Official Compliance with State Council Coal Mine Divestiture Order Is Mixed

The State Council issued a Circular on the Immediate Closure and Rectification of Coal Mines Failing to Meet Safety Standards and Illegally Operating on August 22, which ordered government officials and managers of state-owned enterprises (SOEs) to divest all financial interests in coal mines. Compliance with the directive has been mixed, according to several Chinese and external news media reports.

More than 1,500 officials still own financial stakes in coal mines, estimates the South China Morning Post (SCMP) in an October 24 article. The SCMP report noted that Shanxi and Guizhou provinces have the highest number of officials owning stakes in coal mines, with 922 officials and 237 officials involved, respectively. The total amount invested by government officials in the coal mining industry in Heilongjiang, Shanxi, Inner Mongolia, and Shaanxi provinces, together with the Chongqing municipality, is reported to be 257 million yuan (US $31,767,220). The SCMP commented that experts expect this total to rise when the remaining provinces report holdings under the State Council directive. Of the 27 provincial safety departments that provided results, only nine disclosed the number of officials who had divested their coal mine holdings, reports a September 27 China Daily article.

Some officials, however, have complied with the directive. The State Administration for Work Safety (SAWS) announced on September 26 that 497 officials had divested their stakes in coal mines, according to the September 27 China Daily report.

Chinese news media have reported the following other developments since September:
• 836 officials and SOE managers in Shanxi province had divested their coal mine holdings by October 18, according to a Xinhua report of October 18.
• The Legal Daily reported on October 20 that 356 officials in Henan divested their coal mine holdings.
• Officials in Inner Mongolia had not divested their coal mine holdings by September 15, according to the China Youth Daily.
• The Xinhua News Agency reported on November 1 that 4,578 Chinese officials and SOE managers had withdrawn coal mine shares worth 473 million yuan (US $58.3 million). The report also cited remarks at a press conference by Chen Changzhi, Vice Minister of Supervision. Chen warned that, "Those who have privately transferred their colliery shares to other people or are holding shares in disguised forms will be removed from their posts…and be held liable for administrative or criminal punishment."

Some Chinese scholars, however, doubt that cleaning up the coal mine industry will be easy or quick. Liu Xutao, a political scientist at the State School of Administration, commented in a November 2 South China Morning Post article that he doubts that China’s mining industry can be cleaned up without reforms to the Chinese judicial and law-enforcement systems. Liu expressed the view that coal mine investments by government officials are only a small part of the corruption problem, and that any hesitation over legal reform will bring "more and more challenges."