high-speed trains. He is the most senior party official to be
toppled by corruption charges since Chen Liangyu, the party secretary of
Shanghai and an ally of former president Jiang Zemin, was brought down in 2006.
Chen was sentenced to 18 years in prison in 2008.
While details of Liu's fall from grace have not been released, his replacement,
Sheng, told a national teleconference with railway officials on Sunday night
that he, together with the ministry's party leadership, resolved not to be
involved in rail projects.
He said railway officials must not exert illegal influence in the tendering of
rail contracts and procurement of raw materials and components, exercise
improper approvals or conduct illegal private transactions.
Sheng said corruption was a severe problem in the railway expansion program and
the ministry should strengthen its resolve to fight corruption while
China's railway network has a combined length of about 8,000 kilometers with a
target of expanding to 25,000 kilometers by 2015, with annual investment
reaching 700 billion yuan (US$106 billion).
Ministerial-level officials in China are rarely targeted in corruption
crackdowns as that could damage party credibility. More common is action
against lower-level officials. A total of 146,517 officials were punished for
disciplinary violations in 2010, according to Xinhua, with 5,098 officials
working at the county level or above.
The investigation of Liu indicates the high degree of corruption in the
ministry and its vast monopoly, forcing the Communist Party to deal with it,
according to Antonio Ma, an independent China studies analyst who works in Kong
Ma believed the term "severe violations of discipline" related to serious
corruption cases, while the investigation was probably launched with approval
of China's leadership, indicated by Sheng when he told officials that the
decision to sack Liu "shows the high importance the central leadership, headed
by president Hu [Jintao], attaches to the railway sector ... The entire
ministry should closely unite under president Hu".
In January, Hu told the Central Commission for Discipline Inspection that the
government would wage the fight against corruption with greater determination
and more forceful measures as the situation "remains grave".
Ma said the investigation of Liu was being followed by inspections over the
rail network, indicating a big reform plan for the sector.
"The Ministry of Railways is a very big organization and known as a kingdom
relatively independent of the central government. It not only runs the
country's rail systems, but also real estate and trade. It also involves more
than 3 million employees and multi-billion-yuan projects," he said. The bigger
the organization, the easier it is to hide malpractice, Ma added.
The Ministry of Railways is responsible for developing the a high-speed rail
plan and exploring overseas markets. After introduction of its first high-speed
rail link between Beijing and Tianjin in 2008, China has come to lead the world
in both speed and distance covered.
The latest fast train, the CRH380A, built by CSR Corp, set a world record on
December 3 by hitting 486.1 kilometers an hour during a trial run on the
Beijing-Shanghai High-Speed Railway, according to the China Daily. Shares in
CSR, which have gained more than 50% since last September, surged 7% on
December 7 alone on news that the government planned to spend as much as 4
trillion yuan expanding rail networks.
Despite such success, Liu's competence has constantly been questioned and he
has been the subject of rumors that he would be dismissed due variously to the
number of rail accidents, transport congestion and abuse of power by his
In April 2006, Liu Zhixiang, a former deputy director of the Wuhan Railway
sub-administration in Hubei province, was given a suspended death sentence for
hiring people to kill a man who exposed his corrupt practices. The younger Liu,
now in prison, was found to have embezzled public funds and property worth more
than US$2 million.
"Liu's long tenure as the rail head has reflected his power had made him
untouchable - until now. The inspection indicates Liu may be involved in
corruption over the bidding for multi-billion-yuan contracts to build a
high-speed railway," Ma said.
Liu could be linked to an earlier corruption investigation involving Ding
Shumiao , also called Ding Yuxin, a businesswoman from Shanxi province, whose
company benefited from railway-related industries including equipment
manufacture and advertising, Caing.com, a Beijing-based business news website,
reported on Sunday.
Ding, 55, was president of the Beijing-based Broad Union Group and a member of
the Shanxi province committee of the Chinese People's Political Consultative
Conference (CPPCC). Broad Union won a government contract in 2008 to build
noise barriers for the Beijing-Tianjin high-speed link. It later won bids for
another three high-speed train projects worth 610 million yuan.
The change at the top of the Railway Ministry "will hopefully transform the
railway sector to be more market driven and ensure the quality of equipment and
management, vital to safety of people across the country", Ma said.
Rail accidents killed 1,825 people in 2009, according to the State
Administration of Work Safety, although that was an improvement on the 7,300
people toll four years earlier.
After 72 people were killed and more than 400 injured in a train collision in
Shandong province in April 2008, the State Administration of Work Safety said
initial investigation of the accident found indications of corruption involving
Popular discontent with the rail system has also grown with its inability to
keep running during the Lunar New Year holiday in 2008 amid the worst snowfall
in 50 years in parts of the country. The high price of tickets for high speed
routes and the difficulty to buy tickets for even normal trains during the
Lunar New Year holiday this year also angered the public.
Shares of railway linked stocks declined following news of Liu's downfall, with
Central China Securities strategist Li Jun saying the investigation had created
doubts about the proposed investment in high-speed links. Hong Kong-listed CSR
on Tuesday traded at around HK$9.39, down about 16% from a recent high of
HK$11.16 on February 7.
Olivia Chung is a senior Asia Times Online reporter.