China’s intensifying anti-corruption campaign has turned its guns on the people who link government and business, forcing nearly 230 senior Communist party officials to quit the company directorships they hold on the side.
The draconian orders, which have also affected tens of thousands of more junior officials moonlighting for corporate China, are said to have unleashed a mass “exodus” of independent directors from listed Chinese companies in recent months.
The government has promised there will be more to come. China’s state news agency warned that the authorities were planning another “detailed directive” that analysts believe would attempt to tighten further the restrictions on the roles officials can play in the private sector.
The rules are expected to crack down on the activities of retired officials: as the rules stand, they are able to take on company directorships if those positions do not relate to their former specialities as civil servants.
Sources believe that the new directives will broaden the terms of the ban in a way that could affect foreign companies in the mining, energy, banking and pharmaceutical sectors.
The same burst of anti-corruption propaganda also invited the public to “blow the whistle on violations”.
The crackdown began last autumn with a ban on senior government and party officials from working for outside companies. Although a few resignations followed that ban, the real purge did not begin until scores of listed companies were subjected to an inspection a few months later.
That inspection, according to Chinese state media, identified 229 officials at the ministerial or provincial level who were working for outside companies and 40,700 junior officials with a source of company income outside their civil servant salaries.
About 300 Chinese companies listed on the Shanghai and Shenzhen stock exchanges have apparently been affected by the shakedown, losing the officials they specifically hired to build relationships with Beijing and bring the companies closer to the government.
The central role of those relationships within Chinese business has been laid bare over the past two years as details have emerged of the fabulous wealth amassed by the families of senior officials.
Also exposed has been the extent to which western companies operating in China have been convinced that their success can only be guaranteed by hiring either former officials or people with exceptionally strong personal links to the central and provincial governments.