Corruption Party of China

IN BOTH SIZE AND SCOPE, corruption in China is an enormous concern for the Communist Party of China (CPC). It has proved to be a constant embarrassment, especially because of the large number of corruption cases involving the Party cadre. In the run-up to the 18th National Congress of the CPC, to be held in Beijing in the last quarter of 2012, during which Vice President Xi Jinping and ‘First-ranked’ Vice Premier Li Keqiang are set to replace Paramount Leader Hu Jintao and Premier Wen Jiabao, the primary agenda for the Party is combating corruption. Complicating matters for the political elite in China is that, despite trying to sequester its ‘netizens’ inside a highly policed cyberspace, an increasingly vigilant populace, even though lacking political choice, has found creative ways to express its opinions on an issue sullying the nation.

Since it is a political issue with huge socioeconomic implications, the mood in the CPC is for quickly ramping up certain aspects of the law to rein in corruption and, equally, arrest the Party’s fast-fraying legitimacy. In fact, three landmark cases that gripped the attention of Chinese citizens over the past half-decade all involved Party members.

In July 2007, Zheng Xiaoyu, former head of the State Food and Drug Administration, was executed for receiving bribes of ¥6.49 million (approximately $850,000). As chief regulator of a State Council body mandated with approving new drugs, licences and drafting quality standards for the pharmaceutical industry, Zheng’s sins of omission and commission were considered serious enough to warrant his execution. It later became clear that his ordering the approvals of more than 150,000 new medications and supplements, bypassing quality norms, had led to the global recall of Chinese health products adulterated and infused with heavy metals and toxins.

In April 2008, Chen Liangyu, former mayor and Party secretary of Shanghai, was sentenced to 18 years in prison for his role in what is known as the ‘Shanghai Social Security Fund Scandal’. Chen was alleged to have dug into the ¥10 billion city social security fund at his disposal, diverting roughly a third of it into real estate and road-building projects, abusing his position to benefit family members, using the social security fund to aid the purchase of state-owned enterprises by illegal firms, and leading a ‘licentious’ lifestyle. The exact amount appropriated in the scandal was not made public, since Chen was, after all, a very senior Party functionary. There was a political angle to Chen’s downfall: The beneficiary of the scandal was the Hu Jintao faction, which scored over the ‘Shanghai Gang’ headed by former President Jiang Zemin. Chen owed his escape from execution to the political capital he had amassed in his three decades with the Party and to his intimate understanding of its ways.

The most recent case involves Liu Zhijun, minister of railways from 2003 to February 2011. A relentless proponent of the modernisation of China’s railway network and the headlong construction of its high speed rail (HSR) infrastructure, Liu was feted for bringing the breakneck upgradation of the vast Chinese rail network to global attention. His methodology—developing the system in ‘leapfrogs’—earned him the sobriquet “Leap Liu”. His sudden undoing came after the CPC’s Central Commission for Discipline Inspection (CCDI) charged him with “severe violation of discipline”—in short, taking ¥800 million in kickbacks, mishandling the Chinese New Year travel mega-rush, and laxity prior to the 2008 Shandong train collision.

The Wenzhou HSR accident of July 2011, China’s first fatal HSR crash, which killed 40 people and injured about 200, exposed the dangers of compromised safety and technology in the country’s precipitous expansion of its HSR network. The Chinese government has already spent several hundred billion renminbi on modernising its railway network; it is now feared that the entire process might be shot through with corruption, collusion between government functionaries and private enterprise, favouritism and poor implementation. True figures are hard to come by, but it is widely felt that China Railways, the parent body, is in a mess and in need of stricter supervisory control and realistic future-planning. Liu Zhijun himself has been accused of profiting from his erstwhile position and favouring a few suppliers of sound barriers and signaling systems, but is not expected to meet the fate of Chen Liangyu.

China’s much celebrated first two decades of reforms since they were instituted in 1979 created the conditions for corruption, with the proliferation of rent-seeking activity. The ‘dual-track price system’, ‘factory director responsibility system’, land and housing reforms and shareholding system reforms, among others, initiated and institutionalised in an environment of lax regulatory control and absent supervisory mechanisms, provided opportunities for Party cadres and those with guanxi (connections) to make the most of loopholes. For an economy in transition from overwhelming state control to coexisting with the market, the rule-makers—the Party cadre—became the rule-breakers, too. There have also been instances of local clans taking over Party branches and colluding with secret societies and triads to extract ‘rent’ from new post-reform enterprises. During Jiang Zemin’s presidentship (1989-2005), the Party’s encouragement to entrepreneurs to join its ranks legitimised, in one stroke, private businesses, strengthened ties between Party cadres and entrepreneurs, and led to the morphing of many of them into ‘cadre-entrepreneurs’.

The Party is aware that rampant corruption among its cadres is undermining its legitimacy, and that any absence of firmness in dealing with it would exact an unacceptable political cost. The CPC derives its legitimacy from meeting popular expectations, and from the creation of institutions that secure consent and mobilise resources. The Party holds the view that as long as it has the ability to generate material wellbeing—even by exclusively dominating the political space—society can be convinced, and the consent manufactured, to perpetuate its rule. It is difficult for the CPC to extricate itself from institutionalised corruption because the Party is the primary stakeholder in the economy in terms of personnel and outreach into both the public sector and private enterprises. The CPC’s rules declare that a company with more than 50 employees must include a Party cadre and a unit with 100 or more employees must have a Party branch. For private entrepreneurs, it makes sense to invest in ‘political capital’ by employing Party cadres; simply put, the greater the guanxi of the cadre (especially recently-retired and middle- to high-ranking officials), the more the potential benefits for the firm.

In the months leading up to the 18th Party Congress, it will be interesting to follow exactly how zealous the CCDI is in tackling the corruption. The Party’s approach to eradicating corruption in its ranks is that of ‘internal remediation’ over sensationalism, but this has led to the popular allegation that there are varying levels of punition for those guilty of graft. Cases of corruption that involve or implicate the higher echelon of the Party leadership are hushed up and airbrushed out of existence, thereby subverting the Party’s self-proposed need for more transparency and rule of law. It is only in exceptional cases that high-ranking cadres are given the death penalty; most escape with, at the severest, long jail terms; or mere demotion in the Party ranks; or even internal exile in one of the Party’s less known administrative wings.

It is tempting to conclude with what Wang Hui, one of China’s most prominent intellectuals, has to say, in a couched manner, in The End of the Revolution – China and the Limits of Modernity, about China’s quest for economic modernity at any cost:

In its early phase of reforms, the main objective of the socialist state was to represent the interests of the majority and draw upon legitimacy derived. In its current phase, the socialist state displays a temperament that it attuned to the aspirations of the “special interest groups” that have emerged in a post-reform setting.

Reading between the lines, it’s a scathing indictment indeed.