Opinion / Op-Ed Contributors

Fair competition can rid SOEs of corruption

By Du Zhizhou (China Daily) Updated: 2015-02-16 08:36

The Central Commission for Discipline Inspection of the Communist Party of China vowed to intensify its fight against corruption in State-owned enterprises, and a series of specific regulations are being drafted for the purpose. Predictably, SOEs will be the next big "battlefield" between corrupt forces and anti-corruption agencies.

The importance of eliminating corruption from SOEs for the anti-corruption campaign cannot be overestimated. Unlike government agencies that run only on public funds, SOEs seek profit from the market and, if they are engaged in corruption, astonishing amounts of money can be at stake.

Corruption in some SOEs is detrimental to not only the political ecology, but also the market economy. By bribing local government officials, and forming alliances with them, SOE executives unfairly put the not-so-powerful competitors at a disadvantage, which hinders the economic development of many cities, and even provinces. The prices of products and services that SOEs make or provide are often higher than those of their counterparts because some SOE executives need the additional profits for themselves and local government officials. No wonder, some media outlets say, in a lighter vein, that ordinary citizens have to pay "corruption tax" because of corrupt SOE officials.

Such rampant corruption has dug deep roots in the bureaucracy. Many SOEs have double identities, that of market competitors and State agencies. On one hand, SOEs often enjoy monopolies in the market, leaving consumers no choice but to pay unreasonably high prices for their products and services. On the other, some SOE executives can easily doctor financial reports and put the additional profit into private hands through money laundering.

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