Newspaper article International New York Times

Crony Communism in China

Newspaper article International New York Times

Crony Communism in China

Article excerpt

Xi Jinping is going after corruption because it threatens the party's future. But his actions threaten the party now.

When Xi Jinping launched his anti-corruption campaign shortly after becoming the general secretary of the Chinese Communist Party in late 2012, most observers thought he would merely go through the motions, jailing a few senior officials and then carrying on business as usual. His predecessors, after all, had used anti- corruption investigations largely to eliminate their political opponents and consolidate power. Disciplinary actions would spike during the year following a new leader's appointment and fall the year after that.

But Mr. Xi's campaign goes well beyond any immediate desire to establish his political supremacy. It is unprecedented in sweep and ambition, taking on the class of 5,000 or so very senior officials who operate the most vital organs of the C.C.P., the government, the military and state-owned enterprises. Its goal is no less than to upend the unspoken system by which China's elites have been governing since the Tiananmen crackdown in 1989: a self-reinforcing web of relations based on patronage and corruption. As a leader driven by a historic mission to safeguard the C.C.P.'s rule against all odds, Mr. Xi sees endemic corruption as a serious threat to the regime's long-term survival.

But corruption has penetrated so very deeply into the party- state that it has become the glue that holds it together. And so Mr. Xi's campaign, which is meant to ensure the C.C.P.'s longevity, seems to pose an existential threat to it in the short or medium term.

Reliable data measuring corruption are scarce, yet several indicators, including the sums pilfered by officials, support the consensus among China watchers that corruption has increased significantly in the last two decades. According to corruption cases reported in the most authoritative official media, the median amount of bribes rose from just over $91,000 in 2000 to $225,000 in 2009, a 100 percent increase (after adjusting for inflation).

Unscrupulous officials have been stealing more since the early 1990s thanks partly to a large increase in infrastructure spending. Lucrative contracts for roads, ports and railways are opportunities for them to enrich themselves or their cronies. Investment in infrastructure, real estate and other fixed assets rose from an average of 36 percent of G.D.P. during 1980-1991 to more than 41 percent during 1992-2011.

Based on the data for 2011, investment in infrastructure accounts for about one-third of total fixed-asset investment. Sixteen heads of transportation departments in 11 provinces have received severe punishment (one was executed) for corruption in the last two decades. Last year, China's longtime railway minister, Liu Zhijun, was given a suspended death sentence for accepting more than $10 million in bribes.

Another source of windfall profit has been privatization -- which is euphemistically called "property rights reform," because of a lingering ideological squeamishness about turning nominally state- owned assets into private property. Since the early 1990s, the Chinese government has progressively relaxed its control over the disposal of land and mining resources, for example, allowing local officials unprecedented freedom to transfer these valuable assets to family members and friends. In a major scandal involving Zhou Yongkang, the recently retired internal security czar, his elder son purchased two oil blocks from the state-owned energy giant China National Petroleum Corporation for about $3.2 million and quickly resold them for a profit of more than $80 million. Cao Yongzheng, a crony of Mr. Zhou's who claims to be able to predict the future, seems to have been given, most likely as a reward for some services, an oil block that brought him nearly $100 million a year, according to an investigation by the highly respected Chinese business publication Caixin. …

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