C3S Paper No. 0111/ 2015
China’s Central Commission for Discipline Inspection announced on 4th May 2015, that Wang Tianpu, the president of Asia’s largest crude oil refiner, the state owned Sinopec Group, was being investigated for suspected “serious disciplinary violations”—a euphemism for corruption[i]. Corruption has been one of the major issues in China since the PRC was formed. President Xi Jinping is taking all possible measures to fight against corruption. Unlike his predecessors, Xi’s actions have been more aggressive in fighting against corruption. After an intense focus on military and communist party officials, Xi’s anti corruption campaign has now been targeting China’s State owned enterprises. Answering the following questions will provide an insight of President Xi Jinping’s anti corruption campaign.
Why is corruption prevalent among China’s State owned enterprises? How have Chinese presidents handled their anti corruption campaigns? Why does corruption not cause much significant damage to China’s economy? How has Xi Jinping’s anti corruption drive been taken forward to purge out corrupt officials out of the Communist party of China? What has been Chinese media’s reaction to president Xi Jinping’s anti – corruption campaign? Will China be able to put an end to corruption?
Corruption in China’s State Owned Enterprises:
Corruption is commonly viewed among the state owned enterprises in China. The Chinese government decided to open its economy in 1978. This lead to the development of various state owned enterprises controlled by the central government. In 1992, China adopted the socialist economy model. According to the socialist economy model, the central government’s power was reduced and transferred to the state. Thus, the states were given power to control the enterprises. Socialist economy model contributed largely to the development of China’s economy. Despite this, it has contributed to high levels of corruption in state owned enterprises[ii]. The main reason for corruption is due to the distorted power structure in state owned enterprises. The head of the state owned enterprise decides everything without consulting the others. The company head’s position is usually nominated by the state officials belonging to the CPC. This leaves loopholes for the company heads to trade the nomination for profit in favor of the state officials[iii]. This leads to corruption in state owned enterprises. Xi Jinping and the Central Commission for Discipline Inspection (CCDI) have proved that they are not afraid to target major state owned enterprises. In 2014, over 70 executives of state owned enterprises were placed under investigation for corruption[iv]
State owned Assets Supervision and Administration Commission’ (SASAC) is the Government body which is responsible for supervising the state owned enterprises. However, it has not been working effectively. The SASAC has been accused of not implementing proper reforms to end corruption in state owned enterprises[v]. The Central Commission for Discipline Inspection (CDIC) announced that its disciplinary inspections in 2015 would begin by investigating 26 major State owned enterprises, including China Mobile, China Telecom, China National Petroleum Corp, China National Offshore Oil Corp and China National Nuclear Corp, etc. Corruption and abuse of power in state owned enterprises have caused huge loss of state assets. Reforming the state owned enterprises is high on Xi’s to-do list. Hence, formulating strict anti corruption measures is the only way to fight against corruption in China[vi].
Chinese Anti-Corruption Campaigns Down the Ages
The anti corruption campaigns have always been a tradition for Chinese leaders. In 1951, Mao Zedong launched the “Three-anti/Five-anti campaigns” to fight against capitalists, “Deng Xiaoping’s call” in 1982 to stop economic crimes, Jiang Zemin’s “Three Stresses Party Rectification” campaign launched in 1998 to bring down several senior level officials on corruption charges and Hu Jintao’s speech in 2004 “to eliminate corruption in communist party” were some of the steps taken by the previous generation leaders to fight against corruption. These campaigns were launched largely to target political enemies belonging to the communist party. Though corruption was highly prevalent among the Chinese, still their economic growth continued to progress.
Rapid growth and Intensifying Corruption:
In the period 1979-2010, China’s economy grew at an average rate of 8.75 percent. It is generally perceived that countries affected by corruption have poor economic growth. However, countries like Japan and South Korea experienced high economic growth along with the problems of corruption. In these countries, the business parties pay money to the ruling party. Hence, both the ruling party and business party come together, giving financial and political support to each other for economic growth. In China the business is mostly controlled by the Communist Party. Thus corruption has not slowed down economic growth, since a lot of money was being invested inside China[vii]. However, Xi’s intention to cleanse out the communist party has been more aggressive than China’s previous generation leaders.
Xi Jinping’s Anti-Corruption Campaign:
Xi has been using the slogan “Strike tigers as well as flies”, which implies both the senior level (the tigers) and the lower level (the flies) are not free from Xi’s anti corruption campaign. Several high ranking and low ranking officials have been punished under Xi’s anti corruption drive. In 2013, Bo Xilai’s case set the tone for arresting of other high ranking officials who abused their power and were involved in bribe taking. Bo Xilai one of the rising stars of China’s communist party and secretary of the Chongqing province was initially subjected to trial in 2013. Later Bo was investigated and arrested for taking bribes from two businessmen. Similarly Zhou Yongkang a senior official of the communist party was arrested under Xi’s anti corruption campaign, for abusing his power and involving in bribe taking. Hence, Xi’s anti corruption drive has alarmed all the other top and middle level officials of the communist party. It has been speculated that, the motive behind the arrest of the two top leaders by Xi is a move to pull his rivals out of the communist party.
The Communist party’s Central commission for Discipline Inspection (CDIC) has also punished over 182,000 government officials for corruption and abuse of power. In particular, the cases of 68 high level officials, more than 40 of them at ministerial level and 16 senior people’s Liberation Army (PLA) were investigated[viii]. Government officials now have been ordered to cut down excessive spending on banquets, luxury goods, motor vehicles and other extravagances. The salaries of top executives at state run companies have been cut down and foreign trips for them have been restricted. Shanghai’s decision to not allow close relatives of government officials to run business can serve as a model for other Chinese cities in the future. These developments are top focuses of China’s media.
A divergent media view:
Corruption being a significant threat to a rising China, receives considerable coverage in China’s state controlled media. Some of the main coverage includes ‘identification and extradition of corrupt Chinese officials who fled overseas’ and the maintenance of ‘political discipline’ in China’s communist party. President Xi is often criticized by the media for his anti corruption campaign since it is considered as a weapon used by the president to remove his rivals from power and replace them with his allies[ix]. On the other hand, some newspapers argue that this is a misconception which needs to be clarified. They insist that the anti corruption efforts are not an obstacle but a way to smoothen the path of economic development. They add, it removes inefficiencies and provides a positive outlook for the Chinese society. Despite the president’s effort to end corruption, the menace seems to be continuing in China. The campaign is also enjoying enormous public support. Nevertheless there remain doubts over the success of the anti corruption drive.
Xi Jinping’s China: A Corruption Free China?
In 2014 the annual Transparency International Corruption Perception Index survey of 175 countries placed China at 100th rank, tied in with Algeria and Suriname. This marks a sharp fall in China’s corruption ranking since 2013, when China ranked at the 80th place[x]. The problem of corruption in China can be fought only with greater transparency and reduction in the concentration of powers among government officials. China’s state controlled media should be given more freedom to disclose the assets held by top Chinese officials.
The State owned enterprises have become the recent targets for Xi’s anti corruption drive. These enterprises have been affected by Xi’s campaign with the removal of the senior leaders who own the state enterprises. The decision making at some of the country’s biggest companies have now been delayed. A report released by CDIC shows the investigation results of State owned enterprises overseas assets. The report was launched mainly to target overseas malpractices. With effective auditing of state assets overseas, it can help China initiate its “One Belt and One Road” Strategy. Experts suggest that the only way to get rid of corruption in State owned Enterprises is to break the power structure in state owned enterprises by setting up effective mechanisms such as introduction of boards of directors.
Conclusion:
Corruption is wide spread in the Chinese society. Currently, China’s state owned enterprises have become Xi’s main target for his anti corruption drive. In the past, China’s economy managed to grow rapidly, along with the problems of corruption. Now, reforming the state owned enterprises is the one of the way to stabilize China’s unstable economy. The CPC has stressed that the anti corruption campaign will continue to progress. In the various measures taken, even top officials like Bo Xilai and Zhou Yongkang were not spared from Xi’s trap. CDIC has also been active in punishing both the tigers and the flies. The organization now strictly monitors both the officials and their assets. The media has not ignored this significant phenomenon. The campaign has been enjoying continuous public support. Hence, Xi’s anti corruption measures will serve to prevent discontent among the Chinese citizens. Thus, Xi has a long road ahead to tackle the problems of corruption in China.
Despite President Xi’s campaign, corruption still seems to be prevalent among the Chinese. The previous generation leaders anti corruption campaigns have always checked the problems of corruption. However, by counting the number of honest officials in the communist party one can outnumber the total number of corrupt officials. In the end, anti corruption campaign can only lead to the death of the CPC. It may be that president Xi Jinping is having the same agenda as China’s previous generation leaders to throw his rivals out of the communist party. Else, is Xi trying to project China as a new great power to the international system? This is something to wait and watch in the future.
[i] Huseyin Erdogan,”Anti corruption in China jumps to energy companies”, Turkish Weekly, May 7, 2015, http://www.turkishweekly.net/news/185128/anti-corruption-in-china-jumps-to-energy-companies.html
[ii] Zengke He, “Corruption and Anti Corruption in reform China”, Communist and Post Communist studies, China centre for comparative politics and economics, http://www.cuhk.edu.hk/gpa/wang_files/Corruption.pdf (Accessed on May 5, 2015)
[iii] Ren Jiaming,”More Reform to end Corruption in SOE’s”, China Daily, January 19, 2015, http://www.chinadaily.com.cn/opinion/2015-01/19/content_19344801.htm
[iv] “Probes net 70 SOE bosses”, China Daily, January 9, 2015, http://www.chinadaily.com.cn/china/2015-01/09/content_19278071.htm
[v] Shannon Tiezzi,”China’s State Owned Companies Sweat as Graft Busters Converge”, The Diplomat, http://thediplomat.com/2015/02/chinas-state-owned-companies-sweat-as-graft-busters-converge/ (Accessed on May 7 2015)
[vi] Shannon Tiezzi,”Xi’s New year Resolution: Reform China’s State Owned Enterprises”, The Diplomat, http://thediplomat.com/2015/01/xis-new-years-resolution-reform-chinas-state-owned-enterprises/ (Accessed on May 7 2015)
[vii] Wedeman Andrew, “Double – Paradox: Rapid Growth and Rising Corruption in China”, (New York: Cornell University Press, 2012), https://books.google.co.in/books?id=Pc5v1PggyusC&printsec=frontcover&dq=Xi+JInping%27s+anti+corruption+initiative&hl=en&sa=X&ei=YD5UVfX5JMO8ugS0yoHYBw&redir_esc=y#v=onepage&q&f=false
[viii] Shai Oster, “President Xi’s Anti corruption campaign biggest since Mao”, Bloomberg Business, March 4, 2014, http://www.bloomberg.com/news/articles/2014-03-03/china-s-xi-broadens-graft-crackdown-to-boost-influence
[ix] Russell Leigh Moses, “Zhou yongkang charges come as Xi Jinping’s Anti-corruption campaign hits snags”, China Real Time, April 6, 2015, http://blogs.wsj.com/chinarealtime/2015/04/06/zhou-yongkang-charges-come-as-xi-jinpings-anti-corruption-campaign-hits-snags/
[x] Evan Mckindy, “China slips down corruption perception index, despite high profile crackdown”, CNN, December 3, 2014, http://edition.cnn.com/2014/12/03/world/asia/china-transparency-international-corruption-2014
(Shruthi V is an intern with Chennai Centre for China Studies. As a statutory requirement of her academic course in Stella Maris college, she is required to carry out research in a think tank on identified issues in China under the guidance of the members of C3S. The views expressed in this article how ever are of the author. E-mail: shruti21093@gmail.com )
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