The Evolution of Corruption in China- Part 1

The Epoch Times ^ | 08/13/04 | He Qinglian

[TigerLikesRooster]

The Evolution of Corruption in China- Part 1

Part 1 of 8

---

By He Qinglian, Special to The Epoch Times Translated from the Chinese edition

Aug 13, 2004

---

He Qinglian is perhaps the most famous Chinese economic commentator. In August 1996 she completed a book on the social and economic ills of China after two decades of reform policies. It first appeared in Hong Kong in 1997 under the title China’s Pitfall, and an edited version was published in Beijing as Modernization’s Pitfall in January 1998, with a preface by Liu Ji, Vice-President of the Chinese Academy of Social Sciences, then an adviser to Jiang Zemin. The book was an immediate success, selling 200,000 legal copies and vastly more pirated ones. Her more recent writings have more blatantly found fault with the government, and have led to her exile to the United States.

From Individual Behavior, To Organized Activities, To Systematic Corruption

The international community is already aware of China's rampant corruption. Because China is one of several countries that maintains a strict information blockade, “Transparency International” has not been approved to conduct any studies. So, how serious might the corruption in China be? And what kind of terrible effect will it have on China’s future? The international community still does not have a clear picture.

My upcoming series of articles on this topic try to answer the following questions:

China’s political corruption and its relationship to its social system;
The areas where corruption happens most frequently and the forms corruption takes;
The abominable effect which corruption is bringing to China's future;
How the Chinese government continues to strengthen its control of Chinese society.

The Nature of China’s Corruption at Different Stages

As early as 1999, I had written an article describing how China had become systematically corrupt during the middle of the 1990s. Since China’s economic reforms began, corruption in China has become gradually entrenched: During the 1980s and the early 1990s the main form of corruption was only individual corruption. A typical example is the story of Yan Jianhong, the general manager of Guizhou International Trust and Investment, who embezzled billions and was later executed.

Around 1995, corruption in China developed from individual behavior to organized activities. Characteristics of “organized corruption” are as follows:

• Leaders of social organizations (government departments, state-owned companies, etc.) took the lead in corruption;
• Authorities coerce private businessmen to engage in “money for power exchanges,” by withholding access to public resources;
• Lower level government or company officials use the public resources under their control to bribe high level officials, in order to get more financial support, or more favorable policies.

The best examples of “organized corruption” are the People’s Liberation Army (PLA), whose generals organized an international smuggling ring. One general, General Fhang Wei, was indicted by an U.S. grand jury. Fhang's boss, General Zuang Rushun, the deputy director of the PSB, was executed following a quick trial on corruption charges.

Since 1998, corruption in China started to transform from organized corruption to systematic corruption.

Corruption has gone into every organization of the political system, industry and commerce. The tax department, financial sector, land resource management, education system, public health system are the most corrupt departments.

A typical example of the systematic corruption is the selling of government positions, which was once rare in China, but now is happening in many areas.

From a certain point of view, anti-corruption has become a tool in political struggles and a way for certain officials to monopolize profits. In Ruian City (Wenzhou District, Zhejiang Provice), one gangster used evidence of a local government official’s corruption and to gain some control of the local politics and economy of Ruian City.

In recent years, the Organization Department in the Central Committee of the Communist Party of China (CCCPC) has gone into the stage of controlling human resources by making use of official’s privacy. The so-called “Anti-Corruption Campaign” has shown more and more of it’s true color when it strikes down political dissidents. Typical cases are the “clean-out” of Zhu Xiaohua (former Chairman and President of China Everbright Group) and Wang Xuebing (former Chairman and President of the Bank of China) who were believed to belong to Former PM Zhu Rongji’s group. It is more accurate to say they have been cleaned out under the charge of anti-corruption rather than corruption.

Because corruption has gone into many departments, officials who tried to keep themselves clean would be pushed out because they blocked other people’s way towards wealth. It is a common understanding in China now: All officials take money; things can be done only with money. This kind of social recognition shows the public value in Chinese society has been twisted severely. Sometimes, the Chinese government traded with criminals in order to keep high level official’s corruption covered up. The best example is the trade done by Yang Rong, Director of HuaChen Group, in August 2002 (Yang Rong is also in the 2002 China Forbes list).

By exercising control through the invasion of official’s privacy, and by using “anti-corruption” campaigns to clean-out political dissidents, finally, the current political group has glued itself together nicely so to enjoy great profits. Under these circumstances, any anti-corruption law will never make any ground on corruption itself, it can only prevent the political elite group from splitting, and encourage each of them to stop the formation of any opposition.

In recent years, the voice for political reform has been reduced among the political elite. This is because officials widely accept corruption, and money-for-power exchanges have become common, thus reducing conflicts within the political system. All political forces have reached a consensus about corruption, that is, maintaining the current situation and political system is good for all currently in power.

China's evolving corruption is similar to what happened in South American and South Asian countries. Although on the surface China has a different political system to those countries, the core is the same, that is—those in power are above the law. In China, corrupt rich people are holding both the greatest wealth and the most power in society, but the source of their wealth is unclear. Most Chinese citizens are in doubt about the legitimacy of their wealth and condemn them from a moral standpoint.

In the 1950s, the uneven distribution of wealth in China was caused by many years of market competition. The current uneven distribution of wealth was shaped by corruption and power. So it cannot pass the scrutiny of social ethics.

[TigerLikesRooster]

Ping!

[GeronL]

Corruption.

I am going to copy and read later. I will probably learn much about the Democrat Party... I mean China. =o)

[Lokibob]

Bunch of BS.

In 1959, I worked as a customs clearance officer for NCO and Officer clubs on Taiwan. The only way I could get the papers cleared through customs was with bribes. I would place a stack of notes with the forms that needed to be signed (chopped), and the forms flew from desk to desk. I could clear my items through customs in an hour that would normally take 2 days.

Corruption and bribery is a way of life in China, not a new thing.

[Attention Surplus Disorder]

Corruption in China was invented about 15 minutes after the invention of the abacus.

[piasa]

fyi

[Quix]

THANKS.

SUCH A CRUCIAL ISSUE!

[Quix]

BTW,

What Chinese language learning CD ROM software have you found to be the best?

[walford]

...China's evolving corruption is similar to what happened in South American and South Asian countries. Although on the surface China has a different political system to those countries, the core is the same, that is—those in power are above the law. In China, corrupt rich people are holding both the greatest wealth and the most power in society, but the source of their wealth is unclear. Most Chinese citizens are in doubt about the legitimacy of their wealth and condemn them from a moral standpoint.

In the 1950s, the uneven distribution of wealth in China was caused by many years of market competition. The current uneven distribution of wealth was shaped by corruption and power. So it cannot pass the scrutiny of social ethics...

This passage misses a fundamental point. I seriously doubt that there were ever 'many years of market competition' in China. Certainly not in the sense of Chinese Rockefellers, Vanderbilts, Carnegies etc. with many small entrepeneurs cumulatively building businesses and expanding the Chinese economy. If there were, China would not have been a Third World country up until very recently.

The Chinese and the old South American dictatorships shared an essential similarity: Political and economic power were one and the same. One could not acheive material success unless ruling class status also was attained. Also in both cases, political power was not subject to a popular mandate but held into place by force. That is a medieval politico-economic social structure, which is not conducive to economic prosperity.

Further, I competely reject the implication that 'uneven distribution of wealth' is inherently wrong. In a free society, differences in work ethic, intelligence, courage, wisdom etc. [in addition to inheritance] will indeed result in differences in income and possessions. What is the alternative?

China is tolerating private enterprise now, hoping that the power base will not be challenged. That remains to be seen.

BTW I recall that Walter Williams has offered a $1000 bounty on an intelligible definition of 'social justice.' The article's mention of 'social ethics' likely falls into the same category.

The author of the posted article has bought into Marxist economics whether he realizes it or not.

[Hop A Long Cassidy]

Peter Drucker has been on record saying that China's corruption will keep them from developing beyond a certain (low) level. Without property rights, there is no (little) trust. Thus, the risk premium goes up - killing investment.

Once, their currency rate to the U.S. rises, China might not be such a nice place to do business. For now, it's hot.

Hoppy