Chinese Bullet Train Corruption Scandal—Supplies Procured via Officials

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Chinese media recently reported on the lack of a bidding process for suppliers of China's railway industry. Contracts are being directly awarded to suppliers who rely on their connections with officials. This has led to inflated prices and sub-standard parts.

According to state-run media, parts for China's high-speed rail network were not procured through open bidding, but instead through suppliers directly appointed by the regime. Many of these suppliers have links with officials in the Railway Ministry or other parts of the administration.

The supplier directory of the CSR Corporation, the company that makes the high-speed trains, reveals suppliers with obvious links to transport officials. For example, the ex-wife of the director of the transport bureau, Zhang Shuguang, imports vacuum toilets for the trains.

The chief of one university in Zhejiang says many industries in China are controlled through personal relationships with high-level communist officials known as "princelings." They practically inherited their positions through their family connections and control large parts of Chinese industry and government. His identity is withheld for his protection.

[Zhejiang University Chief]:
"The railway (ministry) is just a big pile of corruption...All finances of China are in the hands of princelings. It's the third generation descendants of those communist leaders of the Yan'an period. Every financial transaction they do involves hundreds of millions of yuan. The current abundance of wealth in Beijing is because of them."

This reliance on personal relationships rather than competition and bidding between suppliers has led to China's trains being produced at sky-high prices. The domestically manufactured parts now cost almost as much as imported parts.

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