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What Are the Effects of China's Anti-Corruption Laws?

The recent sacking of Chen Liangyu, member of the Chinese Communist Party (CCP) Central Committee Political Bureau and Secretary of the Shanghai Municipal Party Committee, has become a hot topic.

While the mainland Chinese media praise the CCP leadership's determination to fight corruption, and the Shanghai residents' elation over the fall of Chen Liangyu and the "Shanghai faction," etc, the overseas media believe that the anti-corruption investigations are a political platform to secure numbers for the 17th Communist Party Congress scheduled for next year.

This power struggle, in the name of anti-corruption, actually conforms to the real situation in China. Corruption in China has infiltrated the entire administration including every fiber of its nervous system. Inside the ruling regime, a so-called "voluntary network" has been formed to protect political relationships. Mutual protection is the basic rule of this "voluntary network," where the fall of one member threatens the rest of the colluders. Hence the only reason high-ranking officials like Chen fall is because they lost their political protection.

The author believes that an anti-corruption policy that supports a power struggle cannot control corruption because the Chinese communist government has degenerated into a "Predatory State," and controls all the nefarious characters in the regime.

An American political scientist referred to some of the corrupt governments in African, South American, and Southern European countries as "Predatory States." In fact, labeling the government's shameless plundering of public resources and private property as thievery is not exaggeration. Four types of "Predatory States" have been identified.

For grand corruption, where bribery recipients are the few top-level agents of the government, the government will either form a bilateral monopoly state with large enterprises (Type I), or become a Kleptocracy ruled by thieves (Type II).

For petty corruption, where there are multiple bribery recipients at the lower levels of government, the bribery will escalate?because of the resources distribution relationship?into a competitive bribery state (Type III), or become a mafia-controlled state or mafia-dominated state (Type IV).

Examples of such notorious governments include Paraguay's Alfredo Stroessner, 1954-1989, the Mobutu regime in Zaire, 1965-1997, and the Duvalier regime in Haiti, 1957-1986. All these regimes were overthrown because of their extreme corruption and looting of public and private property that occurred while the rest of the population lived in terror and poverty.

Modern China exhibits all the features of a "Predatory State." Bribes are distributed at all level of government, from the top authorities to the middle and lower ranking officers, even the lowest ranking official is rent-seeking ? seeking opportunities to make the best use of their authority. All plundering activities of the four types of "Predatory State" are seen in China. The following are some examples.

Industry administration as a tool of profiteering: As long as it's a profitable industry, the licensing of an industry is a means to personal wealth. Mining of coal, gold, and other minerals, for example, and its licensing have become the officials' wealth-producing Taurus. Therefore China has the world's highest rate of mining accidents, and the most serious environmental pollution due to uncontrolled mining.

Land nationalization as a profit resource: Chinese officials at all levels have become wealthy real estate brokers by reselling land under their administration. The officials profit by forcing people to give up their lands and paying them very low compensation, then reselling the land to real estate developers at high prices. Chen Liangyu's case involves more than ten large real estate developers, but it is only the tip of the iceberg.

Local government's fanatical support of the privatization of state-owned enterprises: Chen Guangyin, the mayor of Zhucheng City of Shandong Province, is nicknamed "Chen sold out." He has become "the number one official in state-owned enterprise reform" because he sold 272 state-owned enterprises within his city in a very short period of time. After fleeing with an accumulated fortune, Chen Guangyin's whereabouts are still unknown. In China, crimes committed by officials in charge of state-owned enterprises have become the norm. For example, crimes committed at the management level of state-owned enterprises accounted for 41.5 percent of the total number of corruption and bribery cases investigated in 2004. These are largely related to the reform of the state-owned enterprises.

The ruling regime prefers a certain type of reform: China has experienced more than 28 years of reform, which never reached completion. Each reform has become an effective wealth-collection method for those in power. From state-owned enterprise reform, stock market establishment, and land reform, to the ongoing financial system reforms, each and every "reform" has enabled a number of officials to become millionaires.

The proliferation of the plundering by officials has created a highly unstable government. Maintaining stability has become the mantra of current Chinese officials. These beneficiaries will not hold political power forever; and their wealth derived from plundering cannot withstand a change in regime. The elite members of the political and economic groups in China prefer to emigrate to other countries. China has therefore become the country with the world's largest exodus of retired officials.

If a country's leadership is only satisfied with cracking down on political opponents using anti-corruption laws, but does not correct and rebuild the political and judicial systems, it will not be able to effectively combat corruption.

In a totalitarian "Predatory State" such as China, anti-corruption laws that serve power struggles can only lead to one outcome?the country's political faction will promote allegiance from the bureaucrats and thereby create political protection. Thus "voluntary networking" will reach perfection and continue to escalate.