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Report says corruption a threat to China
2007-10-11
Corruption costs China more every year than it spends on education and is one of the most serious threats to the country's political stability, according to a new report from the Carnegie Endowment for International Peace. The report said graft would continue because the ruling Communist Party is unlikely to carry out the political reforms needed to fight corruption, as a result of fears of losing its grip on power. "Corruption has not yet derailed China's economic rise, sparked a social revolution or deterred Western investors. But it would be foolish to conclude that the Chinese system has an infinite capacity to absorb the mounting costs of corruption," said the report written by Minxin Pei, a senior associate at the Washington-based think tank. Pei calculated that roughly 10 percent of government spending, contracts and transactions is converted into kickbacks or bribes for officials who award contracts, or the money is simply stolen. The amount of money stolen has jumped "exponentially" in recent years, according to the report issued Tuesday, less than a week before the Communist Party holds a twice-a-decade meeting to decide on policy for the next five years and select some new top leaders. "Even after adjusting for inflation, the sums of money looted by government officials today are astonishing. Even a relatively low-level official can amass an illicit fortune," it said. The report said the direct cost of corruption in 2003 equaled 3 percent of gross domestic product, or $86 billion, "an amount exceeding the government's entire spending on education in 2006." Pei said the vast scale of corruption was possible because of extensive state involvement in the economy despite decades of economic reform, along with lax law enforcement and the party's reluctance to adopt needed reforms. This was compounded by collusion between officials that "has transformed entire jurisdictions into local mafia states." Communist Party leaders have repeatedly warned that corruption threatens social stability. They admit corruption within the party has not fallen despite several high-level arrests, including the party boss in Shanghai, Chen Liangyu, and a vice mayor of Beijing last year. Chen was toppled in a scandal linked to the misuse of hundreds of millions of dollars in city pension funds, some of which were illicitly invested in dubious real estate and other projects. Chen was the highest-level party official to be ousted in a decade. In July, China also executed Zheng Xiaoyu, the country's former top drug regulator for taking millions of dollars in bribes to approve substandard medicines, including an antibiotic that killed at least 10 people.
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