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Corruption

Corruption costs China some 10 percent of its gross domestic product (GDP), according to estimates by Shanghai-based independent economist Andy Xie Guozhong.

The Communist Party of China (CPC) vowed 25 December 2013 to firmly fight corruption and maintain its "high-handed posture" in the next five years. "If the problems of work styles and corruption are not handled properly, they will critically harm the Party, and even lead the Party or nation to perish," said a five-year (2013-2017) plan on building a system to punish and prevent corruption, issued by the CPC Central Committee.

All cases must be investigated and miscreants punished more severely to deter others, the plan said. The CPC reiterated its pursuit of "tigers" and "flies" and the fight against harmful work styles, the hotbeds for corruption. The Party's work style campaign is fundamental to the fight against corruption, according to the document. "Corruption is still common. The soil that nourishes corruption still exists. The situation remains critical and complicated," the plan said.

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.

Since 1995, officials in China have been required to report their salaries to the partys Central Commission for Discipline Inspection. Just a few years ago, that was expanded to include the assets of their family members personal income, investments and property holdings. That information, however, has never been made public, in part because of government concerns about how the release of such information could create social instability.

In the past, the results of amnesty programs was just the opposite of what was intended.Those who did not come forward and reveal their acts of corruption managed to escape punishment, and those who did come forward willingly were punished.

On July 25, 2013 a court indicted disgraced politician Bo Xilai on charges of corruption and abuse of power. Bo was swept from office in April 2012 following one of Chinas biggest political scandals and vanished from the public limelight. Chinese state media reports said Bo will face charges of abuse of office, accepting bribes and embezzling of massive amounts of public funds. Around the time that Bo was kicked out of the party, state media reported that his crimes stretch back more than a decade. In addition to corruption, Bo was also alleged to have engaged in illicit sexual affairs attempted to cover up his wifes murder of a British businessman. The scandal was one of the Communist Partys ugliest in decades and comes as public trust in the party is waning over concerns about corruption.

Bo was once one of Chinas most well-known and popular up and coming politicians. He was one of 25 members in the Communist Partys Politburo, and was widely expected to become one of Chinas top leaders. But just as China was beginning its once-in-a-decade leadership reshuffle, allegations of corruption and murder swirled around his family. He disappeared from public view and was then ousted from his post as party boss of the southern megacity of Chongqing. His wife, Gu Kailai, was given a suspended death sentence following her confession to the murder of British businessman Neil Heywood. Bos former right-hand man, Chongqing police chief Wang Lijun was sentenced to 15-years in prison for initially covering up the murder and other crimes.

Most local leaders had "bought" their positions and wanted an immediate financial "return" on their investment. They always supported fast-growth policies and opposed reform efforts that might harm their interests. The central feature of leadership politics was the need to protect oneself and one's family from attack after leaving office. Thus, current leaders carefully cultivated proteges who would defend their interests once they stepped down. It was natural that someone like Xi Jinping, who maintained a non-threatening low profile and had never made enemies, would be elevated by Jiang Zemin and Zeng Qinghong. Xi would act to ensure that Jiang was not harassed or that Jiang's corrupt son would not be arrested.

Since becoming party chairman in November 2012, Xi and the head of the partys disciplinary commission, Wang Qishan, had taken steps to crack down on corruption. Xi pledged to go after both high- and low-ranking officials, and the party said it would launch a major anti-corruption plan in 2013. But the anti-graft campaign focused largely on those rumored to be Xis adversaries in the party, reflecting a bitter power struggle behind the scenes.

Chinas fight against the rampant problem of corruption had long lacked a tool that many believe could help shine a light on graft: a requirement from the central government that officials publicly disclose their assets. In early 2013 several new - albeit small scale - asset disclosure programs were initiated, one in the eastern city of Ningbo and three others in the progressive southern province of Guangdong. Some of the programs that already have been experimented with in the past, such as one in Xinjiang and the provinces of Hunan and Zhejiang, have had mixed results.

The government could set up an amnesty program to prod corrupt officials to come forward, and give them some guarantees that possible penalties could be lightened. The amnesty would need a legal basis and should be different from political movements the party has launched in the past to root out corruption. If amnesty is used again, it needs to have a legal basis. Some analysts in China said the amnesty could apply to acts of corruption prior to the 18th Party Congress of November 2012.

In October 2012 the government established a frugal working style rule barring government officials from spending public money on luxury items such as lavish banquets and luxury cars and from accepting expensive gifts. In September the government banned officials from using public money to send mooncakes as gifts and in December published regulations that banned dishes containing shark fin, bird nests, and wild animal products from official banquets. In December the government issued guidelines forbidding officials from chartering planes or flying in private or corporate jets overseas.

China's top leadership had carved up China's economic "pie," creating an ossified system in which vested interests drove decision-making and impeded reform as leaders maneuvered to ensure that those interests were not threatened. It was well known that former Premier Li Peng and his family controlled all electric power interests; PBSC member and security czar Zhou Yongkang and associates controlled the oil interests; the late former top leader Chen Yun's family controlled most of the PRC's banking sector; PBSC member and Chinese People's Political Consultative Conference Chairman Jia Qinglin was the main interest behind major Beijing real estate developments; Hu Jintao's son-in-law ran Sina.com; and Wen Jiabao's wife controlled China's precious gems sector.

China announced 29 July 2014 it was investigating a man who used to be one of the country's most powerful politicians, former domestic security chief Zhou Yongkang. The investigation was likely to boost already growing public support for Chinese President Xi Jinping's widening anti-corruption drive. The decision to go after Zhou was perhaps the biggest investigation since the Gang of Four at the end of the Cultural Revolution. Zhou is a close ally of former rising political star Bo Xilai, who was sentenced to life in jail in 2013. Xi Jinping is getting more and more powerful and is centralizing power in his own hands, for the better or maybe for the worse.

The investigation found that Zhou seriously violated the Party's political, organizational and confidentiality discipline. He took advantage of his posts to seek profits for others and accepted huge bribes personally and through his family. He abused his power to help relatives, mistresses and friends make huge profits from operating businesses, resulting in serious losses of state-owned assets. Zhou leaked the Party's and country's secrets. Zhou committed adultery with a number of women and traded his power for sex and money.

Zhou Yongkang was expelled from the Communist Party of China (CPC) and prosecutors have opened an investigation into his suspected crimes and decided to arrest him, authorities announced 06 December 2014. Zhou's expulsion from the CPC was according to a decision made at a meeting of the Political Bureau of the CPC Central Committee. The meeting also decided to transfer the suspected criminal case of Zhou, a former member of the Standing Committee of the Political Bureau of the CPC Central Committee, and relevant clues to judicial organs for handling according to the law.

Chinese authorities formally indicted former security chief Zhou Yongkang on 03 April 2015. A brief statement posted on the website of Chinas top prosecutors office, said Zhous crimes of bribery, abuse of power and leaking state secrets stretched from his time as head of China National Petroleum Corporation - one of the worlds biggest energy companies - to his final post as a member of Chinas powerful Politburo Standing Committee.

There was no reference to his son or his other relatives, as well as his cronies and former colleagues, numbering in perhaps more than 100 people, who were also members of the corruption gang led by Zhou Yongkang.

There was speculation that Zhou, Bo Xilai and others were plotting or somehow taking steps to prevent Xi Jinping from rising to power. In June 2015 Zhou Yongkang was sentenced to life in prison following a secret trial. Tianjins Intermediate Peoples Court found Zhou guilty of corruption, abuse of power and disclosing state secrets. Although details of the trial released by the state media provided some information about Zhous crimes, they shed little light on the massive network he had allegedly built up over his years at the helm of Chinas oil industry and in powerful state and party positions.

An alleged scam in which journalists at a prominent business news website extorted money from companies for positive coverage was under investigation in September 2014. The case involved eight people including journalists, media heads, marketing staff and public relations heads, all of whom had been detained by police. They include Liu Dong, president of 21cbh.com, Zhou Bin, the website's editor-in-chief, and reporters and employees of its marketing department, as well as heads of the two PR firms.

Together, they extorted money from more than 100 companies since November 2013, said police. Police said business news website 21cbh.com and two public relations firms collaborated to extort money from companies in return for favorable coverage and withholding negative news reports on the site. If companies refused, the website would purposely publish negative or malicious information about the company.

In 2016, Bai Enpei, a former senior lawmaker with the National People's Congress, was sentenced to death - with a two-year reprieve - for taking 246.7 million yuan and holding excessive assets from unidentified sources. Bai later received a life sentence, the standard practice for most such sentences.

More than 159,000 people were punished for corruption and violating the Party code of conduct in China in 2017, according to the Central Commission for Discipline Inspection of the CPC. Since the start of 2017, a total 1,300 fugitives have returned to China, including 347 Party members and State functionaries as well as 14 others listed on a red notice of corruption suspects.

Zhang Zhongsheng, ex-deputy mayor North China city of Lliang, sentenced to immediate death for accepting bribes worth 1.04 billion yuan ($166 million) by a court in Shanxi Province on 28 March 2018. Zhang was sentenced to death for accepting bribes and seeking illegal benefits for others with a severe impact on the local economy, according to the Intermediate People's Court in the nearby city of Linfen. Zhang was "extremely greedy," it said. He "crazily took bribes from 1997 to 2013 and did not restrain himself after the 18th National Party Congress and caused extraordinarily great losses to the nation and its people and should be punished severely by law."



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