Profiteering fear as officials turn to business

THE growing number of Chinese government officials ''jumping into the sea of commerce'' and forming their own companies could lead to a resurgence in official profiteering, a mainland newspaper has warned.

Official profiteering, or guandao as it is colloquially known, was rampant in the late 1980s as officials used their power and influence to sell off state controlled goods on the private market at huge profits.

Such abuses of power and corruption became a focal point of the 1989 student demonstrations in Beijing and ''da dao guandao'' (beat down official profiteering) became one of the most often heard slogans in the protests.

The Entrepreneurs News, a semi-official publication, said that while the situation now was different to that in the late '80s, there were two important similarities.

Firstly, although officials are under strict orders to sever all links with their former government departments before going into business, many secretly maintain those links.

Secondly, many goods and raw materials are still in short supply allowing officials with access to such materials to sell them off on the free market.


While, in the late '80s, officials were selling colour televisions and other luxury items which are now in ample supply, the newspaper said the profiteering market had switched to raw materials, all of which were in short supply as a result of the rapid economic growth of the past two years.

Raw materials are largely under state planning controls and, as such, government officials are in a good position to exploit market shortages.

Many analysts agreed that guandao was on the increase again but thought it would not lead to a wave of popular discontent.

''Two things are different this year: people have a lot more money so they are not so worried about officials being on the take and people are a lot more cynical - they expect officials to be corrupt,'' a Chinese economist said.