22 July 2018
Former Premier Li Peng's family is said to control a significant portion of China's power grid. Photo: Bloomberg
Former Premier Li Peng's family is said to control a significant portion of China's power grid. Photo: Bloomberg

Song case seen used to target Li Peng family, not He Guoqiang

The corruption case of Song Lin, the ousted chairman of state-owned conglomerate China Resources (Holdings) Co., could be used to rein in former premier Li Peng’s family, which controls a significant portion of China’s power grid, a source told EJ Insight.

China announced last month that Song has been sacked for “suspected serious violations of discipline and law”, in description that is usually a euphemism for corruption.

“Song’s case is connected with coal prices in Shanxi, where the coal prices have kept rising and made the electricity producers lose money,” said the source, who is an expert on the Chinese political issues.

Song’s actions in 2010 were “aimed at giving further support to the skyrocketing coal prices in Shanxi, so that electricity companies can get more subsidies from the government,” said the person, who did not wish to be identified.

The family and associates of Li Peng, who had served as China’s premier for about 10 years until March 1998, are said to control most of the power grid in the country. 

Li had won notoriety as he backed the use of force to quell the Tiananmen Square protests of 1989, resulting in the bloodshed in Beijing on June 4 that year. 

“The central government might want to use history to force the Li family to hand in the control of power grid in China,” the source told EJ Insight. Authorities might be sending the family a message: give up the economic benefits, or you have to come out and address the June 4 massacre, the person said.

China Resources bought stakes in Shanxi Jinye Coal Coking Group Co. back in 2010 for more than 10 billion yuan (US$1.6 billion). It took 80 percent stake in Jinye assets, including three coal mines that were touted as having the potential to yield 255 million metric tons of the resource, apart from some expenditure for the land use license.

The deal came under suspicion over its premium price for Jinye, and for causing huge losses in state assets. Song is suspected to be involved in the transaction and transfer of interests.

According to the EJ Insight source, He Guoqiang, the immediate predecessor of Wang Qishan as the Communist Party’s anti-graft commission’s head and who was the eighth most senior official in the party before his retirement in 2012, is unlikely to be the possible target for the next round of investigation, contrary to media reports.

“He might just be one of the related parties in Song’s case, but will not be the final target, as he is not supported by interested parties, which the central government is aiming at in the crackdown,” the source said.

– Contact the reporter at [email protected]


Ayishah Ma is a financial reporter on Greater China issues.

EJI Weekly Newsletter

Please click here to unsubscribe