The State Council has demonstrated its determination to regulate the coal industry. It has ordered owners of substandard mines to improve conditions to meet safety requirements by the end of the year or face closure.

It has also decreed that local government or State-owned enterprise (SOE) officials with personal investments in mines must withdraw their stakes by September 22 or suffer severe punishment.

The decision reflects the central government's desire to address the matter after mining disasters have killed 9,000 workers in China in the last 20 months.

Extensive official corruption was exposed in the recent Daxing Mine tragedy in southern Guangdong Province that left about 120 people trapped in flooded shafts.

Li Yizhong, director of the National Bureau of Production Safety Supervision and Administration, stressed that all localities should strictly enforce the new rules. No dereliction of duty will be pardoned.

Although several regulations have banned Party members and public servants from having personal interests in businesses, the practice is still widespread in the coal mining industry and other areas.

Many officials have used their power to acquire personal stakes in State-owned mines or enterprises that have been privatized, often at a discounted price. Some SOE chiefs have subcontracted their business to relatives and friends, causing a huge loss of State assets. At many bankrupt SOEs, hundreds or even thousands of poor workers were laid off while the personal wealth of a few company officials swelled.

Officials have also cashed in on China's stock and property markets by opening deals to their business partners or families. No wonder many on China's rich list have previously worked for the government or large SOEs, or members of their family have similar connections.

With personal interest in companies that are usually under their jurisdiction, these officials are assuming the role of both player and referee. They abuse their power to gain advantage in competition, such as access to business deals, information, markets, bank loans and even preferential treatment in taxation.

Businesses are usually happy to offer well-paid jobs to current or retired government officials as long as they can help them get rid of business rivals and gain an edge in competition. In some areas these officials are called "red hat" business people, referring to their government background.

By abusing their power for personal gain, these officials are eating away at government credibility in the eyes of ordinary people. Government efficiency has also been seriously corroded. How can an official work impartially and wholeheartedly when he has personal business to take care of?

Entertaining a clear conflict of interest, these officials have created an uneven field on which they are happy to compete. Fair competition no longer exists in their area and the market economy that has been established is undermined.

Zhan Xialai, Party secretary of Wuhu, Anhui Province, was a well-known "red hat." He quit his job a year ago as chairman of Chery Automobile after extensive media exposure.

The State Council's decision is certainly a big step towards making our mines safer and officials cleaner. But official involvement in business should be banned in many other sectors too.

(China Daily August 25, 2005)