Xinjiang Officials Apparently Ignore State Council Directive to Divest Interests in Coal Industry

October 18, 2005

Officials in the Xinjiang Uighur Autonomous Region who have financial interests in coal industries and mines have not divested themselves of these holdings, despite a State Council directive to do so, according to an October 14 Xinjiang Daily report. The State Council had issued a Circular on August 24 ordering all government and Party officials and state-owned enterprise managers throughout China to disclose and divest all of their financial holdings in coal industries and mines (other than shares purchased in the public stock exchange) by September 22. Faced with this situation, the Xinjiang government extended the deadline for local officials to divest their coal interests to October 20, and is encouraging citizens to report to relevant authorities known cases of "government-mine industry collusion." The Xinjiang Daily article suggests that hundreds of local government workers own shares in coal mines, including 187 officials who hold shares in the Shenlong Coal Mine in Fukang County.

The State Council directive followed an August 7 coal mine explosion in Meizhou, Guangdong province, that killed 123 people and led the State Council to investigate allegations that local government corruption contributed to the casualties (see an August 29 Xinhua report on the incident). The State Council investigation, and others by local governments since August, revealed widespread government corruption in the mining industry. Li Zhilun, head of the Ministry of Supervision, explained in an October 7 Xinhua interview that hundreds of officials are receiving kickbacks from mine owners and that "corruption by local officials has appeared in every single procedure that relates to the approval, licensing, production and sales practices of coal mines." The State Administration of Work Safety has decided to close 8,648 mines, or 40 percent of the nation's total, due to unsafe working conditions, according to the Xinhua report.

Some analysts (see, e.g., the China Labor Bulletin) question whether the State Council directive will have any impact on coal mine safety. They argue that Chinese law has long prohibited government officials from holding undisclosed shares in private coal mines and that corrupt officials are unlikely to abide by the new State Council directive. Fewer than 500 officials had reported their financial dealings with coal mines by the September 22 deadline, according to a September 29 China Daily article. Li Yizhong, director of the State Administration of Work Safety called these numbers "incomplete," and pledged to continue tracking down officials with undisclosed financial stakes in mines. Some provinces have announced limited success in enforcing the State Council directive. An October 10 Jiangxi Daily report, for example, noted that officials had divested 17 million shares in local coal mines by mid-October.