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Thursday, September 23, 1999 Published at 18:38 GMT 19:38 UK

World: Asia-Pacific

Corruption scandal hits China

The Communisty Party is preparing to celebrate 50 years in power

By Duncan Hewitt in Beijing

China has announced the expulsion of a senior official from the Communist Party's central committee after he was discovered to be involved in a massive corruption scandal.

The state media said Xu Yunhong, who was party secretary of the major port city of Ningbo and a non-voting member of the central committee, had repeatedly abused his power to benefit family members - in one instance leading to financial losses of more than a $100m.

The expulsion of such a senior official is an embarrassment for the Chinese Communist Party as it prepares to celebrate 50 years in power next week.

The city of Ningbo, where Xu Yunhong was party chief, is an important shipping and textile centre south of Shanghai - the kind of area seen as the hope of the Chinese economy.

[ image: An embarrasment to party leaders]
An embarrasment to party leaders
But reports say Mr Xu and his family took advantage of the money flowing into the city.

In one case he granted a licence to a local investment company which had paid a bribe of $100,000 to his son.

The company's manager subsequently embezzled large sums of money causing losses of assets estimated at $140m.

Mr Xu is also accused of abusing his power to help another local company obtain bank loans of some $8m.

The company gave his wife half a million dollars as a thank you, but is incapable of repaying the loans.


Mr Xu is now under criminal investigation. Earlier reports said at least 40 other officials in Ningbo were removed from their posts in connection with the affair which local media have called shocking.

The case is a reminder of the temptations for China's relatively low paid officials.

It also illustrates the kind of political pressures which contributed to the massive bad loans of China's state banking sector.

News of Mr Xu's removal cast a shadow over a key Communist Party meeting which pledged to press ahead with reforms of state enterprises in an attempt to repay some of those bad loans.

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