Shaanxi County Government Permeated By Local Oil Interests

January 18, 2005

An article originally carried in the China Youth Daily illustrates the links between local government and corporate interests in China, particularly at local levels. The article details the extent to which current government and Party officials hold key positions in the largest state-owned enterprise (SOE) of Jingbian county (in northern Shaanxi province) in violation of national rules.

The general manager of the corporation, an oil drilling and exploration corporation, is concurrently the deputy county head. The assistant Party secretary of the county disciplinary committee serves as the SOE's assistant manager. Approximately 50 other government officials also hold positions in the company and receive both government salaries and private compensation.

Jingbian county's practices appear to be in open defiance of a 2004 national directive prohibiting concurrent corporate employment by Party and government officials at the county level and higher.

As illustrated by the article, Chinese authorities face continuing difficulties in separating government and corporate functions, particularly in relatively poor counties where individual SOEs are the primary economic force. This helps fuel China's current epidemic of corruption.

Developments in Jingbian county may also reflect particular local political problems in northern Shaanxi. As noted in an earlier analysis, government encouragement of oil exploration in northern Shaanxi during the 1990s led to uncontrolled private development efforts and significant environmental destruction. The Jingbian SOE appears to have been established in 2003 as a tool to seize control of private oil interests. This may indicate government intent to manage local economic development more tightly.