Corruption and Anti-corruption in reform China
Dr. Zengke He
Introduction
Corruption has become a major social and political issue in China since 1978when Chinese authorities began to implement the policy of "reform and opening".The public's outrages with the mounting corruption within the party organisationsand government institutions is an important reason for explaining that why thereare so many people participated in or supported the pro-democracy student demonstrationin 1989. After 1989 Tiananmen Square event， the new Chinese leaders have giventhe priority to the anti-corruption work on their agenda and strengthened the anti-corruptionefforts. But up to now， the corruption phenomenon is still very rife ， and presentlyis seen as the second greatest public concerns（behind unemployment ）。 The abilityor inability of "third generation" political leaders to successfully curb corruptionwill play a major role in their political survival. This article will focus on theanalysis of the extent， forms and characters of corruption in current China， itscauses and effects， and the anti-corruption efforts of the Chinese Communist Partyand its government. 2
The extent， forms and characteristics of corruption in current China
What is corruption？ The notion of corruption varies with time and places. Accordingto Chinese official terminology ， the core element of the definition of corruptionin current China is the notion of use of public power and public resources for privateinterests （'Yi Quan Mu Si' ）。 This is a very broad definition， which can includea series of phenomenon and behaviours and vary with time. Consequently， it canbe adapted to include new forms of corrupt practice. Corruption in current Chinais often links with negative phenomenon and unhealthy tendency within party andgovernment departments. As a result ， anti-corruption effort also includes fightagainst all of these phenomenon and behaviours.
This definition has three features. First ， the core element of corruptionis not 'abuse' or 'misuse' of public power via-a-via legal norms or social standardsfor private benefits but the very 'use' of public power for private benefits. Onthe one hand， this is a very strict standard for determining what behaviours canbe defined as corrupt since it can includes any behaviour utilising public powerfor private benefits. On the other hand ， given that legal norms and moral standardsmay change with time， the definition may take some risks to exaggerate the extentof corruption or arbitrarily label some practice as corrupt.
Another feature of this definition is the ambiguous of the term 'private interests'in contrast to "public interests" ， i.e. the interests of whole nation and partyPrivate benefits include not only personal gains， but also the interests of workunits ， departments and regions when they are given priority over public interests.
Third ， the definition leaves open the question of which the subject of corruptionis. It not only refers to individual public officials ， but also can includes therelatives of public officials and retired public officials， and can also refersto some public bodies and their leaders （as legal rather than natural persons）。
As mentioned above， in official terminology， corruption ， "negative phenomenon"and "unhealthy tendency" are linked together. Although government officials andthe public generally agree on some practices as "corrupt" ， there are fewer consensuseson other practices. Heidenheimer's three-category classifications system providesa useful framework for understanding both the Chinese categories and the areas ofconsensus and lack of consensus. Heidenheimer's framework includes three categories：（1 ）。 Class A or "black corruption"：The corrupt practices in this category，including graft ， bribe， fraud， embezzlement ， extortion， smuggling， tax evasion，etc.， Constitute an important part of "economic crimes". Because they are obviouslyillegal and the main purpose of those involved in these practice is to increasetheir personal wealth ， government officials and the public generally agree thatsuch practices are corrupt. （2 ）。 Class B or "grey corruption" ： The key characteristicsof this category， into which more and more practices are being categorised ， isleaders of public institutions using their institutional power to increase the oftheir institutions and improve the welfare of their staffs through various legal，semi-legal and illegal ways. Such practices includes public institutions makingprofits by engaging in business activities（such as public bank enter into the stockmarket， the bureau of environment protection selling environment protection facilitiesto their clients）， setting up satellite companies ， and imposing fines or collectingadministrative fees or charging the so-called 'service fee' and then putting theincome into their own coffers. Class B also includes such "unhealthy practices"as the extravagance and waste ， e.g. ， spending public money to support luxuriouswork conditions and/or life style by senior officials. Such extravagance and wasteis manifested in many aspects ： expensive entertainment， costly foreign cars forsenior officials， magnificent and tastefully furnished office buildings， domesticor foreign travel in the name of official business， etc. Such "unhealthy tendencies"and the associated corruption ， both significantly increasing the public's burden，have led to a significant public outcry. This has led Chinese authorities to attemptto stop these practices. However they have met strong resistance from these publicinstitutions which， in turn， justify their practices in terms of the purpose oftheir practice， the legitimacy of their institutional power and the work requirement.（3 ）。 Class C： or "white corruption"： Class C practices constitute a kind of'common practice' of social life. They include the nepotism and favouritism in thepersonnel recruitment and promotion ， bending the law in favour of relatives andfriends in law enforcement， preferential treatment in resource-allocations forrelatives and friends ， etc. They are characterised by preferential treatment byofficials of relatives， friends， fellow-villager etc. much of which is， in fact，a way of reciprocating previously given favours. Such practices have penetratedwidely into public life ， influencing the behaviour of government officials andordinary citizens as well， contributing to the operation and existence of networksof personal ties throughout China. Creating and maintaining the networks of personalties to seek and give favourable treatment is accepted by most people ， includinggovernment officials， as a 'normal' practice when they involved in these practice.However ， such networks are condemned by those excluded from them although theywill not be hesitate to engage in such practice should they have an opportunityto do so. The late British China scholar Gordon White had also made a similar classification.3
Inasmuch as the Chinese authorities combine all the above categories togetherin their anti-corruption work ， in this paper I will treat them all as corruption.However by so doing ， the Chinese authorities have set a difficult goal for themselvessince the limited consensus on white corruption may increase the difficulty of attackingthese practices. On the other hand， the labelling of some common practice falleninto the grey area from the white area and some common（"white" ） as "corruption"may help to delegitimize them and/or push them into the "grey" category ， thuscontributing to anti-corruption and social and political progress.
The extent of corruption has increased dramatically and sharply since 1978 withthe situation becoming even worse after in the 1990s. This tendency is apparentfrom the data on perception of corruption in developing countries provided by TransparencyInternational and summarised in table 1.
The above table demonstrates a clear drop in the scores of corruption in Chinafrom until 1980 until 1995 reflecting the increase of corruption in China in thisperiod. The slight improvement is likely due to the strengthen of anti-corruptionefforts by the third generation political leadership and the deepening of market-orientedreform. But despite these slight improvements ， the public and its deputies arestill very dissatisfied with the widespread corruption and the inadequate effortsat fighting corruption. The vote of nearly forty per cent of the deputies in the1997 session of National People's Congress against General procuratorators ZhangSiqing's Annual work report is an indication of this dissatisfaction.
In the 1990's ， corruption has worsened and taken new characteristics withinthe above three categories：（1 ）。 Class A： corruption as a form of economiccrimes has increased with the following manifestations. First ， the number of large-scalecorruption cases increased sharply. The so-called "large-scale cases" refereed tothe huge amounts of money obtained by corrupt officials through graft ， bribes ，embezzlements ， smuggling and other illegal activities. In the early 1980's， "largescale cases" refer to amount over 10， 000 yuan ， but now the standard has beenraised to 100 ， 000 yuan ， while the especially big cases involving amount overone million yuan， have also increased continuously. . According to official statistics，large-scale cases over 10 ，000 yuan investigated by the procuratorates of variousprovinces from January to September 1993 accounted for 59.7 per cent of the totalcases investigated. Of these， large-scale graft and bribery cases involving overhalf a million yuan doubled and those and those involving more than a million yuantripled compared to the same period in 1992. For example， the largest 1993 graftcase involved grafted by a staff of public bank in Hai Kou city ， while the largest1993 bribe case involved a Guang Dong government official receiving 7 million yuanbribes. Second， the ratio of senior officials at and above the county level involvedin corrupt crimes also increased significantly. The grand corruption cases increasedobviously. According to official statistics ， 190 senior officials at or abovecounty level involved in corrupt crimes was sentenced to jail in 1988 ， while thefigure for the same group was 504 in 1993. The most famous such case is that ofthe former Mayor and Deputy-Mayor of Beijing whose corrupt acts had negative effectson the entire country. Third， the corruption crimes committed by the work unitsand their legal persons have also grown in numbers. Crimes committed by legal personssuch as bribes， smuggling， tax evasion， etc. ， has become an important partof economic crimes.4（2 ）。 Class B： as Wei Jianxing， head of Central Commissionfor Discipline Inspection （CCDI） pointed out， the unchecked spread of negativephenomenon such as the use of public power for personal gains below the thresholdsdefined for prosecution ， rampant unhealthy tendencies within governments， escalatingextravagance and waste and the moral degeneration of some Party members and officialsare all prominent manifestations of increased corruption in current period.5 Forexample ， in Xinmi city（a county level city in Henan） the total extra budgetaryincome from imposing on fines ， collecting administrative fees and charging 'servicefee' by various city government departments was greater than the city government'stotal 1997 budgetary income of 200 million yuan.（These departments turn over asmall promotion of the above extra-budgetary income to the city government whileretaining the majority as their own income）。（3 ）。 Class C： Networks of personalties with senior officials have become an important resource for accessing politicalpower and gaining economic wealth. Consequently ， investing in creating and maintainingsuch networks has become a common practice for many people inside and outside ofgovernment. Simultaneously， the children of the former senior officials and thepresent senior officials（the latter hand picked by the former） have utilised theirprivilege and advantages to access political power and economic wealth. The conspicuouspolitical power and economic wealth of the children of some senior officials，includingretired senior officials， became a specific focus of anti-corruption demonstrationof 1989.
Changes and continuity both characterise the forms in reform China. Some traditionalforms of corruption ， such as nepotism ， patron-client practice ， bend the lawfor the benefit of relatives or friends ， graft and embezzlement. Sales of governmentposts are still very widespread. But some traditional forms have incorporated newcontents. For example ， the networks of personal ties with senior officials havebeen commercialised as a way of obtaining personal gain. Many people invest theirmoney to create and maintain such networks in the expectation of rewards. At thesame time ， some modern forms of corruption has emerged and developed linked withthe modern economy and political system. Examples include commission， kickbacksin the procurement of government contracts and biding for public work or servicecontracts ， inside trading and manipulation in the stock market and real estatemarket， bribing voters and/or deputies at the village and township level ， etc.The most interesting thing is that new forms of corruption have emerged and developedand are sometimes replaced by even newer forms of corruption. Such practices aredifficult to classify as either modern or traditional forms of corruption. One newform of corruption is speculative and profiteering activity ， include smugglingby individuals public officials or work units as a whole. The object of such speculationand profiteering has varied with time through three waves moving from the consumergoods such as the colour TV and bikes in the early 1980's to the producer goodssuch as steel ， petrels in the mid-1980's and finally to the factors of productionsuch as stock ， land and credits in the early 1990's. Another new and very popularforms of corruption ， called "Gong Hui"， is a bribe to a public official by publicofficials for public benefits. In such cases， managers and staffs of state ownedenterprises bribe the relevant officials in marketing their products， gaining creditsand monopolies and avoiding regulations ， local government officials bribe theirhigher body in order to get preferential treatment such as favourable loans ， policies； pubic officials in one department bribe public officials in another departmentin order to get the resources controlled by the latter. In addition ， althoughthe patron-client relations are not new ， patron-client relations between seniorofficials and private entrepreneurs have taken on new forms. Senior officials providepolitical protection for their clients' private properties in the face of changingand uncertain policies and protection from extortion by corrupt junior officialsand organised crimes， while the entrepreneurs provide financial support for thesenior officials to enjoy a luxurious life. Although there have been many formsof corruption during the reform period， they all share a common purpose， namely，realising the personal enrichment of public officials through corrupt practice undertakenby the officials themselves or by their work units or even the whole department's.Getting rich first and fast has become the major motivation of various forms ofcorrupt.
The Causes of Corruption in reforming China
Why has China changed from a less corrupt country to one of the most corruptdeveloping countries in the only two decades？ Why did reform China undergo threewaves of economic crimes in the past twenty years ？ Will China face the fourthwave of economic crimes in the near future？ Is there any relationship between theevolution of reform the changing and the changing forms of corruption during thetransition period ？ I will try to answer these crucial questions in the discussionof the causes of corruption below.
Exploring the causes of corruption in reform China is a very difficult and complicatedtask because there are so many factors which contribute to the development and spreadof corruption and because the transition is still ongoing. Even so， there are stillsome common factors relevant to the growth of corruption.
1.The co-existence of dual economic systems during the whole transition periodprovides plenty of incentives and opportunities for corrupt practices.
The market-oriented economic reform ofChina since 1978 is a gradually advancingprocess that has followed its own path of evolution. With the goal of establishinga socialist market economy having been finally settled in 1992， the long term co-existenceof the planned and market economies will be an important feature of economic transitionwhich will contribute to the large-scale growth of corruption.
The economic reform has allowed three kinds of persons to become independentor relatively independent economic actors in control of their own interests. Ithas also created strong incentives for these three categories of economic actorsto participate in corrupt practice：（1 ）。 Actor A： This refers to the managersand staffs for marketing and purchasing work in non-state owned enterprises ， includingvillage and township enterprises， household and privately owned enterprises， andforeign or jointly owned enterprises. Before 1978 ， non-state owned enterprises（except the village and township enterprises ， which only accounted for a verysmall proportion in the total enterprises ） were basically non-existent. After1978， the new economic policy permitted and encouraged the development of variousnon-state owned enterprises ， as a consequence of which actor A began to emergein economic life. Actor A has strong incentives to engage in corrupt practices fora number of reasons. First， actor A has full autonomy to deal with the internalaffairs of their enterprises and can enjoy any profits s/he makes. Second ， actorA has unequal （lesser） status via-a-via state-owned enterprises in receiving legalprotection for property and getting resources allocated by state plan. Actor A alsohas fewer restrictions than counterparts in state-owned enterprises in enteringinto markets and competing with state-owned enterprises This combination of advantagesand disadvantages encourages or forces actor A to participate in corrupt practicein order to maintain and/or development of his/her enterprises. （2 ）。 Actor B： This refers to the managers of state-owned enterprises. The reform policy of'transferring power （to state-owned enterprises）and letting （them）profit'（"Fang Quan Rang Li" ） gave actor B more and more power to run his/her enterprisesand correspondingly reduced supervision within and outside of these enterprises.Actor B also has strong incentives to engage in corruption. First ， the appointmentand removal of such personnel are still controlled by the relevant government departments.Thus， it is very important to maintain good relations with various government departmentsthat have the power to regulate enterprises. Second ， actor B must compete withits counterpart in non-state-owned enterprises even when the latter use corruptand/or illegal methods in their business activities. Finally， despite similarlydifficult job responsibilities， the official income of actor B far lags behindthat of actor A.（3 ）。 Actor C： This refers to local government officials. Thedecentralisation aspect of reform has made local government officials become s importanteconomic actors in developing their regional economies. As such ， actor C alsohas strong incentives to engage in corrupt practice. First， the promotion of seniorofficial at local levels is based on their performance in advancing regional economicdevelopment. Which， in turns ， depends， to a large extent， on the degree towhich they can obtain （from these very promoting authorities ） preferential policies，favourable loans， higher financial allocations and lower quotas for turning overfunds. Second ， local government officials face heavy pressure and fierce competitionfrom the other regions in advancing economic development， pressuring them to useirregular ways to win the competition. Third， due to the incompleteness of themarket system ， local government officials must often play a brokering role betweenstate planing and the market. All of roles require a close relationship with businessmenin their own regions and provide an incentive to exchange bribes with other governmentofficials.