Corruption in China

Topics: Economics, Planned economy, Economy Pages: 5 (1525 words) Published: March 30, 2014

The domestic challenges facing China during the next few decades are enormous. China faces serious corruption, increasing mass unrest, enlarged polarization in the personal and regional income distribution, increased unemployment and insufficient social safety net, shortages of energy and key resources for economic modernization, massive migrations from rural areas to urban areas, extensive bad debt held by state banks and deep problems in the financial sector, excessive public debt, environmental deterioration, etc. All these problems and obstacles could lead to political instability and disrupt economic growth. In China, corruption refers to “all acts of bribery, embezzlement, misappropriation, official profiteering or illegal speculation, illegal procurement, and other acts of unlawful profit-making that utilize public resources for private gain, committed by the personnel of any state organ or enterprise” (T. Wing Lo, 1993:1). By comparing cases of corruption occurred in the early 1980s and cases taking place in the 1990s, two crucial variables: political and socioeconomic factors changes amongst will be analyzed later. Early 1980s demonstrated a changing political-economic relations characterized by “rampant bureaucratic corruption, widening social inequalities and the rising material needs of the people” (T. Wing Lo, 1993: 70) under the background of transitioning from state planning to market economy, with the elaborated leftovers of former command economy. Politically, during the Cultural Revolution, the breakdown of existing law and institution pushed people into the dogma: power is everything. The abuse of power and official positions by the state functionaries were rampant, since the bureaucrats were at privileged and superior position. Another aspects of the aftermath of the Cultural Revolution was resurgence of informal and instrumental relations (Guanxi) and the illicit transactions based on those relations, which was assumed as direct result of people’s needs in an environment where the marketplace was under state-control as well as more complex institutional causes, such as “weakening organizational control, confusion of norms, volatile political mobilizations” (Lv Xiaobo, 2000: 136). From socioeconomic perspective, as Deng Xiaoping attributed, system characteristics that could be conducive to corruption were centralization, monopoly, lack of functional division and accountability. An expected result of combining central planning, collectivization and push for industry was pervasive “social entities” that had not only economic functions, but also “social, religious and political functions”, which caused “diffusion of function of public institutions” (ibid) and was highly conductive to corruption. Moreover, the government allowed market economy accompanying centralized resources allocation as well as planned price system while the consumer goods were still in short supply, which stimulated some cadres sought privileges for personal gains. Thus, corruption was regarded a response to the pressure of shortage economy. As Shawn Shieh argues that, although corruption in China is less harmful to economic growth than in countries like Indonesia and the Philippines, a failure to combat corruption would endanger market reforms and “peaceful development” by undermining public confidence in the regime, weakening bureaucratic competence, and aggravating social inequality. Thus a more transparent and democratic political system is needed in reducing corruption in China. With successful market-oriented economic reform in 1990s, official corruptions have become more pervasive, serious and regime-threatening than that was in early 1980s. The underlining pattern of corruption has gradually changed from “whom one knows” (based on Guanxi) to “what one control” (based on discretion over resources) and “how much one pays” (Lv Xiaobo, 2000:192). The locale of corruption in early 1980s tended to occur in...
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