China’s Culture of Corruption

We keep hearing how corrupt the U.S. political system is; this fueled the Sanders and Trump revolts. And the problem is real. It’s mainly that political campaigns are costly, and to get the money politicians sell themselves to special interests. (Yet it’s not true that money buys elections. Many well-funded candidates lose.)

China’s system is corrupt on a much deeper level. I say this not to dismiss our problem, nor out of anti-Chinese prejudice. But China looms increasingly large on the world stage – so we’d better understand it.

The Economist recently had an incisive review of Minxin Pei’s book, China’s Crony Capitalism: The Dynamics of Regime Decay. China’s government still owns around half the economy. And while government and party officials generally cannot actually steal these assets, they exploit control over them to enrich themselves. This is exacerbated by decentralization, giving local powers wide-ranging authority.

Government in America at all levels, while not owning assets, nevertheless does impact private financial interests – hence the “pay to play” culture mentioned earlier. But not only does China’s government ownership of commercial assets offer greater scope for chicanery by officials, it’s compounded by China’s very different culture.

Corruption, deceit, and bribery are endemic in every sphere of Chinese life. Getting anywhere is based not on what you know, but who you know – and who you pay off. Combining that culture with a decentralized system wherein officials control commercial assets is a toxic recipe for misfeasance on a grand scale. And worse yet, such exercise of power is not subject to liberal democracy’s checks and balances.

Thus, for example, public contracts in China don’t tend to get awarded without kickbacks. America awards lots of public contracts, but normally through transparent bidding, so Chinese-style bribery seems quite the rarity here. That reflects the profound differences in culture and checks-and-balances. We’ve recently seen just this kind of contracting scandal in New York State. What surprised me was that the culprits imagined they could get away with it. They were nailed by a federal prosecutor (Preet Bharara) who could not be bought off or politically manipulated. Nothing like that exists in China to deter similar misfeasance. And so, as Pei’s book documents, it flourishes there on a monumental scale.

It’s true that President Xi Jinping has mounted an anti-corruption drive, and some big fish have been caught, along with vast schools of smaller fry. Xi seems to realize that public resentment at the depth of corruption threatens regime and party survival. Yet his effort has actually targeted only a small proportion of officials, and its true thrust seems to be more a purge of ones not under his thumb, thus aggrandizing his personal power.*

Xi Jinping

The Economist says Xi’s crusade cannot reach the problem’s roots, which lie in the system itself. China needs democratic checks and balances, such as an independent judiciary, a free press, and political competition. (One should add rule of law.) Xi is going in the opposite direction.

Author Pei is pessimistic. Even a revolutionary overthrow of the regime won’t likely usher a dawn of liberal democracy, he says. Those who acquired inordinate power and illicit wealth will find ways to continue that. Russia and Ukraine are case studies.

America’s better system and culture should not be taken for granted. It’s worrying that ever fewer Americans understand it.

* In China’s system, the leader is supposed to have two five-year terms, then go. It now appears that Xi will ignore that limitation.

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