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Politics

The fall of the Shanxi Gang

Disgraced top official Ling Jihua's childhood home still stands in a sleepy village in Shanxi Province.

Shanxi Haixin Iron and Steel Group was once the biggest privately owned steelmaker in China's central province of Shanxi. Its plant in the city of Yuncheng is now deserted.

     In its heyday, a never-ending stream of large trucks, loaded with coal for fuel, passed through the facility's gate. But Shanxi Haixin collapsed in November 2014, leaving 10 billion yuan ($1.6 billion at current rates) in debt. Problems in China's shadow banking system -- a web of largely unregulated financial institutions -- had come to light the previous year. Haixin was apparently tangled in that web.

     Many regional governments rushed to shield local companies from shadow banking-related turmoil. But in Shanxi Province, help was not forthcoming for many coal-related businesses.

     These companies were left out because the so-called Shanxi Gang -- a faction led by central government figures from the province -- is among the three main targets of Xi Jinping's anti-corruption drive. The other two are known as the security clique and oil clique. These factions have close ties to the "tigers" -- high-ranking officials seen as threats to the president's power.

     Zhou Yongkang, a former Politburo Standing Committee member and security chief, was a tiger linked to the powerful oil and security cliques before he was arrested in December.

     The order to cut off the Shanxi Gang from funding came from Wang Qishan, head of the Communist Party's Central Commission for Disciplinary Inspection. When Shanxi Gang insiders learned Wang had his hand on the lever, they knew the jig was up; his reputation as the driving force of Xi's anti-graft campaign preceded him. Officials on the take were told to cooperate with investigators.

     The Shanxi Gang took a direct hit in December, when news emerged that Ling Jihua, a key political adviser to former President Hu Jintao, had been purged.

     Ling, 58, was a central figure in the Shanxi Gang. He had joined the Communist Youth League in his native Shanxi Province after working in a printing factory. He rose to prominence with the support of Hu, who was also once a member of the youth organization.

Ling Jihua

     Ling's childhood home is in a sleepy village about an hour's drive from downtown Yuncheng. The row of houses where he grew up is now marred by crumbling mud walls. An elderly man who still lives there remembers the young Ling as a "well-mannered, earnest child."

     "I cannot fathom how that kid grew up to be embroiled in this mess," the man said.

     Unlike Xi and other "princelings" whose parents were high-ranking government officials, many elites who started out in the youth league hail from more humble stock. Some claim this makes them more susceptible to bribery.

     Yet not even princelings are safe. With Shanxi having become virtually synonymous with corruption, some speculate that the province's governor, Li Xiaopeng, could be the next target.

     Many attribute Li's rise to the influence of his father, former Premier Li Peng. At the local legislature Jan. 28, Li toed the party line. "We must stop the spread of corruption resolutely," he said.

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