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September 10, 2014

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At last, a solution to ‘corruption on wheels,’ but car auctions must be open to public

FOR years, official cars have been a scourge of corruption.

Almost every government agency, public institution or state-owned enterprise is amply supplied with its own fleet of official cars.

Although these cars are ostensibly meant for work only, many have been effectively turned into the private transports of cadres and their family.

Widely known and lambasted as the culprit of “corruption on the wheels,” the de facto privatization of official cars is such a financial drain that over the years central government authorities have tried, repeatedly yet unsuccessfully, to curb their unregulated use.

Past efforts foundered partly on cynical resistance from vested interests, partly on the failure to address a key paradox: How could they put the brake on official cars without cutting their numbers?

This conundrum seems to be finally solved with a reform package released by the General Office of the Communist Party of China and the General Office of the State Council in mid-August. The package comprises two edicts stating that except for civil servants of deputy ministry-level and above, others should swap their cars for allowances.

According to a report by Guangzhou Daily on September 2, barring a number of cars that officials are allowed to keep, the rest will go under the hammer. Central government agencies alone will have to auction off an estimated 5,000 surplus vehicles, said the report.

The reform is compared to a stone that kills two birds. For one thing, it battles “corruption on the wheels”; for another, it promises to boost state coffers by slashing millions, if not billions, in fuel, maintenance and labor (driver) costs.

Absurdly low prices

Recently, the Ministry of Commerce released figures indicating that sales of government vehicles in auctions totaled 1.13 billion yuan (US$180.8 million) in the first half of this year, with an increase of 50 billion yuan year on year, or a growth rate of 79.4 percent.

As the new reform package takes effect, the number of cars to go on the auction block will rise more dramatically, said Shen Danyang, spokesman of the ministry.

From a chronic headache that defied an easy solution to what now appears to be a national trend, the downsizing of official car fleets is a reminder, yet again, that reforms, once implemented with determination, will proceed swimmingly.

There are caveats, though. It has been reported that official cars occasionally sold like write-offs that fetched only a tenth — or even lower — of what they were originally worth.

In July 2012, Zhongmu County, Henan Province, put 43 official cars on auction, which grossed 391,100 yuan, averaging a paltry 9,000 yuan per unit. Only 40 people made a bid. Such low attendance is guarantee of absurdly low prices.

If that’s not eye-popping enough, the fifth official car auction held in Wenzhou, Zhejiang Province in 2013 will certainly surprise us even more with the staggering discounts available. A Mercedes-Benz sold for a mere 24,000 yuan. A fire-sale, one might well say.

And in an auction on October 24 in Tongchuan City, Shaanxi Province, a Volkswagen Santana sedan — one of the earliest, Spartan-looking models produced by a joint venture in China — went for as low as 600 yuan, dubbed by many as a “cabbage price.”

No wonder bargain hunters are fixated on these auctions. It appears that pies sometimes do fall from the sky. But that they fall anyway is no sure bet that everyone stands an equal chance of getting hit. Guangzhou Daily revealed that 89 percent of these auctioned cars were purchased for less than 50,000 yuan, and a majority of buyers turned out to be their original “owners.”

The plummet in resale prices suggests that many auctions might be non-competitive, attended largely by insiders; and information such as when and where they were held was not made fully public — a necessity if they are to be relevant.

Many also argue that a Benz and a Santana going for 24,000 yuan and 600 yuan, respectively, constitutes a criminal loss of state assets.

Observers note that besides publicizing information about forthcoming auctions, ensuring fairer access for all and encouraging popular participation, the authorities could do a lot more to prevent auctions from becoming formalities that benefit only a well-connected few. For instance, ombudsmen need to monitor auctions to avoid “insider trading” or anything fishy, they suggest.

The reform of official cars is the latest in a series of moves aimed at promoting austerity. It is a belated but commendable development.

But if its fruits are enjoyed exclusively by privileged insiders, it cannot be touted as a sweeping one.




 

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