High-Level Corruption Threatens China’s Reforms, Zhao Warns

BEIJING —  Communist Party leader Zhao Ziyang, in his toughest speech to date, has said that corruption among officials threatens the future of China’s reforms.

In remarks published Saturday in the party newspaper People’s Daily, Zhao said some Chinese do not believe in the party’s commitment to root out corruption because it had sometimes failed to carry out its pledges.

“Now there is indeed corruption among some party and government officials. If we do not take effective measures to control and overcome it, this phenomenon will spread and deepen,” Zhao told a high-level meeting Friday. “If we let matters drift, the new economic order will not be established, the reforms will not continue.”

Zhao’s public attack on corruption was his strongest since taking office last year.

Accompanying the report of Zhao’s speech on the front page of the People’s Daily was a report announcing the shake-up of one of China’s most powerful state enterprises, which has close links with senior leader Deng Xiaoping.

The report said Kang Hua Development Corp. has been ordered by the state council to “clear up and rectify itself.”

The paper did not directly accuse the corporation of malpractice, but Chinese business sources said the message was clear--the party, after years of prevarication, wants to check growing corruption and is starting close to home.

Kang Hua was founded last year and given tax breaks because it donates some of its profits to China’s Welfare Fund for the Handicapped, which is headed by Deng Pufang, Deng’s crippled son.

The People’s Daily said the corporation would be stripped of its tax privileges and ordered to cut its ties with the handicapped fund and close its subsidiaries in Hong Kong.

It would also lose its right to do import-export business and be forced to divorce itself from many of its so-called subsidiaries, the newspaper said.

The People’s Daily said it had 58 direct subsidiaries and 113 branches at a lower level and was linked with an unspecified number of firms trading under its name.