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Inside China

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SINOPEC Liquorgate

A relatively minor corruption case — by Chinese standards — involving graft and alcohol recently spiraled into a major nationwide scandal that helped deepen widespread social discontent and protests against skyrocketing oil and gas prices.

On April 25, in the bustling southern province of Guangdong, Lu Guangyu, general manager of the China Petroleum and Chemical Corp., was ordered by the Communist Party apparatchiks inside the company to relinquish his managerial duties immediately for using "public funds" to purchase "for his personal use" 1,176 bottles of China's most coveted liquor brands at sky-high prices estimated at close to $250,000.

The company, known as SINOPEC, is the largest state-owned enterprise in China.

Starting with an online gossip item a few weeks ago, the sordid episode caused a tidal wave of national outrage within the semi-underground cybernews world in China that serves as a conduit for many Chinese to vent their anger over rising gas prices of late.

The widespread discontent over gas prices clearly produced an unnerving effect on the powers that be in China. On April 20, in protest of rising gas and diesel prices at the pump, thousands of container truckers at the Port of Shanghai, one of China's busiest import-export hubs and a nerve center of China's economic growth machine, launched a violent strike that lasted several days, temporarily paralyzing the port.

An equally large number of police forces were summoned to prevent the strike from spreading to other ports. Unofficial Chinese news reports said the military was involved in breaking up the truckers' demonstration; at least one person was reported killed.

Meanwhile, gas thieves have become active in some major cities. According to a Beijing Daily report April 20, two thieves have stolen more than 800 gallons of gasoline in recent months from some 40 trucks and buses by using an ingenious siphoning system. The gas was then sold on the black market.

SINOPEC is the communist government's largest money-generating company and is actively traded on the New York Stock Exchange. It owns the second-largest number of gas stations in the world, with a network stretching around the globe. Two years ago, SINOPEC became the first Chinese company to make the Top 10 list — at No. 9 — of Fortune magazine's Global 500. Last year, it jumped to seventh place.

The timing of Beijing authorities' decision to expose the SINOPEC corruption case inspired much cynical speculation within Chinese circles. Some believe it was an attempt to alleviate public displeasure at the oil monopoly's perceived greed and callousness to the suffering of common folks.

The surprisingly detailed disclosures of the money trail made public by the party-controlled executive elites clearly show Mr. Lu's flagrant neglect of the most fundamental accounting propriety. It also strongly suggests that Mr. Lu's outing was an inside job, since few outsiders have access to those tightly guarded corporate records. In other words, he was the party's sacrificial lamb.

Ultimate party school

On April 24, the Chinese university that has produced the largest number of Politburo members for the Communist Party held a boisterous gathering in Beijing's Great Hall of the People to celebrate its 100th anniversary. If not for the numbers "1911-2011" on the giant stage curtain indicating the life span of the university, the happy party of more than 8,000 participants easily could have passed for one of the many self-congratulating Party Congresses, replete with socialist music and high-sounding speeches.

Established in 1911 with a fund given to China by President Theodore Roosevelt in 1908 from the American share of the Boxer Indemnity of 1901, Qinghua University has had some brilliant peaks of scholarly achievements, as well as many disgraceful low points.

Its glory days were from 1927 to 1937, when Qinghua was China's most intellectually robust campus, featuring world-class scholars such as Liang Qichao and Zhao Yuanren. During the anti-Japanese war, Qinghua was evacuated to the strategic rear of China's southwest; the Chinese Communist Party penetrated the campus and effectively took control of the university's key posts. In 1948 and '49, the Northern branch of the party used Qinghua as its base in Beijing (then called Peiping) to expand its influence in the future capital of the People's Republic of China.

However, since 1952, Qinghua University has been under the strictest party control of all China's universities because of its close ties to the top echelon of the Communist Party.

Today, Qinghua embraces a robust "loyalty to the party" mission, with more than 55 percent of its faculty and staff belonging to the ruling Chinese Communist Party. It is renowned for having many of its alumni inside the Politburo and other high places in China, including President Hu Jintao, who gave a chest-pumping speech to stress the importance of training technical experts with total loyalty to the Communist Party for the coming decades.

Miles Yu's column appears Thursdays. He can be reached at mmilesyu@gmail.com.

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