China to crack down on lavish public-funded fetes
Chinese Customs Service Vs. Chinese Oil Giant
“Rents” are such easy money, they must not be allowed to tempt a few but be shared by all. We trim, blend, and append three 2010 articles on China from (1) Reuters, Dec 29, on speculation by Langi Chiang and Kevin Yao; (2) Associated Press, Dec 29, on corruption by Cara Anna; and (3) Caixin Online, Dec 30, customs levies by Chen Zhu and Wang Duan.
by L. Chiang & K. Yao, by C. Anna, and by C. Zhu & W. Duan
China to continue property tightening in 2011
China will not relax curbs on property speculation in 2011 and will reinforce the implementation of measures to contain rising home prices, said Housing Minister Jiang Weixin.
The world's second-largest economy has so far rolled out a slew of measures to cool the red-hot real estate market, including higher mortgage rates and down payments. However, property prices have stayed stubbornly high.
Jiang’s pledge is a repetition of recent vows by the country's top leadership. Premier Wen Jiabao and Vice Premier Li Keqiang, acutely aware of public anger over unaffordable housing prices, said that they would not tolerate property inflation and speculation.
China to crack down on lavish public-funded fetes
China plans to crack down in 2011 on lavish parties and seminars organized by government officials, hoping to placate a public angered by corruption and accounts of sex and booze-fueled fetes held at taxpayer expense.
Along with vast improvements in quality of life for most Chinese, China's booming economic growth has led to an ever-larger gap between rich and poor and a surge in corruption.
Many of the parties made headlines this year, including some at which excessive drinking led to deaths of revelers. Other bashes were memorialized in a diary that ended up on the Internet -- allegedly written by an official who was later arrested -- chronicling casual sex, drinking and under-the-table payments at parties.
Lavish official tours to Las Vegas and other places cost taxpayers about 400 billion yuan ($58 billion) every year. On one such trip two years ago, officials spent taxpayers' money on a $700-a-night Las Vegas hotel and visits to a San Francisco sex show.
It reached a point where President Hu Jintao gave a speech in April warning officials of the temptations of beautiful women, money, and power.
According to Wu Yuliang, the ruling Communist Party's top corruption-fighting official, spending of public money on overseas junkets, receptions, and cars declined 5.7 billion yuan ($860 million) in 2010. He did not say how much was spent on such activities overall.
Wu said 113,000 officials were punished this year for corruption, with more than 4,300 cases transferred to judicial authorities for possible legal action.
China has launched numerous anti-graft campaigns in recent years. Some have seen judges and high-profile party figures sentenced to years in prison. Others have brought down some of China's top corruption hunters, who were found to be lining their own pockets. One even saw the head of the country's food and drug agency executed for approving fake medicine in exchange for cash.
Still, some critics say graft is too deeply ingrained in the system and can't be solved with regulations.
JJS: Where does the money for corruption come from? From spending on nature, both land and oil.
CNOOC’s lesson in “local customs”
Handed his walking papers on Oct 14, Jiang Xizhao, the former president of China National Offshore Oil Company (CNOOC) was detained days later by the Chinese customs police. Executives from CNOOC’s Offshore Oil Engineering Department were asked to assist in the investigation.
Since 1997, China has exempted taxes on the import of goods for the extraction of offshore oil and natural gas. The vast majority of equipment and materials needed by CNOOC’s Offshore Oil Engineering were thus tax-exempt.
However, in April 2007, the General Administration of Customs (GAC) set import quotas on equipment for offshore oil and gas projects. But temporary imports were to be tax-exempt. According to one customs official who asked to remain anonymous, CNOOC’s Offshore Oil Engineering was forging temporary import contracts for equipment.
After the global financial crisis, customs revenue dropped in China. Duty collection by port of Xingang Customs dropped significantly, and the port of Tianjin Customs witnessed a 30% drop in annual duty collection at 23.69 billion yuan ($3.59 billion).
In November 2009, when Xingang Customs requested a 300-million-yuan cash guarantee for a shipment of oil, CNOOC declined. A State-Owned Assets Supervision and Administration Commission (SASAC) source said privately that CNOOC lacked experience in dealing with domestic officials. This event led to the deterioration of the relationship between the two sides.
In January 2010, the Tianjin Customs Anti-Smuggling Bureau launched an investigation into tax evasion by CNOOC. The customs office froze related Cnooc accounts, arrested several managers, and took their computers.
At the same time, the oil company began its own internal investigation and discovered that the head of their purchasing department, Lu Lin, received a 600,000-yuan pay-off from Ocean-Run International Freight Forwarding Co, whose chairman Hu Xiaobo has deep personal relationships within GAC and Tianjin Customs, to hire them as an agent to handle customs declaration duties.
Those investigated by the Central Commission for Discipline Inspection also included Ocean-Run Chief Executive Officer Hu Xiaobo and many Xinggang Customs officials close to him, as well as their subordinates.
JJS: So one of China’s big oil companies was so used to preferential treatment, it did not realize when customs officials were truly serious about collecting import duties. I find that entertaining, this clash of corrupt titans. As China pushes up its spending on land and oil, and lets that spending collect in only a few pockets (relatively), expect only more corruption. A fundamental antidote would be geonomics -- public recovery of those values of nature for all the public.
Editor Jeffery J. Smith runs the Forum on Geonomics.
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