Corruption in China increased dramatically after economic reforms began in 1978. The dual economic system created opportunities for officials to profit privately from public authority. Xi Jinping launched a sweeping anti-corruption campaign in 2012 called "Catching Tigers and Flies" to address this. The campaign prosecuted many high-level officials but faced challenges due to the decentralized power of local authorities and cultural factors like nepotism. While improving transparency, the campaign's long-term success in curbing corruption depends on deeper political reforms.

1. State, Causes, Reform

2. What is the state of corruption in China? What are the
causes of Corruption in this developing nation? What
changes have been brought by Xi Jinping's "Anti
Corruption Campaign" and what have been the
consequent challenges?

3.  Corruption: Brief overview & definition
 State of corruption( 1949-1989 )
 Present State
 Causes
 Reform: Anti Corruption Campaign
 Impact
 Challenges
 Conclusion

4. What is corruption in China?

5. Corruption varies with time and place.
According to Chinese official terminology, the core element of the
definition of corruption in today’s China is the notion of the use of
public authority and public resources for private interests.
First, the core element of corruption is the “use” of public power for
private benefit.
Second feature of this definition, is the ambiguity of the term “private
interest” in contrast to “public interest”,
Third, the definition leaves open the question of the subject of
corruption.

6. Heidenheimer’s three-category classifications system
Corruption
Class A
“black
corruption”
Class B
“grey
corruption”
Class C
“white
corruption”
graft, bribe, fraud,
embezzlement, extortion,
smuggling, tax evasion,
etc.
leaders of public institutions
using their institutional
power to increase the
revenue of their institutions
Nepotism and favouritism in the
personnel recruitment and
promotion,

7. Cadre corruption in post-1949 China lies in the "organizational
involution" of the ruling party, including the Communist Party
of China's policies, institutions, norms, and failure to adapt to a
changing environment in the post-Mao era caused by the market
liberalization reforms initiated by Deng Xiaoping.

8. Mao waged war on free speech, stifling the ability of citizens to speak
out against wrongdoing. He instituted a command economy that placed
commerce and property in government hands. He centralized authority,
investing more power in the state than ever before.
And he made life in China so difficult that people had no choice but to
turn to corruption for survival, during the food shortages of the Great
Leap Forward and the political witch hunts of the Cultural
Revolution.
It was survival!

9. In the pre-reform period, bribes most often were paid not in cash but
in kind, with cigarettes, liquor, and meat, the common mediums.
Much of the corruption during the Maoist period happened at “street
level,” involving relatively low-ranking officials
In late 1951, the party launched the Three Antis Campaign against
corruption, waste, and bureaucratism.
Subsequent campaigns, including the Socialist Education Movement
(1963-66) and the One Strike, Three Antis Campaign (1970-72) attacked
other forms of official malfeasance
By the late Maoist period, these repeated attacks on corruption and
the political environment ushered in by the Cultural Revolution had
largely eradicated most visible manifestations of corruption.

10. After the beginning of the post-Mao reform period in 1978-79,
China experienced a marked worsening of corruption.
why did corruption worsen?
In the early and mid-1980s, petty corruption flourished. Many
goods remained in short supply and would-be buyers found that
they still had to present officials with a carton of cigarettes and a
couple of bottles of Chinese liquor (baijiu) to obtain ration
cards.

11. Would-be entrepreneurs and private businessmen seeking to establish
new enterprises also found the only way to navigate the thickets of red
tape was to use personal connections and, increasingly, cash.
In the mid-1980s, the party decided to put off comprehensive price
reform in favor of a hybrid system wherein commodity prices were fixed
by the state based on whether they were being sold within the state-
planned economy or in emerging markets.
Because ongoing scarcity ensured that market prices were generally
much higher than in-plan prices, officials found they could earn quick
profits by diverting goods out of the planned sector and onto the
market. Arbitraging between the two sectors created by the so-called
“two track” price system, and fueled a wave of “official profiteering”
(guandao) during the late 1980s.

12. By the later 1980s, official profiteering had become so
widespread and visible that the perception that corruption was
enabling officials reap the lion’s share of gains from reform
became a major factor intensifying support for the anti-
government demonstrations that swept China in the spring of
1989.
According to Yan Sun, Associate Professor of Political Science at the City
University of New York, it was corruption, rather than democracy as such, that
lay at the root of the social dissatisfaction that led to the Tiananmen Square
protests of 1989.

13. In February 1980, Wang Shouxin, the party secretary of a local
fossil fuel company in Heilongjiang, was executed on the same
day she was convicted of bribery to the tune of 530,000 yuan
(HK$615,000).
Her show trial, billed as the largest corruption case since the
founding of the People’s Republic in 1949, took place in a
stadium filled with more than 5,000 people and was faithfully
documented by reporters and photographers.
To put the scale of her offence in context, the average monthly
salary of a worker was around 50 yuan

14. The extent of corruption has increased dramatically and sharply
since 1978 with the situation becoming even worse after in the
1990s!
Outside observers were so struck by the rapid spread of corruption during
the 1980s and early ‘90s, in 1995 Transparency International (TI)
ranked China the fourth most corrupt country in its Corruption
Perceptions Index.

15. Public surveys on the mainland since the late 1980s have shown that Corruption is
among the top concerns of the general public.

18. TRANSPARENCY INTERNATIONAL

19. A ring of smugglers colluded with local, provincial, and central
officials to run an estimated Y53 billion (US$6.4 billion) worth
of goods through the port of Xiamen in Fujian province in broad
daylight.
The group called Yuanhua Group, a prominent group of
upstart companies that took advantage of the economic
boom of Xiamen's status as a Special Economic Zone, was
founded by Lai Changxing.
China put more than 300 suspects on trial and sentenced
14 to death, including provincial officials and a former
vice minister of public security, in a case Beijing has used
for a propaganda campaign against corruption.

20. Lai Changxing, once considered China's most-wanted fugitive was
sentenced to life in prison on 18th May, 2012 for smuggling and bribery
in a lurid corruption case that reached into the highest echelons of the
Communist Party and involved a decade-long extradition fight with
Canada.

21. Trend showing China’s rank on the Transparency International
Corruption Perception Index from 1997- 2014

22. Implications for Businessmen:

24. 1. The co-existence of dual economic systems during the whole
transition period provides plenty of incentives and opportunities
for corrupt practices.

25. 2. The breakdown of the prior distribution of national income
among different social strata, i.e. the relative reduction of
officials’ income, drives government officials and public
institutions to seek extra income to supplement their own
or their staff’s relative low and fixed official salaries.

26. 3. The loopholes in, and weakness of, regulatory policies
and institutions, certain policy failures, and a lack of
experience and technology in the anti-corruption agencies
tackling the new forms of corruption, all contributed to
the growth of corruption.

27. 4. The incompleteness of political reform and the weakness
of the current political system undermine anti-corruption
efforts which, in turn, promote the further proliferation of
corruption.

28. 5. The decline in the moral costs of corruption stimulates its
further spread.
Factors which have contributed to the decline in moral costs of corruption:
The first is the ideological change.
The second factor is the failure of ethical education among public and government
officials.
The final factor is the lack of commercial morality in economic life.

29. 6. Certain traditional and international factors also
contribute to the growth of corruption.
Traditional Factors:
One is the cultural heritage of absolutist rule that lasted for 2000 years and only
ended at the beginning of this century.
Rulers treated the state as their own private property and bureaucrats
treated their power as theirs while the idea of public trust and
empowerment were non-existent. Such attitudes are still very common
among public officials
Second, many of the social customs and practices of agricultural society are still
very popular in today’s China.
A large proportion of public officials comes from peasant families. Consequently,
they bring many traditional practices linked to corruption into public life.
Particularist practices, i.e. people giving preferential treatment to those with whom
they have close relations, are still very common.

30. International Factors:
The opening of China to the outside world since 1978 has given birth to
additional factors .
One is the “revolution of rising expectations”. The high consumption life style
that exists in many western countries has had a strong “demonstration effect”
on both ordinary citizens and government officials.
Second, globalization has increased the difficulties of detecting and punishing
corruption as corrupt officials engage in cross border forms of corruption,
transfer their illicit profits into off-shore banks and emigrate before they are
caught and punished.

32. Past Campaigns:
Since 1978, the Chinese government has launched four anti-corruption campaigns.
1. The first one, which began in 1982, targeted economic crimes with significant
success.136,024 cases of economic crime were investigated, of which 44,000 were brought to
trial with 26,000 people convicted and 44,000 persons surrendering themselves to the police.
2. The second anti-corruption campaign, which began in late 1983 and lasted until early
1987, concentrated on consolidating party organizations. During this movement, a large
number of party members who had violated party discipline or engaged in corrupt activities
were punished, including 35,616 senior officials at the county level and above.
3. The third anti-corruption campaign began in 1988 and reached at its peak in the late 1989.
Official statistics show, 116,763 cases of graft, bribery and other relevant crimes were heard
by the Procurators in 1989, of which 58,726 cases were investigated and prosecuted, 20,794
criminals were arrested, 482.86 million yuan were recovered, and 36,171 officials
surrendered themselves to the anti-corruption agencies from 15 August 1989 to 31 October
1989
4. The fourth anti-corruption campaign began in the late 1993 and has lasted to the present.
This campaign had three goals: addressing the issue of self-regulation of senior officials;
strengthening the investigation and prosecution of large-size corrupt cases, and forcefully
curbing unhealthy tendencies within the government departments.

33. LEGISLATION CONTEXT AUTHORITY
Criminal Law • Criminal Law Judiciary Interpretation
• Regulates both official bribery and
commercial bribery
Public Security Bureau
Procuratorate;
People’s courts
Anti-Unfair
Competition
Law(AUCL)
• Regulations concerning the
Prohibition of Commercial Bribery
Acts
• Regulates commercial Bribery
State administration for
Industry and Commerce and
its local counterparts
CPC Rules • Communist Party of China(CPC)
policies and rules
Commission for Discipline
and Inspection of the Central
Committee of CPC(CCDI)

35. “Catching Tigers and Flies”
An unprecedented anti-corruption campaign began after the
conclusion of the 18th National Congress of the Communist
Party of China held in Beijing in November 2012.
After being promoted to the post of General Secretary of
Chinese Communist Party, Xi Jinping declared that one of his
top priorities was to tackle corruption.
"Our party faces many severe challenges, and there are also many pressing
problems within the party that need to be resolved, particularly corruption,
being divorced from the people, going through formalities and bureaucratism
caused by some party officials," he said in the nationally televised speech. "We
must make every effort to solve these problems. The whole party must stay on full
alert," he said.

36.  The agency directly charged with overseeing the campaign is the Central
Commission for Discipline Inspection (CCDI)
The CCDI's official mandate is to enforce party discipline, combat malfeasance,
and punish party members for committing offenses. CCDI investigates officials &
forwards evidence gathered to judicial organs, such as the Supreme People's
Procuratorate who proceeds to charge the accused with criminal wrongdoing and
move the case to trial.
 Coordination of anti-corruption efforts in the provinces and state-owned
enterprises have been carried out by “Central Inspection Teams” which
reports to the Central Leading Group for Inspection Work, which like the
CCDI is also led by Wang Qishan.

39.  Increasing Scrutiny of State Owned Enterprises.
 Industry Sweeps
• Energy
• Telecommunications
• Media
• Automobile
• Banking
 Dawn raids(frequently used by Regulators)
• Criminal Prosecution
• Administrative enforcement

40. Highlights in Anti Corruption Campaign
 Enforcement against Chinese Government Officials:
 Prosecution against foreign invested interprises
• GSK- a record fine of US$489 million
*Violation of 8-point regulation of the centre, first announced on 4 December 2012, at a meeting of
the Politburo of the Communist Party of China
TIGERS
Convicted or tried
for criminal
charges
FLIES
Penalized for
breaking
disciplinary rules*
“Fox Hunt”
Illegal assets
recovered from
abroad
100 90,000
> US$
500
million

52. A report from the Carnegie Endowment asserts that direct economic losses due to
corruption represents “a large transfer of wealth… to a tiny group of elites” –
roughly 3% of GDP each year. Moreover, corruption in China is an underlying
cause of economic inefficiency and instability that, if left unsolved, could help turn
the current crisis into a future collapse.
Since China’s anti-corruption campaign was launched, some have asserted that
the effort has in fact hurt China, contributing to its slowing economy, due to
significant drops in luxury industries, such as five-star hotels.

53. Anti-corruption work in China faced considerable challenges
from the beginning. In fact, what is perhaps most surprising is
that corruption did not reach even greater levels and come to the
point at which so many officials were engaged in corruption that
the state’s emerging anti-corruption capabilities were simply
overwhelmed.
“The Chinese have a phrase they have used historically, and that is, ‘The
mountains are high and the emperor is far away,’ ” Dr. Cynthia Watson said.
“The reality is it’s a big country where the central government can make lots of
statements, but it can’t necessarily enforce them out in the provinces. Therein lies
a major problem that Xi Jinping and every predecessor and I predict every
successor will confront.

54. Steve Tsang, professor of Contemporary Chinese Studies at the
School of Politics and International Relations, says two things
stand in the way of Xi Jinping's anti-corruption drive –
the party's absolute power and the endemic exploitation by
leaders' relatives of their position for personal gain

55. Regardless of whether the real goal of Chinese President Xi
Jinping’s anti-corruption campaign is to benefit himself and
strengthen the Communist Party of China OR of cleaning up
government bribery and corruption — the movement has
reached further than any other in modern history, according to a
China expert.
The campaign has been the longest running campaign on
corruption in the world and it is not long due that China sees its
period of renaissance.
The renaissance of the Chinese nation is the greatest dream for the
Chinese nation in modern history- Xi Jinping.

56. Thank You :)