China's Economy Faces Anti-Graft Fears Amid Crackdown

An analysis by Michael Lelyveld
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Zhou Yongkang at the National People's Congress opening session in Beijing, March 5, 2012.
Zhou Yongkang at the National People's Congress opening session in Beijing, March 5, 2012.

China's widening anti-corruption campaign has unsettled officials at all levels, stalling the government's economic agenda and administrative reforms, experts say.

The mounting toll of probes, prosecutions and punishments for offenses ranging from bribery to moral misbehavior has sent officials running for cover, slowing implementation of new economic policies to a crawl.

Local bureaucracies are "effectively on strike," wrote contributor Gordon Chang, quoting John Fitzgerald, director of the Asia-Pacific Center of Australia's Swinburne University of Technology.

Deals and decisions have reportedly been delayed by officials who are afraid to issue approvals or disapprovals in the absence of a safe political course.

"In this environment, those in government feel endangered," Chang wrote. "While all this happens, economic activity is beginning to suffer," he said.

There may be no way of estimating the economic impact of the corruption crackdown since President Xi Jinping took over as general secretary of the ruling Chinese Communist Party in November 2012. But disincentives for risk-taking have risen at a time when the government has called for market-oriented reforms.

One reason is the growing scope and sheer volume of anti-graft cases, convictions and party expulsions this year.

Although official tallies do not necessarily jibe, the counts of corruption cases suggest punishments on a colossal scale.

In the first five months of the year, some 63,000 officials have been sanctioned, according to China International Radio. The 35-percent increase in cases compared with the year-earlier period would means that penalties have been meted out at a rate of over 400 per day.

The Communist Party's Central Commission for Discipline Inspection (CCDI) has "dealt with" 61,703 people in 41,150 cases for breaches of "anti-bureaucracy rules," punishing 6,601 people in June alone, the official Xinhua news agency said.

In the first half of the year, the Supreme People's Procuratorate (SPP) investigated over 25,000 people for corruption, also according to Xinhua. Prosecutors pursued some 16,000 "major cases" of bribery and embezzlement, the SPP said.

The campaign reached a pinnacle on July 29, when the party's Central Committee announced a CCDI investigation of former security chief Zhou Yongkang for "serious disciplinary violation."

The move against Zhou, which has been rumored since last year, marks the first publicized probe of a former Politburo Standing Committee member, shaking the party power structure to the core.

"When it comes to the law and Party discipline, no one should bet on the odds of escape and entertain the illusion that there is some kind of 'safe box,'" the official party paper People's Daily said in a commentary quoted by Xinhua.

'Tigers and flies'

State media reports have highlighted the breadth of the campaign, in keeping with Xi's pledge to target both "tigers and flies" among officials high and low.

As of July 12, the SPP had investigated 17 senior ministerial-level officials and two national-level leaders, the official English-language China Daily said.

The anti-corruption wave has spilled over from government into state-owned enterprises (SOEs), the military, academic institutions and China Central Television (CCTV), spurring fears among officials about where it will go next.

"Misconduct is rampant in education, health, justice and environment protection," China Daily said on July 21, citing recent findings from the CCDI.

Officials face penalties for failing to follow Xi's sweeping directive to eliminate "formalism, bureaucracy, hedonism and extravagance" in work styles.

But the scatter-shot scope of the crackdown and Xi's companion "mass line" campaign may pose the greatest threat to officials as they seek a safe course between the government's stated commitment to market-based reforms and state controls.

In June, state media blasted Shanghai officials for failing to push innovative economic policies in the city's pilot free trade zone but warned them against taking risks. The conflicting pressures followed a mixed message from Xi on experimental reforms.

Last month in a strongly-worded statement, the Communist Party's Central Committee added to anxieties by ordering "intense ideological education for officials to strengthen their faith in communism and curb corruption," Xinhua said.

The committee's organization department cited "profound socio-economic changes at home and abroad," distracting officials "who face loss of faith and moral decline."

The party pledged to "improve officials' morals, calling on them to be noble, pure and virtuous persons who have relinquished vulgar tastes," Xinhua reported.

The committee sought to keep officials dedicated to Marxism and free from foreign influence.

"Officials should keep firm belief in Marxism to avoid being lost in the clamor for western democracy, universal values and civil society," it said.

'Keeping a low profile'

The implied rejection of universal values and civil society appeared particularly odd.

"Marx thought Marxism was the universal value," said David Bachman, a China scholar and political science professor at University of Washington in Seattle.

The public attack on universal values echoed language of a secret party memo known as Document No. 9, reported by The New York Times last year.

But the ill-defined hostility toward outside concepts is likely to leave officials and cadres confused about which way to turn.

"There are now lots of reports about a classic bureaucratic response of keeping a low profile, not taking any initiative ... because you don't know which way the wind's blowing and what will get you in trouble," Bachman said.

The mass prosecutions and calls for "intense ideological education" are uncomfortable reminders of excesses from the dark days of the Cultural Revolution.

During the tumultuous period in the 1960s and 1970s, Xi's own father was purged and Xi himself was sent for re-education to remote Shaanxi province for seven years.

"The sort of ironies and confusion here are truly, truly remarkable," Bachman said.

'Opening up'

The political conflict comes as Premier Li Keqiang continues to promote "opening up" in the economy and new initiatives like mixed ownership and private investment in SOEs.

But suspicions may pervade any new forays in economic policy that could come under attack as foreign, decadent or corrupt as the discipline campaign expands unpredictably.

In one of the latest anti-corruption outbursts, Xinhua slammed government officials for enrolling in business administration programs at Peking University.

The executive master of business administration (EMBA) programs "are very popular and have been unaffected by the ongoing crackdown on corruption and government extravagance," Xinhua said on July 18.

The report aired allegations that officials use the courses for networking and overseas sightseeing to "facilitate the formation of corrupt groups," while charging tuition fees to the government.

It may be argued that the attack is justified by attempts to break corrupt links between officials and SOEs.

On July 23, Xinhua reported that Communist Party inspectors had found that 40,700 "leading officials" held side jobs as directors or supervisors of public companies.

The party ordered 229 officials at the provincial or ministerial level to quit their company posts, Xinhua said. The SOE connections to government have long been cited as a source of political resistance to reforms.

But the push to bar officials from business education programs may only deprive the government of the skills needed to oversee SOEs at a time when many are expected to reorganize for private investment opportunities.

The surge in anti-corruption cases may reflect the size of the problem in China, but the proliferation of targets has also exposed political risks for economic policies as the campaign snowballs, perhaps out of control.

"This is the classic question about economic reforms," said Bachman. "Does the draw of wealth become so attractive, so compelling, that it corrupts political ideology? Certainly, that's the view that's being expressed here."

Popular crackdown

Despite the rising risks and potential costs of the campaign, the juggernaut of punishments may be hard to stop.

State media have cited the overwhelming popularity of the crackdown among the general public.

An online survey last month by China Youth Daily and the operator of the WeChat social network found that 96 percent of respondents backed corruption inspections throughout the povinces, China Daily said.

The survey cited concerns over "passiveness" in punishing corrupt officials, lack of transparency in SOEs, and corruption in land development and government-funded projects, the paper said.

But in an opinion piece for the Hong Kong-based journal China-US Focus, excerpted by China Daily, two analysts at the Brookings Institution in Washington denied that the crackdown is weakening the economy.

"... there is no evidence that officials have stopped making decisions out of fear of being reprimanded," wrote Cheng Li and Ryan McElveen, director and assistant director of Brookings' John L. Thornton China Center.

"In the end, officials will be removed from office if they fail to ensure that the government is functioning properly and produce economic growth," they said.

More than 182,000 party officials have been investigated under the anti-corruption campaign, the analysts said.

Comments (6)


The analysis by Professor David Bachman is particularly astute--the Xi leadership's denunciation of universal values and Western thought should logically include Marx's prophecy of a universal classless society, withering away of the state, and other aspects of Marxist romanticism and utopianism. The article includes quoted material from PRC state-run media, and is reasonably balanced.

Aug 08, 2014 01:15 PM

Anonymous Reader

@Xhit Cheatpig

Care to cite your source instead of telling us about it like it is hearsay? Everyone, including the Chinese, know that there is no oil need the Diaoyutai/Senkakus. There is however, a large gas field. If your so-called "Asian paper" can't even get that bit of research right, then I recommend switching to a more credible source. But given your bias, perhaps that is exactly what you need for your brain.

@Anonymous 8/5 1:49 PM

What secret weapon? You mean the Self-Defense Force, which coincidentally in Mandarin, sounds like "Self-Comforting" Force? (I will let you figure out what the euphemism "self-comforting" stands for and why it is very much connected with Japanese culture, at least post-WWII.)

Aug 07, 2014 11:23 PM

Anonymous Reader

@Anonymous 8/6 3:13 AM

If the article is going to quote Gordon Chang, an extremist who is known to be very much biased against China, then it should also quote someone who is also very pro-China in order to balance him out and allow readers to get both sides of the story. Otherwise, it is a propaganda piece no better than that produced by the Chinese state media.

Aug 07, 2014 11:19 PM

Asian Investor

It is interesting to note how all these experts throw their half baked comments all over the place based upon information from dodgy sources like Gordon Chang, an infamous anti China idiot.

Aug 05, 2014 06:40 PM

Anonymous Reader

These are not experts but concerned people. If the communists allowed them to speak their minds, the communist see the true feeling of its citizens.

I supposed the communist propaganda are the true source of information. Should we eat up all what the communist serve us without asking questions? Oh wait, we don't want to do that, we might be charged for "stir up trouble" for asking questions.

Aug 06, 2014 03:13 AM

Xhit Cheatpig

The little "Government workers" are frightened or on strike? LOL. No problem, Xhit Cheatpig will instigate a noisy "NAtionalistische soZIalistische" Bewegung, or in English: NAZI outcry, against a neighbor. Today I read a news from an Asian paper that China starts to move an Oil Rig towards Senkaku...Bet that the Chinese will start to go on rampage... However, Japan isn't Vietnam...

Aug 04, 2014 02:48 PM

Anonymous Reader

China doesn't know Japan. Although Japan has pacifist constitution, it doesn't mean Japan will let China its throat, far from it. Japan will defend herself, even if she has to use her secret weapon. A defeat Japan is a dead Japan. A victor Japan is a proud Japan.

Aug 05, 2014 01:49 PM

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