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February 19, 2015

Corruption In China, Is It Really That Bad?

By Frank Li via Econintersect  

Happy Chinese New Year (February 19, 2015), the year of sheep! 
China's astronomical rise over the past three and a half decades is both amazing and remarkable, as its magnitude is totally unprecedented in human history. Unfortunately, China's success comes with a huge cost, with environment pollution and government corruption being among the top problems.
In this article, I offer my unique perspective on corruption.
First of all, how bad is corruption in China? Very bad! There is even a "standard" definition in Wikipedia: Corruption in China. Here is an excerpt:

China suffers from widespread corruption. For 2013, China was ranked 80th out of 178 countries in Transparency International's Corruption Perceptions Index, on par with Serbia and Trinidad and Tobago, ranking less corrupted with tied countries Burkina Faso, El Salvador, Jamaica,Panama, and Peru, but more corrupted than Sri Lanka and most developed countries. Means of corruption include graft, bribery, embezzlement, backdoor deals, nepotism, patronage, and statistical falsification.
The fairness of the definition aside, government corruption in China is real and widespread. But is corruption in China really all that bad? No! Hear me out ...
There are four types of government officials in China:
  1. Useless and corrupt: They are the worst!
  2. Useless and clean: They are bad, but do little harm.
  3. Able but corrupt: Many! They are not all bad for the country, since they may enact worthwhile programs while lining their own pockets.
  4. Able and clean: Rare! President Xi seems to be one of them! It was with good reason that he made it all the way to the top!
Here is a prominent example of category 3) above: Liu Zhijun, pictured below with Nancy Pelosi.
Who is Liu? Here is an excerpt from Wikipedia:

Liu Zhijun (simplified Chinese: 刘志军; traditional Chinese: 劉志軍;pinyinLiú Zhìjūn; born January 1953) is a Chinese former politician and a senior bureaucrat within the Ministry of Railways of the People's Republic of China. Liu was a farmer's son who left school in his teens to take a job as a low-level bureaucrat in the Railway Ministry. He rose rapidly within the Ministry, eventually heading several regional railway departments and serving as vice-minister before being promoted to the head of the Railway Ministry in 2003.
As Railway Minister, Liu oversaw numerous expansions of China's railway system, most notably the rapid development of China's high-speed railway. He was a figure of national praise until February 2011, when he was arrested and expelled from the Party over allegations of corruption. After the Wenzhou train collision in July 2011, in which forty people died and one hundred and ninety-two people were injured, a government report singled out his leadership as one of the main contributors to the crash and he was publicly criticized.
In April 2013, Zhijun was arrested on corruption charges for allegedly taking bribes and abusing his power as Minister of Railways.  He was convicted and received a death sentence with reprieve in July 2013.
My summary: without Liu, there would have been no high-speed rail (HSR) in China and hence no international expansion of China's HSR (China's International Projects)! It took a lot of guts and wisdom to make things like HSR happen in China (or anywhere else). Along the way, Liu made a huge mistake by enriching himself and got caught, for which he ultimately paid the price.
However, overall, it's good for China to have had Liu, a necessary evil, just as Mao Zedong or even the First Emperor more than two thousand years ago!
Now, between Liu and Nancy Pelosi, I'd pick Liu every time! Furthermore, if I had to categorize Nancy Pelosi, I would put her in category 1) above: useless and corrupt (and purely detrimental to the country)! Need concrete examples? Three informative readings:
Oh, railway and big government scandals happen in America too. Here is an example: Crédit Mobilier of America scandal .
Finally and very importantly, President Xi has been working hard on his anti-corruption campaign over the past two years, with great success. Most Chinese speak highly of him, and so do I!
Below is my favorite quote. It says a lot about President Xi and China. Better yet for China (as compared with America), whatever President Xi says actually matters - big and positive changes will follow ...

Courtesy Frank Li for Global Economic Intersection  (EconMatters author archive here)

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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