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Rise of Xi
China's Anti-Corruption Purge Hits Energy Projects Hard

Chinese President Xi Jinping’s anti-corruption campaign against the “tigers and flies” (high- and low-ranking officials) is hurting the state-run oil and gas industry, especially CNPC, China’s biggest energy company. In shale-rich Sichuan province, so many officials have been purged that operations have slowed to a crawl or stopped entirely. Interfax has the details:

China’s largest oil and gas company has been forced to halt work at numerous drilling sites because of the number of executives detained by the graft probe, said the source, who is a third-party engineer conducting field work at shale plays in Zigong, Sichuan.

The investigation has left the remaining CNPC staff in Sichuan with virtually nothing to do. “Since there is no work, many CNPC workers have to stay at home, receiving only half of their original salary and no bonuses at all,” said the source.

“Even Shell’s foreign supervisors have all gone back to their home countries. Shell is famous for its strenuous safety checks, but I’ve seen no supervisors from Shell or CNPC come to check our work this month. Sometimes we have to work with China National Offshore Oil Corp. so that we don’t waste our time.”

Xi’s reform program has put him on track to become China’s most powerful leader in decades, but reforms this aggressive always come with the risk of creating disarray, at least in the short term. This slump in energy operations will probably be only temporary; China will do whatever it takes to ensure its energy security, and Sichuan’s extensive shale resources will be developed eventually. But Xi’s anti-corruption campaign is still a roll of the dice; he’s betting that focusing power at the center will help China weather the storms on the horizon without creating insurmountable problems of its own.

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  • Kevin

    Why is Xi’s motivation to prepare to weather the storms? Ideology, abhorrence of corruption and decay or simple greed for power could equally explain his behavior. I’m not saying this is not his motivation, but where is the evidence for it?

  • ShadrachSmith

    All economies have a corruption problem. China, for a list of reasons available upon request, has the worst one among large economies (Honorable mention to Russia). This is cultural, the absolute tyranny of the local Chinese despots (by whatever name) includes the misuse of funds. One example, the Chinese lost a naval engagement to Japan in large part because the local Mandarin filled a large number of shells with charcoal instead of gunpowder, and pocketed the difference.

    This ‘culture of corruption’ has always been a major limiting weakness of the middle kingdom, so I expect it is in play here. The goal of an honest bureaucracy is mostly chimera to start with. An honest Mandarin bureaucracy seems an unreachable star.

    • Andrew Allison

      It has to do with the rule of law rather than that of those in power. Not to say that we don’t have our fair share of corruption, but it flourishes in nations where the rule of law is subservient to the government.

  • Anthony

    Xi Jinping’s challenge as he perceived it from his ascension is to both kep his country’s economy growing (going) and keep PRC in power. These CNPC actions appear to be following pattern set in 2012 (see Xi’s “China Dream”).

    • Kevin

      I’m not sure. I think internal maneuvering inside the CCP may be more important. Bo Xilai and now Xinhave undermined the post-Mao model of governance by committee and no harsh sanctions for losers. It is moving back towards the Maoist paradigm of high stakes winner take all and losers are obliterated style of government. Under Deng and his successors losers would give up power but would get a very comfortable retirement. Now losers and their families go to jail, soon they may be shot. Bo showed that appeals to the masses via ideology might be possible, that politics involved more than maneuverings among gray technocrats in the inner circle.

      • Anthony

        CCP is always important and your interpretation is quite reasonable.

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