The corruption investigation into Jiang Jiemin, who has just been removed from his job in charge of the State-Owned Assets Supervision and Administration Commission (Sasac), the agency that controls China’s state-owned enterprises, could prove a big boost for the country’s economic reformers on two fronts.
First, state-owned enterprises have been notable obstacles to the pace of reform as any switch to a more market-oriented economy would diminish the easy access to capital, customers and connections that they have long enjoyed and which provide a large part of their competitive advantage. The corruption probe into the princely China National Petroleum Corp (CNPC), of which Jiang was formerly chairman and from which four senior executives have been removed, shows that President Xi Jinping’s administration considers no state-owned enterprise sacrosanct. If any executive or senior party official in any other SOE needs any convincing of the seriousness of Xi’s intent they should note that Jiang is the first ministerial level official to be taken down in this anti-corruption drive. Xi is making good on his promise to root out the corrupt “tigers” as well as the “flies.”
Second Jiang is close to Zhou Yongkang, who, until his retirement with the change of leadership earlier this year, was the Politburo member in charge of the China’s internal security and intelligence services. These have business tentacles that reach deep into the economy. There is already widespread speculation that Zhou is himself under investigation. Zhou, who rose up through CNPC before coming Party boss in Sichuan (see this illustration of the nexus of political power of “the petroleum faction“), was also close to disgraced politician Bo Xilai. So Xi would be getting a “twofer” here, cracking down on political opponents and opening the way for more economic reform.