Corruption in China: Insights and Reforms

The state-controlled nature of many prominent businesses in China, mixed with instances of corruption and inefficiency at various levels, highlights challenges faced by the government and public discontent. Economist Adam Hersh suggests a complex relationship between government-owned and privately owned enterprises, with reforms aimed at addressing corruption issues. Premier Li Keqiang promises transparency in financial matters and a crackdown on corrupt officials as part of anti-corruption efforts.

• China
• Corruption
• State-controlled businesses
• Economist insights
• Policy reforms

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Presentation Transcript

1. Current Corruption in China { Pol 324 Seth Sheldon

2. Chinas largest businesses are state controlled Many of China s largest businesses are state-controlled, remnants of the country s more central planning days. Here are some examples of the biggest: China Mobile, the biggest mobile phone operator, (Tech sector) Cnooc , an oil exploration company, (Nat. resources) Air carrier China Eastern, (Travel) CCTV, the official government tv broadcaster. (Media) Scandals involving highly placed leaders, day-to-day incidents of minor corruption and the sheer inefficiency or negligence by local cadres are among the most potent sources of public discontent.

3. Economist Adam Hersh Local Gov t Beijing neither controls nor coordinates everything in the Chinese economy. While government involvement in China s economy is extensive, most of the action aimed at developing individual companies happens at the local government level. Local officials make their own decisions in their own interests, often without the knowledge or support of Beijing. Local officials are integral to many of the entrepreneurial decisions that have led to China s remarkable economic success. The investment resources under local government control vastly exceed those used by the central government to support its own state- owned enterprises as well as private sources of financing.

4. (Hersh Cont.) As China has evolved towards a more free market... Hersh states, There is often no clear distinction between privately owned and government-owned enterprises in terms of government support national, provincial, or local for economic development. Corporate-governance reforms beginning in the mid-1990s transformed many once distinctly government-owned companies into an array of seemingly private, shareholding, or joint-venture ownership forms. But the various government institutions that support the development of government-owned companies are just as readily applied to other ownership forms, as well. There is often a revolving door between top leadership in business and key government economic positions. And beyond this system of local government-led industrial policy, Communist Party infrastructure is expanding within private firms even as business leaders are expanding their reach within the Communist Party hierarchy.

5. Premier Li Keqiang Promises Reform.. He pledged to make public information about the government's financial budgets and statements. Cao, procurator-general of the SPP (Supreme People s Procuratorate), called on procuratorial organs to work out specific measures for the implementation of a five-year (2013-2017) plan on building a system to punish and prevent corruption, issued by the CPC Central Committee on Dec. 25. Recent statements in his speech Jan. 15 .. the task to streamline administration and delegate power to lower levels should be given priority in the government's efforts to deepen reform and build a clean government. also promises that... zero tolerance to corrupt officials to seriously punish any breach of the "eight-point" anti-bureaucracy and extravagance-busting guidelines as announced by the central authorities.

6. Xi Jinping and His Corruption Campaign Current President of People s Republic of China The general consensus is that Xi has acquired more power during his short time in office than any Chinese leader since Deng Xiaoping (who, it should be noted, also had to consider the opinions of the other seven members of the Eight Elders). In his year since taking office, he has taken measures such as banning expensive flower arrangements and elaborate red-carpet ceremonies "We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people," Xi said in a speech carried by the state news agency Xinhua. He has continued to stress that their will be no exceptions made, no matter how many constituents he upsets..which is already becoming a problem ..

7. Zhou Yongkang Former Domestic Security Czar Allegedly at center of gov ts biggest corruption scandal for past six decades Gov t remaining quiet as possible "It's the ugliest in the history of the New China," said one of the sources, who has ties to the leadership, requesting anonymity to avoid repercussions for speaking to the foreign media about elite politics. If charged, Zhou would become the highest-ranking official to be formally charged with a crime in the People Republic of China (PRC) history Zhou retired in the fall of 2012 from the Politburo Standing Committee, the highest body in the Communist Party somewhat forcibly.. Throughout much of Xi s tenure in office, Zhou s loyalists and family members have been arrested so far, while Zhou himself is reportedly being held under informal house arrest. More than 300 of Zhou s relatives, political allies, proteges and staff have also been taken into custody or questioned in the past four months. The same report said that the Chinese government has also seized about 90 billion yuan ($14.5 billion) from Zhou s associates and family members.

8. Jiang Zemin and President Hu Jintao on Zhou YongKang The only two living past Chinese Presidents Initially came out in support of Xi s Anti-Corruption Campaign, but now have issued statements in somewhat the opposite direction Jiang s warning to Xi was this, the footprint of this anti-corruption campaign cannot get too big. Same UK newspaper stated Hu has expressed a similar sentiment to Jiang Their views are definitely founded, questions raise, could this become a witch hunt if it gets too big? If this many have been caught just related to Zhou, how high up and how long does the list go? Because of this, many news outlets are reasoning that both former president s slight appearance of change in support towards Xi s platform and also hinting that they may not want the gov t to hold trial against Zhou as he served with them on various committees, could the trial reveal additional dirt on them or too many constituents?

9. Likely outcome: Will this result in first substantial step against corruption or not? Xi has arranged two meetings (or hearings) in front of the National People s Congress (NPC) and the Chinese People's Political Consultative Congress (CPPCC) in Beijing this week to help determine legal action for Zhou Xi s statement last week was this.. "It's my decision not to point it out, to name him in my stories," Xie said. "I think it's not the right time to do it; this is a politically sensitive story. So that's why we haven't made it explicit. But after the two meetings, I think a lot of things will be out in the open. One newspaper reports, "There's one 'big tiger' behind businessman Zhou Bin and others, and everyone is waiting for him to be exposed. Another reporter states, "Anyone who violates the party's discipline and state law will be seriously investigated and punished, no matter who he is or how high-ranking, Does Xi have enough power to exonerate ALL the parties involved? Could this eliminate too much of the party members in power and only cause more problems (as Hu and Jiang suggest)? If so, then should it just be understood that more corruption is inevitable within a communist system?

10. Sources http://news.xinhuanet.com/english/china/2014-01/16/c_126011215.htm http://www.forbes.com/sites/russellflannery/2013/09/04/chinese-billionaire-hua- bangsong-ensnared-in-govt-corruption-probe/ http://articles.latimes.com/2014/mar/04/world/la-fg-china-zhou-20140305 http://thediplomat.com/2014/04/chinas-former-leaders-tell-xi-to-halt-anti- corruption-campaign/ http://www.theguardian.com/world/2013/jan/22/xi-jinping-tigers-flies-corruption http://www.americanprogressaction.org/issues/economy/report/2012/02/15/11069 /chinese-state-owned-and-state-controlled-enterprises/