Can China curb endemic corruption before its economy slows and people lose faith?

Dan Hough says China’s impressive economic results have defied those who say corruption and growth don’t go together, but this, and the Chinese people’s unfailing hope for the future, won’t last forever

PUBLISHED : Friday, 08 September, 2017, 11:22am
UPDATED : Friday, 08 September, 2017, 7:16pm

The Chinese are the world’s most optimistic people. In 2016, for example, analysis conducted by YouGov found 41 per cent of Chinese citizens thought the world was becoming a better place. This result put them 18 percentage points ahead of Indonesians in second place. The French came in last; only 3 per cent of “La Grande Nation” felt optimistic about the world’s future; 81 per cent believed things were getting worse.

The main driver of Chinese optimism is the country’s consistently impressive economic development. The equation is simple; China gets richer, its people remain optimistic. As anyone with even cursory experience in mainland China knows, this economic development has nonetheless gone hand in hand with a range of challenges, none greater than dealing with endemic corruption.

The corruption we see on the mainland poses a number of challenges for both the Chinese state and for independent analysts. One of the most intriguing is the poke in the eye China’s development gives to the notion that corruption stunts growth. Following a long period of head-scratching, analysts now think they have a handle on what is going on.

China is a classic case of developmental corruption. It engenders a stability that has helped the economy to grow impressively. The Chinese Communist Party under Deng Xiaoping set out to reform China’s planned economy by opening it up to market pressures. This process offered incentives for productive economic activity, just as it created myriad opportunities for self-enrichment, of both the corrupt and non-corrupt kind.

In other words, introducing the market to help allocate resources stimulated growth and corruption alike. The problem, of course, is that corruption is now hardwired into the system. Once China runs into choppy waters, however, this endemic corruption will develop into a(n even more) significant problem.

The nuanced relationship between corruption and economic development should not lead anyone to think that corruption is an attractive policy choice. China is as rich as ever , but that does not mean that other prospective developing nations should want to hardwire corruption into their systems’ DNA as China has. Sooner or later, the Chinese economy will stop growing, and the Chinese will have to look for ways to effectively deal with the underlying corruption.

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President Xi Jinping is almost certainly well aware of this; the tens of thousands of prosecutions for corruption under his watch are a testament to that. His government certainly talks a good anti-corruption game, but there is still plenty of work to do.

Too much anti-corruption talk in China remains polemical. Any government, for example, that claims it will adopt a zero-tolerance approach or that it will sweep away the corruption within its ranks should be viewed with some caution. In a world of ever more belligerent rhetoric, it is much better to under-promise and over-deliver rather than the other way around.

The real challenge is working out what progress is possible where. Policies that help citizens find out a little more about how decisions are made, how they can legitimately defend their own interests and hold those in power responsible are likely steps forward. However, do not expect them to be simple steps or ones those with something to lose will take lying down. The Chinese state regularly illustrates that this not the type of medicine it’s prepared to discuss, let alone implement.

The road to reform is incremental and confusing, often involving considerable time lost down cul-de-sacs. Reform is also inherently political, and it is rarely clear what reforms are necessary where. Other Asian tigers have shown the corruption/growth double act does not last forever. China’s leaders would do well to take note of this, as, when the slowdown inevitably hits, the Chinese are unlikely to remain the world’s most positive people much longer.

Dan Hough is a professor of politics at the University of Sussex and director of the Sussex Centre for the Study of Corruption. His new book is Analysing Corruption