02/14/2011, 00.00
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Railways minister’s departure creates uncertainties, causes shares to fall

Liu Zhijun, minister since 2003, was viewed as one of China’s most powerful figures, in charge of huge budgets and capable of surviving accusations of incompetence and corruption. High-speed projects are now on hold. Corruption is an endemic problem in China.

Beijing (AsiaNews/Agencies) – China’s railways are in emergency mode following Saturday’s resignation of Railways Minister Liu Zhijun over corruption charges. Chinese railway-related shares fell sharply today, despite the fact that Sheng Guangzu replaced Liu overnight on Saturday.

At a teleconference in Beijing, Sheng Guangzu stressed the importance of maintaining safety and stability in the nation's railway sector. He also called for unity under Hu's leadership but did not say whether any project was in jeopardy.

Chinese railways are well funded by government and railway companies are among the strongest in the country. However, Hong Kong-listed China South Locomotive and Rolling Stock Corporation (CSR) fell by as much as 6.2 per cent in early trade today. In Shanghai, the China North Locomotive and Rolling Stock Corporation lost as much as 5.8 per cent. Stocks in related sectors also fell, but experts believe the drop to be short-lived, urging people to wait and see for developments over the next few days.

Liu lost his position as Communist Party chief at the Railway Ministry because he came under investigation for “serious disciplinary violations”, i.e. corruption.

The uncertainties associated with the lack of information have spooked investors in a sector that is highly independent even of Beijing.

The Railway Ministry employs nearly 3 million people and commands a vast budget, including multibillion-yuan investment in high-speed rail systems. It operates its own schools, hospitals and telecommunication services.

In its 2011-15 budgets for high-speed rail, China plans to spend a total of 3.5 trillion yuan. The Railways Ministry wants to reach a national high-speed rail network of 25,000 kilometres by 2015.

However, the Ministry is also involved in many businesses, which have nothing to do with railways, like real estate, trade, karaoke, food and car distribution

Liu spent nearly his entire political career in the railway sector. He was director of the railway bureaus in Henan and Liaoning provinces before becoming vice-minister of the railways ministry from 1996 to 2003, then minister in 2003. He survived misgivings over his competence, given the railways’ poor safety record.

Twenty people died every day, on average, in mainland rail accidents in 2005. That is 7,300 for the year, according to the State Administration of Work Safety.

Shortly after a train collision in Shandong province in 2008 that killed 72 people and injured 416, public calls for Liu's head to roll reached a peak.

That same year, the national rail system was nearly paralysed by massive snowstorms, with millions of Lunar New Year travellers stranded at stations.

In April 2006, Liu's younger brother, Liu Zhixiang, who was the head of the railways bureau in Wuhan, was given a suspended death sentence for hiring hit men to kill a man who had exposed his corrupt practices.

Liu’s case illustrates how difficult it is to fight China’s widespread corruption, despite years of zero tolerance by China’s leaders. He had been under investigation since 2006 and yet he was able to hold onto power until now. According to the discipline commission, 146,517 officials in China were punished for disciplinary violations in 2010.

Experts believe that corruption cannot be eliminated by repression alone. Only in a democratic system where citizens have the power to criticise can it be done.

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