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China, Corruption and the Crossroads: Placing the Anti-Corruption Campaign into Perspective

(This piece is based on a presentation given to Transparency International in Perth, August 2014).

Money makes the world go round no matter what the domination.

There is a great deal of reporting and opinion these days on the anti-corruption campaign in China. And rightly so as it is the biggest such campaign since the PRC was founded in 1949. Yet what we are witnessing is much more than just a crackdown on corruption, it is a party-rectification campaign and moral crusade that points to the end of the post-1989 reform era and a concerted effort by President Xi Jinping to re-establish Maoist-like party authority and ideological controls, albeit in the context of a globalised market economy. It is therefore important that we put the current campaign into perspective, both in terms of the political history of China since reform began in 1979, and in terms of the implications of the broad sweeping social changes that China faces. It’s somewhat of a cliché to write that ‘China is at the crossroads’, but it seems to me that the analogy is particularly apt for this moment in time. Whilst bearing in mind that China is an incredibly diverse country, and that it is dangerous to make generalisations, please allow me some license to explain.

The Dengist Social Compact

Let’s start by examining the ‘social compact’ that Deng Xiaoping and the Communist Party of China (CPC) formulated during the 1980s as reform unfolded. The compact is between the CPC and Chinese society in general. Its foundation was the memory of the chaos of the Maoist period (1949-1978), and especially the excesses of the Cultural Revolution (1966-1976). Deng Xiaoping promised political stability and economic growth in return for accepting the authority of the CPC. The economic model to drive that growth was based on developing exports through opening up to foreign investment – first in the Special Economic Zones (SEZs) and then later throughout the rest of China – and maintaining low wages. The model was relatively successful given that China was working from a very low base and global conditions for demand in the developed countries was seemingly insatiable. Over the course of the first decade or so the vast majority of the Chinese population, both rural and urban, benefited from the spoils of economic reform. People also enjoyed greater freedom in their private lives in ways that were unimaginable during the Maoist period. The processes of industrialisation, urbanisation, increased mobility, and so on, that China is still experiencing today, began to gather momentum.

As China moved away from ‘class struggle’ and ‘politics in command’, the CPC’s political legitimacy post-Mao rested on three pillars: nationalism (Marxism becomes increasingly irrelevant), social stability (a significant achievement given the size of China and the speed and scope of change), and shared prosperity (yes, some people got rich first, but overall during the 1980s, and much of the 1990s, the majority of the population benefited directly or indirectly).

Deng Xiaoping said that ‘when you open the door some flies will come in’. Xi Jinping has declared to catch the ‘flies’ that are exclusively ‘Made in China’.

End of the Dengist Social Compact

In terms of economic growth the social compact was thus quite successful in the 1980s. Of course there were growing political and social tensions in urban areas that eventually culminated in the demonstrations of 1989 and the brutal crackdown by the authorities in Tiananmen and, we should remember, many other urban centres in China (although none with the level of violence found in Beijing). In the wake of Tiananmen the conservative elements in the CPC got the upper hand and it was unclear as to how reform would continue, or indeed whether or not it might be rolled back. To break the impasse, in 1992 Deng Xiaoping comes out of retirement to embark on the famous ‘southern tour’ of the SEZs – and Shanghai, which in the early 1990s was still something of a dilapidated museum of Maoist socialism. Deng pointed to the SEZs as the way forward for China. In the same year Jiang Zemin declared at the 14th Party Congress that the CPC’s mission was henceforth to construct a ‘socialist market economy’, the first time that the term ‘market economy’ had been used in such a way by a leading party figure. As far as the CPC is concerned the social compact stays in place, the only difference being that the planned economy would now give way to a market economy, albeit one in which the party-state’s position, political and economically, was still to be paramount (we should always remember it is a ‘socialist market economy’). It was never envisaged that the authority of the CPC would be weakened by the process of introducing widespread market reform, on the contrary, it was consistently argued instead that the party-state should be strengthened to adapt to new circumstances. Since then the CPC has proved to be very resilient, responsive and adaptable, such as when in 2001 it amended its constitution to allow China’s rising cohort of entrepreneurs – that is, capitalists – into the party ranks.

However, two of the pillars of the Dengist social compact begin to collapse. First and foremost, whilst the economy takes off and enters a ‘golden age’ of double digit growth and large inputs of foreign direct investment, the spoils of that growth increasingly concentrate into the hands of a small but powerful elite. The gains that were made in the 1980s, especially in rural areas, but then also later in many urban centres that where built on the planned economy (such as in China’s northeast), begin to erode as the cost of living begins to outstrip ordinary incomes. We begin to witness from this point forward the very rapid social stratification of Chinese society. That is, as the World Bank itself notes, China has gone from being one of the most egalitarian societies in the world to one of the most unegalitarian, and accomplishes this within only a decade or so (the speed of this transition is important to bear in mind and is it exacerbates the sense of dislocation and social injustice). Secondly, as inequality increases and as reform encounters bottlenecks, social instability also begins to rise with the number of ‘mass incidents’ (demonstrations and social unrest) increasing. In some regions, such as Tibet and Xinjiang, this is coupled with growing ethnic tension which over time becomes quite violent. As I write much of Tibet and large parts of Xinjiang are under what is akin to martial law.

Inequality is quite visible these days in China. Of course a lot of deprivation remains unseen.

By the end of the 1990s the alarm bells are ringing in Zhongnanhai (the CPC’s titular political compound in Beijing). As already noted the party-state has proved very adaptable and adroit at managing the tensions that have emerged. The CPC still tightly controls the mainstream media, and even the challenges of regulating the Internet have not been completely insurmountable, although the rise of a digital ‘public sphere’ has added a new dynamic. The party-state still has at its disposal a massive public security apparatus, one which it has been developing and strengthening over the last two decades. It still has a huge cohort of over 80 million party members to mobilise when necessary. Through ‘mass transmission’ organisations such as the women’s organisation, trade unions, religious organisations, and so on, it still is able to keep a close tab on all that is happening. The party-state, whilst being careful not to think of the CPC as a monolithic entity, is also very well informed by tens of thousands of ‘experts’ in academic and party-state-sponsored think tanks. Yet even the strongest apparatus still has its weaknesses and circumstances aren’t guaranteed to remain the same forever. On the contrary, the task of policing Chinese society is getting more challenging over time. I will return to this point later.

Corruption in the Reform Period

The CPC came to power in 1949 with a reputation for fighting corruption. Unlike other political organisations and armies, of which China had quite a number over the course of the first half of the 20th Century, the soldiers of what eventually became known as the People’s Liberation Army (PLA), were famous for treating ‘the people’ with courtesy and paying for goods and services. By the end of its rule in Mainland China, by contrast, the ruling Nationalist Party (Guomindang/Kuomintang) was corrupt to the core. Thus fighting corruption and establishing a ‘clean government’ was very high on the agenda of Maoist China. Indeed, there was very little in the way of corruption, although of course having good connections – guanxi in Chinese – and being in the party-state’s social elite was always beneficial. Under the conditions of the planned economy it is fair to say, that when compared to now, there were not many real opportunities for corruption as we understand it.

However, since the beginning of reform in 1978 the ‘opportunities’ for corruption began to appear and gather momentum. Indeed one of the key targets of the student and worker demonstrations in Beijing in 1989 was corruption. The party-state did attempt to intiatie more vigorous anti-corruption efforts, including some discussion of separating party and state and giving the judiciary much more independence, but to very little effect (the events of 1989 put the kibosh on any real efforts at political reform). And once the ‘socialist market economy’ is launched in 1992 and China enters the ‘golden era’, the opportunities for rent seeking, embezzlement, and outright criminal plundering, began to spring up like ‘bamboo shoots after a spring rain’. In the wake of the Tiananmen crackdown, political reform with substance, that might have had some real ‘anti-corruption teeth’, was shelved. The CPC’s Disciplinary Inspection Committee (CDIC), the entity charged with monitoring and prosecuting corruption within party ranks, is a watchdog on a very tight leash. The party-state instead went in the other direction and the powerful ‘red elite’ – that is, the still living party elders and their kin – seemed to form a ‘if you don’t tell on me, I won’t tell on you’ consensus of their own.

It’s Party Time

Over time, without adequate checks and with more capital flooding into China, corruption becomes more outrageous and pervasive. One Chinese government report, for example, noted that one if five corrupt officials is a judge, which goes to show how pervasive bribe taking had become. The non-party new rich could also use their wealth to exchange for power and political influence, as demonstrated in a number of scandals in which either the children of powerful party members or the new rich literally got away with murder.

China is a growth market for luxury brands.

The 1990s and 2000s were true party times for the old and new elites. Pei Minxin (2007) writes that bribery, kickbacks, theft and mis-spending of public funds cost China at least 3% of GDP during this period. A Chinese Government report (2011) noted that since 1990, 18,000 corrupt senior officials fled China, taking $123bn with them (Chinese authorities are now turning their attention to places like Australia where many of those officials and their families have settled). China’s large urban centres were the new love of global luxury brands. Exclusive gated communities and shopping malls were part of the construction boom. It seemed like the good times would never end. And yet all the while the pillars of the Dengist social compact continued to erode and nothing substantial was put as way of replacement. The alarm bells rang ever louder.

The Party’s Over

All things good and bad, however, must come to an end. In China today the party is well and truly over. The excesses of the 1990s and 2000s are being reigned in in what, I argue here, is the biggest party rectification campaign since the Maoist period. What are the signs? The first major sign is the most obvious and takes the form of Xi Jinping’s coming to power in 2012 as the President of the People’s Republic, the General Secretary of the CPC, and the Chairman of the Central Military Commission – China’s new ‘paramount leader’. One of the first things President Xi did was to announce the campaign against corruption and excesses within the CPC. He stated that this campaign was going to catch ‘tigers’ as well as ‘flies’. So far he seems to be true to his word, although we would be naïve to think that it was going to be open season on all the ‘tigers’.

One of the first major tigers to go down is found in the dramatic downfall of Bo Xilai. Bo Xilai is the son of a famous first generation revolutionary. He thus had a privileged background. He was also, evidently, very talented and charismatic. Bo Xilai paved a way to power through a stint as the Mayor of the port city of Dalian and rose in the ranks to become a the Minister of Finance before being parachuted into the city of Chongqing to deal with, ironically, entrenched corruption and abuses of power. Bo Xilai was fond of media attention, something major political figures in China tend to shun. He also initiated a series of Maoist-like campaigns in Chongqing aimed a reinstalling a party-patriotic fervour amongst the masses, and what appeared to some like a ‘Cult of Bo’. In the background he initiated a very harsh – and some would say excessively so – campaign against criminal elements in Chongqing within and without the party-state. His efforts seem to have been effective and he was quite popular in Chongqing. All the while his charismatic and attention-seeking approach to politics ruffled feathers in Beijing. Ultimately when his excesses had gone too far – and those of his wife who was later charged with the murder of a British subject – the full force of the party-state came crashing down upon him and in September 2013 he was jailed for life for embezzlement, bribe-taking and abuse of power.

Bo Xilai in better times before the fall.

Bo Xilai in better times before the fall.

Following in the wake of the Bo Xilai ‘tiger’ many smaller ‘tigers’ and a great many ‘flies’ began to be investigated, detained and charged with various crimes as part of the campaign. As is typical in these cases persons associated with Bo Xilai’s patronage network came under heavy scrutiny. In time rumours began to spread that an even bigger ‘tiger’ was in the sights of the now very active CDIC. Bo Xilai was the protégé of ‘security czar’ Zhou Yongkang. As the ‘security czar’ Zhou Yongkang was in charge of the police, secret service, paramilitary, judiciary and the prosecution apparatus. Zhou Yongkang and his network, even before investigation, was well known in many circles for having amassed much wealth and abused his powerful position. He has been accused of helping his family members and business and political cronies to amass wealth totally US 16 billion. As of 29 July 2014 he has been detained (he may have already been in detention prior to that) and it was officially announced that he is being investigated. As a former member of the Politburo Standing Committee (he retired in 2012), Zhou Yongkang is the highest ranking official and party member to ever be investigated for ‘serious disciplinary violations’ since the founding of the PRC in 1949.

The rumour mill continued to run hot in the wake of the fall of these big tigers. Some were even suggesting that an even bigger tiger – in the form of former President and General Secretary Jiang Zemin – was going to be next. But at this stage the rumours remain unconfirmed and, from my position, it seems unlikely that even Xi Jinping would target a former head of state. Nonetheless the message was well and truly out that the ‘party is over’. Other tigers began to fall including a top ranking PLA figure, General Xu Caihou, and at least forty cadres at vice-minister rank and above. The net also caught a number of prominent television personalities (including a close associate of Kevin Rudd), countless numbers of lower ranking cadres and business persons. The CDIC even went to the unusual measure of putting up the names of those persons under investigation on its website. The number of persons caught up in this crackdown are very large indeed. Most people you meet in China these days seem to know of somebody directly or indirectly who has been detained. Even this author was surprised to find that some of the people he knows in the tea industry (a principle research area) have been detained and are indefinitely incommunicado.

The Return of Party Rectification

How can we understand the anti-corruption campaign within the broader picture of the CPC’s continued authority in China? As I’ve already suggested, we can begin by understanding that this anti-corruption campaign is part of a much wider campaign of party rectification. The CPC has a long tradition of periodically ‘cleaning out the ranks’ that dates back to its very inception in 1921, or at least by the 1930s when the ranks of party cadres began to grow. As the paramount political body in China the CPC and its disciplinary body literally stand above the law (if it didn’t then the legal system would have prosecuted many tigers and flies already and not have to wait for the imprimatur of the party leadership to do so). Thus periodically the party has to clean itself out. These periodic bouts of party purification can be inspired by political and social reasons, or as is the case at present, a combination of both. That is, with the excesses of the 1990s and 2000s it was evident to even the most pedestrian of observers that the party’s legitimacy was taking a pounding, and that certain factions or patronage networks had become far too powerful and blasé.

A one Chinese yuan note with anti-CPC messages added by the outlawed Falungong organisation.

A one Chinese yuan note with anti-CPC messages added by the outlawed Falungong organisation.

But given that the CPC’s position in Chinese society extends far beyond the boundaries of what we would typically regard as ‘the political’, a good party rectification campaign also includes significant social dimensions as well. In short, the party and society are both deemed to have become corrupted. That is, party rectification and a moral crusade against the ills of society go hand in hand. Thus it comes as no surprise that President Xi’s anti-corruption campaign sits alongside a crackdown against all manner of social vices that are seen to also be the expression of recent excesses and hedonism. The current campaign is thus all-encompassing. It includes a major crackdown on vice, especially prostitution and illegal drugs. It includes a tightening of the screws against intellectual dissent of various forms. Chinese television celebrities and entertainers, including a number of news hosts, have been caught up in the anti-corruption net. The authorities across China have also been more vigilant than usual in fighting ‘evil cults’ such as Falungong and the many other smaller ‘cults’ that have emerged in recent years.

And a few days ago President Xi give an important speech on the role of art in Chinese society in which his sentiments eerily echoed those of Mao Zedong famous 1942 speech on art and culture at Yan’an (that is, art must serve the interests of the party-state’s political line, there is no such thing as ‘art for art’s sake’). At times like this a xenophobic fortress mentality is also heightened. We have thus seen many statements that the party and society should be vigilant against hostile foreign forces that are seeking to undermine ‘socialism’ [sic]. In the last year, for example, the prestigious Chinese Academy of Social Sciences (CASS) has come under extensive criticism as a site harbouring hostile foreign forces.

Mao Zedong declared that there was 'no arts for arts sake'. Mao's estate and sue Warhol's estate for any infringement here.

Mao Zedong declared that there was ‘no arts for arts sake’. Mao’s estate can sue Warhol’s estate for any infringement here.

The Motivations of President Xi Jinping: The Demise of the Dengist Social Compact

I have already given some indications as to why President Xi has launched such a wide campaign. Here I will flesh out the motivations further by stressing that a good explanation lies in the demise of the aforementioned Dengist social compact.

Firstly, Deng’s export driven economic model based on low wages and state-led investment in construction is now widely recognised, even by the Chinese party-state, to have failed, or at least to have run its course. China, especially since the tumult of the Global Financial Crisis (GFC) of 2007, has been attempting to shift the economy from its dependence on exports to one that relies increasingly on domestic consumption and economic diversification. Overall the transition to a consumption model may continue to provide reasonably high levels of economic growth (but nowhere like the heyday of the previous ‘golden era’), but any gains that are made will no longer be distributed fairly. Indeed China is entering, or has already entered, a period of growth without wider social benefits and distribution, a very dangerous scenario.

Chinese society is now characterised by increasing social inequality and instability on a number of fronts. This also includes, as already mentioned, significant ethnic tension in Tibet and Xinjiang. Since 2008 over 125 Tibetans have set themselves on fire as a horrific form of protest against the party-state’s ethnic policies. Violent civil unrest is now a regular feature of life in far western Xinjiang, and more recently the political and religious conflicts between the Uighur’s and the Han were brought to eastern China in the bloody knife-wielding attack at the Kunming Railway Station on the 1st of March this year.

It is commonplace amongst China-watchers – amateur and professional alike – to reduce anything the party-state does to pure self-interest. The extreme position in this regard takes any measures at cleaning up the party and society as merely a sideshow in intra-party factional struggles. Of course there is a measure of truth in this. Even President Xi has described the current rectification as a matter of ‘life and death struggle’. But it seems to me that there is indeed a genuine side to the anti-corruption campaign and moral crusade. In short, this is how the party-state governs, and although much has changed in China since 1978, many essential features of party-state rule developed in the Maoist period continue (as is discussed in the edited collection by Sebastian Heilmann and Elizabeth J. Perry (2011) Mao’s Invisible Hand: The Political Foundations of Adaptive Governance in China).

China’s Dream

Of course it does no good to just detain, arrest, prohibit and condemn. The party-state also has to provide a vision, whether or not the punters are willing to accept it. Hence another feature of rectification is providing an alternative vision to the lure of ‘Western values’. Xi Jinping’s grand vision for China is embodied in the ‘China Dream’ (中国梦) and ‘The Rejuvenation of China’ (中国复兴). The China Dream is a campaign directed at a domestic audience. The ‘American Dream’, by contrast, through a combination of the lure of consumer capitalism, Hollywood, and the brute force of the military-industrial complex, was exported around the world. China’s forays into ‘soft power’ are relatively recent and not the focus here, suffice to say that the ‘China Dream’ is meant for Chinese domestic consumption and has virtually no chance of being exported. ‘The Rejuvenation of China’ plays to the theme of a rising and confident Chinese nationalism, one of which of course, like the ‘China Dream’, features the role of the party-state front and centre.

The Chinese Dream. So far only Chinese people seem invited to join this dream.

The Chinese Dream. So far only Chinese people seem invited to join this dream.

Risky Business: The Choices of Xi Jinping

To say that I believe China is at the crossroads means that the party-state needs to make serious strategic choices. President Xi has clearly indicated that political reform is not on the agenda. And yet if nothing is done social instability could certainly reach a point of no return. Former President and General Secretary Hu Jintao once said: ‘If we don’t deal with corruption, China will be doomed, but if we deal with it too harshly, the Communist Party will be doomed.’

The Dengist compact has finished and President Xi is putting something else in its place, the so-called ‘second wave of reforms’. In many ways these reforms seek to build upon the economic success to date, but also to control and reform many of the excesses of the golden boom years of the 1990s and 2000s when social and political elites road and pilfered the gravy train. These can be seen as a form of social and political reforms, the former including efforts to address China’s many demographic and social challenges, the latter aiming to create a more accountable, transparent, and efficient one-party state. Some of these reforms did emerge during the Hu and Wen period, but without attacking the vested interests nothing much long lasting could hope to be achieved.

What are the risks inherent in President Xi’s strategy? One of the most serious is blowback from the vested interests themselves. There has been growing concern that the rectification campaign is having a detrimental impact on party morale and inner-party legitimacy. Officialdom in China has for two thousand years been seen as a form of personal advancement. The campaign, insofar as it has radically curtailed public spending on things like gifts, banquets, travel, and so on, is having an impact on the economy itself. The vested interests are in themselves a major force to be reckoned with.

The other major risk is that whilst the public may support the detention of ‘tigers’ and ‘flies’, there is also much cynicism and detachment from politics itself. Although the CPC has a strong tradition of ‘mass politics’, it has not really found a way for ordinary folk to be more engaged in the political process. This form of alienation is not visible on a daily basis but it is there, simmering away. As Mao Zedong himself famously said, ‘it only takes a single spark to start a prairie fire’.

What is the long term goal here? To transform China in to a one-party authoritarian state Singapore style? Singapore is often held up as a model for China to emulate and we know that the party-state has sponsored many studies of the Singaporean model. But at the end of the day Singapore and China are radically different. China, ironically, is more open than Singapore, and with so much diversity – ethnically, culturally, regionally, and so on – it is almost impossible to govern. This bubbling undercurrent of vibrant culture, dissent, and even entrepreneurship, is actually something that I’m quite positive about. Yes, China needs stability. But it also needs to find a way to control social, cultural and economic disruption, whilst at the same time giving societal forces an autonomous space in which to flourish, to be creative, and innovative. Finding this balance will be difficult, but if it can be achieved we will truly witness the ‘rejuvenation of China’ and maybe the ‘Chinese Dream’ will at last go global. But the signs from President’s Xi’s office do not inspire confidence. A few years ago the authorities ordered a moratorium on the production of any television dramas that involved time travel of characters from the present back to the dynastic past. Ironically President Xi seems to be keen to take the party and society on a bit of time travel, rolling back some aspects of reform and rebuilding some of the key political and ideological controls of the not-too-distant past. Will this formula provide the key to China’s transition to the next phase of development, one that creates social stability, sustainable development and distribution of benefits and social justice to the majority of the population? Time, once again, will tell.

Time travel is banned in China. If you see a blue police box please inform the police immediately.

Time travel is banned in China. If you see a blue police box please inform the police immediately.

2 Comments

  • Nov 23rd 201413:11
    by David Cowhig

    Reply

    Prof. Zheng Yongnian talks about Xi have a long term plan to recentralize China, with Xi seeing the need to institutionalize strong oversight from the center over provincial and lower level officials in order to fight corruption. Interesting as a comment on Xi’s long term strategy. How to keep the top leaders under control is a question not answered by Zheng’s commentary on Xi’s political roadmap. My translation of Prof. Zheng’s article is at http://gaodawei.wordpress.com/2014/11/17/zheng-yongnian-xi-jinpings-political-roadmap/

    • Nov 23rd 201423:11
      by Gary

      Reply

      Thanks David, it reminds me of the long oscillation in Chinese history between ‘centralism’ and ‘feudalism’.

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