Private coal mining is a good business to be in. In late 2001, four companies purchased a 75% interest in of a package of three mines and one transport station from the government of Qinshui County in Shanxi province. By the end of 2004, the venture had turned a profit of 370 million yuan on an initial investment of 37.5 million.

And their true out-of-pocket may have been just a 3.75 million yuan deposit, with the balance being paid out out of the newly-privatized company's funds at the official signing four months later. A 3000% annual return is not too shabby, even in today's overheated Chinese economy.

And according to an investigation by Oriental Outlook, it was all done legally, with the new company simply being in right place at the right time. The move to private hands coincided with a rapid rise in coal prices, and once the investors bought their shares, they could used the state coal reserves as they wished, gratis.

Of course, this doesn't mean that the situation was entirely free of irregularities. The local government has been accused of acting irresponsibly by retaining only a minority stake of 25%, and sanctioning the flow of state resources to private holding companies based in Beijing which contributed virtually nothing to the enterprise.

On the other hand, according to the chairman of the county CPPCC committee, three mines were so horribly mismanaged and rife with corruption under state ownership that county government had no choice but to attract outside, profit-driven investors.