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Corruption In China

China and Corruption: Quick Facts

In 2011 the anti-corruption group Transparency International ranked China 78th out of 178 countries in its corruption perception index, worse than countries like Romania, Turkey. Economist Wang Xiaoli has estimated that the unreported and untaxed “gray income” of government officials was about $800 billion.

Corruption takes many forms: bribes, kickbacks, fees, hurry up money, sweetheart deals. “Holiday corruption” is a term used to describe bribes given in the form of traditional gifts during holidays such as the lunar New Year often in the form of hongbao, red envelopes that traditionally contain gifts of money. One American businessman told Newsweek, "Clients tell us that acting illegally is the way it's done in China."

Although corruption does not seem to affect China’s economic growth it does undermine the soundness of the system and make it vulnerable to instability, crises and even collapse. It also makes investors suspicious and reluctant to invest their money.

What is Corruption?

The notion of corruption varies with time and place. According to Chinese official terminology, the core element of the definition of corruption in today’s China is “the notion of the use of public authority and public resources for private interests (“Yi Quan Mu Si”).

3 TYPES OF CORRUPTION IN CHINA

Three types of corruption are common in China: graft, rent-seeking, and prebendalism

Types of corruption in China

Graft- is the most common Refers to bribery, embezzlement, and theft of public funds. Graft involves something of value given to, and accepted by, public officials for dishonest or illegal purposes.

3 Types of corruption in China

Rent SeekingRefers to all forms of corrupt behavior by people with monopolistic power. Public officials, through granting a license or monopoly to their clients, get "rents"—additional earnings as a result of a restricted market.

Prebendalism when incumbents of public office get privileges and perquisites through that office. Prebendal corruption doesn't necessarily need to be about monetary gain, but may include usurpation of official privilege, backdoor deals, clientelism, cronyism, nepotism

Why does corruption thrive in China?

The co-existence of dual economic systems during the whole transition period provides plenty of incentives and opportunities for corrupt practices. The loopholes in, and weakness of, regulatory policies and institutions, certain policy failures, all contribute to the growth of corruption

Corruption and Economic Development

Seeking money from ministries” (“Pao Bu Qian Jin”) has become an unwritten but successful measure for advancing local economic development, while the bribery of public officials by other public officials for public, rather than private interests (“Gong Hui”) is an open secret as a means for seeking funds and the other favours from the central government. Such practices lead to the spread of corruption from local to higher levels.

Local economic development depends to a large extent on the degree to which local government can obtain preferential treatment in the form of loans and financial subsidies, from the national government and its ministries.

According to China’s official record, during 1997-2002, there are totally  861917 corruption cases under investigation  842760 corruption cases concluded  846150 people punished by communist laws, of which 137711 expelled from the communist party

Measures to eradicate Corruption

The CCP has tried a variety of anti-corruption measures, constructing a variety of laws and agencies in an attempt to stamp out corruption. Such measures are largely ineffective, due to the insufficient enforcement of the relevant laws. The strict controls placed on the media by the Chinese government limit the discovery and reporting of corruption in China. Nevertheless, there have been cases of whistleblowers publicizing corruption in China.

Alternatives to Bribery: Ethical Response
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Alternatives

Pros

Cons

Establishing a good relationships with the right people

Problem (especially bribery related) would be resolved quickly

Require an investment of time and energy

Using government lobbying and high-level Promoting fair trading visits

Company would rely more on government effort

Ethical Response
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Utilitarian ethics :: A set of ethical beliefs based on maximizing good for the greatest number of people Rights of the parties

“ Does the action respect the rights of the individuals involved?”

Justice or fairness :: The quality of being fair and reasonable. “ Does the action respect the canons of justice or fairness to all parties involved?”

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