By EO Editorial Board
Economic Observer Online
Aug 6, 2012
Translated by Wang Fan
Original article: [Chinese]

An 18.5 million yuan Ministry of Railways promotional video has initiated an investigation into Chen Yihan and her husband Liu Ruiyang, former head of the ministry's propaganda department and deputy director of the transport vehicle department respectively.

Because of nepotism and cronyism, relationships between relatives, friends, and acquaintances are financial assets. When someone gets promoted, several others benefit. It’s because of this that a corruption investigation of one suspect inevitably implicates many others. It’s a typical phenomenon in a “closed system” that exists independently of society.

In a separate case, Liu Zhixiang rose from a low-level railway worker to director-general of the Wuhan Bureau of Railways in just a few years. It turns out he was the younger brother of former railways minister Liu Zhijun, who was dismissed in 2011 on corruption allegations.

After the 7·23 Wenzhou train collision in 2011, netizens posted suspected familial connections between some top Ministry of Railways officials. “It’s not just among relatives,” one insider revealed. “There’s a wide range of relationships and nepotism between officials. This has resulted in a convoluted human resources system within the ministry.”

Nepotism certainly isn’t rare in Chinese society. Complex “family trees” within political agencies at the town and county level in rural China are commonplace. However, these local fiefdoms don’t come close to the scale of the national railway system, which covers the entire country. The complexity of the railway’s nepotism comes from its ability to function in a self-contained environment where it’s almost separated itself completely from China’s social system and has become a “sub-system” or “sub-society.”  

As its name suggests, the Ministry of Railways is supposed to administer the transportation of goods and passengers by rail. However, the railway is a “system” because its functions and powers have become so far-reaching that they cover almost every aspect of society through a top-down system of party and government leaders.

The Ministry of Railways has exerted its influence on public security agencies, procuratorates, and courts. Its reach can also be felt in ideological outlets (television, newspapers, periodicals, book publication, cultural and art troupes), business (machinery, real estate, construction, tourism, logistics, broad-band networks, advertising, catering services, foreign trade), and public services (hospitals and schools).

It’s not merely a government department, nor is it an industry or business. As the boundaries of its power suggest, the Ministry of Railways is a relatively self-contained “sub-society.”

The Ministry of Railways’ status wasn’t always so unique. For example, Chinese banking, postage, shipping, oil, coal, and forestry industries historically had nepotism and cronyism at a similar scale under the strictly controlled economy where work units (danwei) oversaw social policies. However, reforms over the past three decades have resolved the problem of “independent kingdoms” to a large extent. So obviously the problem can be solved if we’re willing to take action.

Nepotism and cronyism breed in the vastness and omnipotence of an independent “sub-society.” Overly-intertwined relationships and other maladies become unavoidable if the larger system stays unchanged. If you want to change the status quo, the first step is to attack the problem at its root.

Government should stay away from business and profits and enterprises should stay away from politics and social functions. Responsibilities of the Ministry of Railways must be clarified, and the agency must open its operations to public query and scrutiny. Only in this way can it be pulled from its status as an independent “sub-society” back to a subordinate role compatible with a healthy society.