Fair competition can rid SOEs of corruption

Moreover, since SOE executives are also part of the bureaucracy and thus can be shifted to leading positions in government agencies, they can form "corruption gangs" to easily transfer interests. Former national security chief Zhou Yongkang, now under investigation for suspected corruption, used to hold key positions in State-owned oil companies, which he reportedly used to form one of his "corruption gangs". Sometimes senior bureaucrats even "arrange" for their children or spouses to occupy leading positions in SOEs to weave a more intricate net of vested interests.

Such activities also build obstacles for the fight against corruption in SOEs. Once senior officials and their family members that run SOEs control the interest groups, they start opposing attempts to challenge their nefarious activities to make profits for themselves.

Therefore, the country's leadership needs not only political courage, but also political wisdom to sever the interest chain and lead the anti-corruption drive to success. And the process cannot be separated from the ongoing overall reform that is aimed at establishing a market economy with the rule of law.

The State can be a shareholder in SOEs, but the latter have to face market competition as equals. The competition would be unfair if SOEs get the chance to make profits illegally for the benefit of corrupt officials. Only when SOEs and other kinds of enterprises are treated as equals can corruption be eliminated from the roots.

The fight against corruption in SOEs will in turn help propel the overall reform, and the central leadership has vowed to let the market play a decisive role in allocating resources. But only if the SOEs are made to face fair competition can the reform truly succeed.

The author is a professor at and deputy director of the Center for Integrity Research and Education at Beihang University.