Since the foundation of the People’s Republic of China in 1949, different local governments and organizations began to set up the liaison offices in Beijing to have “a direct and convenient connection with the central government”. However, some of those offices become the breeding ground of corruption.

In early February, two liaison offices of Xuchang and Luohe, Henan in Beijing were reported to buy 777 bottles of luxury liquor that turned out to be fake. Meanwhile, it was said that Weifang Municipal Government, Shandong closed its liaison office in Beijing. For a while, the corruption of the liaison offices in Beijing and the reason of its existence become the hot topics of the public.

On April 14, those two liaison offices in Beijing responded to the public for the first time, saying that they bought those luxury liquor on behalf of the local hotels and restaurants. It is said that the annual expense for Xuchang’s liaison office in Beijing is less than 300 thousand yuan (USD 43.9 thousand) while the one for Luohe’s liaison office is only 200 thousand yuan (USD 29.3 thousand). “We can not afford those luxury liquor by ourselves.” After this event, the governments of Henan Province, as well as Luohe and Xuchang, criticized the two liaison offices in Beijing.

Weifang closed all its 11 liaison offices in Beijing, Shanghai, Shenzhen and so on, which was praised by many people. Frankly speaking, the liaison offices have no legal and systematic reference. Some people even call those offices “systematic freaks.” Since the reform and opening up, the “freaks” have gradually become a hotbed for corruption. These liaison offices, people say, need overhaul.

Two Numbers

The liaison offices in Beijing have 60 years’ history, as old as the People’s Republic of China. The local government which earliest set up its liaison office in Beijing is Inner Mongolia in March 1949. At that time it was called the “Liaison Office of Inner Mongolia Autonomous Government in Beiping (former name of Beijing)”.

In the late 1990s, the number of liaison offices in Beijing saw an explosive increase. According to the data issued by Beijing Municipal Development and Reform Commission in 2007, there were 745 liaison offices of provincial and municipal governments in Beijing. In addition to the liaison offices of a variety of associations, enterprises and colleges, there might be over 10 thousand liaison offices in Beijing.

If each liaison office in Beijing has 1 million yuan (USD 146.5 thousand) as their funds each year, the amount of funds of all the liaison offices in Beijing will reach 10 billion yuan (USD 1.46 billion). According to the report, the liaison offices in Beijing cost 20 billion yuan (USD 2.93 billion) to improve the relationship with the superior departments.

Many local governments list those liaison offices in Beijing as public service units and give them the public service fees. Actually, those liaison offices play the role of the stationed offices of the local governments. At the beginning of the Reform and Opening up, the liaison offices usually played the role of receiving local officials and collecting information about recruiting investment for local governments and enterprises. Now, they act like “public affairs” dealer. The local governments have to build up good relationship with the relevant central departments if they want to have their projects and investment approved or introduce new projects and investments. The liaison offices play an important role in this link. Some local officials even consider the liaison offices as platforms for their promotion in official ranks. Some liaison offices even operate their own hotels or restaurants, like a company.

Though the human resources, funds and something else of the liaison offices in Beijing are under the supervision of the local governments they belong to, the local governments can not supervise their liaison offices in Beijing effectively because of the long distance. Somebody said: “the liaison offices are beyond the supervision of both the local and central governments.”

People who are familiar with China’s officialdom know that if the local governments’ officials are changed, the directors of their liaison offices in Beijing will also be changed. The new directors must be the trusted people of the new officials. Besides, the directors must be changed every three or four years, otherwise, “some problems may arise”.

Some big corruption cases in these years are also connected with the liaison offices in Beijing. For example, in Cheng Kejie Case (Cheng Kejie was the former deputy Party secretary of Guangxi Zhuang Autonomous Region and was sentenced to death for corruption in 2000), the deputy director of Guangxi’s liaison office in Beijing was also accused of taking briberies.

    The liaison offices of different provinces in Beijing

Government Men or Businessmen?

According to the official sayings, the main functions of the liaison offices in Beijing are reception and recruiting investments. A liaison office in Beijing usually has two function departments: a reception department and an economic information department.

“Reception” is the most regular function of the liaison offices in Beijing. When the local officials or their relatives come to Beijing, the liaison offices provide the whole-day service. All the expenses are afforded by the offices. According to the report, in the yard of Weifang’s liaison office in Beijing which has been closed, there are two Benz vehicles, two Cadillac vehicles and two Lincoln vehicles.

Another function is to recruit investments. People working for the liaison offices in Beijing spend most of their time in connecting with and helping the enterprises and the businessmen from their hometowns in Beijing. Those enterprises are also very willing to have good relationships with those liaison offices. In that way they can have more political resources and enjoy more favorable conditions if they invest in those provinces or cities.

To acquire the rare resources and investment projects from the state ministries may be the most important and most realistic function of the liaison offices in Beijing. At the end of 2005, Li Jinhua, former director of the National Bureau of Statistics criticized some liaison offices which spent money in improving the relationships with the state ministries.

As of the tax reform in 1994, the local governments have less money. Every year the central government will give different local governments some money to help them finish the targeted political goals, like social security, environmental protection, fighting against natural disasters and so on. However, this kind of money is limited in amount and no scientific ways are used in the distribution. How to distribute those money mainly depends on people, who will give more money to the local governments having good relationships with them. Therefore, those local governments set up their liaison offices in Beijing, focusing on improving the relationships with the state ministries.

For example: last November when the central government issued the 4-trillion-yuan stimulus package, some local governments’ liaison offices in Beijing quickly began their actions, going to the National Development and Reform Commission to ask for more investments into their own provinces or cities. It was reported that once upon a time different people and cars crowded the areas in front of the National Development and Reform Commission.

In addition, those directors of the liaison offices in Beijing, who are the trusted subordinate of the senior officials of local governments, collect the information about the situation of officialdom. Some local officials even use the liaison offices in Beijing to pave the way for their promotion by money and something else.

Some liaison offices even play the role of stopping ordinary people who appeal to the higher authorities. According to the source, during the National People’s Congress and National People’s Political Consultative Conference, the liaison offices usually try their best to stop the ordinary people who appeal to the higher authorities to prevent the “images” of their local governments.

“They are both the government men and businessmen,” said Wang Xiaofang, the writer of a popular novel about the liaison offices in Beijing. In order to make up the deficient funds, most of the liaison offices in Beijing run hotels and restaurants, selling their local products or doing business in the name of their local governments. The deficit, if any, will undoubtedly be offset by the local governments.

If you try searching “liaison offices in Beijing” in Google map, you will see a dense crowd of point coordinates, most of which are the hotels or restaurants operated by the liaison offices in Beijing. Those hotels are at least three-star business hotels. The “seven-province yard” is an area having the most liaison offices in Beijing. The liaison offices of Jiangxi, Hunan, Fujian, Shandong, Zhejiang and Jilin in Beijing have opened their restaurants here, selling the food with their local favors and they are said to have good performance in the business.

The liaison offices in Beijing also “play an important role” in pulling the domestic demand of Beijing. The 2003 Beijing Industrial Statistical Yearbook showed people how flourishing the liaison offices’ businesses are.

To Be or Not to Be?

For the liaison offices in Beijing, the question of “to be or not to be” has been under discussion for long.

Weifang government closed all its liaison offices, which has received a lot of support from the public. Some media commented that the previous function of the liaison offices, which is the public affair liaison, can no longer be realized. They gradually become the hotbed for corruption. Closing the liaison offices is a rational and clever movement, which is worth being referred to and being spread. Some experts think that the liaison offices are the product of the period of planned economy. In the current period with advanced information technology and consummate market economy system, those offices have no necessity to exist. The intermediary agents like the chamber of commerce also have the functions of recruiting investments.

However, some people say that to set up the liaison offices in Beijing is still the cheapest way for the local governments to have the largest return. Yang Chaobin, Director of Sichuan’s liaison offices in Beijing even said: “closing the liaison offices in Beijing is a loss for both the local governments and central government.”

After the criticism of Li Jinhua over those liaison offices, in 2006 there was said to be a large reform to the liaison offices in Beijing. It is said that the Government Offices Administration of the State Council was stipulating a complete reform program. To reorganize the liaison offices in Beijing was also listed into the four main tasks of Central Discipline Inspection Commission that year. In 2007, Chengde City, Hebei Province became the first local government which actively closed its liaison office in Beijing. The liaison offices seemed to be facing the largest survival crisis in fifty years.

However, three years passed and no real actions were seen. The liaison offices in Beijing still have their good time. The reform to those offices proved to be nothing but words. Some one said that it is difficult to investigate the corruption of the liaison offices in Beijing. The order of closing the liaison offices still has no way to be found. People have to say that the liaison offices in Beijing have a solid foundation.

The root of liaison offices in Beijing is the concentration of power and resources. The systems of tax distribution and the transfer payment between the central and local governments somewhat amplify the dependence relationship between this kind of power and resource distribution. Meanwhile, this kind of power and resource distribution is not apparent and fair. There are no regular definition in the local and central governments’ difference of finance, affair and human resources. Those local governments who are good at speaking sweet words or have good relationship with central government can get more investments and projects. This is the real reason of why those liaison offices in Beijing exist. Li Jinhua advised to reduce the transfer payment of the special funds and exert regulations on it.

Some people think that the liaison offices in Beijing are not the source of corruption and corruption is not the only problem of liaison offices in Beijing, though people are used to connecting the word “corruption” with the liaison offices in Beijing. If there is a deep reform to the management and approval power of the budget funds and transfer payment, the foundation for the liaison offices in Beijing will not collapse.

Wang Xiaofang said in his book: “This thing (liaison office in Beijing) can not be closed. If one day people can not hear the words of ‘liaison office in Beijing’, well, it must be given another name and still stands here.”

A hotel run by Jiangxis liaison office in Beijing