The court cited Liu's confession and the help he could offer in recovering stolen funds as factors influencing its decision not to order his execution. It did, however, order the seizure of his assets, including a reported 374 houses, 16 cars and up to 800 million yuan (about $130 million) in cash — probably only a fraction of the assets Liu's family and associates control. The clemency may also reveal how despite his brazen corruption, abuses of power and willingness to sacrifice safety for the sake of rapid development — something at least partly responsible for the July 2011 Wenzhou train crash — Liu did successfully oversee the near-complete restructuring of one of China's key strategic and economic assets.
Under Liu, annual investment in the rail system grew nearly tenfold between 2003-2009, rising from 69.2 billion yuan to 623 billion yuan, focusing particularly on his prized high-speed passenger rail lines. In addition to flagship high-speed rail projects like the Beijing-Shanghai line, which cost an estimated 221 billion yuan, Liu's tenure also saw the expansion of lines to China's strategic central regions and resource-rich but poorly integrated western "buffer regions," including Xinjiang, Inner Mongolia and Tibet. In this respect, Liu helped bring China one step closer to fulfilling one of the Communist Party's core geopolitical imperatives: integrating the country's disparate regions into a single national economic unit.
But as with many other key industries in China during the mid-2000s, the expansion of rail capacity led to enormous waste, overcapacity and soaring debt. This was exacerbated by the unusual political autonomy and lack of oversight Liu and the Ministry of Railways enjoyed. Liu's dominance over the largely autonomous Ministry of Railways throughout the 1990s and 2000s highlighted the central government's persistent challenge in attaining long-term institutional reform and consolidation in the face of deeply entrenched bureaucratic interests.
With Liu's sentencing and the dissolution of the Ministry of Railways, China's rail sector is entering a new phase. If Beijing has its way, this phase will entail major changes to the industry's structure and the direction of future rail investment through more market-oriented mechanisms.
While no concrete strategic plan for the industry has been released since the March 2013 bureaucratic reorganization, the reorganization itself and anecdotal reports suggest that over the next decade Beijing will push for greater central government oversight under the auspices of the Ministry of Transport and the newly created China Railways Corp. Beijing is also likely to expand the more cost-effective freight transport networks, which connect emerging resource bases in northwest China and consumer bases in coastal and central China, at the expense of marquee projects such as high-speed rail. And Beijing probably will open the rail sector to outside investment, perhaps even private investment, eventually.
It is unclear whether the successors to the Ministry of Railways and Liu will have the institutional clout and political will to genuinely restructure China's railway sector. This will prove especially challenging given the former ministry's already-poor financial performance and reputation for corruption and inefficiency. Liu's sentence represents a small symbolic victory in Beijing's long-running struggle to stamp out high-level corruption and to reassert control over key industries and ministries. But it also marks the beginning, not the end, of a much more difficult process of reworking the basic institutional machinery of China's political and economic system.
