Recent scandal in Datong City, Shanxi Province has come to light, exposing a situation where local government, in order to create the illusion of a vibrant economy, has been inflating the numbers of “new market entities.” A village secretary was found to have processed over twenty business licenses on their own. This kind of economic fabrication is not unique to Shanxi Province.
According to whistleblowers from Yanggao County, Datong City, Shanxi Province, during the implementation of the “doubling of market entities” plan, serious falsification has been occurring. Over the past two years, almost every month in Yanggao County saw an assessment of the increase in market entities. Tasks were delegated from townships to villages, where village secretaries had to rely on friends and family to register new businesses, sometimes even registering multiple entities under their own names. They described this extensive delegation as unsustainable.
A report by China Voice on April 19th revealed the above scandal. It was reported that starting from April 2022, Yanggao County received the task of “doubling market entities,” with the county assigning tasks to townships, and then towns distributing them to village secretaries.
According to grassroots cadres who exposed the situation, the most recent task was issued on February 26, 2024, demanding the registration of nine new companies within two days in the town. The town exceeded the task and registered all as “individual proprietorships.” Such demands were recurring monthly. From August last year to February this year, the entire town registered over two hundred companies, with some individuals establishing six companies in half a year.
It was mentioned by the grassroots cadres that the required number of “doubling market entities” was allocated by the county to townships, streets, cooperatives, and companies each month. Townships had no choice but to delegate to villages, where village secretaries had to register businesses without actual operations under their names due to the pressure of monthly tasks. Reports were required every month, and failure to complete the tasks resulted in criticism.
Initially, village secretaries would mobilize friends and family, providing transportation to register businesses in the county. Later, county officials came down to the town to facilitate the registration process. Initially, each person could only register three business entities, but with increasing task pressure, superiors relaxed the registration restrictions, allowing village cadres to register multiple business licenses. “Later, as it became difficult to find people, one person kept registering.”
In mid-2023, a new task emerged. The focus shifted from just increasing the number of market entities to also improving their quality. The county began evaluating the proportion of enterprises within market entities rather than simply the quantity of individual industrial and commercial households. Entities registered prior to 2023 were required to upgrade to companies to meet the new criteria.
A breakdown of the “doubling market entities” task from April to August 2022 in Yanggao County included eleven townships, community offices, market supervision bureaus, public utility service centers, industrial parks, and investment service centers, among others.
In April, the county’s task was to add 1100 market entities, with an actual completion of 720. In May, the task was 750 with 685 completed, in June, it was 709 with 751 completed, and in July, 970 tasks were set, with 829 completed. The August task included unfinished tasks from July, totaling 1100.
Over the four months from April to July, Yanggao County added 2985 market entities.
Public information shows that the county has a population of 186,000 residents with a registered population of 262,900. A village secretary revealed that after trying everyone they could, with the relaxed registration requirements, they decided to register all businesses under their own name. “It’s all to complete the tasks. We couldn’t find people, so we had to do it alone.”
An investigation discovered that a village secretary registered 23 market entities, with only three being cooperatives operational before 2022, while the other 20 consisted of individual industrial and commercial households, cooperatives, and companies, covering businesses like shoe stores, clothing stores, fruit shops, freight teams, breeding farms, seafood shops, flower shops, building material factories, two convenience stores, and a nail salon.
The government work reports for Yanggao County in 2023 and 2024 show that in 2022 during the “Market Entity Construction Year” campaign, 6792 new market entities were added, reaching a total of 22,615. In 2023, 4956 new market entities were added, with enterprises and tax-related entities accounting for 49.61% and 67.55%, respectively.
Investigation revealed that in March this year, the Shanxi Provincial Government Office issued a notice on the “Action Plan for Deepening the Year of Market Entity Operation in Shanxi Province in 2024,” requiring local authorities to “inspire entrepreneurial vitality of individual industrial and commercial households,” “stimulate the vitality of private enterprise investment and operation,” and “create urban ‘vibrant’ gathering areas.”
The “doubling market entities” plan is not limited to Shanxi Province. As early as the second year of the pandemic outbreak in China, the Yunnan Daily, the official newspaper of Yunnan Province, reported in September 2021 that Yunnan Province issued opinions on further optimizing the business environment to promote the doubling of market entities.
The Yunnan Provincial authorities set a target for 2025 with the intention to reach six hundred and fourteen thousand market entities, with a ratio of 130 market entities per one thousand people, achieving the national average. The aim was for the total number of enterprises to double to 1.55 million, with thirty-three enterprises per one thousand people.
Additionally, the authorities required the number of Yunnan Province enterprises listed in the Fortune Global 500 and Forbes Global 500 to reach a certain level by 2025.
It is worth noting that while the Yunnan Provincial Government focused on adding “vibrancy” to the market and implementing measures to promote the doubling of market entities through its opinions, the entire province was concurrently implementing the “zero-COVID” policy advocated by Beijing authorities. Regions such as Ruili City and Dehong Prefecture in the province repeatedly enforced epidemic control measures, leading to the closure of numerous businesses, and even tragic incidents of residents in lockdown areas starving to death.
Responsibility Editor: Li Jing#