China raps state-owned firms for lack of party loyalty

China's top graft-busting agency rapped the country's powerful state-owned industries on Monday for their often hazy loyalty to the ruling Communist Party, saying management must understand that the party will never relinquish control of the sector.

As part of president Xi Jinping’s battle against corruption, anti-graft inspectors have over the past few months visited dozens of strategic central government-owned groups, where top executives hold the rank of deputy ministers.

Senior executives at carmaker China FAW Group, Baosteel Group and China National Petroleum have all been put under investigation for corruption this year.

Mr Xi has warned that the problem of official graft is serious enough to threaten the Communist Party's legitimacy and has vowed to go after powerful "tigers" as well as lowly "flies".

In a statement on its website, the party’s Central Commission for Discipline Inspection said that the root of the problems its teams had found in state-owned firms was lack of party leadership or understanding of the party’s role.

“Some party organisations had never held party-building study groups, and party offices had become like homes for retirees or rest homes for cadres,” it said.

“Some officials who seriously broke the law or discipline said, upon reflection after being investigated, that they basically had no concept of the party, had never held a party meeting and never felt that the party was there with them,” the watchdog said.

Party organisations exist in all state-owned companies and act almost as a separate layer of management. There is a similar structure in government offices.

Beijing has been expected to unveil a master plan to reform the sector which could limit its role in the economy and give the private sector a greater role, but it has yet to be published.

The watchdog signalled that the party’s role in the state sector was not going to be up for discussion.

“No matter whether on the topic of deepening reform or increasing supervision, it must all happen under the party’s leadership,” it said.

Mr Xi said last week that state-owned enterprises are the backbone of the economy and the government must “avoid the blindness of the market” even as it pursues reform.