In recent weeks, China sentenced Tian Hui, a former official at a state-owned asset management company, to death for taking about 1.1 billion yuan ($151 million) in bribes. At the same time, the state launched a corruption investigation into Agriculture Minister Tang Renjian. Even officials who have fled abroad have not been spared. Earlier this year, China launched Operation Skynet 2024 to hunt down corrupt officials who embezzled funds and fled. For a public fed up with official corruption, the news brought much-needed relief. After all, who doesn’t want to see justice served? The name of the operation is taken from a Chinese proverb: “The sky is vast and the network is vast, but there are no omissions.”
However, such prominent anti-corruption initiatives have repeatedly failed to eradicate corruption, despite a major push since the 1980s. Each time, corruption reappeared years later in more sophisticated forms. In the early days of China’s economic reform, the most common types of corruption were petty bribery and embezzlement of low-level officials. Think factory managers stealing inventory, or local bureaucrats extorting “fees” from hapless villagers. Subsequently, China’s political system rapidly developed to link incentives for local officials to economic performance. The more prosperous a local economy is, the more leaders can collect huge benefits and, of course, bribes. This prompts officials to strike lucrative deals with entrepreneurs, promoting development while curbing corruption. Many of the officials now classified as “fugitives” were once praised as capable leaders who achieved impressive economic growth within their jurisdictions.
Fast forward to the 2000s, and corruption has reached its most severe form: crony capitalism. Instead of small bribes, business tycoons and political elites make government contracts, bank loans and land deals worth hundreds of millions of dollars. Businessmen who pay cash earn astronomical returns through access to monopolies, cheap financing, and prime real estate. Politicians who pocketed the gains gained the clout to promote large-scale programs that boosted gross domestic product. The result is a turbocharged version of crony capitalism that has helped fuel China’s stunning economic rise, turning backwaters towns into booming metropolises and propelling well-connected tycoons into the ranks of the global super-rich.
But there’s a problem! Over time, this corrupt growth model poses huge risks to the economy: massive amounts of bad loans, ghost towns of vacant apartments, and growing inequality between politicians and everyone else. If left unchecked, these problems can undermine public trust and jeopardize the party’s legitimacy. Chinese President Xi Jinping recognizes the seriousness of this threat and has made fighting corruption a signature priority of his government since taking office in 2012. The scale and duration of Xi Jinping’s crackdown are unprecedented in the 100-year history of the Communist Party. Between 2013 and 2022, authorities investigated a staggering 4.39 million cases and fined approximately 4.7 million people. Those under investigation include not only low-level “flies”, but also high-level “tigers” such as former Politburo Standing Committee member Zhou Yongkang, who was sentenced to life imprisonment, and former Vice Minister of Public Security Sun Lijun, who was sentenced to death.
Since its launch in 2015, Skynet has become the centerpiece of Xi Jinping’s anti-corruption campaign. Through cooperation with foreign governments and international law enforcement agencies such as Interpol, China repatriated 140 government officials and recovered 2.91 billion yuan in stolen assets in 2023 alone. Yet while catching individual bad apples makes for headline-grabbing headlines, they do little to address the systemic problems that lead to corruption in the first place. The crux of China’s corruption problem is the state’s dominant role in the economy, which gives officials significant influence over land, loans, licenses and countless other resources. This creates an irresistible temptation for officials to offer favors to businessmen, or for regulators to collude with state-owned enterprises to stifle private-sector rivals.
All of this is compounded by enduring cultural norms. relation (Personal Relationships), which emphasizes cultivating relationships with those in power to achieve success. In addition, the formal salaries of most Chinese civil servants are extremely low, prompting them to charge companies and citizens fees to increase their wages. This illustrates why China’s anti-corruption approach fails: It relies on opaque party-state institutions that foster corruption in the first place. By targeting individuals who no longer fall under China’s jurisdiction, Skynet avoids prosecuting powerful figures who remain within the system. This allows the party to appear tough on corruption without confronting vested interests.
None of this means China is doomed to corruption. Since the 1990s, the country has made admirable progress in curbing excessive official brutality, achieving the largest poverty reduction in human history despite rampant corruption. To be successful in the long term, anti-corruption efforts must upend the incentive structure so that the corrupt behavior of many local officials is rationalized. Economically, this means raising public sector wages to reduce the need for predatory extraction. In 2015, the government announced plans to increase civil servant salaries by an average of 60% over the next few years. However, the implementation of the plan is uneven in different regions and industries.
The transition to a more market-oriented system must also be accelerated to create a level playing field for private enterprises. Politically, it requires external audits of dealings between businesses and officials and subjecting them to greater public scrutiny. In recent years, China has launched a number of initiatives to improve government transparency, especially the Government Information Disclosure Regulations. However, these efforts have been hampered by resistance from vested interests and a lack of enforcement mechanisms. As China’s economy matures, the rewards of crony capitalism will diminish while the economic and social costs will rise. Ultimately, the Communist Party will have to face the harsh truth: anti-corruption is not just about catching crooks, but about changing the entrenched systems that breed crooks.
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