There were, however, two interconnected surprises on the last day of the 20^th Party Congress. First, Xi’s predecessor as general secretary, Hu Jintao, who was seated to Xi’s right, was seen fumbling with a red folder. Outgoing Politburo Standing Committee member Li Zhanshan, who was seated to Hu’s right, leaned over, and appeared to gently tell Hu to leave the folder alone, that it was not time to open it. Hu persisted. Li then reached over and slid the folder away from Hu, who then tried to retrieve it. At that point Xi signaled to an aid standing in the wings who approached Hu and took his arm in what seemed to be an effort to help Hu stand up. Hu resisted and seemed disoriented but eventually, he stood up. As he was being escorted across the dais, Hu touched Xi on the shoulder and said something to him. He then touched Li Keqiang, who was sitting to Xi’s left. Hu looked confused and unsteady on his feet. But he quickly found his balance and walked off under his own power, and exited stage left. After Hu left, the congress resumed its deliberations, which included electing the Politburo.

Hu’s exit was an oddly unscripted moment in what is normally a tightly stage-managed political performance. According to the official Chinese media, Hu had not been feeling well before the congress but had nevertheless insisted on attending. Once the closing session began, the Chinese media reported, he felt unwell and was led off stage to receive medical care. In other words, “Just an old man feeling a bit queasy. Nothing to see. Let’s move along with the business at hand, comrades.”

But Hu’s exit was not the only surprise. First, when the new 20^th Politburo was elected, it had one fewer member than the outgoing 19^th Politburo. Because the Politburo does not have a fixed size, the reduction in numbers was not, in and of itself, a shock. The new lineup, however, did not include any of what were considered to be Hu Jintao’s protégés. The new lineup was made up entirely of Xi protégés or individuals who were very likely Xi’s personal picks. The new lineup also omitted Hu Chunhua, who was thought of as a Hu Jintao protégé and who many believed was slated to replace Li Keqing, also a Hu Jintao protégé, as premier. In short, Xi made a clean sweep of Hu Jintao protégés and packed the leadership with his allies.

Although the reasons Hu Jintao exited the proceedings cannot be known for sure, it seems possible that while sitting next to Xi, Hu peeked at the list in the red folder and discovered that none of his protégés would be members of the new Politburo. It is possible, that Hu had been led to believe that even though Xi was going to pack the Politburo with his lieutenants, he would include Hu Junhua as number two and hence the candidate to succeed Li Keqing when the new 14^th National People’s Congress it convened in March 2023.

Regardless of whether Hu Jintao’s exit was prompted by a bout of ill health or confusion brought on by what Hu might have seen as a double-cross by Xi, the outcome of the 20^th Party Congress was clear. Xi will not only serve at least another five years as the supreme leader of China, but he will do so with a Politburo made up entirely of “Xi men” (no women were elected to the Politburo). 

Ostensibly, that “changed everything.” Theretofore, “Sinologists” believed that the party’s leadership politics were structured by struggles between rival “factions.” These were not factions split over policy but rather they were split by their loyalties to various members of the leadership who had been their patrons while they were climbing the ladders of power. Over the years, we are told, Jiang Zemin’s “Shanghai Gang” struggled to wrest power from Premier Li Peng and his conservative allies. When Hu Jintao came to power, his “Communist Youth League Faction” vied with members of the Jiang’s Shanghai Gang. By the time Xi came to power, the Politburo was said to be split between Jiang and Hu allies, with some believing that Xi was aligned with the Jiang camp. At the 19^th Party Congress, the number of Jiang protégés fell and were replaced by Xi protégés. Hu protégés, however, retained a respectable share of the seats. The evolution of the “factional balance” was in part simply a function of time. Over the years, as Jiang’s allies grew older and reached retirement age, younger cadres who had entered the senior ranks while Hu was general secretary replaced them. The same natural turnover process took its toll on Hu’s lieutenants after Xi took over. Nevertheless, Xi’s clean sweep of Hu’s protégés and apparent denial of even a “fig leaf” of respect for Hu by including Hu Chunhua as an ordinary member of the Politburo seemed a rather blunt nullification of Hu a distinguished party elder.

But does the clean sweep mean things have really changed? The change is likely an incremental or perhaps even merely a symbolic one. Over his first 10 years as General Secretary, Xi made sweeping personnel changes, not only at the paramount leadership level, but also at the much wider level of the second rank leadership – the ministers, provincial party secretaries, and governors who command the governing apparatus of China’s party-state. Xi has also remade the senior ranks of the People’s Liberation Army. In part, he did this through the mechanism of his ongoing crackdown on corruption which has “bagged” more than 300 “tigers” – officials holding ranks at the vice-ministerial, deputy provincial party secretary, and vice gubernatorial level, as well as the heads of major state-owned companies and the presidents of elite universities – since 2013. Xi’s long tenure in office, however, also afforded him ample opportunities to replace senior officials with his allies through regular channels as those promoted by Jiang and Hu reached retirement age and exited public life. Xi’s grip on power was thus presumably tight even before the 20^th Party Congress. Although there have been rumors about opposition and unhappiness with Xi’s high-handed leadership style, there were few tangible signs of splits within the leadership. Nor was there credible evidence of tensions between team Hu and team Xi. It is also well worth remembering that in 2007, Xi had to have been selected as heir apparent through some sort of agreement between Hu and Jiang. It thus seems rather implausible that Xi was some sort of an anti-Hu or anti-Jiang “rebel.” It is quite possible – or perhaps even likely – that both Jiang and Hu underestimated Xi’s determination to take a total grip on power and shunt their protégés (and the protégés of those protégés) off to the political wilderness. Xi did not, therefore, cease to be an insecure leader and become a secure leader at the 20^th Party Congress. Rather he moved from a position of strength to a position of greater strength. In doing so, he clearly signaled the days of collective leadership were over, and that henceforth he alone would be in charge. Even that change seem slight because well before the 20^th Party Congress, Xi had made himself the “secretary of everything” and there was little evidence that he shared power with Li Keqiang or any the other members of the Politburo.

So, what does the outcome of the 20^th Party Congress signal? Predicting the future of Chinese politics is, frankly, at best a guessing game. When Xi came to power in 2012, many thought he was going to be a soft-liner who would further relax daily life and allow individuals greater personal freedom, deepen market reforms, continue the trend toward political moderation, and seek to make China a “responsible stakeholder” in the international system. He proved otherwise. 

In the days immediately after the Congress, it seemed that we could expect “more of the same.” At that time, the key questions seemed to be whether Xi would continue the crackdown on corruption, hold the line on COVID Zero and its draconian system of lockdowns, continue to respond harshly to what he and Chinese nationalists see as provocations by the United States and Taiwan that would gut the One China Policy and move the island toward independence, continue to enforce the political crackdown in Hong Kong and among China’s dissident circles, continue the harsh assimilationist policies in Xinjiang and Tibet, and continue to press China’s claims in the East China Sea and the South China Sea. 

Whatever he may have gained at the 20^th Party Congress, Xi nevertheless faced headwinds. The economy was slowing, in part because of the trade war and the downturn in global economic activity resulting from the pandemic. The Chinese economy, however, also has been badly disrupted by the Xi’s anti-pandemic “People’s War” with its COVID Zero policy and system of rolling lockdowns of major cities including Shanghai, Wuhan, Zhengzhou, Xian, and Guangdong, as well as many other second- and third-tier cities, for prolonged periods and hence a near-constant disruption of manufacturing and the supply chain. 

The near-term outlook was, however, soon thrown into confusion. Popular discontent over the lockdowns and the often heavy-handed enforcement by local cadres unexpectedly boiled over in late November 2022 as protests broke out in multiple cities. Although mostly small, these protests – dubbed the “blank page protests” because demonstrators have held up blank paper as a symbol of protest against censorship and the regime’s lack of transparency – were noteworthy. That’s because in a number of cases, protesters — many of whom appeared to be members of the middle and professional classes, as well as university students — chanted “down with the Communist Party” and “down with Xi Jinping,” slogans that are rarely heard in China today. 

The protests quickly fizzled, and a number of protesters were reportedly “invited to drink tea” by police. But then, the regime suddenly began relaxing core features of the COVID Zero policy. However, the abrupt – and thus far confused and chaotic – relaxation generated a quick backlash. Although some welcome the change in policy, others fear that the relaxation will trigger a new wave of infections. Some are going further to predict it could lead to more than half-a-million deaths because the population is not fully immunized and COVID Zero has blocked the development of some level of “herd immunity” similar to that which has developed in societies that dropped the most draconian lockdown policies in 2021. As a result, Xi now finds himself confronting conflicting demands. On the one hand, he is under pressure to continue backing off from his signature COVID Zero policy and reopen the economy. At the same time, he also faces the possibility that if he does so, a surge in cases will trigger panic and force him to beat a hasty – and potentially politically humiliating – retreat to some sort of COVID Zero 2.0 policy and a wave of new lockdowns. 

The short-term challenges generated by uncertainty about the public health outlook come, moreover, on top of the broader challenges of high youth unemployment, deepening pessimism about the future, the high cost of housing, concerns about environmental quality and food and drug safety, and fears of a potential bursting of a property bubble. These combine to put Xi in a less than enviable position, one that is certainly not as rosy as that of his two predecessors as general secretary. Xi cannot, at this juncture, turn to the Chinese people, ask the “Ronald Reagan Question:” “Are you better off now than you were four years ago?” and expect to get a heartfelt “yes.” Moreover, given the complicated results of the 2022 midterm elections in the United States and the announcement that Donald Trump will seek election again as president in 2024, Xi faces a potentially weak and embattled Biden Administration, one that would likely not be positioned to make any decisive moves to reconfigure Sino-American relations, particularly if House Republicans are hammering his son Hunter Biden with allegations of potentially shady dealings with Chinese interests. Movement toward some sort of “ceasefire” in the Sino-American trade war, a move that would presumably help reinvigorate the Chinese economy, thus seems unlikely.

On balance, therefore, Xi has clearly emerged from the 20^th Party Congress with a firm grip on power. It is not clear, however, that having such a strong grip will enable him to weather storms at home and abroad. 

The post The 20th Congress of the Chinese Communist Party: Sea Change or Much Ado About Nothing? appeared first on China Research Center.

Given the atmospherics, many observers have questioned whether the Russian attack on Ukraine might encourage Chinese leader Xi Jinping to take a harder line on reunification and even try to strong-arm the island’s government to agree to “return to the motherland.” A series of statements and moves first by the Trump administration and more recently the Biden administration also have increased tensions. Adding to the tensions — a series of high-level visits by senior members of Congress, including Speaker of the House Nancy Pelosi, in August 2022.

This suggests the United States has grown weary of the “one China” policy, is inching toward a “one China, one Taiwan” policy, and is prepared to stand with Taiwan should a crisis erupt. Others have argued that Xi wants to cement his legacy as China’s greatest leader since Mao Zedong by being the man who liberated Taiwan and finally won the Chinese Civil War.

But is there an alternative explanation? Is it possible that Xi is actually playing defense? More specifically, is the goal of China’s pressure campaign not to force Taiwan to return to the motherland but rather to stop it from drifting further away? While it is certainly true that Xi and Chinese nationalists want reunification, they also fear that Taiwan – with the support of the United States, Japan, and others – is contemplating a unilateral declaration of independence.

Under the 1979 Taiwan Relations Act, the United States has committed itself to help the island maintain its de facto independence. Successive American administrations have, however, hinted that the United States would not welcome a unilateral declaration of independence but instead favored a negotiated path from de facto to de jure independence for the island – or reunification, if that is what the Taiwanese decide they want. For decades the policy of “strategic ambiguity” served to concurrently warn Taipei against a unilateral declaration of independence and warn Beijing against using military force to bring the island under its control. In short, the United States embraced policies that discouraged both Taipei and Beijing from seeking to change the status quo.

At the same time, the United States welcomed increasing economic, social, and cultural links between the mainland and the island. Things seemed to be moving in the direction of peaceful coexistence. The flow was not toward a rapid political rapprochement and then reunification. On the contrary, President Ma Ying-jeou’s goal seemed to be to placate Beijing with gestures as a means of maintaining the island’s de facto independence and perpetuate the status quo. Ma, whose Kuomintang, or Nationalist Party, promoted improved relations with China, was elected president in 2008.

The monkey wrench was, however, that many on the island were unhappy with the flow of jobs and capital to the mainland, and support for reunification was diminishing. In 2014, resentment of the Kuomintang’s policy of détente with the mainland burst into the open during the Sunflower Revolution and helped increase support for Tsai Ing-wen and the Democratic Progressive Party (DPP) to the point where Tsai won the presidency and the party won a parliamentary majority in the 2016 general elections. Even though Tsai had not advocated independence, in Beijing’s eyes the DPP is hiding its intentions and biding its time, waiting for a signal from Washington to make its move.

And in Beijing’s eyes, Washington has in fact been signaling that it might welcome a bold move by Taipei. It has increased arm sales and weaken the policy of limiting official contacts between the two governments. Anti-Chinese rhetoric has proliferated in Washington and “standing up to Beijing” seems to be the only major thing Republicans and Democrats can agree on. Thus, from Beijing’s perspective, the commitment of Taipei and Washington to the “one China” policy and its ability to sustain the status quo has become questionable.

In this light, Russia’s attack on Ukraine and the West’s response may have worsened Beijing’s predicament. In 2019, Washington and its allies essentially stood by and let Beijing’s agents in Hong Kong suppress anti-government demonstrations and enact a harsh new national security regime that has silenced and imprisoned critics of the Hong Kong government and Beijing.

In 2022, however, the United States stood by Ukraine, not just rhetorically, but with harsh economic sanctions and billions of dollars in military hardware – the opposite of how the Obama administration reacted to the Russian annexation of the Crimea in 2014 and subsequent occupation of the Donbas and Luhansk regions with only condemnations, limited sanctions, and non-lethal military aid, policies that the Trump administration largely continued. Washington also succeeded in rallying its NATO allies and convinced key members to provide substantial military aid. Moscow’s threats to cut off the flow of Russian oil and natural gas failed to drive wedges between Washington and the major European capitals. Backed by western arms, Ukrainian forces pushed back the Russian drive on Kyiv and have stubbornly resisted Russian attacks in the Donbas and the rest of the east. In September 2022, a Ukrainian counteroffensive overran Russian forces in the northeast and seemed to suggest that the tide may have turned against President Putin.

From Beijing’s point of view, the Ukrainian war raises the chances that the Taiwanese could move in the direction of independence if Taipei concludes that the Biden administration considers Taiwan on a par with Ukraine. Beijing has repeatedly made clear that a Taiwan independence declaration would trigger war. Despite the expansion of China’s military capabilities, including the fielding of two aircraft carriers (and the launching of a third), a war would be risky. The Taiwan Strait is a far more formidable barrier than the snow and mud that Russian forces encountered in their failed attack on Kyiv. An attack on the island would be rendered more complicated and victory less certain if the United States came to Taipei’s aid. Conflict over Taiwan, moreover, could rapidly escalate into a much larger war. There is, therefore, a chance that an assault on the island might be thwarted, in which case not only would Beijing face an immediate declaration of independence but, far worse, Xi could become “the man who lost Taiwan.”

Rather than risking that fate, Xi needs to join the line of party leaders who have kept Taiwan from getting away. To this end, he needs to ratchet up the pressure in hopes of signaling to the Biden administration that the mainland opposes any significant change in the island’s status and that if push comes to shove, the mainland will go to war regardless of the risks and costs. Only by threatening war can Xi avoid war. It’s a dangerous game and serves to steadily worsen relations between Beijing and Washington. But it’s a risk Xi must run. Regardless of how much power he may have accumulated over the past decade, it is unlikely he could politically survive the loss of the island.

The post The Ukraine Crisis, Xi Jinping, and Taiwan appeared first on China Research Center.

In February 2012, it was revealed that Gu Kailai, the wife of Bo Xilai — a Politburo member and Party Secretary of Chongqing, a provincial-level city in southwest China — had been arrested and charged with murdering an English businessman. It appeared to be a money laundering relationship gone bad. The following month, Bo was expelled from the Politburo and was accused of corruption. That same month, news leaked out that Ling Gu, the son of Ling Jihua, Director of the General Office of the Central Committee of the Chinese Communist Party (CCP) and widely believed to CCP General Secretary Hu Jintao’s right-hand man, had been killed in an early morning car accident that left two female passengers critically injured. Rumors quickly spread that protégés of Zhou Yongkang, a member of the Politburo Standing Committee and Secretary of the Central Committee’s Politics and Law Committee, had tried to cover-up Ling Gu’s death. Zhou, who oversaw China’s sprawling internal apparatus and who had previously served as Minister for Public Security, Party Secretary of Sichuan Province, Minister for State Land and Resources, and Party Secretary and General Manager of the China National Petroleum Corporation (CNPC), soon came under suspicion and dropped out of sight. Talk about attempts to assassinate Hu Jintao’s successor, Xi Jinping, and coup plots involving Zhou, Ling, Bo, and more than two dozen senior party leaders began making the rounds. In early January, newly elected General Secretary of the CCP Xi Jinping ordered a new all-out attack on corruption and vowed that he would to not only “swat flies” (low-ranking officials) but also “hunt big tigers” (senior officials). Over the next eight years, almost 300 senior state officials, party cadres, and military officers were implicated.

The ferocity of Xi’s attack on high-level corruption immediately evoked questions about who was being targeted and why. While these were obviously important questions, the more critical questions were actually “what” and “where?” That is, what was the nature of the corruption that Xi confronted when he became party leader in 2012 and where did it come from?

Answers to these questions can be found in the backgrounds of the corrupt senior officials whom Xi “pulled from their horses.” These data reveal that the high-level corruption Xi began attacking in 2012-2013 had its roots in mid-level corruption during the Hu Jintao (2002-2012) and Jiang Zemin (1989-2002) periods. Many of the so-called “tigers” entered public service as junior officials at the county-department level. Others began their careers as rank-and-file public functionaries or technicians. Over a span of years, these low-level officials (i.e., “flies”) climbed up through the layers of the party-state apparatus and morphed into “rats” and “wolves” (mid-level officials) before ultimately becoming “tigers” (senior officials) when they were promoted to ranks at or above provincial vice-governor, deputy provincial party secretary, or vice minister.

These background data also suggest that prior anti-corruption drives failed to prevent corruption among low- and mid-ranked officials from forestalling promotion into the senior ranks in the years before the 18^th Party Congress. Xi’s attack was hardly the opening round of the party’s “war on corruption.” On the contrary, the CCP has been battling corruption since its early days. During the 1950s and 1960s, the party launched repeated drives aimed at rooting out corrupt officials and party cadres. Since the advent of economic reforms in the late 1970s, the party leadership has ordered three major crackdowns down on rank-and-file corruption (1982, 1986, and 1989) and significantly escalated the attack on mid-level corruption in the mid-1990s. The apparent proliferation of high-level corruption that necessitated Xi’s tiger hunt thus came in the wake of a decades-long struggle to cull the corrupt flies, rats, and wolves who then morphed into tigers. Xi thus has not been fighting some “new corruption,” but rather corruption that was spawned under his predecessors and then metastasized upward into the leadership.

Tigers Everywhere

Xi’s attack on corruption fell most heavily on the upper-ranks. Whereas an average of four tigers were “bagged” (i.e., detained) annually between 2000 and 2012, in 2018 – six years after the crackdown began – 29 senior officials were charged, over sevenfold more than the four charged in 2012. In 2019, another 29 were charged with corruption, as were 20 more in 2020.¹ At the same time, the number of low- and mid-level officials charged dropped back to pre-crackdown levels. Thus, the answer to the “what” is clear: Xi was responding to an apparent surge in high-level corruption. That being the case, the next big question is “where did this high-level corruption come from?”

Data on the tigers make clear that high-level corruption had not surged immediately before Xi became General Secretary. Of the 250 tigers I classified as “Xi Tigers,”² data were available on when they first became corrupt for just more than 170. These data show that a third were corrupt by 2000 and two-thirds by 2003 (see Figure 1). Only 15 percent, or 10 percent of the total, became corrupt after 2007 and none turned corrupt after 2013.³ Sixty percent of the tigers bagged during Xi’s crackdown had been corrupted during the Jiang Zemin period and the other 40 percent turned corrupt during the Hu Jintao period. More critically, the data suggest that the number of tigers exploded in the decade-and-a-half preceding the 18^th Party Congress in 2012, not only as senior officials succumbed to corruption, but also because corrupt lower-ranking officials (wolves) were promoted and hence were transformed into tigers. (See Figure 2.)

Source: Publicly available reports in English and Chinese compiled by the author.

Source: Author’s database.

Absent hard data on the actual extent of high-level corruption, it is impossible to rule out the possibility that high-level corruption was just as extensive in the 1980s and 1990s. High-level corruption would have been largely invisible if Hu Yaobang, Zhao Ziyang, and Jiang Zemin turned a blind eye to evidence of widespread malfeasance by senior officials. The apparent drop in the number of “free tigers” after 2012 is also likely misleading because data on those tigers, who had been detained but not formally indicted, are missing and hence these tigers are not included in the estimated number of “wild tigers.” Other tigers, finally, are obviously still at large, including some who may never get caught. Even with these caveats in mind, the data nevertheless suggest that the tigers Xi have bagged since 2012 were involved in corruption long before 2012.

Given that on average Xi’s tigers had been corrupt for 14 years, with only eight being corrupt for five years and more than a quarter corrupt for over 17 years, it is also reasonable to assume that most were not senior officials when they became corrupt, but were likely mid-level or perhaps even junior officials. An analysis of four “biggest” civilian tigers, in fact, shows that all were in fact climbing their career ladders, and that it took most over a decade to reach ranks that would qualify them as a tiger.

Climbing the Ladder

The four civilian members of the Politburo taken down during Xi’s crackdown all spent extended periods as mid-level officials or even low-level functionaries. Zhou Yongkang, for example, came from a poor village outside Wuxi in Jiangsu, earned admission to the university, and started as a technician working in the Daqing oilfield in the late 1960s. Thereafter he rose steadily and was named deputy party secretary of the Liaohe Oil Exploration Bureau in 1983. That year, Zhou became a mayor and in 1989 was named party secretary of the Tarim Oilfield Exploration Bureau. In 1992, Zhou was elected an alternate member of the 14^th Central Committee and was then elected a full member of the 15^thCentral Committee in 1997. He was named general manager of the China National Petroleum Commission in 1996, a post that likely bestowed him tiger rank and if not, Zhou definitely achieve that status in 1998 when he was appointed Minister for State Land and Resources. Zhou thus reached tiger status roughly three decades after he started out as a fly. After 1998, Zhou rose fast. He was elected a member of the 16^th Politburo in 2002 and named a deputy secretary of the Central Committee’s Politics and Law Committee. Concurrently, Zhou moved to Sichuan as provincial party secretary in 1999 and then back to Beijing as Minister for Public Security in 2002. Five years later, Zhou became a member of the 17^thPolitburo Standing Committee and named Secretary of the Politics and Law Committee, making him one of the most powerful members of the party leadership.

Like, Zhou, Ling Jihua started out as a fly. The son a local cadre in Shaanxi, Ling was “sent down” to the grassroots during the Cultural Revolution where he worked in a factory before serving as a county and prefecture level cadre in Shanxi province during the 1970s. In 1985, he joined the staff of the Communist Youth League Central Committee where he became a protégé of league leader Hu Jintao. In 1997, Ling moved over to the staff of the Central Committee. In 1999, Ling was named a deputy director of its General Office and a deputy director of the Central Committee Organizational Department in 2000, positions that gave him considerable status and arguably made him a tiger 15 years after he started climbing through the ranks. In 2002, Ling was elected an alternate member of the 16^th Central Committee and became a full member of the 17^th Central Committee in 2007. That same year, he cemented his status as a “big tiger” when he was appointed director of the General Office and hence CCP General Secretary Hu Jintao’s private secretary. It was widely assumed that Ling would be elected to the Politburo at the 17^th Party Congress in the fall of 2012. The death of his son in March 2012, however, apparently blocked his rise to the innermost political circle, and he was instead shunted aside to head the Central Committee’s United Front Department to serve as a vice chair of the Chinese People’s Political Consultative Conference.

Bo Xilai, on the other hand, was the son of a first-generation revolutionary, Bo Yibo, who headed the powerful state planning apparatus in the 1950s and came back from being purged in the Cultural Revolution to become one of the “Eight Immortals” who formed the core of Deng Xiaoping’s reform coalition in the 1980s. Bo Xilai also rebounded from being sent down to the grassroots as a teenager during the Cultural Revolution, and started his official career as a staff researcher attached to the offices of the Politburo. He was appointed to the staff of the Central Committee’s General Office in 1982. Four years later, Bo was promoted to director of the Liaoning Provincial Transportation Bureau and then deputy mayor of Dalian City in 1989. Bo was promoted to mayor in 1993 and party secretary of Dalian in 1999. The following year, 18 years after he started his official career, Bo entered the senior ranks and became a tiger when he was named a deputy party secretary of the Liaoning. He was elected a full member of the 16^th Central Committee in 2002 and then to the 17^th Politburo in 2007.

Born into a farm family in Shandong, Sun Zhengcai began his official career in 1997 as a deputy party secretary and magistrate of Shunyi County outside of Beijing. He earned a doctorate in agronomy and held a series of posts at the China Agricultural University from 1993 to 1996. In 2002, he was promoted to party secretary of the recently restructured Shunyi District. In short order, Sun was named secretary-general of the Beijing government, a post which pushed him closer to the lower rungs of senior officialdom. Sun achieved tiger status in 2006 when he was appointed Minister for Agriculture, nine years after he started his career. In 2007, Sun was elected a member of the 17^th Central Committee and the following year he was appointed party secretary of Jilin. In 2012, he replaced Bo Xilai as party secretary of Chongqing and was elected a member of the 18^th Politburo.

In many ways, Xi Jinping’s own career trajectory paralleled these four corrupt tigers. The son of Xi Zhongxun, a first generation revolutionary, Xi found himself under a political cloud when his father fell out with Chairman Mao Zedong in 1963. Sent down to the countryside during the Cultural Revolution where he served as a grassroots party cadre, Xi began his official career in 1979 as a staff secretary for Minister of Defense and Politburo member Geng Biao. In 1982, after Geng fell out with Deng Xiaoping, Xi returned to the countryside as a deputy party secretary of Zhengding County in Hebei. In 1988, Xi moved to Fujian where he served as party secretary of Ningde Prefecture and then Fuzhou City. Seven years later in 1995, Xi reached the level of a tiger when he was named a deputy party secretary of Fujian, 16 years after he started as a fly. Thereafter, Xi rose rapidly, getting elected an alternative member of the15th Central Committee in 1997, named governor of Fujian in 1999, governor and party secretary of Zhejiang in 2002. That same year, he was elected a member of the 16^th Central Committee. In March 2007, Xi was transferred to Shanghai to replaced Chen Liangyu as party secretary after Chen, who was also a member of the Politburo, fell in a corruption scandal that ended in his arrest. That fall, Xi became a member of 17^th Politburo.

Not only were Zhou, Bo, Ling, and Sun climbing the career ladder during the decades of the 18^th Party Congress, they were all climbing while corrupt. According to prosecutors, Ling and Sun started taking bribes in 2001. Bo was officially accused of turning corrupt in 1999. There is evidence to suggest that he began taking bribes in the early 1990s. Prosecutors never specified when Zhou started taking. It seems likely, however, that he also had turned corrupt sometime in the early 1990s. The four big tigers thus managed to evade detection for extended periods, even though the party leadership had ordered repeated crackdowns, including a drive against mid-level corruption that saw the number of rats charged increase more than threefold from 652 in 1992 to 2,313 in 1995. The number of wolves charged more than doubled from 64 in 1993 to 143 in 1995. It is, of course, possible that Zhou, Bo, Ling, and Sun were able to get away with corruption because they had powerful patrons. But not all the senior officials charged with corruption after 2012 were born with “red spoons” in their mouths, or were said to be linked to the high and mighty. The spread of corruption upward into the senior ranks was likely a function of structural parameters that gave mid-level officials incentives to engage in corruption and allowed them to evade detection for the extended periods required to climb up out of the mid-levels of officialdom and into the senior ranks.

Payoffs, Probabilities, and Penalties

Although corruption is largely an individualized crime involving a small circle of parties, the aggregate extent and severity of corruption is presumably governed by a combination of payoffs, probabilities, and penalties. Payoffs — the gains from accepting bribes, embezzling monies, or misappropriating public funds — create the incentives for corruption. Probabilities determine the risk of getting caught. Penalties — in the form of prison terms, fines, and confiscations — set the negative disincentives for corruption. In combination, payoffs, probabilities, etc., determine the “expected value” of corruption. That is, the size and likelihood of corrupt gains if the individual “gets away with it,” or the likelihood and severity of punishment if they get caught. In theory, individuals weigh the expected gains against the potential costs. Where payoffs are minimal, the probability of punishment is high, and the penalties are high, the objective incentives for corruption will be low. Conversely, where payoffs are large, the probability of punishment low, and the penalties are minimal, the incentives for individuals to parley their delegated authority into personal gains will be high.

To an extent, payoffs and penalties are knowable parameters because we can use data from individual cases to measure how much individuals would have gained if they had not been caught and the losses, mostly in terms of prison time, they incurred because they got caught. The probability or risk of getting caught is, however, almost impossible to estimate because while we may know how many of those engaged in corruption have been caught, there is really no way other than simply guessing how many of those engaged in corruption did not get caught. It is possible, however, to use longevity as a proxy for risk. We might think of corruption as an iterated game of chance in which an individual who has engaged in corruption must repeatedly “roll the dice,” with a chance of getting caught each time. The lower the risk of getting caught, the more times the “dice” will come up with a “winner” that allows the individual to keep “playing the game.” Conversely, the higher the risk of getting caught, the most likely the individual will roll a “loser” and have to abruptly exit the game.

Because risk affects duration, it also shapes careers. Corrupt Chinese officials face two sets of risk. First, they face an ambient, background risk in the form of the “random” chance their misdeeds will get exposed. Second, supervisory- and management-level officials face more intense periodic risk because when such officials are promoted or transferred, they undergo audits specifically designed to detect malfeasance. Either way, exposure can result in punishments ranging from administrative warnings, demotions, and termination to criminal referrals.

Thus, if the probability of detection is high, those who resort to corruption will presumably not last long and hence will have short “careers.” If we assume most officials enter officialdom at the rank-and-file or lower supervisory levels, it then follows that if risk is high, corrupt officials are apt to be weeded out before they can rise up through the ranks. If the probability of detection is low, on the other hand, individuals who turn corrupt while junior officials are more likely to enjoy longer careers and thus rise upward from the rank-and-file into the senior ranks. Low risk, in other words, should increase extent of high-level corruption.

Payoffs, probabilities, and penalties may be uniform or may vary by level. Low-ranking officials, for instance, might enjoy a certain “safety in numbers” because anti-corruption monitoring resources may be insufficient to allow for more than episodic oversight. If they get caught, however, low-ranking officials might face a significant chance of punishment because they lack powerful patrons who can act as “protective umbrellas” for their protégés. By a similar logic, although their fewer numbers might make it easier to monitor senior officials, senior officials may be powerful enough to deflect unwanted scrutiny and block sanctions if malfeasance is uncovered. Senior officials may also have “friends in high places” who can protect them if they run into trouble.

Quantifying payoffs, probabilities, and penalties is complex, and I offer only preliminary data on payoffs and probabilities herein. Even these relative crude measures suffice, I believe, to explain why mid-level officials would opt to engage in corruption and why they had a good chance of evading punishment long enough to rise into the senior ranks and hence become tigers.

Wide variations in the amount of corrupt monies and the length of time individuals engaged in corruption make simple averages unreliable measures. I have, therefore, first normalized corrupt monies by dividing by the length of time an individual was corrupt and then estimating the median amount of corrupt monies for official working at the:

Village, township, and neighborhood level (aka fly);

County and district levels (aka rat);

Prefecture and city levels (aka wolf); and

The provincial and central levels (aka tiger).

This division imperfectly parallels the fly-rat-wolf-tiger hierarchy, which is based on an individual’s rank not their location in the bureaucracy pyramid. For simplicity, I have nonetheless retained the flies, rats, wolves, tiger labels. In addition, I calculated the lower and upper quartile bounds and thereby estimated the maximum size of “small corruption” and the minimum size of “big corruption.” The data reveal that even the small amounts of monies taken by corrupt officials at the grassroots level was almost double the per-capita income of the poorest fifth of rural residents, while the minimum size of big corrupt monies at the upper levels was a staggering 55-plus times the per capita disposal income of the richest fifth of urban residents (see Table 1).

Source: Author’s database.

Data on the lag between when an official first became corrupt and when they were detained also suggest that the risk of getting caught within a year was fairly substantial (40 percent) for those at the bottom. The risk for those at higher levels were substantially lower and the most senior officials tended to evade capture for extended periods (see Figure 3).

Source: Author’s database.

Note: Based on data for 3,444 cases at the “fly level,” 4,106 at the “rat level,” 5,248 at the “wolf level,” and 25,81 at the “tiger level.”

These “risks,” of course, apply only to those corrupt officials who got caught. Given that we must assume some not insubstantial percentage of corrupt officials never get caught, the actual probability of getting caught would be, of course lower, perhaps even substantially lower. Such a lower possibility, however, reinforces the evidence that corrupt officials, particularly senior officials, had a good chance of “getting away with it.”

For those corrupt officials who got caught, penalties were substantial. Six percent of the 14,740 officials for whom I had sentencing data were sentenced to life in prison or given a “suspended death sentence.”⁴ A third of those given fixed-term sentences were given more than 10 years while another third was sentenced between four and nine years. Ultimately, corruption is a gamble and the available data on payoffs, probabilities, and penalties strongly suggest that systemic conditions in the years before Xi launched his attack on corruption in 2012 were conducive to extensive corruption and, more critically, to the rise of corruption mid-level officials into the senior ranks.

Conclusion

The data presented herein suggest that high-level corruption exploded in the two decades before Xi launched his so-called tiger hunt in 2012-2013. Despite three burst-like attacks on rank-and-file corruption during the 1980s and a sustained drive against mid-level corruption in the mid-1990s, the payoffs from corruption, the risks of getting caught, and the penalties that those caught using their authority for private gain faced did not deter officials at all levels from engaging in corruption. Over time, the failure of the anti-corruption effort during the Jiang and Hu periods allowed corrupt low-level officials to climb the career ladder and enter the senior ranks. Flies thus became rats; rats grew into wolves; and wolves morphed into tigers. As a result, corruption apparently spread upward. Consequently, corruption was likely considerably worse when Xi assumed leadership than it had been in the boom years of the 1990s when China’s transition from the plan to the market putatively created a pool of rents that ought to have fueled a wave of corruption as officials cashed in on the windfall gains created by the commodification of theretofore undervalued state assets and positioned officials to profitably leverage their control over access to profit-making ventures.⁵ The rapid worsening of corruption in post-Mao China appears to have thus been not only a function of the transition from the plan to the market but also the failure of the party to sustain efforts to confront and control corruption.

The post Flies into Tigers: The Dynamics of Corruption in China appeared first on China Research Center.

Rhetorical claims notwithstanding, key questions remain about Xi’s protracted assault on corruption. What triggered the crackdown? Was the crackdown actually a political witch hunt disguised as an anti-corruption crackdown? What has the crackdown achieved and has it actually reduced corruption?

Origins of the Crackdown

After the adoption of economic reforms in the 1980s and the beginning of the post-Mao economic boom, corruption also took off, with sums of money changing hands steadily expanding and mounting evidence that corruption was not a street/grassroots level problem but one that increasingly infected the middle levels of the party-state bureaucracy. Faced with rising corruption, the party responded with a series of drives against the rank-and-file “flies” in the 1980s and then a drive against corruption at the county and department levels in 1993. Over the next two decades, the party’s “war on corruption” ground on year-in and year-out. In the process, several major scandals, including the arrest of Beijing Party Secretary and Politburo member Chen Xitong in 1995 and Shanghai Party Secretary and Politburo members Chen Liangyu (no relation to Chen Xitong) in 2006, shook the party.

During 2011-2012, a series of new scandals likely revealed to the party leadership that corruption at the top was perhaps not a matter of “a few bad apples.” In March 2011, the CDIC announced that Liu Zhijun, the Minister for Railways, was under investigation. Liu was at the heart of a web of corruption that had been feeding off the massive investments being made in the construction of China’s rapidly expanding high-speed rail system. Liu, according to rumors, had gotten so brazen that he claimed he was going to buy a seat on the Politburo. Later that year, General Liu Yuan, the son of Liu Shaoqi, the former Chairman of the People’s Republic of China (PRC), accused Lieutenant General Gu Junshan, Deputy Director of the People’s Liberation Army’s General Logistics Department, of raking off huge sums from the sale of use rights to military-controlled property and using part of the money to pay off senior military officers.³

More dramatically, in February 2012, Wang Lijun, the former Director of the Chongqing Public Security Bureau, fled to Chengdu, the capital of neighboring Sichuan province, to seek political asylum in the U.S. consulate. According to news reports, Wang had fled Chongqing after he had clashed Bo Xilai, the city’s party secretary. After a falling out, Bo demoted Wang to head the city’s Environment Bureau. Wang countered by telling Bo that he had evidence that Bo’s wife, Gu Kailai, had murdered an English businessman named Neil Heywood after the two had a falling out over bribe money that Heywood had been helping Gu launder. Bo struck Wang who then fled the city fearing for his life. After the State Department declined his request for asylum, Wang called friends in Beijing to dispatch agents from the Ministry for State Security to guide Wang past Chongqing police, who had surrounded the consulate, and to escort him onto a flight to Beijing.

In combination, the Liu, Gu, and Bo cases likely suggested to Xi and other senior leaders that three decades of battling corruption at the middle and rank and file levels had not prevented corruption from spreading upward into the core of the party-state leadership. The Bo case must have been particularly disturbing because Bo was a member of China’s red aristocracy. Bo’s father, Bo Yibo, was a first generation revolutionary and one of the eight most senior members of Deng Xiaoping’s reformist coalition. Bo himself had been a high-profile proponent of a Maoist revival that include the “singing of red songs” and a populist social welfare program aimed at China’s lower classes.

It appears, therefore, that as he prepared to take over as paramount leader, Xi Jinping confronted evidence of extensive corruption at the very top of the party-state power hierarchy. Although such corruption posed an obvious threat to the party’s grip on power, it also presented Xi with a Janus-faced opportunity to strengthen his own grasp on the reins of power. On the one hand, a bold assault on corruption writ large gave him the chance to position himself as the new upright leader sweeping out rotten, self-serving, money-grubbing officials who had betrayed the people. At the same time, an attack on corruption also gave Xi a justification for going after powerful officials who might have wished to hem him in and render him a weak leader, one who would be little more than the nominal first among equals within the Politburo Standing Committee. Purging – cleansing – the party as a whole, in other words, served not only the goal of attacking corruption at all levels within the party-state, it also afforded Xi an avenue to consolidate his own political interests. As such, the issue is not whether Xi’s drive against corruption was a political witch hunt or an apolitical anti-corruption cleanup, because it sought to achieve multiple goals concurrently. Rather the key to understanding Xi’s crackdown is how it was targeted.

The Tiger Hunt

The 1982, 1986, and 1989 crackdowns had primarily targeted the so-called flies – the rank and file. In 1993, the leadership shifted the focus to the middle levels of the party-state hierarchy, focusing on leading officials and cadres at the county, departmental, prefectural, and bureau levels. The crackdown launched in 2012-2013, resulted in dramatic increases in the number of investigations by conjoined party Discipline Inspection Commission and the state Ministry for Supervision, with the number of disciplinary cases investigated rising from 155,000 in 2011 and 172,000 in 2012 to 226,000 in 2014 and 330,000 in 2015. In 2017, the number of cases increased to 527,000. In 2018, the Supervisory Commission conducted 638,000 investigations, a four-fold increase compared to 2011. The total number of criminal indictments filed by the Procuratorate increased much more modestly, rising from 44,000 in 2011 to a peak of 55,000 in 2014, a 25 percent increase. Thereafter, the number of individuals indicted on corruption-related charges fell, dropping to 46,000 in 2017, 1,000 fewer than in 2012. The number of corruption-related cases tried by the courts more than doubled from 27,000 in 2011 to 56,000 in 2017.

The modest overall increases in the number of criminal indictments and trials, almost all of which would result in convictions, masked dramatic increases in the attack on high-level corruption. Whereas the number of indictments for rank and file officials increased from 44,453 in 2012 to a peak of 50,444 in 2014, the number of indictments for senior officials at the county-department levels rose from 2,396 in 2012 to a peak of 4,568 in 2015, an 80 percent increase. The number of senior officials at the prefectural-bureau level increased more than four-fold from 179 in 2012 to a peak of 769 in 2015. The number of senior officials at the provincial-ministerial levels increased over eight-fold from just five in 2012 to 41 in 2015. As a result, whereas the crackdown may have led to a surge in disciplinary investigations but not criminal indictments of ordinary officials, it resulted in a surge in criminal prosecutions of senior officials.

The attack on high-level corruption was, in fact, what sets Xi’s crackdown apart from previous anti-corruption drives. Whereas press reports document a total of 30 cases involving officials at or above the vice-ministerial and vice-gubernatorial levels between 2000 and 2011, between 2012 and March 2019, 204 senior officials – which the Chinese press calls “tigers” – were charged with corruption-related offenses.⁴ During those same time periods, whereas one military officer (Admiral Wang Shouye) was convicted of corruption prior to 2012, since then 78 officers holding ranks of major general and above have either been charged with corruption or were reportedly sidelined after allegations of corruption were leveled against them. Although the number of civilian tigers “bagged” peaked at 41 in 2014, thereafter the number of senior civilian officials charged with corruption has remained considerably higher than compared to the period prior to the current crackdown. The announcement that nine senior officials have been charged with corruption during the first month of 2019 suggests that the tiger hunt is not over. The attack on corruption in the senior ranks of the military, by contrast, appears to have been limited to the period 2012-2015.

In sum, the available data suggest that the crackdown on violations of disciplinary regulations and official extravagance begun when Xi Jinping assumed power in the fall of 2012 continues unabated as of early 2019. Criminal prosecutions of state officials and party cadres, however, peaked in 2015 and as of the end of 2017, the last year for which data on indictments by the Procuratorate and trials by the People’s Courts were available. At the time of this writing, it appeared that the overall intensity of the crackdown was beginning to wind down, with the exception of the attack on corruption within the most senior ranks of the party-state apparatus, where investigators and prosecutors continue to “bag” new “tigers.”

Over the past several years, Xi’s investigators have in fact taken down a considerable number of big tigers. Between January 2018 and June 2019, 38 senior officials including 13 holding the rank of vice-governor, 10 vice chairs of either a provincial people’s congress or provincial people’s political consultative conference, five vice ministers, five managers of major state-owned companies, two mayor of major cities, one provincial party secretary, the former chair of the Xinjiang regional government, and one deputy provincial party secretary have been charged with corruption. Most notable among those charged were Zhao Zhengyong, Party Secretary of Shaanxi; Lai Xiaomin, Chair of China Huarong Asset Management; Meng Hongwei, a former Vice Minister for Public Security and the President of Interpol. Zhao was at the center of a new “Shaanxi Earthquake” that cut a wide swath through the Shaanxi provincial apparatus. Lai is suspected of having improperly loaned major sums to many of the high-flying tycoons who have been cut down during the crackdown. Meng, finally, was recalled from his post as the first Chinese to head Interpol and charged with accepting Y14,000,000 in bribes. Meng pleaded guilty. The tiger hunt thus shows few signs of coming to an end.

A Crushing Tide?

As a drive against corruption, it seems likely that Xi’s crackdown has yielded positive results. At a minimum, it has culled large numbers of corrupt officials and has likely cowed other corrupt officials, leading them to stop accepting bribes and stealing public monies, at least so long as the “heat is on” and they fear getting caught and punished. If these officials begin to sense that the crackdown has run its course and the things are “getting back to normal,” they may begin to once again discount the risk of getting caught and revert to their corrupt ways. By the same token, amid the sound and fury of the crackdown other officials who have not resorted to corruption may be scared off and keep their hands clean. But they too could turn corrupt if they sense they can get away with taking bribes and stealing public monies because “everybody else is doing the same thing.” Thus, if the crackdown has in fact reduced corruption, it is hard to determine whether the reduction will prove permanent or whether future upsurges in corruption will necessitate future crackdowns.

If the focus of Xi’s crackdown was high-level corruption, was the primary purpose of the campaign actually a political purge of his rivals, as has been frequently asserted? Absent hard evidence of Xi’s intent, the only way to determine whether the real goal was to curb corruption or gain political advantage would be to focus on whom the crackdown targeted.

Network analysis of the tigers and those linked to them reveals two central figures: former Politburo Standing Committee member Zhou Yongkang and former Director of the Central Committee’s General Office Ling Jihua. Zhou had served in a variety of senior posts, including Vice Minister for Petroleum, General Manager of the China National Petroleum Corporation, Secretary of the Sichuan Provincial Party Committee, Minister for State Land and Resources, Minister for Public Security, and Secretary of the Central Committee’s Politics and Law Commission. Ling was widely considered former General Secretary Hu Jintao’s right-hand man. Zhou was due to retire from his official posts at the 17^thParty Congress. Ling, on the other hand, was expected to be elected to the Politburo at the congress and become Hu’s eyes and ears after Hu retired.

In theory, Zhou and Ling might have been the leaders of factions opposed to Xi Jinping. Ling had the backing, it was argued, of the powerful “Youth League” faction which had risen to prominence under Hu, who had been secretary of the league in the 1980s. Zhou was said to be a protégé of former General Secretary Jiang Zemin. Zhou was also said to have backed Bo Xilai in his bid for a seat on the Politburo Standing Committee. The assumption that Hu and Jiang opposed Xi seems questionable, however, because Xi must have received their endorsements when he was selected to become general secretary.

If Zhou and Ling were potential rivals, by the time of the 17^thParty Congress both had been weakened. The arrest of Bo robbed Zhou of his entrée into the inner circle of power. Ling, on the other hand was politically crippled when his son Ling Gu plowed a $700,000 Ferrari into a Beijing bridge abutment during the early hours of March 8, 2012, killing himself and serious injuring two women passengers. An attempt to cover up the accident failed and reports about the crash and Ling Gu’s death spread rapidly on the internet. Ling was quietly moved aside. At the 17^thParty Congress he was not elected to the Politburo and was named to Director of the Central Committee’s United Front Department.

Zhou was removed from his post as Secretary of the Politics and Law Committee in May 2012 and was put under investigation in July 2013 after extensive discussions among the current leadership in consultation with former general secretaries Jiang and Hu. While Zhou remained in limbo, party investigators began rounding up his former subordinates and colleagues. Ling was put under investigation in December 2014, after his brother Ling Zhengce, a senior official in Shanxi province, had been arrested and charged with corruption in June 2014. Zhou, his wife Jia Xiaoye, and his son Zhou Bin were convicted of accepting bribes. Zhou received a life sentence. Other members of Zhou’s family were also charged with corruption. Ling and his wife Gu Liping were convicted of accepting bribes. Ling received a 12-year prison sentence.

Whether Zhou and Ling were political threats to Xi is not clear. For the most part, Zhou’s “faction” consisted of his former secretaries and subordinates. Ling, on the other hand, was charged with accepting bribes from a variety of provincial leaders in return for arranging their promotions. It is thus not clear if either Zhou or Ling headed political factions or were simply tied into networks of self-serving officials bound together in pursuit of illicit plunder. Regardless of whether Zhou or Ling were true political enemies, their arrests certainly afforded Xi the opportunity to take down a wide range of central and provincial leaders and replace them with his allies and loyalists.

The attack on corruption in the military was equally ambiguous. It appears that the arrest of Lieutenant General Gu Junshan exposed General Guo Boxiong and General Xu Caihou, both of whom were vice chairs of the Central Military Commission, the party-cum-state body that controls China military. Guo and Xu had been collecting large bribes from officers seeking promotions and transfers. Both retired in November 2012. Xu was terminally ill at the time of his arrest and died before his court martial. Guo was sentenced to life in prison. Although Guo had held field commands in the past, he had been a headquarters staff officer since 1999. Xu had spent most of his career as a political commissar and as part of the General Political Department staff. It thus is not clear that Guo and Xu were part of an anti-Xi bloc in the army or even possibly part of a coup plot.

The fall of Politburo member and Party Secretary of Chongqing Sun Zhengcai also does not appear to have stemmed from fears that Sun had become a political threat to Xi. Sun has been described as a protégé of former Premier Wen Jiabao and had been a subordinate of former Politburo member Jia Qingling. His membership in the Politburo was not necessarily evidence of that he was a “force” with the party. Sun likely got a seat on the Politburo because he was party secretary of Chongqing, a provincial-level city that appears to command a seat on the Politburo because of economic importance. Some had suggested that Sun might get elected to the Politburo Standing Committee at the 19^thParty Congress and that because of his age (54 in 2017) he might be a potential successor to Xi at the 20^thParty Congress in 2022. But aside from his age, there seems to have been little evidence that Sun was a major political player.⁵

Ultimately, the main purpose of Xi’s crackdown seems to have been to attack serious corruption among the party, state, and military leadership. As argued earlier, by the time Xi assumed the office of general secretary, there was strong evidence of serious high-level corruption. Moreover, there was public pressure for action against corruption. Public opinion polls conducted by Pew Research between, for example, showed that whereas 78 percent of those surveyed said corrupt officials were a moderately big or very big problem in 2008, fully 90 percent of those surveyed in 2014 held those views.

Conclusion

As of mid-2019, it is not clear that Xi’s attack on corruption has produced a “crushing tide” or a “sweeping victory.” The crackdown certainly produced a surge in the number of party members and state officials investigated by the Discipline Inspection Commission and later the Supervisory Commission. In total between 2013 and 2018, the Supervisory Commission investigated 2.3 million party members, about three percent of the total membership. Upward of 300,000 individuals have been indicted for corruption-related offenses.⁶ Most of those indicted were convicted and sentenced to prison. Almost 280 individuals holding ranks at or above the level of vice-minister and general had been investigated for corruption.

Despite these numbers, it is unclear whether Xi’s crackdown will make a difference in the long-term. In the immediate term the crackdown has likely taken out enough corrupt officials to make a difference. It is also likely that the crackdown has scared off some and driven others to stop taking bribes. But the crackdown has also reportedly led to a degree of bureaucratic paralysis because officials fear being accused of corruption. The popularity of the crackdown is also difficult to gauge. In its early days, the crackdown was clearly very popular. Citizens who sought to expose official corruption using social media, however, quickly found out themselves facing restrictions and penalties. The party thus made clear that the crackdown was a party affair and the public’s role would be strictly limited to that of a passive audience. Many ordinary citizens have also grown cynical about corruption. They see officialdom has inherently corrupt and believe that those who get caught and punished as merely the “unlucky” and “unloved,” the poor saps who lacked the friends in high enough places to protect them.

The lack of decisive victory is perhaps not surprising. The party has been fighting corruption for decades and its war on corruption is by necessity a protracted war. Corruption, moreover, is ultimately not controlled by crackdowns and arrests. Real victory comes from changing official ethics and codes of conduct. Anti-corruption crackdowns are thus actually a response to the prior failure of a regime’s anti-corruption program. Although further analysis is needed, the evidence produced by Xi’s 2012-2019 anti-corruption crackdown suggests that corruption worsened significantly in the years before he was named general secretary. Xi, in other words, has been fighting against the failure of his predecessors to take effective action to control corruption.

The post A Crushing Tide Rolling to a Sweeping Victory: Xi Jinping’s Battle with Corruption after Six Years of Struggle appeared first on China Research Center.

 As the anti-corruption campaign launched by CCP General Secretary Xi Jinping approaches its fourth anniversary, the question ought to be asked: where is it going? When the drive was first announced in the winter of 2012-2014, it appeared that it would prove a repeat of crackdowns launched by Xi’s predecessors – a burst of sound and fury in which a swarm of rank-and file-officials – known popularly in China as “flies” – would be detained by the party’s Discipline Inspection Commission, some of whom would then end up being prosecuted by the Procuratorate, and ultimately be packed off to prison by the People’s Courts. In the process, a few senior officials – known as “tigers” – would be “bagged.” Based on past precedent, Xi’s crackdown should have ceased being front-page news after a few months and quietly faded away – until some new scandal prodded the leadership to again declare that the party must fight corruption to the death.

As it developed in the spring of 2013 and onward, Xi’s crackdown wrought havoc on such assumptions. As in the past, tens of thousands of flies were investigated (upwards of 500,000 by rough estimates) by the party and indicted (more than 120,000) by the judiciary. The annual rates of increase were impressive. The total number of economic and official malfeasance cases “filed” by the Procuratorate increased nine percent in 2013 and a further 10 percent in 2014, followed by a slight two percent decrease in 2015 compared to 2014. The number of officials at the county and department leadership levels indicted increased nine percent in 2013, 32 percent in 2014, and a further 11 percent in 2015, with the result that the number indicted rose from 2,610 in 2012 to 3,821 in 2015. The number of more senior officials at the prefectural and bureau levels jumped 46 percent in 2013, 126 percent in 2014, and 27 percent in 2015, thus increasing indictments from 179 in 2012 to 747 in 2015. Between 2012 and 2015, the courts convicted 100,200 individuals on corruption-related charges. As of November 2016, 116 civilian tigers – defined as state officials, party cadres, and state-owned enterprise (SOE) managers holding bureaucratic ranks equal to or above that vice minister – and 82 military tigers – officers holding ranks of major general or above – had been implicated, including one former member of the Politburo Standing Committee (Zhou Yongkang); three former members of the Politburo, Bo Xilai (former Party Secretary Chongqing), General Xu Caihou (former Vice Chairman of the Central Military Commission), and General Guo Boxiong (former Vice Chairman of the Central Military Commission); and the former Director of the CCP Central Committee General Office (Ling Jihua).

Far from another short-lived political drama, Xi’s anti-corruption drive has thus proven to be more intense and protracted than its predecessors. Moreover, unlike its predecessors, it does not yet seem to have a discernable end. On the contrary, observers have suggested that Xi’s intensified drive against corruption is not a finite “campaign,” but is rather part of a “new normal” (新常态). It is true that in the past six months or so the drive has become less visible and dramatic. The “heyday” of the tiger hunting when senior officials and generals seem to be falling right and left (roughly from December 2014 to March 2015) appears to have passed. The drive nevertheless continues to claim victims, the most recent (September 2016) being the Acting Party Secretary of Tianjin Huang Xingguo. Flies also continue to fall at an unrelenting pace, as evidenced by terse reports posted daily on the Ministry of Supervisor and Central Discipline Inspection Commission’s shared website (http://www.ccdi.gov.cn/) and the party’s “anti-corruption” website (http://fanfu.people.com.cn/). As such, the blitzkrieg attacks of the earlier phases of the drive have now apparently given way to a less dramatic but perhaps no less intense war of attrition as Xi and his primary ally in the fight against corruption, Wang Qishan, continue to press onward.

At the Sixth Plenum of the 18^th Party Congress in late October 2016, Xi in fact made it clear that the drive would continue, and vowed to continue to attack high-level corruption. But little in terms of concrete regulations was new. For example, the plenum promulgated a new set of guidelines on corruption that included warnings against tolerating corrupt behavior by members of officials’ families, but it did not adopt a policy mandating that officials disclose family assets that would have served as a significant new hedge against such corruption. Similarly, talk arose of centralizing the discipline inspection system by pooling the resources of the party’s Discipline Inspection Commission, the state Ministry of Supervision, and the judicial Procuratorate, a change that would have helped make its local organs more independent of the corresponding party committees, and therefore less apt to protect local officials from scrutiny and more aggressive in pursuing evidence of corruption. In the end, however, the plenum approved a modest pilot program limited to a few provinces. Shortly afterward, the Central Discipline Inspection Commission also announced that it would dispatch inspection teams to Beijing, Chongqing, Guangxi, and Gansu plus 15 other major state agencies. This new round of inspections, however, replicates a pattern of periodic central intervention put in place back in 2013, not a major new escalation of the drive. In sum, the results of the plenum suggest that Xi intends to continue the drive, but that his basic tactic will likely remain much the same.

It would seem the drive is now approaching a critical juncture. Xi and Wang have bagged a lot of tigers, some of whom also happen to have been Xi’s potential or perceived political rivals. Xi has thus clearly used the crackdown on corruption to consolidate his grip on power and to at least partially re-establish the primacy of the central leadership over the sprawling party-state apparatus. In the process, he has perhaps made inroads against the extensive high-level corruption that apparently spread during the Hu Jintao era. He has certainly not, however, dramatically reduced the overall level of corruption. At best, he has perhaps brought the problem closer to some sort of “controlled” level.

Having made some inroads, Xi and Wang now face the difficult task of figuring out how to back off the anti-corruption fires they set during the more intense phases of the drive. Many observers report the ongoing drive has produced a pervasive atmosphere of fear among officials, and has left many paralyzed. Such fear is hardly unexpected. A broad reading of the past three years of revelations suggests many illegal and questionable behaviors and practices on which Xi and Wang have “dropped the hammer” since the 18^th Party Congress had become essentially “standard operating procedure” during later Jiang Zemin and Hu Jintao years. Some of those convicted of accepting bribes have, for example, confessed that they thought little of pocketing “red envelopes” (or briefcases or suitcases) stuffed with cash. In some cases, they claimed they felt pressured to accept bribes because to not do so would have violated prevailing informal norms of official behavior, and would have offended and angered those who offered bribes.

Given the apparent extent of corrupt practices among officials, cadres, and managers, Xi and Wang now face four daunting tasks. First, they need to continue to tighten administrative procedures and curb the autonomy of decision-makers and hence reduce the opportunities for corruption. Second, they need to reduce the gap between the pay officials, cadres, and managers receive and the income of private-sector actors with whom they interact. Higher official pay will not eliminate temptation, but so long as poorly paid officials control valuable assets and opportunities, resisting temptation will be difficult.

Third, Xi, and the party more broadly, has to address the reality that since the 1990s rapid economic development has spawned a new economic elite that is linked by blood and marriage to the older political elite. Power and wealth overlap in all advanced economies and political systems, including both authoritarian and democratic systems. Although Jiang Zemin embraced and legitimated China’s new economic elite with the Three Represents in 2002, China still lacks a system of ethics to regulate and regularize how power and money interrelate. As a result, a “culture of corruption” has grown and festered. Although the negative economic consequences of such loose ethics and shady officials might have been endurable during the days of rapid economic growth, as China’s economy slows, a culture of corruption will prove an increasing drag if it is not replaced by a new set of elite ethics.

Fourth, Xi and Wang have to devise some sort of “amnesty” that would allow corrupt officials, cadres, and manager to make a clean breast of their past transgressions and become part of new “less corrupt” way of doing official business. If corruption has become a near ubiquitous pathology among officialdom, continuing to aggressively combat corruption indefinitely could wreak significant damage to the party-state and could potentially destabilize China’s political superstructure. Having bagged more than 200 civilian and military tigers, taken down thousands of mid-level “cats,” and swatted upwards of 100,000 flies, Xi and Wang need to figure out how to declare “victory” and let the current anti-corruption drive transition to a true “new normal” of intensified anti-corruption work that deters corruption while also ensuring that the party-state can function.

De-escalating the anti-corruption drive and seeking to transition to a new normal could, however, confront Xi with two major challenges. First, even limited amnesty and marginal pay raises for officials and SOE managers could be seen as rewarding past corruption rather than a means to disincentivize future corruption. After almost three-and-a-half decades of China’s war on corruption, many ordinary Chinese have grown cynical and believe that corruption is a pervasive pathology. As a result, Xi is apt to find it difficult to convince the public at large that his crackdown has significantly reduced corruption.

Second, although Xi’s crackdown has bagged more than 200 senior party cadres, state officials, senior SOE managers, and military officers, as well as a number of China’s brash new tycoons, Xi’s critics grumble that his “friends” have escaped unscathed. They argue that the real goal of the tiger hunt has always been to take down Xi’s political enemies and thereby enable him to secure a grip on political power akin to that of Chairman Mao Zedong. To an extent, there can be little question that the crackdown has enabled Xi to consolidate power. It also likely true that, like the “dead tigers,” others among China’s political and economic elite have become wealthy by playing loose with the formal “rules” and using their access to power and connections to gain advantages from the economic boom that accompanied China’s transition from the plan to the market. Absent a dramatic takedown of some member of Xi’s inner circle, such talk is not likely to die down. On the contrary, if the intensity of the crackdown begins to fade, rumors that Xi allowed other tigers to remain free are likely to continue. Xi thus faces the risk that ramping down the crackdown could be seen as a self-serving attempt to legitimate a political system that remains dirty.

Finally, Xi may be facing a new and potentially serious challenge from China’s business elite. In December 2013, 56 delegates to the Hunan Provincial People’s Congress from the city of Hengyang were expelled after it was found that they had paid a combined Y110 million to 518 members of the Hengyang Municipal People’s Congress and 68 staffers to secure their seats. In September 2016, 45 delegates to the National People’s Congress (NPC) from Liaoning province were expelled after it was revealed that they had paid Y40 million in bribes to 523 of the 619 members of the Liaoning Provincial People’s Congress. Thirty-eight of the 62 members of the congress’s standing committee were axed. Twenty of the 85 members of the Liaoning Provincial Party Committee were among the expelled delegates. Among the 40-odd members of the province’s leadership,¹ the congress’s chair Wang Min, the former secretary of the Liaoning Provincial Party Committee and a member of the 18th Central Committee; congress vice chair Wang Yang; congress vice chair Zheng Yuchao; congress vice chair Fan Feng; congress vice chair Zhu Shaoyi; Vice Governor Gang Rui; Vice Governor Liu Qiang; and Su Hongzhang, secretary of the party’s powerful provincial Politics and Law Committee and Deputy Secretary of the Liaoning Provincial Party Committee, were expelled and in some cases charged with criminal bribery and election fraud.

Although the National People’s Congress and its local counterparts nominally exercise substantial legislative authority, they are often described as “rubber stamp” bodies that provide mere window dressing for China’s communist party dominated “people’s democracy.” If the congresses are functionally powerless, why would want-to-be delegates in Liaoning be willing to pay an average of Y900,000 (US$136,000) for worthless seats in the national legislature? Even more perplexing, why would want-to-be delegates in Hunan be willing to pay an average of Y1.96 million (US$295,000) for a seat in the even less influential provincial legislature?

According to Hong Kong-based scholar Suzanne Pepper, even though having a seat in a people’s congress may seem bestow no political power, “membership in any honorary body is coveted by people who see it as a mark of social status.” ² The people’s congresses, journalist Michael Forsythe writes, have become a “club for some of China’s wealthiest executives, keen to rub elbows with government officials.” Being a delegate, he continues, “… brings prestige, much like peerage or knighthood in Britain.” ³ A deputy’s “red hat,” Professor Zhang Ming argues, gives its wearer access to powerful officials and nefarious insider deals. ⁴

Members of the business community have, in fact, become part of China’s political establishment since former General Secretary Jiang Zemin first introduced his “Three Represents” theory in 2000 and announced that the communist party was not only the vanguard of the proletariat but also the representative of the “advanced productive forces.” Private capitalists, industrialist, investors, real estate speculators, and white collar professional thus joined workers, peasants, cadres, soldiers, and the managers of state-owned enterprises as part of the China’s “socialist” coalition. Preliminary data suggest, in fact, that not only have members of the non-state business sector become part of that coalition, the vast majority of those buying votes were members of the business community. The weight of the business community was particularly great in Liaoning and Hunan where managers and other business professionals made up more than 40 percent of the elected delegates. Among the 45 delegates expelled from the Liaoning Provincial People’s Congress, upwards of 40 had business connections. The available data also suggest that the many vote “sellers” were also members of the business community. But they were not alone in taking money for their votes. Delegates from a variety of other sectors – including the party apparatus, officialdom, education, and, perhaps most notably the police and military – were implicated and expelled from the Liaoning PPC. Eighteen of the 25 delegates from the PLA’s Liaoning garrison were expelled for selling their votes.

Whether the Liaoning and Hengyang vote-buying scandals are anomalies or indicative of a more widespread problem is not clear. But in light of evidence that vote buying is common at the village level where candidates reportedly often curry favor with voters by handing out relative small sums of cash, free dinners, and gifts such as cigarettes and cheap alcohol, it is possible that vote buying has become an integral part of the “electoral process” at the local and provincial levels in contemporary China. While local business elites may have begun to try to buy their way into the political superstructure from the bottom up, China’s new super rich also have been penetrating it from the top down through both the NPC and the Chinese People’s Political Consultative Conference (CPPCC). Close to one in 20 members of the 11^th National People’s Congress (2007 to 2012) and the 11^th CPPCC were listed among China’s super rich by Hurun, a Hong Kong-based magazine.

Formed in 1949, the CPPCC wrote the organic laws of the People’s Republic of China, and transferred its national legislative authority to the NPC in 1954. Relegated thereafter to an amorphous advisory role in a political system dominated by the Communist Party and largely defunct for a decade beginning in the mid-1960s, the national CPPCC, the provincial CPPCCs, and their local affiliates have been described as “useless flowerpots” whose main function was to give delegates from the provinces an opportunity to spend a week wining, dining, and basking in the media spotlight during the annual “double meeting” when the NPC and CPPCC simultaneously convene in Beijing, as well as providing retired cadres and officials with honorary sinecures for the golden years. The CPPCC’s apparent lack of any meaningful power notwithstanding, close to two dozen chairs and vice chairs of provincial political consultative conferences and dozens of senior members of local political consultative conferences have been implicated in corruption during Xi’s crackdown. Even though it appears that in many cases those implicated were involved in corruption before retiring from their party and state posts, evidence also exists that corrupt monies continued to flow to others after they relinquished their official posts.

If China’s growing business elite, with its hybrid mix of private entrepreneurs and SOE managers, is trying to buy its way into China’s institutions of power, it is possible that while Xi has been cracking down on corruption among the party and official ranks, corruption has been spreading among the ranks of the broader “united front” that the party has historically relied on for its political legitimacy. Xi may now be facing a new “second front” in the war with corruption. Rather than seeing the gradual de-escalation of Xi’s four-year-old tiger hunt, the anti-corruption crackdown could gain new momentum as Xi shifts from fighting corrupt party cadres and state officials to fight a new threat from the business sector.

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These prior efforts notwithstanding, upon assuming the office of General Secretary of the party in November 2012, Xi Jinping announced yet another campaign, which was formally approved by the Third Plenum of the Eighteen Party Congress in early November 2013. At first, the campaign appeared to be a repeat of the same old song and dance. Many of the steely toned slogans about the necessity to fight a life-and-death struggle against corruption and the need to put an end to extravagant spending by officials and cadres had been raised many times before. Announcements of new regulations mandating fewer dishes at official banquets, banning the purchase of luxury sedans and their use for unofficial business, and the construction of lavish government buildings all reiterated orders issued in past years. Eighteen months on, however, it appears that far from a smoke and mirrors attempt to create the impression of action, Xi Jinping’s anti-corruption campaign may well be the most sustained and intensive drive against corruption since the start of the reform era.

By the Numbers

Measuring the intensity of an anti-corruption campaign is, admittedly, a tricky business given that we cannot even roughly estimate the true extent of corruption. Instead, we can at best guess at the extent by asking experts for their impressions of how bad things are or tracking changes in the number of officials who suddenly stop being corrupt because they get caught. Indices such as the popular Corruption Perceptions Index (CPI) published by Transparency International would have us believe that rather than getting worse, corruption in China has actually been on the decline for at least a decade, with its score falling from 7.6 (out of a maximum of 10, where 10 is the most corrupt and 1 the least corrupt) in 1995 to 6.0 in 2013, which would put China just below the 75^th percentile and hence not among the worst of the worse.¹

Data on prosecutions tell a different story. The number of criminal indictments was up 9.4 percent in 2013, with the total number of corruption and dereliction cases increasing from 34,326 in 2012 to 37,551 in 2013 (see Figure 1). The number of officials holding position at the county and departmental levels who were indicted rose from 2,390 to 2,618, a 9.5 percent increase. The number of officials the prefectural and bureau levels who were indicted shot up more dramatically, from 179 in 2012 to 253 in 2013, a 41.4 percent jump. Although nine percent increases in the total number of cases and in the number of county and department officials indicted may seem modest for a highly trumpeted campaign, these increases followed a decade in which the total number of indictments had been slowly decreasing. Increases in 2013, moreover, follow more modest increases in 2012. As a result, the total number of indictments in 2013 was 16.2 percent more than in 2011, and the number of country and department officials indicted was up 12.6 percent compared to 2011. More critically, the 41 percent increase in prefectural and bureau level officials indicted is the largest such increase since 2004, and represents a 27.8 percent rise over 2011. Finally, eight officials at the provincial and ministry levels were indicted, compared to five in 2012. The party’s Discipline Inspection Commission (DIC) also reported a 13.3 percent increase in the number of party members who faced disciplinary action.

Sources: Zhongguo Jiancha Nianjian [Procuratorial Yearbook of China], (Beijing: Zhongguo Jiancha Chubanshi, various years) and Zuigao Renmin Jiancha Yuan Gongzuo Baogao [Work report of the Supreme People’s Procuratorate], 3/18/2014, available at http://www.spp.gov.cn/tt/201403/t20140318_69216.shtml, accessed 6/12/2014.

Note: To provide a long-term perspective, I have transformed the raw data on cases filed into an index anchored on the years 1997-8. I do this because the 1997 revision of the criminal code decriminalized a large number of low-level offenses. The dramatic drop in cases filed thus creates the misleading impression that either corruption fell dramatically, which it did not, or that enforcement suddenly slacked off, which it did not either.

Targeting

It is also possible to look at the type of corruption a campaign is targeting and who is getting caught to get a more nuanced sense of whether Xi’s roar is that of a paper or a real tiger. China’s ongoing efforts to curb corruption are often described as a “war” and it is thus convenient to use war as a way to deconstruct the current campaign. The campaign can be decomposed into four distinct fronts. At the grassroots level the regime is fighting a guerrilla war in which whistleblowers and netizens have used social media to expose brazen examples of corruption and degenerate official behavior. Videos of officials laughing at the site of fatal highway accidents, photos of them sporting luxury watches, smoking outrageously priced cigarettes, documents identifying poorly paid low-level bureaucrats as the owners multiple of luxury condominiums and villas, videos of cadres playing sex games with their mistresses, drinking, and cavorting with Thai transvestites have gone viral within China despite the efforts of the army of “ten cent” Internet, forcing the party to move with unheard of speed to sack and indict officials. But the internet front of Xi’s war on corruption is a bush war in which most of the corrupt officials exposed are low-level officials who were so foolish, so arrogant, or so greedy that they failed to remember that corruption should kept discrete.

Parallel to the internet guerrilla war, the regime continues to wage a protracted war of attribution against low- and mid-level corruption. This part of the push against corruption resembles trench warfare: an ever-lengthening list of casualties but scant evidence of real advances. In recent years, prosecutors have indicted about 35,000 individual on economic crime charges each year, the bulk of whom are officials holding posts below the county and departmental leadership levels. The fighting on this front in 2013 seems a bit more intense than in past years. Based on a survey of cases reported in the press and on the Discipline Inspection Commission’s website, it appears that more “tiger cubs” – senior party cadres and officials holding posts just below the county and department levels – have been bagged. At present, however, there is no reason to believe the number of corrupt officials has been reduced by much.

The third front in Xi’s attack is a drive against “commercial bribery” in the domestic and foreign business sectors. Although official corruption receives the bulk of public attention, corruption often involves both a supply side (officials willing to use their authority for illicit private gain) and a demand side (private parties willing to pay officials to use their authority for illicit private gain). Corporate actors, moreover, can use the authority delegated to them to pursue illicit gains. Procurement managers, for example, can demand kickbacks from potential venders. Although the data are thin, it appears that inter-firm corruption is widespread in China and that a corporate “culture of corruption” exists in which bribery and corruption are viewed as a normal part of doing business. Chinese prosecutors began cracking down on corruption in the business sector in about 2006. In the spring of 2013, they intensified these attacks and expanded their targets to include foreign businesses. Chinese prosecutors are not alone. In recent years, prosecutors in both the United States and the United Kingdom also have gone after American and British companies for paying bribes to Chinese officials and companies. Chinese prosecutors have gone after evidence that foreign pharmaceutical and medical equipment vendors frequently turn a blind eye to the illicit means used by their sales forces to book orders and the complex dodges used by “consultants” and other middlemen to secure contracts and close deals. Charges were leveled against GlaxoSmithKline, Abbott Labs, Astra Zeneca, Sanoli, Norartus, Eli Lilly, and others. Prosecutors detained almost two dozen GlaxoSmithKline employees and consultants, including Peter Humphrey, a Shanghai-based British risk consultant, and his wife. JP Morgan, Goldman Sachs, Citibank, and Deutsche Bank have been accused of hiring the sons and daughters of senior Chinese officials with some expectation that such hires might benefit them financially.

The final aspect of Xi’s war on corruption is a highflying aerial combat in which corruption often becomes a weapon in factional infighting. Any scandal involving a senior official is inherently political. At a minimum, prosecutors have to receive high-level political approval to look into allegations of corruption among top officials. The inner leadership itself must presumably clear investigations of very senior officials. To go hunting a big tiger, therefore, investigators must first get a license. It is widely assumed, therefore, that factional politics play a major role in decided who gets investigated and who gets swept quietly under the rug.

Factional Politics

High-level scandals also create political opportunities. Xi’s current campaign is no different. Triggered by the exposure of Neil Heywood’s death and allegation that Bo Xilai’s wife either killed him or had him killed, the current drive has spawned a series of investigations into corruption in the oil sector and Sichuan that seem to implicate former Politburo Standing Committee Member and former Chairman of the Central Committee’s powerful Politics and Law Committee Zhou Yongkang. According to insiders, in the run up to the November 2012 Eighteenth Party Congress, Zhou had been pushing Chongqing Party Secretary, Politburo Member, and so-called “Red Princeling” Bo Xilai as a leftist counterweight to Hu Jintao’s heir apparent Xi Jinping.² Bo’s abrupt fall from power clearly removed a potential political rival, while investigations into corruption involving PetroChina Chairman Jiang Jiemin, Chengdu Party Secretary Li Chuncheng, Hainan Vice Governor Li Hualin, Vice Minister for Public Security Zheng Shaodong, former Sichuan Vice Governor Guo Yongxiang, and former Chairman of the Hubei Party Committee’s Politics and Law Committee Wu Yongwen – all of whom worked with Zhou at one point or another – enabled Xi or others to take out many of the now retired Zhou protégés.

In late July 2014, the official media announced that the Central Committee had approved a formal investigation of Zhou Yongkang. Zhou and his involvement in corruption had been the subject of rumors almost since the Bo Xilai case became public. For months, rumors circulated that Zhou and Bo had been plotting a coup, that Zhou had ordered three failed attempts on Xi Jinping’s life, that Zhou had his first wife killed after they divorced; Zhou’s son Zhou Bin had been detained; that his son had ties to Liu Han, a Sichuanese business tycoon who was sentenced to death in May after being convicted of leading an organized crime syndicate; that Zhou had had affairs with 400 women. For months there was also talk that Xi was afraid to put Zhou on trial because he feared that Zhou would speak out and expose the secrets he had learned during his days in charge of the internal security apparatus. Other rumors said that Xi had been unable to get permission to go after Zhou from former General Secretary and still party strongman Jiang Zemin. Despite talk that Xi might not be brave enough or strong enough, he ultimately did move against Zhou, but only after a series of Zhou’s former secretaries, protégées, and cronies had been detained and charged with corruption. Authorities also arrested Zhou Bin and a half dozen other members of Zhou’s extended family. Zhou has yet to be formally indicted and it is not entirely clear exactly what he will be charged with when the Procuratorate issues a formal indictment. The announcement that Zhou would face a formal investigation may signal the beginning of some sort of end game. Although the campaign has afforded Xi the opportunity to take down a series of rival political leaders, assert himself as party leader, and show the public that he is willing and able to do something about China’s corruption problem, the politics of the campaign also have a downside. Zhou is not the only rotten apple and he alone did not cause the rot to spread to other apples in the barrel. Moreover, Zhou has long been seen as a member of the “Shanghai Gang,” the cadre of officials linked to former General Secretary Jiang Zemin. Even before Zhou was formally taken down, the rumor mill was full of speculation about who the “real target” of Xi’s tiger hunt was and who would be the next retired leader to find himself detained by investigators from the Central Discipline Inspection Commission. There was also talk of a building backlash against Xi, who many senior leaders felt was going “too far” and was becoming dangerously like former Chairman Mao Zedong. Xi thus has incentives to use the indictment of Zhou as an opportunity to declare “victory” and begin scaling back the campaign or at least easing off on his attack on high-level corruption.

Scaling back also had a downside. One of the core objectives of an anti-corruption campaign is to demonstrate to the public that the leadership is determined to fight corruption. Bagging big tigers helps show such determination. But bagging too many big tigers can backfire if the public becomes convinced – if it is not already – that the party’s jungle is full of big tigers, senior leadership is full of corrupt tigers, and that the only big tigers being hunted are Xi’s political enemies and the politically unlucky and unloved whom Xi had sacrificed.

Finally, in recent months evidence of corruption among the senior military command has surfaced. General Gu Junshan, Deputy Commander of the PLA General Logistics Department, who was in charge of barracks construction, was indicted in March 2014 on bribery charges. According to various sources, Gu had received huge bribes and kickbacks from developers seeking rights to land controlled by the PLA and had used part of his illegal income to bribe senior officers, including possibly two Vice Chairmen of the Central Military Commission. One of them, General Xu Caihou was allegedly arrested in a hospital bed where he lay dying of bladder cancer. Corruption among the military has long been suspected, but before now, military corruption has remained largely hidden from view. Evidence of more extensive corruption among senior military officers could thus prove a major political liability for the party and could generate resentment among the officer corps.

Regardless of whether Xi opts for a slow winding down or an abrupt claim to have won, it seems unlikely that he will convince the Chinese public that the campaign had achieved its goals of significantly reducing corruption and ending official extravagance. Neither goal is, in fact, achievable in the short-term. Making real inroads into corruption will take time, sustained effort, and a combination of political and administrative reforms.

Conclusion

The scale and scope of the high-level, heavily political portion of Xi’s campaign differentiates the current campaign from its predecessors. The current campaign is clearly more sustained and intense. It is now 18 months old and by all indications more senior officials and cadres, perhaps as many as 31, have been investigated, expelled from the party, sacked, indicted by the Procuratorate, or tried than in any other post-1978 period. How many are ultimately brought down by Xi’s campaign remains to be seen and it may be months before the ultimate scale and intensity of the campaign become clear. It is also likely that many of those detained on corruption charges over the past year-and-a-half will not go to trial for some time. Regardless of what the coming weeks and months bring, however, it seems clear that Xi Jinping’s anti-corruption campaign is no tempest in a teapot.

Gauging the long-term and broader political impact of Xi Jinping’s anti-corruption campaign is difficult. Anti-corruption campaigns seek to achieve three goals. First, they seek to cull out corrupt officials. Second, they seek to deter those who are now tempted. As evidenced by the number of indictment and investigations, it is possible that Xi campaign has cut into the ranks of the corrupt, but how far is uncertain. Even more uncertain is whether the bagging of this crop of tigers will scare off other potential tigers and flies. Third, anti-corruption campaigns seek to convince the public that a regime is serious about fighting corruption, particularly in the highest places. Bringing down Zhou, or even his protégées, along with other senior officials, may convince ordinary Chinese that this time the regime is really determined to deal with corruption. Ultimately, however, the real proof will be in the follow-through. Should the fight against corruption fall off when all of the sound and fury of the current campaign comes to an end, then it is likely that the public will sink deeper into cynicism and dismiss the campaign as political knife fight in which a lot of flies and tiger cubs were killed to cloak the true factional reasons for the drive.

Suggested Reading

Roderic Broadhurst and Wang Peng, “After the Bo Xilai Trial: Does Corruption Threaten China Future?” Survival (June 2014): 53:3.

Jerome Doyan, “A new impetus for the fight against corruption,” China Perspectives (June 2013), 2; 74-5

Kilkon Ko and Cuifen Wen, “Structural Changes in Chinese Corruption,” China Quarterly (September 2012) No. 211: 718*740.

Peter Kwong, “Why China’s Corruption Won’t Stop,” The Nation (4/22/2013); 17-21.

Alice L. Miller, “The Road to the Third Plenum,” The China Leadership Monitor Fall 2013, (42): http://www.hoover.org/sites/default/files/research/docs/clm42am-2013.pdf

The post Xi Jinping’s Tiger Hunt and the Politics of Corruption appeared first on China Research Center.

Stunning though the spread of corruption after the adoption of economic reforms may be, it is only half the story. At the same time corruption was increasing, China’s economy also grew rapidly. Between 1980 and 2010, Gross Domestic Product (GDP) per capita increased thirteen- fold, according to the International Monetary Fund. China, in fact, had the second-largest gain in per capita GDP globally during this period, two times more than the next-best performer (South Korea) and almost eight times more than the United States, where per capita GDP increased only 65% in these three decades. Equatorial Guinea, which was the only country to outperform China, grew not as a result of sustained economic expansion, but because it struck oil and went almost overnight from abject poverty to vast wealth – wealth that was being swiftly stripped away by a government far more corrupt than China’s. China thus not only experienced rising corruption as it moved from a command economy toward a market economy, it also experienced rapid growth, a combination that economists suggest is unlikely, if not impossible.

The worsening of corruption during the reform period thus confronts students of contemporary China’s political economy with a series of questions. First, why did corruption worsen? Second, what forms did this new corruption take? Third, why has worsening corruption not slowed or even retarded China’s economic growth?

In the pages that follow, I will address these questions to explain why China was able to experience concurrent rising corruption and rapid economic growth.

Rising Corruption

After seizing power in 1949, the CCP cracked down on corruption in a series of major campaigns. In late 1951, the party launched the Three Antis Campaign against corruption, waste, and bureaucratism. In January 1952, the Five Antis Campaign targeted bribery, tax evasion, theft of state property, bid rigging, and the theft of state economic information. The following year, the New Five Antis Campaign struck at bureacratism, commandism, and other violations of law and disciplinary regulations by state officials and party cadres. Subsequent campaigns, including the Socialist Education Movement (1963-66) and the One Strike, Three Antis Campaign (1970-72) attacked other forms of official malfeasance. By the late Maoist period, these repeated attacks on corruption and the political environment ushered in by the Cultural Revolution had largely eradicated most visible manifestations of corruption.

Corruption was, however, far from eliminated. On the contrary, during the 1960s and 1970s a new culture emerged in which individuals sought to cultivate personal relationships (guanxi) that would allow them to slip “through the backdoor” (zou huomen) to obtain scare commodities, get admission to schools, find work, and seek favors from bureaucrats and officials. At the time, money was of secondary importance because it alone could not buy rationed goods or access. More often, people seeking to build relationships and get favors relied on “gifts” of cigarettes, liquor, meat, and other hard-to-find commodities. Officials often peddled equally mundane goods – ration cards or a “chop” on a document. There were, of course, more egregious cases of corruption, including that of Wang Shouxin, a mid-level official whose position as head of a local coal supply unit enabled her to spin a web of illegal deals that netted her and her confederates the then-princely sum of Y500,000 (US$320,000).

In the early and mid-1980s, petty corruption flourished. Many goods remained in short supply and would-be buyers found that they still had to present officials with a carton of cigarettes and a couple of bottles of Chinese liquor (baijiu) to obtain ration cards. Would-be entrepreneurs and private businessmen seeking to establish new enterprises also found the only way to navigate the thickets of red tape was to use personal connections and, increasingly, cash. In the mid-1980s, the party decided to put off comprehensive price reform in favor of a hybrid system wherein commodity prices were fixed by the state based on whether they were being sold within the state-planned economy or in emerging markets. Because ongoing scarcity ensured that market prices were generally much higher than in-plan prices, officials found they could earn quick profits by diverting goods out of the planned sector and onto the market. Arbitraging between the two sectors created by the so-called “two track” price system, and fueled a wave of “official profiteering” (guandao) during the late 1980s. By the later 1980s, official profiteering had become so widespread and visible that the perception that corruption was enabling officials reap the lion’s share of \ gains from reform became a major factor intensifying support for the anti-government demonstrations that swept China in the spring of 1989.

Faced with rising corruption and evidence that corruption was undermining its legitimacy, the CCP cracked down, first in 1982, then again in 1986, and a third time in July 1989. In each campaign, the government announced it had substantially increased the number of officials charged with corruption, made a show of putting the “big tigers” it had caught on trial, and, in some cases, publicly executing corrupt officials. Despite these repeated crackdowns, the best available evidence suggests that corruption increased substantially during the 1980s. The Procuratorate “filed” 9,000 corruption-related cases in 1980, the 1989 anti-corruption campaign yielded some 77,400 cases. Thereafter, the average number of cases hovered around 60,000 from 1991 to 1997. Revision of the criminal code in 1997 resulted in the decriminalization of a range of lesser offenses, and dropped the average number of cases filed to approximately 32,000.

In the early 1990s, after a second round of reforms, corruption intensified. By the mid-’90s more senior-level officials had become corrupt; they were now “auctioning off” control rights for enterprises and real estate and receiving much larger illicit payoffs in return. In 1995, for example, the Party Secretary of Beijing, Chen Xitong, who was also a member of the party’s core leadership, was caught raking in millions of dollars in “commissions” from real estate developers. The number of cases involving senior officials (defined in Chinese law as those holding leadership positions at or above the county level) shot up from a dozen a year in the mid-1980s to an annual average of 2,500. The amount of money reportedly recovered per case jumped from Y4,000 (US$1,700) in 1984 to Y42,000 (US$4,900) a decade later. Four years later in 1998, the amount exceed Y121,000 (US$14,600), and in 2007 the Procuratorate reported it recovered funds averaging more than Y273,000 (US$35,800). Meanwhile, the party’s Discipline Inspection Commission, which has responsibility for maintain intra-party discipline, was sanctioning around 150,000 party members a year, one-third of them for corruption-related infractions.

As corruption got worse, the party fought back. But the effectiveness of China’s anti-corruption effort has been questioned. Official statistics, however, show that about 10,000 officials are sent to prison each year on corruption charges and an additional 20,000 receive lesser punishments. Among those sentenced to prison, roughly 5,000 received sentences ranging from five years to life. Almost 400 individuals are known to have been sentenced to death; an additional 240 got “suspended death sentences.” To date, there is no hard or convincing evidence the war on corruption has had a significant effect. Some evidence, however, suggests that corruption actually has worsened over the past decade. So it would appear the war on corruption has succeeded in the sense that it has brought corruption under control.

Assessments by outside experts also suggest some degree of improvement. According to Transparency International’s index (using a scale of 1 to 10, with 10 as the most corrupt), corruption in China dropped from a high of 7.57 in 1995 to either 6.4 or 6.5 between 2007 and 2011. In 2011 China ranked overall a middling 75th out of 182. A recent poll of Chinese citizens found that only 9% reported having had either firsthand experience with corruption or had known somebody who had paid a bribe in the preceding year. At that level, direct experience with corruption in China was actually the same as reported by citizens of Singapore, which was one of the five least corrupt countries, according to TI. More surprisingly perhaps, 5% of Americans surveyed reported that they had paid a bribe.

In sum, it is clear that China experienced a significant surge in the incidence of corruption during the 1980s and that in qualitative terms corruption “intensified” in the 1990s. Since then, evidence suggests that corruption has remained at about the same levels and hence has been brought under control in the sense that China’s “war on corruption” has prevented it from spiraling further out of control. Rising corruption, however, failed to retard economic growth. On the contrary, according to the IMF, GDP per capita grew at an average rate of almost 8% between 1980 and 1991, then shot up to an average of 12% between 1992 and 1995, and falling to a still torrid 8% between 1996 and 2004. Thereafter average growth rates jumped back up to greater than 11% during 2005-07 before settling back to 9% after the advent of the global recession in the summer of 2008. Since then, growth has slowed, but at 7.5% remains strong by global standards. Growth rates have thus remained robust even after corruption worsened and intensified.

Corruption with Chinese Characteristics

If worsening and intensifying corruption didn’t inhibit China’s economic boom, is there something “special” about corruption in China? In the 1970s, a number of scholars argued that given gross inefficiency in the allocation of resources by the state, bribery might allow would-be entrepreneurs to “buy” these resources and use them more efficiently. Others argued that bribes were often given to poorly paid government officials with the goal of getting them to cut through red tape. “Speed money,” some claimed, might not only lubricate the creaky machinery of government, but also might even give bureaucrats a profit-based motive to perform their duties more efficiently. Some have argued that corruption in China differed from that found elsewhere because it often involved “profit-sharing.” Businessmen cut officials in on their profits when officials helped them earn money. In some areas, local governments were said to have transformed themselves into entrepreneurial “local developmental states” by entering into partnerships with businesses and facilitating their operations in return for ad hoc taxes and other forms of illicit profit-sharing.

Although it does not appear that corruption in post-Mao China was qualitatively different, the nature of China’s economic reform did create conditions in which some corruption (not all) was compatible with rapid growth. In abstract terms, economic reform involved large-scale transfers of potential value from the state to the market. In the early stages of reform, for instance, the de-collectivization of the agricultural sector transferred control over production to individual households. Because they stood to reap substantial windfall profits from land transfers, farmers had incentives to pay bribes to secure particularly productive plots and control rights for “sideline” production. Local cadres were also often in a position to leverage “considerations” in return for providing farmers with access to state subsidized inputs such as fertilizer, pesticides, and diesel fuel.

As reform deepened in the 1990s and the state began to lease out land for industrial, commercial, and real estate development, would-be industrialists, businessmen, and developers stood to earn quick windfall profits. A plot of unused land attached to a state-owned factory, for example, could generate a very substantial windfall if it were redeveloped into high-priced condominiums, shopping malls, or luxury hotels. Quick profits could, in fact, be made by simply flipping a piece of land leased cheaply from the state and then selling the lease rights to others.

Rapid growth also created a high demand for capital. Because China lacked a developed capital market when the economy moved into high gear, government agencies were often important sources of investment loans. Most government agencies either controlled stocks of capital or had accumulated substantial slush funds (known in Chinese as xiao jinku – literally small golden treasuries) \ they could use to make under-the-table loans with interest rates above those for regular bank loans. Even if they lacked their own capital, government agencies and state-owned enterprises enjoyed better access to the state-controlled banking system and could profit from arbitrage borrowing and re-lending to private entrepreneurs who could not obtain bank loans. The windfall profits generated by reform and the demand for capital thus created a series of new opportunities for officials to cash in.

The reform period also witnessed a major expansion in infrastructure. Since the 1980s, the Chinese government has spent vast sums – upward of Y6 trillion (US$874 billion) from the state budget alone as of 2009 – building new highways, railroads, airports, ports, and urban infrastructure. Public works contracting is a notorious source of corruption worldwide and China has been no exception. The development of China’s much-touted high-speed rail system, on which the government will have reportedly spent Y3.5 trillion (US$532 billion) by 2015, has resulted in unprecedented cases of corruption. China’s Minister of Railways Liu Zhijun allegedly conspired with middlemen and major state-owned companies to skim about Y800 million (US$122 million) (BBC 2011). Zhang Shuguang, the deputy chief engineer for the project, was said to have stashed Y18 billion (US$2.8 billion) in overseas bank accounts.

China’s surge in corruption can be attributed to other factors as well. During the Cultural Revolution, China’s law enforcement institutions had been “pulverized.” Branded as bastions of “revisionism” and “counter-revolution,” the Procuratorate and the party’s Control Commission ceased to function or were taken over by the military. In 1979, these institutions were only in the early stages of reconstitution, and it was not until that year that China’s first criminal code was enacted. On a very fundamental level, therefore, China entered the reform era with a very rudimentary institutional capability to fight corruption.

The lack of a functioning judicial system staffed by trained investigators, prosecutors, and judges was a major impediment to fighting corruption because, unlike a street mugging in which you have an obvious victim, corruption is a hidden and “victimless” crime to which the actual victim – the public – is not a direct party. Corruption most often involves two offenders – an official who accepts bribes and a private party who pays them – both of whom stand to profit from their transaction. More critically, “properly” done, corruption is a subtle “art,” a careful “dance” wherein the parties never directly discuss exchanges of favors for bribes, use multiple subterfuges to hide payments, and conduct all transactions in cash to leave the most minimal trail. Corrupt relationships are best framed not in terms of quid pro quo “deals,” but rather as exchanges involving “diffuse reciprocity” wherein financial “considerations” are repaid indirectly and seemingly in the “normal course” of business. For example, an official might discuss a contract with a building contractor who might then engage the official’s son as a “consultant” for other “unrelated” matters or donate money to an “educational foundation,” which just happens to be funding the official’s daughter’s doctoral studies at an American university. High-level corruption of the sort that became increasingly common in the mid-1990s is, moreover, apt to be much harder to detect than street-level corruption. Street-level corruption is apt to take place in open view and create aggrieved victims willing to report unjust demands. But high-level corruption is more likely to take place behind closed doors and be mutually profitable for both parties, neither of whom are apt to report their illegal deals to the authorities. In addition, powerful officials can take advantage of their authority to create conspiratorial “protective umbrellas” that enable them to stonewall and even suborn investigators.

China’s emerging business culture also has contributed to China’s surge in corruption. All of the business fortunes in contemporary China were built in a rough and tumble environment in which new businesses frequently rested on questionable foundations, by bending the rules, very often by paying bribes, providing kickbacks, giving lavish gifts, and participating in a culture of “banqueting” involving not only expensive dishes and fine liquors but often the provision of prostitutes and other “favors.” In this environment, corruption only becomes a problem for those willing to pay when officials bought with bribes fail to “stay” bought or cannot deliver the benefits supposedly secured with under-the-table money. Otherwise, bribes can become nothing more than a quick means to obtain inflated profits and remove unwanted government impediments. And as corruption spread, many officials came to view it as “normal” and essentially an official perk enjoyed by “everybody.” A “culture of corruption” thus emerged in which embezzlement and bribery were not deemed sins, per se, but more of a fact of life.

Anti-corruption work in China thus faced considerable challenges from the beginning. In fact, what is perhaps most surprising is that corruption did not reach even greater levels and come to the point at which so many officials were engaged in corruption that the state’s emerging anti-corruption capabilities were simply overwhelmed.

Rising Corruption and Rapid Growth

If China experienced a significant worsening of corruption and corruption is negatively correlated with growth, why did the Chinese economy to manage grow so rapidly, even as corruption was worsening? Three factors help explain why this was possible. First, corruption was not a serious barrier to the initial acceleration of growth. Second, the most intense period of corruption coincided with large-scale transfers of value from the state to the emerging market economy. Third, despite a somewhat halting start and less than decisive results, China’s anti-corruption efforts managed to bring corruption under control by the early 2000s, albeit without significantly affecting its overall severity. The first two factors combined to create a situation wherein corruption fed off growth rather than stifled it. Even though corruption became much worse than it had been in the pre-reform period, it was kept at levels that are not necessarily extraordinary for a developing economy.

At an abstract level, corruption can be broken down into two major forms: “plunder” and “transactive” corruption. In the case of plunder, officials prey on the state, stealing tax monies, looting the treasury, privately selling off state property, and so on. Officials engaged in plunder often target the private sector, expropriating profitable businesses and real estate, extorting money from wealthy individuals, or even demanding cash at the point of a gun. Transactive corruption, on the other hand, involves exchanges of money and favors. Neither form of corruption is benign. Transactive corruption may, in fact, involve extortionary bribery that borders on plunder. Nevertheless, plunder is apt to have a much more debilitating effect than transactive corruption because while transactive corruption often involves exchanges that are mutually beneficial to those directly involved, plunder attacks the economy’s vitals by rendering property rights insecure and encouraging capital flight. Plunder wreaks economic destruction in much the same way that roving bandits destroy rural communities by driving off farmers’ cattle, destroying their crops, stealing their goods and savings, and burning their homes. In its most extreme form, anarchic plunder by official “bandits” can morph into “kleptocracy.” Best defined as a form of political system in which the state becomes an instrument for the extraction of plunder by the kleptocrat-in-chief and his inner circle of henchmen and cronies, kleptocracy generally results in a wholesale assault on an economy’s core structures and the systematic destruction of the formal economy.

As noted earlier, during the Maoist era, petty bribery predominated. Officials and workers in state-owned enterprises also pilfered state property, stealing goods either for their own consumption or sale on underground black markets. Large-scale bribery was uncommon because so long as the state monopolized the economy, there were few private parties in a position to use illicit means to influence officials. Reform fundamentally changed the dynamics of corruption by creating a set of actors, including not only private businessmen but also the managers of state- owned enterprises, who could leverage financial advantage by bribing officials. As the economy took off, this “demand side” for corruption grew quickly. Not only did the incidence of bribery increase, but it also began to displace plunder as the modal form of corruption. A growing economy and thus increasing profits and incomes caused the size of bribes to grow as the “returns” from bribery grew.

When the state began letting out many more valuable assets, including land, the amounts paid in bribes increased exponentially. More senior officials became involved because they, not street-level bureaucrats, were in a position to “auction off” assets that would yield entrepreneurs and developers large windfall profits in the form of sizable gaps between the state’s nominal valuation of assets and their actual market value. Rising corruption was an endogenous byproduct of economic reform; it was this reform, and the rapid economic growth it created, that fed rising corruption. Much of the “new corruption” that emerged during the mid-1990s can thus be linked to transactions involving the transfer of value-bearing assets from the state to the market. Because these transfers also spurred rapid growth, the result was a concurrent worsening of corruption and an acceleration of growth. This is not to say that corruption had a positive effect on growth. Instead, rising corruption imposed real costs. Inefficiency and misallocation, however, were what economists call “marginal costs” because they siphoned off a share of the total gains that might have been realized from investment.

The regime’s much-maligned anti-corruption campaign also played a role. As noted earlier, corruption becomes most destructive when it morphs into kleptocracy and state institutions are converted into instruments for corrupt gain. The fact that the regime fought back and brought to justice at least some of those who turned corrupt prevented such a transformation of the Chinese state. Thus, even though individual officials and agencies may have succumbed to the “silver bullets” of corruption, the state as a whole did not degenerate into a kleptocracy. This is not to deny that some localities became “mafia states” where corrupt officials freely and even openly connived with unscrupulous businessmen and even criminals. Nor is it to say that very senior officials, their wives, children, relatives, and cronies were not deeply involved in corruption. The result was a dynamic wherein corruption was “controlled” in the sense that the regime’s anti-corruption efforts were minimally sufficient to keep the aggregated level of corruption below the vaguely defined boundary that separates serious corruption and outright kleptocracy.

Conclusion

To some, economic reform in China is a miracle. To others, reform is a tale of ever-worsening corruption. There is no question that the latter version is true. Each new major corruption scandal seems to make those that came before pale in comparison. What was a “shocking” amount in the early 1980s was nothing compared to the corrupt monies being reported in the 1990s, and chump change by today’s standards. Today, a case such as that of the Wang Shouxin ring and its Y500,000 (US$320,000) take would hardly raise the eyebrow of a public that has witnessed the 1999 Yuanhua case wherein a ring of smugglers colluded with local, provincial, and central officials to run an estimated Y53 billion (US$6.4 billion) worth of goods through the port of Xiamen in Fujian province in broad daylight, or read reports on the wealth of Premier Wen Jiabao’s family, or heard to tales of corruption and murder involving Chongqing Party Secretary Bo Xilai and his wife Gu Kailai.

China’s experience with rising corruption and rapid growth does not necessarily contradict the existing economic orthodoxy that corruption is negatively correlated with growth and hence rising corruption causes growth rates to fall. As argued herein, rising corruption in China was actually the result of rapid growth. If China stands out, it is not because it is exceptionally corrupt, but rather because its growth rate has been exceptionally high. There is also nothing about corruption in China that somehow distinguishes it from corruption elsewhere. If anything, “corruption with Chinese characteristics” more closely resembles the sorts of corruption found in much of the developing world than the “structural corruption” found in nations such as Japan, South Korea, and Taiwan.

That China has managed to maintain high growth rates despite rising corruption also does not mean that corruption might not cause greater economic damage in the future. As argued herein, rising corruption was a function of the transition from the planned to market economy. Completing that transition and consolidating a functioning market economy requires that the Chinese government begin to make substantial gains in its fight against corruption. Ultimately, the regime has to implement administrative and political reforms that would increase transparency and accountability. Before now, progress on these fronts has been limited, and even though the regime seems to understand that corruption has the potential to kill the economy, many within the party and leadership seem to fear that fighting corruption will certainly kill the party. As a result, many within the party have resisted the sorts of structural reforms needed to deal with the root problem – the party’s monopoly on power and the resulting extensive discretionary power wielded by officials – rather than its overt manifestations. Nevertheless, the partial measures, such as mandatory disclosure of officials assets, documentation of the employment of their spouses and children, and requirement that officials account for the origins of property and assets or face prosecution under a new “unexplained assets” law may prove sufficient to keep corruption from getting substantially worse, and thereby may help ensure that the current combination of high levels of corruption and rapid growth continues for some time to come.

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