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Further Reading

Corruption

The restrictions imposed on Chinese sovereignty in the 19th century were rendered inevitable by the inefficiency and corruption of the mandarinate of the empire. Whereas formerly it was China which dictated the conditions under which international relations were to be maintained, now it was the Western nations which imposed their will on China. To save appearances was the first rule of the Chinese official. But along with the constant outward profession of the moral platitudes of Confucius and Mencius, there existed a very shrewd selfishness which sought the greatest personal gain that can be reconciled with appearances. The cause for the divergence between the spirit and the practice of Chinese law is found in the notorious corruption of the Chinese magistracy and judiciary. With "reason" on their lips and the keen desire for gain in their hearts," their judgment was at the disposal of the long purse.

Dr. Sun Yat Sen wrote in 1897 that "There is, in truth, one and only one cause of ... all China's ills: that is the universal and systematic corruption which is directly responsible for famine, flood, and pestilence, no less than for the perennial flourishing of large hordes of armed robbers and banditti .... So universal and deeply rooted is the corruption from which all these evils spring, that partial and gradual reform is impossible and no change for the better can be hoped for except from a radical alteration in the administrative system. For under the present regime any official who wishes to be honest is, nevertheless, compelled to follow in the footsteps of the dishonest ones, or retire from public life altogether. He must accept bribes in order to pay the bribes exacted of him by his superiors; and he must connive at all kinds of corruption both in his subordinates and in those who hold higher rank or office than his own."

On November 30, 1951 Mao Tse-tung wrote that "The struggle against corruption and waste is a major issue which concerns the whole Party, and we have told you to give it your serious attention. We need to have a good clean-up in the whole Party, which will thoroughly uncover all cases of corruption, whether major, medium or minor, and aim the main blows at the most corrupt, while following the policy of educating and remoulding the medium and minor embezzlers so that they will not relapse. Only thus can we check the grave danger of many Party members being corroded by the bourgeoisie, put an end to a situation already foreseen at the Second Plenary Session of the Seventh Central Committee and carry out the principle of combating corrosion then laid down."

Corruption remains endemic in China. Sectors requiring extensive government approval are most affected, including banking, finance and construction. The lack of an independent press as well as the fact that all bodies responsible for conducting corruption investigations are controlled by the Communist Party hamper anti-corruption efforts. Senior officials and family members are suspected of using connections to avoid investigation or prosecution for alleged misdeeds.

According to Chinese law, accepting a bribe is a criminal offence with a maximum punishment of life in prison or death in "especially serious" circumstances. The maximum punishment for offering a bribe to a Chinese official is five years in prison, except when there are "serious" or "especially serious" circumstances, when punishment can range from five years to life in prison. It is currently not a crime under Chinese law to bribe a foreign official. A draft amendment to the Penal Code under consideration would make offering bribes to foreign officials or officials of international organizations a punishable offense, with punishment ranging from three to ten years in prison plus fines.

Four waves of official corruption were associated with different stages of the nation's economic reform. Each wave of corruption had different forms and targets. By 2010 the general trend was that as the nation's economic reforms move forward, official corruption in China is becoming more serious and pervasive with more money and higher ranked officials involved in corruption cases. This is raising a serious challenge to Chinese authorities who have shown a willingness and effort to control official corruption. In China, theauthorities are increasingly aware of the need for an independent and apolitical justice system tomeet the demands of the 21st century, but are still uncertain of how much power to cede.

Chinese officials have noted that most acts of corruption in China are closely related to economic activities that accompany illegal money transfers. Observers register increasing concern regarding underground banking and trade-based money laundering. Value transfer via trade goods, including barter exchange, is a common component in Chinese underground finance. Many Chinese underground trading networks in Africa, Asia, the Middle East, and the Americas participate in the trade of Chinese-manufactured counterfeit goods.

Although China has had some success at combating illegal underground banking, the country's cash-based economy, combined with robust cross-border trade, contributes to a high volume of difficult-to-track large cash transactions. While China is adept at tracing formal financial transactions, the large size of the informal economy--estimated by the Chinese Government at approximately ten percent of the formal economy, but quite possibly much larger--means that tracing informal financial transactions presents a major obstacle to law enforcement. The prevalence of counterfeit identity documents and underground banks, which in some regions reportedly account for over one-third of lending activities, further hamper law enforecement efforts.

The mainland Chinese stock markets have had serious problems with corruption, cronyism and lack of transparency. Euromoney describes these markets as "mired in corruption, dominated by moribund companies and manipulated by government and speculators alike." Corruption extends beyond the exchanges to include listed companies. The China Securities Regulatory Commission (CSRC), which regulates the securities market, reported in 2004 that 10 percent of its listed companies had doctored their books. The CSRC is also tackling corruption. It is investigating related-party transactions to stop the prevalent practice of shifting assets from listed companies to their unlisted state-owned parents.

Corruption is considered to be especially prevalent in remote branches and rural institutions: private businesses have complained that in order to borrow from rural banks and credit cooperatives, they are typically forced to bribe lenders with kickbacks of 10 to 15 percent of the loan value. The rural credit cooperatives are reportedly riddled with fraud and controlled by local government officials. Corruption appears to be a problem not just in rural banks or remote branches but also in the big four banks. The central bank recently reported that 40,000 CCB employees and 18,000 Bank of China employees had been disciplined for misappropriating funds and making unauthorized loans. Additionally, the chairman of CCB was forced to resign in March 2005 for taking bribes. Significantly, CCB had been considered the cleanest of the big four banks.

Chinese leaders acknowledge that official corruption in China continues to be a serious problem. Anti-corruption campaigns have led to arrests of many lower-level government personnel and some more senior-level officials. Most corruption activities reported in the press in the PRC involve abuse of power, embezzlement, illegal land confiscations, and misappropriation of funds. Payoffs to "look the other way" when questionable commercial activities occur are surely an important type of corruption as well. As in other countries, many perceive that a number of corruption cases are arbitrarily brought against political enemies or economic competitors, and against junior rather than senior officials, although this is difficult to verify.

In Transparency International surveys in the mid-1990s, China was listed by U.S. and European business people as one of the three most corrupt countries in Asia. Transparency International, a global corruption-monitoring group, rated China 2.16 in 1995 (a rating beneath 3.0 indicates rampant corruption). In 2005, the ranking improved to 3.4, placing China solidly in the middle in terms of corruption-71st out of 146 countries. A Chinese national survey revealed that Chinese citizens regard corruption as the most serious problem after inflation. But a review ofthe World Bank's annual World Business Survey indicates that overall corruption in China appears to be less than in other developing countries with similar per capita income.

The history of Chinese criminal law on corruption is divided into three period: the early period before economic reform (1950-1980), the period of early economic reform (1980s), and the later periods of economic reform (1990s). The criminalization of corruption in the private sector is also examined. The law against corruption has changed from the ordinance in the 1950s that regulated a compound of the criminal and administrative offenses to separate laws that provided independently for criminal offenses or administrative misconduct in the 1980s this trend of division of regulation started in the criminal law in 1979, and both jurists and practitioners view this as the correct direction for the development of criminal law. Compared with the offense of theft, punishment for embezzlement and bribery has been lessened. The scope of offenses of embezzlement, bribery, and misappropriating public funds has been reduced comparatively, possibly in order to limit the number of officials punished criminally for corruption.

In response to demands for a more fair and effective judiciary, the SPC issued a code of ethics in 2003 setting down 13 rules strictly prohibiting certain corrupt behavior. That same year the NPC joined the anti-corruption fight by embracing open trials, the separation of trials from enforcement and monitoring, evaluation of judges, and amendments to the criminal code that laid down a 10-year prison term for abuse of judicial power. Since then, thousands of judges and other court staff have been arraigned or prosecuted for corruption.

Some behaviors that arguably are grave enough in their social impact to merit criminalization have not been provided for in criminal law, although many criminal jurists suggested that they should be punished criminally. Hard evidence is scarce about the precise effect that both the reality and the national and international perceptions of corruption control have upon economic development, but the way that China approaches this challenge will have significant effects on the future of its legal system as well as upon its economic and political well-being.

China employs a comprehensive counter-drug strategy, dubbed "The People's War against Drugs," which includes prevention, education, eradication, interdiction, rehabilitation, thorough regulation on commerce in precursor chemicals, and increasing international cooperation. However, corruption in drug-producing and drug transit regions of China limits what dedicated enforcement officials can accomplish. While narcotics-related official corruption likely exists in China, it is seldom reported in the press, but the fact that narcotics transit into and out of China and are trafficked and abused throughout the PRC suggests strongly that official corruption at all levels is almost certainly part of the problem. Official corruption cannot be discounted among the factors enabling organized criminal networks to operate in certain regions of China, despite the efforts of authorities at the central government level to prohibit and punish such activity.

Institutions of higher learning, as social organizations, rely on their administrations to harmonize their resources and coordinate relations. Meanwhile, institutions of higher learning are also important links in political socialization, and state forces intervene to a certain extent in school administration and regulate their developmental objectives. However, the long-term dependence of China's state-run universities on the government and the lack of a proper orientation for academic authority have limited the universities' overall efficiency and the individuals' initiative. The universities' lagging mode of administration during the reforms of the national economy and the political system has created discrepancies between the universities' interest orientation and the interests of society and given rise to academic corruption.