Quick Graft Probe Urged

The top leadership has asked investigators to try to wrap up their investigation into China's biggest smuggling and corruption scandal since 1949 by the end of next month, a Guangzhou newspaper says.

Hundreds of anti-graft police from the Central Discipline Inspection Commission are still investigating the Yuan Hua smuggling scandal in Xiamen, Fujian province.

Set up by Lai Changxing, a Fujian migrant based in Hong Kong, the Yuan Hua group of companies is reported to have smuggled billions of yuan in goods, including diesel, telecommunications equipment and cars into the mainland in the past decade.

A report carried on the Guangzhou Daily website says investigators are trying to wrap up their investigation by the end of February. It also says that some of the suspects had been referred for prosecution. Zhang Maodong, former director of the Fujian Post and Telecommunications Bureau, was reportedly tried last week for helping to smuggle US$300 million worth of telecommunication equipment. Meanwhile, the Xiamen leadership will undergo a major reshuffle.

At the Fujian People's Congress, senior provincial and city officials have been briefed about the planned switches.

"Officials were ordered to ensure that anti-smuggling operations could be effectively carried out," a Fujian official says. "We were told that the investigation would be closed soon to minimize the negative impact on the normal operation of the Government," the official adds.

The Guangzhou Daily report says Qinghai Vice-Governor Jia Xitai will be transferred to Fujian, where he will serve as vice-governor, while Fujian Vice-Governor Zhu Yayan will become mayor of Xiamen.

Chen Bingfa, president of Xiamen Intermediate People's Court, is set to join the city party's standing committee and be in charge of the anti-corruption campaign.

It is reported that Beijing has asked Interpol to trace Lai, who is said to have fled overseas. Also believed to be on the run from police are Xiamen Vice-Mayor Lan Fu and his wife.

Three Gorges Graft Scam

Corrupt officials have embezzled RMB5 billion (US$600 million) set aside to relocate people out of the path of China's Three Gorges Dam project, state media reports.

"Five billion yuan for resettlement of residents in the Three Gorges Dam area was embezzled. Fourteen people were involved," the People's Daily says, giving no further details.

The huge scam - revealed by auditor general Li Jinhua as part of the RMB125 billion of state funds embezzled last year - represents around 12 percent of the budget of RMB40 billion set aside to relocate 1.2 million people at the dam site. It is the first time that details of corruption ensnaring the huge project have been revealed. The report also shows that the Ministry of Water Resources, which is in charge of the dam project, "illegally raised" RMB3 billion which was later "misused."

The RMB200 billion (US$27 billion) dam project - destined to become the world's largest hydroelectric dam when it is completed in 2009 - has been beset by a series of financial, environmental and social problems. Many people living in the area are reluctant to leave the banks of the Yangtze River to make way for the 632-square-kilometer (252-square-mile) reservoir, while experts have questioned the financial logic of the project and warned of the damaging impact on the environment.

Sina IPO Delayed

Beijing's Sina.com, which hoped to list its stock on the American Nasdaq exchange at the start of this year, has completed all the preparations needed to do so.

However, because China's Ministry of Information Industry (MII) has not expressed its position on this stock listing, Sina.com will postpone its initial public offering.

This case has forced other Chinese Internet companies wanting to list their stock abroad to adopt a wait-and-see attitude, Hexun Caijing (Homeway Financial News) reports.

Sources say recently that the brokers, China International Capital and Morgan Stanley Dean Witter & Co., have completed all preparations to list Sina.com on Nasdaq, and that the China Securities Regulatory Commission has given its approval in principle. But, MII, the ministry in charge of China's Internet sector, has yet to voice its opinion.

According to the newspaper, the relevant parties reportedly will seek the support of higher authorities, such as the State Council, to resolve this issue as quickly as possible.

Industry observers note that MII's current policies on Internet service providers (ISP) and Internet content providers (ICP) are not explicit, and that there are no clear regulations or limits on foreign firms' participation in these sectors.

Many foreign companies are already participating secretly in the operations of Chinese ICPs and ISPs, which is why the MII has not yet clarified its position on Sina.com's listing. Sina.com currently also has foreign investment.

According to other sources, MII believes that Internet stocks' global upsurge is a "bubble." It therefore is adopting a cautious policy concerning listings of Chinese Internet stocks.

The newspaper says China's officials fear the impact on the country's industrial structure if many Chinese enterprises hurry to launch Internet stocks and list them abroad.

China Limits Internet News

China's press regulators will introduce new regulations this month that explicitly control the release of news over the Internet. These new regulations reportedly prohibit Chinese websites from releasing news and permit them only to quote news reports published in domestic newspapers, the Hong Kong Ming Pao newspaper reports.

China's Internet companies are currently not allowed to hire reporters. The government has established a RMB1 billion (US$120.9 million) fund to help members of the traditional mass media establish their own websites.

An official in charge of the Propaganda Department of the Communist Party of China's (CPC) Central Committee recently emphasized that China's small newspapers and online sources of news must be well supervised.

Last year, high-ranking officials from the CPC Central Committee's Propaganda Department and the State Council's Press Office frequently reviewed the Internet editions of central government newspapers. These officials emphasized repeatedly that press reform should be accelerated and the mass media's Internet presence should be strengthened.

People in Chinese Internet circles say the predominant content of many Chinese websites' is news and information services, and that these Internet content providers' major source of income is from advertising and providing value-added news services. These observers also say if the government's new regulations prohibit these sites from releasing news, this will greatly restrict their growth.

Many national Chinese newspapers are actively preparing to launch websites focused on news and information services.

Chinese Internet observers are concerned that the traditional mass media's web presence will accelerate and that Internet companies not permitted to release news will lose their competitiveness. By the end of 1998, more than 120 traditional Chinese mass media companies had established themselves on the Internet. By mid-1999, this number had more than doubled.