In recent weeks, China has been sentenced to death Bai Tianhui, former head of a state-owned asset management company, for accepting some 1.1 billion yuan ($151 million) in bribes. At the same time, the country launched a corruption investigation against the Minister of Agriculture. Tang Renjian. Even civil servants fleeing abroad are not spared. Earlier this year, China launched Sky Net for 2024, a special operation aimed at tracking down corrupt officials who fled abroad with embezzled funds. For a the public is tired of official corruption, this news brings well-deserved relief. After all, who wouldn’t want justice to be done? The operation takes its name from a Chinese proverb: “The net of the sky has wide meshes, but nothing escapes. »
However, so important anti-corruption campaigns have repeatedly failed to eradicate corruption, despite vigorous promotion since the 1980s. Each time, corruption resurfaces years later in more sophisticated forms. In the early years of Chinese economic reform, the most common types of corruption were petty corruption and embezzlement by low-level officials. Think of the factory manager who steals inventory or the local bureaucrat who extorts “fees” from hapless villagers. Then, the Chinese political system evolved rapidly, link the incentives of local officials to economic performance. The more prosperous the local economy, the more rulers can reap massive profits, as well as bribes. This motivates officials to make lucrative deals with entrepreneurs, thereby spurring development and corruption. Many officials are now targeted as “fugitives» were once hailed as capable leaders who generated impressive economic growth in their jurisdiction.
Fast forward to the 2000s, and corruption has reached its most grandiose form: crony capitalism. Instead of small bribes, business tycoons and political elites exchange government contracts, bank loans and land deals worth hundreds of millions of dollars. Businessmen who shell out the cash reap astronomical rewards by securing monopolies, cheap financing, and prime real estate. Politicians who pocket the profits gain the clout to push through megaprojects that could boost GDP. The result is a supercharged version of the crony capitalism that helped propel China’s spectacular economic rise, transforming isolated cities into booming, catapulting metropolises well-connected tycoons among the world’s super-rich.
But there is a catch. Over time, this corrupt growth model generates enormous risks for the economy: mountains of bad debt, ghost towns of empty apartments, and a gaping inequality between those who are politically connected and those who are not. Left unchecked, these problems erode public trust and jeopardize the legitimacy of the Communist Party. Aware of the seriousness of the threat, Chinese President Xi Jinping has made the fight against corruption a priority. signature priority of his administration since he took office in 2012. The scale and duration of Xi’s repression are unprecedented in the 100-year history of the Communist Party. Between 2013 and 2022, authorities investigated a staggering 4.39 million cases and punished some 4.7 million people. The people studied include not only low-ranking “flies”, but also high-ranking “flies”.tigers” as the former member of the Politburo Standing Committee Zhou Yongkangimprisoned for life, and former Deputy Minister of Public Security Sun Lijunwho was sentenced to death with a two-year suspended sentence.
Since its launch in 2015, Sky Net has become the centerpiece of Xi’s anti-corruption crusade. Through its collaboration with foreign governments and international law enforcement agencies like Interpol, China repatriated 140 officials in 2023 alone, recovering 2.91 billion yuan in stolen assets. However, while catching bad apples makes headlines, it does little to address the systemic problems that enable corruption in the first place. The crux of China’s corruption problem lies in the dominant role of the state in the economy, giving officials considerable influence over land, loans, licenses, and myriad other resources. This creates irresistible temptations for officials to sell favors to businessmen, or for regulators to collude with state-owned companies to stifle private-sector competitors.
All of this is compounded by the persistent cultural norm of guanxi (personal relationships), which emphasizes cultivating relationships with those in power in order to advance. Additionally, the majority of Chinese civil servants receive extremely low formal salaries, which incentivizes them to supplement their salaries with taxes levied on businesses and citizens. This shows why China’s approach to fighting corruption has failed: it relies on the same opaque party and state apparatus that enables corruption in the first place. By targeting individuals no longer under Chinese jurisdiction, Sky Net avoids prosecuting powerful figures still within the system. This allows the Communist Party to appear tough on corruption without confronting special interests.
None of this suggests that China is doomed to wallow in corruption. The country has made admirable progress in combating the blatant excesses of its officials since the 1990s, while achieving the most dramatic reduction in poverty in human history, despite widespread corruption. To succeed in the long term, anti-corruption efforts must disrupt the incentive structure that makes corruption rational behavior for many local officials. Economically, this means raising public sector wages to reduce the need for predatory extraction. In 2015, the government announced a plan to increase civil servants’ salaries on average by 60% over the next few years. However, the implementation of this plan has been uneven across regions and sectors.
The transition to a more market-oriented system must also be accelerated, creating a level playing field for private companies. Politically, this requires external audits of agreements between companies and civil servants, which should be subject to greater public scrutiny. In recent years, China has launched several initiatives aimed at increasing government transparency, including Open Government Information Regulations. However, these efforts have been hampered by resistance from vested interests and a lack of enforcement mechanisms. As China’s economy matures, the benefits of crony capitalism will decline, while the costs, both economic and social, will increase. Ultimately, the party will have to face the hard truth: fighting corruption is not just about catching crooks, but also about changing the entrenched systems that breed them.
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