In recent weeks, China sentenced Bai Tianhui, a former official at a state-owned asset management company, to death for taking bribes of about 1.1 billion yuan (US$151 million). Meanwhile, the state has launched a corruption investigation into Agriculture Minister Tang Renjian. Officials in exile abroad are no exception. Earlier this year, China launched Sky Net, a special operation in 2024 to identify corrupt public officials who fled abroad using embezzled funds. For a public weary of public misconduct, this news brings much-needed relief. After all, who doesn’t want to see justice served? The operation’s name comes from a Chinese proverb: “Heaven’s net is wide, but nothing escapes.”
However, despite this prominent anti-corruption movement being promoted since the 1980s, it has repeatedly failed to eradicate corruption. Each time, corruption resurfaces years later in a more elaborate form. In the early years of China’s economic reform, the most common types of fraud were petty bribery and embezzlement by low-level officials. Think of factory managers stealing inventory or local officials extorting ‘fees’ from hapless villagers. Then China’s political system developed rapidly, linking the incentives of local officials to economic performance. The more prosperous a local economy is, the more leaders can bribe and make huge profits. This motivates officials to strike profitable deals with entrepreneurs and promote development along with corruption. Many of the officials now being targeted as ‘fugitives’ were once hailed as capable leaders who achieved impressive economic growth in their jurisdictions.
By the 2000s, corruption had reached its greatest form: crony capitalism. Instead of petty bribes, business tycoons and political elites trade government contracts, bank loans and land deals worth hundreds of millions of dollars. Entrepreneurs who raise cash reap astronomical rewards by securing exclusivity, cheap financing, and prime real estate. Politicians who pocket the proceeds gain influence to push for large-scale projects that increase GDP. The result is a turbocharged version of crony capitalism that has helped fuel China’s remarkable economic growth. It has turned underdeveloped villages into fast-growing metropolises and elevated well-connected conglomerates to the ranks of the global super-rich.
But there’s a problem. Over time, this corrupt growth model poses enormous risks to the economy. Mountains of bad loans, empty apartments in ghost towns, and growing inequality between the politically connected and the rest of us. If left unchecked, these problems will erode public trust and jeopardize the legitimacy of the Communist Party. Recognizing the severity of the threat, Chinese President Xi Jinping has made fighting corruption a top priority for his government since he took office in 2012. The scale and duration of Xi Jinping’s repression is unprecedented in the 100-year history of the Communist Party. From 2013 to 2022, authorities investigated as many as 4.39 million cases and punished about 4.7 million people. The subjects of the investigation included not only low-level ‘flies’ but also high-ranking ‘tigers’ such as former Politburo Standing Committee member Zhou Yongkang, who was sentenced to life imprisonment, and former Vice Minister of Public Security Sun Lijun, who was sentenced to death. With a two-year grace period.
Skynet has become the centerpiece of President Xi’s anti-corruption campaign since its launch in 2015. In cooperation with foreign governments and international law enforcement agencies such as Interpol, China repatriated 140 government officials and recovered 2.91 billion yuan worth of stolen assets in 2023 alone. But while poaching individual bad apples makes dramatic headlines, it does little to address the systemic problems that make transplants possible in the first place. At the heart of China’s corruption problem is the state’s dominant role in the economy. This gives officials considerable influence over land, loans, licenses, and numerous other resources. This creates an irresistible temptation for public officials to do favors for businessmen, and for regulators to collude with state-owned enterprises to stifle private sector competitors.
All of this is compounded by persistent cultural norms. Guanxi (personal relationships), which emphasizes building relationships with those in power to get ahead. Moreover, the majority of Chinese civil servants receive extremely low official salaries, which forces them to supplement their salaries with fees collected from companies and citizens. This points out why China’s approach to fighting corruption is lacking. This is because China relies on an opaque party-state apparatus that fosters corruption in the first place. Sky Net targets individuals who are no longer within Chinese jurisdiction, preventing prosecution of powerful figures still within the system. This allows the Communist Party to appear tough on corruption without having to confront vested interests.
None of this suggests that China is doomed to corruption. The country has made remarkable progress since the 1990s in curbing the egregious excesses of its officials and, despite rampant fraud, has achieved the most dramatic poverty reduction in human history. To succeed in the long term, anti-corruption efforts must overturn the incentive structures that make corruption a rational behavior for many local officials. Economically, this means raising public sector wages to reduce the need for predatory extraction. In 2015, the government announced plans to increase civil servant salaries by an average of 60% over the next few years. However, implementation of the plan has been uneven across regions and sectors.
The transition to a more market-oriented system must also be accelerated to create a level playing field for private enterprise. Politically, there is a need for external audits of transactions between companies and public officials, who should be exposed to wider channels of public scrutiny. In recent years, China has launched several initiatives, including open government information regulations, to increase government transparency. However, these efforts have been hampered by resistance from vested interests and a lack of enforcement mechanisms. As China’s economy matures, the returns to crony capitalism will decline while its economic and social costs will increase. Eventually the party will be faced with the hard truth. Fighting corruption isn’t just about catching fraudsters, it’s about changing the entrenched systems that produce them.
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