1 Rising gas prices in Chongqing and public fury reveal local gov’t troubles
Residents of Chongqing, a directly-administered municipality, have been gradually lodging complaints on government platforms since the start of 2024 about their skyrocketing gas bills after the installation of “smart gas meters.” In April, the complaints and their increasing number became a hot topic of discussion on Chinese social media platforms.
Notable complaints include:
- Some residents alleged in videos that their “smart gas meters” continued to register usage even though there were gas shutdowns in their area.
- Other residents complained their gas bills in March surged to 270 yuan, up from an average monthly bill of around 50 yuan previously.
- One resident shared on social media a gas bill for 6,170 yuan, and noted that their previous month’s gas bill was only 463 yuan.
April 12
Chongqing Gas Company responded to the gas meter complaints with the following:
- The installation of new meters is in accordance with national regulations for replacing expired gas meters.
- All new gas meters were subjected to qualified inspections by the authorities.
- A fast-track service channel for on-site gas meter rechecks has been opened to address resident feedback about inaccurate metering and excessively high gas bills.
- No issues of metering inaccuracies were found upon rechecking gas meters.
April 13
The Chongqing municipal government held a press conference specifically to address gas meter-related matters.
Local officials made the following remarks:
- The local government summoned key gas companies to verify the situation and investigate the reasons behind the gas bill increases.
- The local government has launched comprehensive inspections on gas meters.
- The local government urged gas companies to open fast-track service channels that will provide service free-of-charge.
- The local government has formed four special inspection teams to investigate key companies like Chongqing Gas and Kaiyuan Gas (a subsidiary of PetroChina), as well as conduct a three-year retrospective review.
Tu Xingyong, a deputy director and spokesman of the Chongqing Municipal Economic Information Commission, said that the authorities will urge enterprises to promptly refund residents who have been overcharged for gas in cases where there were billing errors.
April 15
Chongqing Gas shares opened sharply lower, fell by as much as 5 percent during intra-day trading, and closed down 3.06 percent.
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Mainland media reported that the State-owned Assets Supervision and Administration Commission of the State Council became the actual controller of Chongqing Gas in 2023. Also, the volume of gas sold by Chongqing Gas accounts for 30 percent of local consumption.
In the first three quarters of 2023, Chongqing Gas reported:
- Operating revenue increased by 14.72 percent year-on-year to 7.166 billion yuan.
- Operating profit decreased by 27.14 percent year-on-year to 304 million yuan.
- Net profit decreased by 27.5 percent year-on-year to 274 million yuan.
After providing free replacement of smart gas meters in the fourth quarter of 2023, Chongqing Gas reported:
- An increase in gas sales volume of just 0.69 percent year-on-year.
- Operating revenue increased by 23.59 percent to 3.08 billion yuan.
- Operating profit increased by 1127 percent to 261 million yuan.
- Net profit increased by 824 percent to 219 million yuan.
April 19
1. Chongqing Gas Group announced that their senior executives decided to remove Che Dechen from the positions of general manager and secretary of the Party Committee of the company. The Chongqing Gas board of directors also removed Che from the position of chairman of the board.
2. The Chongqing local government said in a press conference that a joint investigation team had confirmed instances of overcharging and other billing discrepancies as reported by some residents by Chongqing Gas Group and other gas companies.
The Chongqing authorities added that there had been 1,425 cases of increased gas consumption “errors” involving 500,000 cubic meters of gas from January to April 2024.
Chengdu residents also complaint about abnormal gas bills and usage
Residents in Chengdu, the capital city of Sichuan, started filing complaints on government platforms and airing their grievances online from April 14 as the Chongqing gas situation was brewing. Residents also claimed that their gas bills have shot up since their gas meters were replaced in 2023.
Prominent mainland writer Li Yaling wrote in a post on Chinese social media on April 17 that the gas meter in her Chengdu showed that she used 500 cubic meters of gas in the two months that she was on vacation in Hainan and there was no one in her house. Li added that this was not an isolated phenomenon in her community. Li’s post became the top search item on Baidu on April 18.
Mainland media reported that an elderly Chengdu resident had been charged 15,000 yuan for gas over four months. Upon inquiry, the gas company claimed there was “no issue found upon inspecting the meter” and that the resident’s abnormally high gas bill was them being charged for “gas consumption from 2011 till February 2023” that were not originally registered due to a “transmitter malfunction causing delayed transmission of gas volume” to the company.
On April 20, the Chengdu administration for market regulation posted on its official WeChat account that it had received a total of 1,996 complaints regarding gas issues as of April 19 and had found problems with gas companies. The Chengdu regulator added that it would require relevant gas companies to issue full refunds on any confirmed cases where gas fees were overcharged. However, the regulator also said that it did not find issues related to gas meter measurements and quality, gas quality, or manipulation of gas meter measurements through remote control.
Public utility charges adjusted in many areas
Various regions in mainland China started increasing public utilities charges from 2023, according to mainland media reports:
- From the second half of 2023, 125 cities and counties, including Shenzhen, Fuzhou, and Zhenjiang, announced plans to raise prices for piped natural gas.
- From the second half of 2023, multiple regions including Beijing, Shanghai, Guangzhou, Chongqing, Jiangsu, and Sichuan began implementing “time-of-use electricity pricing.” This led to provincial-level electricity transmission and distribution pricing seeing increases of up to 30 percent.
- Water prices in Shanghai saw significant increase in December 2023, with the first-tier water usage price rising by 20 percent and the highest tier rising by 50 percent.
- Guangzhou announced a reform plan in early April 2024 that led to water usage prices going up by about a third. Small and medium-sized cities such as Xianyang, Wuhu, and Qujing also began rising tap water prices.
Our take
1. It is likely that the gas companies in Chongqing and Chengdu resorted to administrative sleight-of-hand and various dishonest measures, or so-called “technical means” (技術手段), to take advantage of the replacement of gas meters to overcharge local residents. However, the gas companies appeared to have miscalculated in their scheme to make a quick buck using “technical means” as outrageously high gas bills led to a huge public outcry and forced the local authorities to step in.
Gas companies in China have resorted to “technical means” to bill higher charges to residents since the late 1990s. According to information circulating on Chinese social media, gas companies have been known to:
- Increase the pressure of gas inside pipelines to accelerate the rotation of gas meters.
- Adulterate natural gas with other gasses to reduce its heating value.
- Increase pipeline pressure by reducing the diameter of the gas meter inlet pipe.
- Use the new “smart gas meters” to alter the pulse coefficient of pipelines and therefore increase the bill charges.
- Some Chinese netizens suspect that recent residential gas explosions in mainland China could be related to this “technical means” tactic by gas companies.
Other utility companies in China are also known to employ “technical means” to boost their profits. For instance, the PRC authorities published unusual data showing that more electricity was consumed than generated in China in 2023. Data from the National Bureau of Statistics showed that China generated 807.32 billion kilowatt-hours of electricity from January to November 2023 while the National Energy Administration showed that 836.78 billion kilowatt-hours of electricity was consumed in China during that same period.
While observers suspected that the nearly 30 billion kilowatt-hours of excess electricity consumption was likely the result of power companies employing “technical means,” CCP propaganda outlets explained that the unusual data was due to inconsistencies in the statistical methods of the NBS and NEA. A month later, the NBS announced that the total electricity generation for the whole of 2023 was 9.46 trillion kilowatt-hours and the NEA announced that total electricity consumption for the same period was 9.22 trillion kilowatt-hours, a development which suggested that the PRC authorities resorted to its usual statistical fudging to cover up an abnormal phenomenon.
2. The Chongqing local government’s handling of the gas issue appears to be an attempt at focusing on more trivial aspects of the development to cover up more serious matters.
The Chongqing authorities moved to investigate gas companies and likely pressured Chongqing Gas Group to remove its general manager as a way to pacify the public and give the impression that it was addressing the grievances of residents. However, the Chongqing municipal government did not mention that Chongqing Gas comes under the direct oversight of the State-owned Assets Supervision and Administration Commission of the State Council. Put another way, the CCP authorities appeared to have sacrificed local officials and interests to protect central interests.
The Chongqing local government’s investigation also only disclosed the “errors” of increased gas consumption for the first four months of 2024 while ignoring the fourth quarter of 2023. Coincidentally or otherwise, Chongqing Gas saw its net profits in Q4 2023 go up by more than eight times. Meanwhile, Chongqing Gas overcharging residents for 500,000 cubic meters of gas in the first four months of 2024 would only allow the company to bring in an additional 1.1 million to 1.35 million yuan per its current rates. The discrepancy in the figures hints at a cover up by the local authorities to downplay the scandal.
3. The CCP authorities generally try to make public utilities affordable to maintain social stability. This means that local governments often use subsidies to keep utility charges from becoming too high. For instance, Hebei Province faced severe gas shortages during the winter of 2022 due to excessively high natural gas prices and local government subsidies being delayed. The high gas prices adversely affected gas companies and the resulting gas shutdowns and restrictions caused difficulties for local residents. Eventually the central government and the Hebei provincial government eased the gas shortage by issuing a special subsidy of 800 million yuan in early 2023.
The recent phenomenon of gas companies in Chongqing and Chengdu resorting to “technical means” to boost profits suggests that they may not be receiving sufficient subsidies from the local authorities. Local governments in general are now in a weaker position than before to issue subsidies due to the adverse impact of three years of “zero-COVID,” the rapid deterioration of the Chinese economy prompting belt tightening, and the real estate debt crisis affecting local government revenue.
4. Aside from dealing with difficulties in issuing subsidies, local governments in many areas could have been increasing utility charges since 2023 partly as a means to drive inflation by rising living costs and counteract deflation in the Chinese economy. In theory, inflation would lead to increased tax revenue for local governments and dilute government debt. Local government debt in the PRC is particularly perilous; the central government last year approved the issuance of 1.4 trillion yuan in refinancing bonds and 1 trillion yuan in special government bonds in what appears to be a move to delay the triggering of local government debt risks.
However, we believe that the CCP authorities’ approach of raising public utility fees to ease China’s economic woes is unlikely to be successful. Deflation in China is due to residents and businesses earning reduced income or revenue and their unwillingness to spend or invest over pessimism about China’s prospects. Increasing utility fees could alleviate some government fiscal pressure but will not significantly impact total social consumption. On the contrary, rising living costs for individuals and operating costs for businesses over higher utility fees will further suppress consumer demand and deter businesses from investing. Beijing could also see increased social contradictions and instability as public discontent grows over costly utility charges, and would have to correspondingly spend more scarce funds and resources to “maintain stability.” Ultimately, the CCP regime’s crises will be further intensified, not alleviated, if it is indeed looking to raise utility costs as a novel way to curb deflation.
2 Is the Xi leadership targeting ‘political swindlers’ in the Party’s highest ranks?
Study Times targets ‘political swindlers’
April 12
Study Times, the Central Party School’s official newspaper, published a commentary by Central Party School professor Lü Pin titled, “Resolutely Eradicate the Breeding Ground for ‘Political Swindlers’” (堅決剷除“政治騙子”生存土壤).
The commentary opened by citing cases involving officials who “participated in factional activities within the Party and associated with ‘political swindlers’” such as former PRC justice minister Fu Zhenghua and former Shanxi provincial public security bureau director Liu Xinyun.
The commentary stressed that the term “political swindler” has appeared multiple times in the notices of officials who were investigated and dealt with by the Central Commission for Discipline Inspection and the National Supervisory Commission. Also, Party Central has intensified efforts to crack down on the problem of befriending and acting as “political swindlers,” and has demanded the resolute eradication of breeding grounds for “political swindlers.” The commentary added that Xi Jinping emphasized the need to “severely crack down on so-called ‘well-connected’ ‘political swindlers’” during the second plenary session of the 20th CCDI.
The commentary said that “political swindlers” are a typical manifestation of the intertwining of political and economic issues. The persistence of the problem can be attributed to the influence of “clique culture” and “gangster culture” in the Party. The commentary noted that a minority of Party members and officials have blind faith in “finding shade under a big tree” (i.e. looking for political patrons), are keen on weaving “relationship webs,” and tirelessly engage in factionalism, forming cliques, and pursuing personal gain.
The commentary urged all Party members and cadres, and especially senior cadres, to maintain a “firm political stance” and be “politically clear-minded and astute” (政治上的清醒人、明白人). Also, the CCP authorities will persist in simultaneously investigating misconduct and corruption on the basis of sternly cracking down on various types of “political swindlers.” Concurrently, the CCP authorities will eradicate the institutional conditions that foster the breeding of “political swindlers.”
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The Study Times article attracted much attention and discussion in Chinese-speaking circles. Some commentators wonder who exactly the piece was referring to when referring to “political swindlers.” In particular, commentators noted that Fu Zhenghua was a ministerial-level official and the “political swindlers” that he was aligned with had to be at the sub-national level or higher.
Yuan Hongbing, an Australia-based Chinese dissident and jurist with channels to sources inside the CCP, said in a program on New Tang Dynasty Television that aired on April 19 that people are guessing based on the actions taken by CCDI Party secretary Li Xi that the “political swindler” is likely the Politburo Standing Committee member and current National People’s Congress head Zhao Leji.
Rumors about CCP elite politics
April 10
Yuan Hongbing told Dajiyuan (Chinese-language edition of The Epoch Times) of information he had received from Party insiders about certain developments in CCP elite politics.
Yuan said that the Third Plenum of the 20th Party Congress has been “indefinitely postponed” because Xi Jinping originally intended to “thoroughly negate” Jiang Zemin’s political line at the plenary session and present his own version of “reform and opening up” that incorporates Maoist ideology. However, Xi allegedly lost the “credible basis” needed to establish this new direction after incidents involving Li Shangfu and Qin Gang, and had to temporarily postpone convening the Third Plenum.
Yuan also said that Cai Qi and several secretaries of the CCP Central Secretariat, including United Front Work Department head Shih Taifeng, Propaganda Department chief Li Shulei, and public security minister Wang Xiaohong had jointly proposed to Xi about a year ago that he should initiate a new internal Party line struggle at the Third Plenum to address the strong public dissatisfaction towards the CCP and its tyranny. The new Party line struggle would involve holding Jiang Zemin accountable, including attributing to Jiang’s political and economic policies all of the political, economic, and social crises (corruption, economic decline, etc.) plaguing the PRC. According to Yuan, Xi allegedly praised the proposal because it meant that he could establish himself as a leader on par with Mao Zedong by negating Jiang.
Yuan said that Xi had “temporarily shelved” his plan to solely blame Jiang for all of the corruption in the Party because he would lack credibility as nearly 200 high-ranking officials in the military and defense industry were recently exposed as being corrupt. However, Yuan believes that Xi will not completely abandon his idea of holding Jiang accountable because “criticizing Jiang is a political way out for Xi.” Yuan also believes that Xi could reconsider the issue after he is done with resolving the current wave of cases of disloyal and corrupt officials within his faction.
April 19
Yuan Hongbing said on a New Tang Dynasty Television program that he was informed by Party insiders that Xi Jinping has come to believe that there are “political swindlers” within the highest echelons of the leadership ranks of the 20th Central Committee. While it is unclear who the “political swindlers” are, Yuan said that it is popularly believed that Zhao Leji is one of them. In particular, the CCDI under Xi ally Li Xi has been looking into anti-corruption cases that are linked with Zhao and his subordinates, including the construction of illegal villas in the Qinling Mountains and China Evergrande.
Yuan added that Xi Jinping is currently “extremely isolated” within the CCP and its system, having offended the Party princelings (“second-generation red”), the class of administrative officials nurtured by Wen Jiabao and Li Keqiang, and the private entrepreneurs who fear Xi’s adherence to Maoist orthodoxy. Yuan further observed that Mao Zedong at least had a bunch of fervent supporters, but no one from officials to the general public holds favorable views of Xi. Yuan believes that this is Xi’s “greatest crisis” and why “double-dealers are rampant” in the CCP system.
Yuan said that those who are “anti-Xi” in the CCP system are currently divided into two ideological camps. One camp wants to reverse the “personal dictatorial regression” under Xi and return the PRC to the “reform and opening up” policies of Deng Xiaoping and Jiang Zemin. The other camp is more “progressive” and has growing nostalgia for the reforms of Hu Yaobang.
Our take
1. The call to target “political swindlers” within the CCP in the Study Times article by Central Party School professor Lü Pin does not seem to be a new targeted political mobilization effort directed by the Xi leadership. For one, CCP propaganda outlets have not been promoting the elimination of “political swindlers” and officials are not being indoctrinated in the concept, unlikely when Xi Jinping rolled out political theories like the “Two Safeguards” and “Two Establishes,” as well as political campaigns like “self-revolution” and “common prosperity.” Thus, it is more likely that the “political swindlers” commentary was a one-off thought piece meant to complement the broader anti-corruption theme rather than the Xi leadership signaling to the Party that highly consequential purges are coming.
That being said, the attention given to the commentary by the overseas Chinese community and how intensely it is being discussed could have some future influence on the dynamics of CCP elites politics and factional struggle. For instance, the “Objective Evaluation of Xi Jinping” (客觀評價習近平) article that made the rounds in early 2022 reflected the state of factional struggle within the CCP at the time and was almost certainly an attempt at political mobilization against Xi Jinping.
2. Yuan Hongbing’s Party insider revelations cannot be independently verified. Some of the information, however, does correspond with our observations of political dynamics within the CCP.
We believe that the main reason why the Xi leadership has been unable to convene the Third Plenum of the 20th Central Committee is because Beijing currently has no good solutions for fixing the economy and is waiting on favorable developments (such as the Fed cutting rates) before holding the plenary session to roll out economic rescue policies. While it cannot be completely ruled out, the idea that Xi is not going to hold the Third Plenum until he has decided on whether or not to proceed with denouncing Jiang Zemin and his “incorrect political line” is somewhat implausible given that the regime’s economic problems currently far outweigh the political ones. Of course, “thoroughly negating” Jiang could suddenly become the top priority for Xi in the event of a political emergency, such as if Xi survives a serious assassination attempt or a coup.
Barring political emergencies, Xi does not have sufficient “quan wei” at the moment to blame Jiang and his faction for all of the CCP’s ills without running into stiff opposition and inviting trouble upon himself. First, Xi is currently in the process of cleaning up corruption within the ranks of his own camp, and cannot immediately target Jiang and the Jiang faction without being scrutinized himself. Second, as we have observed on numerous occasions and as Yuan Hongbing has pointed out, Xi is becoming increasingly isolated within the Party as he undertakes the anti-corruption campaign and other power consolidation measures, and would struggle with any attempt at rallying support to hold Jiang Zemin accountable for all of the CCP’s ills.
It is possible that the Xi camp is targeting Zhao Leji and other “political swindlers” in the highest echelons of government. However, we believe that Xi Jinping will only officially move in on Zhao and other senior cadres in the remnant Jiang faction if he has decided to completely abandon the CCP and set China on a different path. This is because openly pursuing Zhao, who is an active member of the Politburo Standing Committee, the head of the National People’s Congress, and a former CCDI secretary, is tantamount to criticizing Jiang Zemin in terms of its political significance. And if Zhao goes, then Xi would naturally also have to take out the entire cabal of “political swindlers” to show that he is truly committed to “self-revolution” and taking the anti-corruption campaign into “deep-water territory.”
We believe there is currently a low chance that Xi Jinping goes after Zhao Leji. But that does not mean that the Xi leadership is not possibly laying the groundwork to do so when investigating Zhao’s associates in the process of anti-corruption investigations. Also, Xi’s reform measures and attempts to hold Jiang Zemin accountable for the CCP’s crimes are unlikely to succeed if he is not concurrently prepared to dismantle the Communist Party and change China’s political system.
