VZCZCXRO0160
RR RUEHCN RUEHVC
DE RUEHGH #0225/01 1090700
ZNY CCCCC ZZH
R 190700Z APR 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5720
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6102

C O N F I D E N T I A L SECTION 01 OF 04 SHANGHAI 000225 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/CM, INR/B AND INR/EAP 
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH, READE 
TREAS FOR OASIA - DOHNER/CUSHMAN 
USDOC FOR ITA/MAC - DAS KASOFF, MELCHER, MCQUEEN 
NSC FOR WILDER AND TONG 
 
E.O. 12958: DECL:  X1, MR 
TAGS: PGOV PINR EINV ECON CH
SUBJECT: EAST CHINA CONTACTS ON CHINA'S SUPERVISION SYSTEM 
 
REF: A) BEIJING 533; B) 06 SHANGHAI 3843; C) 06 BEIJING 23885 
 
SHANGHAI 00000225  001.2 OF 004 
 
 
CLASSIFIED BY: Mary Tarnowka, Political/Economic Section Chief, 
U.S. Consulate, Shanghai, Department of State. 
REASON: 1.4 (b), (c), (d) 
 
 
 
¶1.  (C) Summary.  East China contacts described a multilayered 
but relatively ineffective supervision system that did little to 
end rampant corruption among Chinese officials.  One contact 
with the Shanghai People's Congress claimed the problem was 
systemic and due to lack of rule of law.  Another from the 
Nanjing Party School said that there were too many supervision 
organizations, leading to bureaucratic inefficiencies and an 
inability to properly supervise government and party officials. 
The Shanghai People's Congress contact laid out how 
investigations run by the party's Discipline Inspection 
Commission typically unfolded, to illustrate how the process was 
driven by political decisions and did not, as a Nanjing contact 
asserted, reflect an expression of Chinese democracy.  Although 
none of the contacts we spoke with were certain about what the 
new State Corruption Prevention Bureau --likely to be set up 
this year--would do, several expressed concern that it would 
overlap with functions of already established organs and two 
doubted it would have much overall impact.  End summary. 
 
--------------------- 
A Multifaceted System 
--------------------- 
 
¶2.  (SBU) During an April 6 discussion with several Nanjing 
Party School (NPS) professors, NPS Executive Vice President He 
Jiaquan explained that the national Chinese supervision system 
consisted of five separate parts.  These included: the Central 
Discipline Inspection Commission (CDIC) that investigated 
internal party malfeasance (Ref A); the Ministry of Supervision 
(MOS), which was the governmental mirror of the CDIC; the 
Procuratorate and court system for trying cases; the media, 
which played a watchdog function; and public supervision through 
the National People's Congress (NPC) and the Chinese People's 
Political Consultative Conference (CPPCC) systems.  He noted 
that on January 1, 2007, the new Supervision Law passed by the 
NPC went into effect, enacting a "strict work procedure."  He 
also noted that Nanjing Municipality had a "Corruption 
Prevention Committee" comprised of representatives of all of the 
organs involved in combating corruption to coordinate the 
inter-agency effort. 
 
¶3.  (C) During an April 17 discussion, Shanghai Municipal 
People's Congress Training Department's Zhou Meiyan added a 
sixth layer, explaining that the Letters and Visits system was 
also a major part of the supervision system (Ref B).  She noted 
that of the six parts, the Discipline Inspection Commissions 
(DICs) at all levels had the most power.  The DICs worked with 
the Procuratorate to decide which cases needed to be handled 
internally within the party and not by state prosecutors.  Zhou 
elaborated that the Procuratorate's responsibility was to inform 
the DIC of any cases involving party members.  The DICs actually 
made the decisions about which cases could remain with, or be 
referred to, the Procuratorate and which needed to be handled 
with greater sensitivity by Party investigators.  Zhou said that 
there was little differentiation between the CDIC and the MOS, 
describing them as "one office, two placards."  Both were housed 
in the same office and, with the exception of the top leaders, 
there was no distinction between which employees worked for 
which bureaucracy.  Moreover, since almost all of the government 
officials that the MOS supervised were also party members, there 
was no practical way to differentiate where the authority of one 
organization left off and the other's began. 
 
------------------ 
Just Too Many Cats 
------------------ 
 
¶4.  (C) Professor He complained that people were wondering why 
there continued to be so much corruption when there were already 
so many supervisory agencies.  He said it appeared to be a case 
of "so many cats, that they can't catch the mice," meaning that 
the agencies were stumbling over each other in their efforts, 
ensuring that "nothing gets done."  One reason for this, he 
noted, was that local DICs and Supervision Bureaus were 
supervised by the localities, meaning that the anticorruption 
agencies answered to those they were supposed to monitor. 
 
 
SHANGHAI 00000225  002.2 OF 004 
 
 
¶5.  (C) Professor He noted that there were some recent major 
examples--such as Shanghai--where Beijing moved to replace the 
DIC heads with people accountable to the center, but did not 
think this practice would extend much beyond its current scope. 
Nanjing, however, had adopted a rule that the head of a local 
DIC needed to come from outside the locality.  Likewise, a 
Nanjing DIC head who was promoted needed to find work outside of 
the Province.  He said this was not a nation-wide practice, 
however. 
 
¶6.  (C) Ms. Zhou, on the other hand, believed that the practice 
of replacing provincial DIC secretaries with Beijing appointees 
would expand as the center tried to rein in recalcitrant 
provinces.  She believed that the relatively recent central 
appointments in Shanghai, Tianjin, and Beijing would have some 
marginal utility in supervising the municipal leadership since 
the new DIC secretaries were answerable to Beijing.  Ms. Zhou 
said these new secretaries were also undoubtedly well-connected 
to the Politburo, noting that she believed the new Shanghai DIC 
head, Shen Deyong, was close to Vice President Zeng Qinghong 
through connections in the Organization Department.  Ms. Zhou 
assessed that the practice of having the next administrative 
level up choose the DIC secretaries of the level below would 
likely eventually become standard practice. 
 
¶7.  (C) Zhou remained skeptical, however, that central control 
over provincial DICs would do much to curb corruption in the 
long run.  First, unless they were frequently transferred, Zhou 
believed it likely that the local DIC secretaries would still 
develop relationships with those they were supposed to 
supervise, making them less inclined to rock the boat.  More 
importantly, since supervision relied on people monitoring other 
people, or organizations monitoring other organizations, rather 
than adherence to and application of the rule of law, there was 
simply too much room for corruption. 
 
------------------------------ 
Anatomy of a DIC Investigation 
------------------------------ 
 
¶8.  (C) Professor He explained that the DIC, as a tool for 
investigation, was a useful vehicle for democratic expression. 
DIC investigations could be launched one of two ways.  First, 
every citizen had the right to submit a complaint to the Letters 
and Visits Office.  Complaints concerning specific behaviors of 
party members would trigger a DIC investigation.  Second, every 
government and party bureaucracy was required to produce an end 
of year work report.  Every person within the organization was 
then expected to give the leader of the organization a grade on 
the report, of "excellent," "competent," "basically competent," 
or "not competent."  Cadres who whose evaluation came up as 
"excellent" received a bonus equivalent to an extra month and a 
half's salary.  Cadres who received an overall review of 
"competent," received an extra month's salary.  If, however, 30 
percent or more of the respondents rated an official as 
"basically competent" or "not competent," a DIC investigation 
would automatically be triggered. 
 
¶9.  (C) Separately, while Ms. Zhou acknowledged that Professor 
He was correct in his description about how a number of the DIC 
investigations were launched, she disputed the notion that this 
was any sort of democratic procedure, noting that He was not 
telling the whole story.  Aside from poor evaluations and 
people's letters, many DIC investigations were launched based on 
referrals from the Procuratorate, or simply because someone at a 
higher level had an axe to grind. 
 
¶10.  (C) Moreover, not every case that came before the DIC was 
investigated.  When a case came to the attention of the DIC, its 
Case Examination Office (CEO) (anjian shencha shi) would examine 
the initial complaint to see whether it merited further 
investigation.  If the CEO decided the case warranted a closer 
look, it would refer the case to the DIC secretary who would 
consult with and get the approval to move forward from the party 
secretary at the next level above the suspect.  Once the 
 
SIPDIS 
decision was made to investigate, a team would quietly make a 
preliminary investigation into bank accounts and other financial 
records to uncover some sort of irregularity.  Zhou said that 
the DIC could uncover or manufacture some sort of dirt on any 
Chinese official it wanted to. 
 
¶11.  (C) After some initial findings were dug up, the suspect 
would be invited to dinner or breakfast at a hotel where he was 
told he would stay the night.  This was the so-called "Two 
 
SHANGHAI 00000225  003.2 OF 004 
 
 
Restrictions" or "Shuang Gui", where the person was asked to 
report at a certain time and a certain place (Ref C).  Once the 
official--generally unwitting of any problem at this 
point--showed up at the appointed time and place, he was 
sequestered in a room, where he would be told he would be held 
until the case was resolved.  Zhou noted that since the 
confinement of Chen Liangyu, many Shanghai officials joked that 
if someone invited you to coffee or lunch, you were fine, but if 
it was dinner or breakfast you were in serious trouble. 
(Comment: It would appear that it is common practice for 
officials to stay overnight at hotels for dinner or breakfast 
meetings, or else the invitation would probably be a dead 
giveaway of pending doom and a cue for the suspect to flee.  End 
comment.) 
 
¶12.  (C) The person would then be held incommunicado until the 
DIC inspection team completed its work.  DIC teams were given 
great leeway in how to run their investigations and often left 
no stone unturned in their efforts to find as much dirt on a 
person as possible.  During a house arrest in the hotel, the 
suspect would be constantly criticized and interrogation 
techniques would be employed to wear down resistance.  The 
suspect would be told that his friends, coworkers, and relatives 
had already told the teams everything about the case and the 
suspect would be encouraged to tell the team his or her side of 
the story to "make things easier on yourself."  The official 
would be told he knew why they had been placed under "Shuang 
Gui" and that they needed to write daily self criticisms.  Once 
the team completed its investigation, it would turn the evidence 
over to the Procuratorate and the courts for sentencing and 
punishment.  (Note: The team could also decide to handle the 
matter entirely within the party.  End note.) 
 
¶13.  (C) The whole problem with the DIC investigation system was 
that it was based on political decisions.  Once a decision had 
been made to investigate a cadre, guilt was usually a foregone 
conclusion.  The investigation itself was used to build up 
evidence to support a decision that had already been made.  Zhou 
noted that since this system was not based on the rule of law, 
but rather on decisions of unelected, unaccountable party 
officials, it was a sham to say that it represented any sort of 
Chinese democracy. 
 
¶14.  (C) Zhou cited the Chen Liangyu case to prove her point. 
Despite having been under house arrest for over half a year, the 
CDIC investigation team had still produced no hard evidence of 
Chen's malfeasance.  The money that Chen had supposedly 
misappropriated had all been recovered, and Chen's case had 
still not been turned over to prosecutors.  Chen's biggest 
crimes, Zhou opined, were having been affiliated with the wrong 
political faction, ignoring central policy directives, and 
making personally disparaging remarks about Hu Jintao.  Zhou 
said her contacts in Beijing had assessed that if Zeng Qinghong 
had not "turned" in his allegiance from party elder Jiang Zemin 
to Hu Jintao, Chen would not have fallen.  However, when Zeng 
made the switch, he abandoned Chen to the wolves. 
 
--------------------------------------------- --- 
A New Ministry in the Works But What Will it Do? 
--------------------------------------------- --- 
 
¶15.  (C) With a massive anticorruption bureaucracy already in 
place unable to stem the tide of bureaucratic malfeasance, it 
was only a matter of time before the Chinese government decided 
to add one more layer of bureaucracy to "fix" the problem. 
During an April 6 meeting with officials from the Jiangsu 
Academy of Social Sciences (JASS), President of the School of 
Political Sciences Bian Min--and Ms. Zhou separately--confirmed 
Xinhua reports that the State Council planned to set up a new 
State Corruption Prevention Bureau (SCPB) in the near future, 
with Bian noting that Beijing had already decided on how many 
staff the Bureau would have. 
 
¶16.  (C) Ms. Zhou said she had heard from friends in Beijing 
that the idea for the Bureau had actually come from the CPPCC. 
Some of the CPPCC representatives had presented it to the 
government as part of their "democratic oversight" 
responsibility as a way to help combat the pervasive problem of 
corruption.  Zhou said that when the CPPCC presented its 
suggestions to the Politburo, members had little political 
choice but to wholeheartedly agree to its establishment or risk 
looking as if they personally had something to hide.  Exactly 
when the Bureau would be established was unclear, but Ms. Zhou 
believed it would be by year end. 
 
SHANGHAI 00000225  004.2 OF 004 
 
 
 
¶17.  (C) During an April 17 conversation, Jiaotong University 
Law Professor Zhou Wei said that, initially, there had been high 
expectations and hope that the agency would act like Hong Kong's 
Independent Commission Against Corruption.  However, now, as 
Professor Zhou understood it, the Bureau would be 
organizationally under the Supervision Ministry, rendering it 
ineffective at performing any independent investigations. 
(Note: Professor Zhou's assessment of where the SCPB would fit 
organizationally differed from our contacts in Nanjing who 
expected the Bureau would be directly under the supervision of 
the State Council.  In late February and late March, Xinhua 
reported that CDIC and MOS officials also said that the new 
Bureau would fall under the State Council.  End note.) 
 
¶18.  (C) What functions the SCPB would ultimately have, was even 
less well understood.  Professor He believed that the SCPB would 
be solely a central government-run organization, funded by 
Beijing, and doubted it would have provincial offices.  He 
believed it would serve a coordinating function, much like the 
Nanjing Corruption Prevention Bureau and would directly 
supervise top provincial leaders.  From that perspective, NPS 
Director of the Scientific Socialism Department Wu Shu said he 
believed that the Bureau would have a great deal of overlap with 
the CDIC and the Ministry of Supervision, but did not go into 
detail.  Wu thought that part of the Bureau's function would be 
to draw lessons from foreign and Hong Kong experiences on 
building a clean government and help devise policies to 
strengthen punishments.  JASS's Bian believed that the SCPB 
would focus more on finding ways to prevent corruption rather 
than overlapping much with the CDIC's and Ministry of 
Supervision's investigative authority.  Bian noted that 
corruption was a serious problem and Beijing recognized it 
needed to focus more on prevention than solely on punishment. 
 
¶19.  (C) Chief of the JASS Research Section Tian Boping added 
that he thought the goal was worthy, but that it would be 
difficult to carry out.  He said that if the central government 
had the will, it would carry out the "effective" establishment 
of the Bureau.  Whether that carried down to real implementation 
at the local level, where corruption was most rampant, would be 
a different story.  Ms. Zhou had no insights on what the 
function of the new Bureau would be, other than expecting it 
would likely duplicate efforts already underway in the CDIC and 
Procuratorate.  She opined that corruption was a structural 
problem involving lack of rule of law and that adding another 
layer of bureaucracy would have little overall impact without an 
overhaul of the political system. 
JARRETT