CORRUPTION IN CHINA

Causes And Consequences Of Corruption In Contemporary China

Causes And Consequences Of Corruption In Contemporary China

Introduction

The interest in corruption as a factor affecting development has a long history. Corruption is usually defined as the transgression of formal rules governing the allocation of public resources by officials in response to offers of financial gain or political support. UN Secretary General Kofi Annan in his report to the General Assembly charged that:

… this evil phenomenon is found in all countries, rich and poor. The China, despite its wealth, democracy, and elaborate system of justice, has been experiencing a troubling bout of financial fraud. Corruption, however, hits poor countries especially hard by diverting money away from development (Francis, 2003). Consequently, fighting corruption is no longer just a moral issue. It has become a major tool in the fight against world poverty (Francis, 2003).

This paper will therefore survey current academic and policy debates on the nature and causes of corruption in China; consequences or impact of the phenomenon on economic growth, aid flow and development; the forces shaping it at the global level such as the World Bank, OECD, UN, etc.; the international initiatives and efforts aimed at combating the problem as well as the policy implications of these anti-corruption strategies for social and economic development in both China.

Conceptualizing corruption

Since, the mid-1990s, corruption has become an issue of major economic and political significance in many countries across the globe, including a number of developed western states. Corruption scandals are a prominent source of media interests and newspapers frequently publish stories about illicit behavior by politicians and public officials. Partly on account of heightened media attention, there is widespread perception that corruption is on the increase, both among the general public who demand effective action and politicians who are eager to derive political capital by adopting forthright stance over the need to eliminate corrupt practices (Robinson, 2004).

What exactly constitutes corruption?

Economic corruption is the use of public office for private gains where an official (the agent) entrusted with carrying out a task by the public (the principal) engages in some sort of malfeasance for private enrichment which is difficult to monitor for the principal (Bardhan, 1997). Political corruption differs from economic corruption as defined above. Political corruption is defined as the violation of the formal rules governing the allocation of public resources by public officials in response to offers of financial gains or political support (Nye, 1967; Robinson, 2004).

Corruption may be categorized into three main forms: incidental (individual), instrumental (for instance, the public service) and, systemic (societal). In the systemic case, corruption pervades the entire society and in the process becomes routinized and accepted as a means of conducting everyday transactions. This “entrenched” or “systemic” corruption affects institutions and influences individual behavior at all levels of political and socio-economic system (Johnston, 1996). Entrenched corruption features in societies with the following characteristics: low-political competition, low and uneven economic growth, weak civil society and the absence of institutional mechanisms to deal with corruption (Robinson, ...