American Expert on China’s Corruption
Over the weekend, Jonathan Manthorpe of the Vancouver Sun launched a familiar tirade against China, this time on corruption. At the beginning of the article, he mentions a new book, Double Paradox: Rapid Growth and Rising Corruption in China, by Andrew Wedeman, Chair of Asian Studies at the University of Nebraska and a foremost expert on corruption in China but then immediately dismisses the author’s conclusions.
Instead, he focuses on a recent interview with Bao Tong, policy secretary of former disgraced CPC General Secretary Zhao Ziyang who died in 2005. Of course Mr Bao is going to denigrate the entire Chinese leadership since he was incarcerated for a number of years after the tragedy in Tiananmen.
Instead of sensationalizing the issue, it’s worthwhile to take a look at what Mr Wedeman specifically had to say. Following the publication of his book, he was interviewed by Tom Orlik, the Wall Street Journal’s finance and economic reporter, on its online China Real Time segment. In the interview, while declaring that corruption remains extensive in China, Mr Wedeman is nonetheless confident that the authorities can keep it in check, albeit unable to make significant inroads in mitigating it.
Here are some excerpts edited by the WSJ (I’ve done further editing due to the lack of space):
You talk about the difference between ‘developmental’ corruption’ in South Korea, Taiwan and Japan, and ‘predatory’ corruption in China?
One of the dirty secrets of high speed growth in the East Asian Tigers is that the developmental states rested on a foundation of corruption. Money flowed from business to the ruling party, which redistributed it to political stalwarts and voters to forge stable ruling coalitions.
China is different because the Communist Party does not depend on injections of cash from the private sector. As a result, whereas dirty money was an integral part of the developmental success in South Korea, Taiwan, and Japan, in China corruption fits the classic definition ─ the misuse of public authority for private gain.
Economic reform in China has created new opportunities for corruption on a grander scale?
Stripped to its barest essentials, economic reform in China involves the transfer of property rights from the state to the market. The nominal value of these assets is often well below their market value. The existence of large windfall profits creates strong incentives for officials to demand bribes from recipients and for buyers to kickback a share of the expected windfall profit.
Has corruption stimulated China’s growth?
Far from stimulating rapid growth, corruption in China feeds off rapid growth. In essence, corrupt officials are stripping off a share of the profits created by reform.
But in the long term, most experts think graft will weaken China’s economy what’s the doomsday scenario?
In the long term, graft will harm the Chinese economy. But I am not sure there is a “doomsday scenario.” Amidst all the hype about corruption gone wild in China, it is often forgotten that even though it is worse than the global average, it is not a level on par with what we might call crisis corruption.
(See Transparency International’s Corruption Perceptions Index for 2011, a world ranking of 183 countries that can be found in my post of May 1, 2012. In the ranking, China places 75th, closely behind Brazil (73), not far behind Italy (69), and 20 spots above India (95).)
My sense is that if corruption were not controlled then it would begin to become more of a drag on growth rates, particularly as the extent of asset transfers decrease and overall growth rates slow. But corruption alone would not push the economy into collapse.
You are more optimistic what’s your theory?
I have more confidence in China’s war on corruption than others, not because it will significantly reduce corruption, but in the much more modest sense that they have managed to prevent the problem getting significantly worse.
If you look at either the number of individuals charged with corruption or the estimates of the severity of corruption in China by outside experts, corruption has been at about the same level for nearly a decade.