« Merkel in, Schroder out | Main | Fed talks tough on inflation »

Sunday, October 09, 2005


Angry Economist

China is a fertile ground for corruption...

• A large, developing economy: China is a large country with a population of 1.3 billion. Its economy has growth by about 9 per cent per annum since 1978. The Chinese economy is open with low tariff barriers, a developing infrastructure and a large workforce.
• A state-led economy: Half of the productive capacity of China is in state hands. State Owned Enterprises dominate the economy, and represent the majority of potential and actual overseas inward investors. All of China’s 11 Fortune 500 companies are state-owned.
• A diverse nation with many sub-economies: China is often mistakenly considered as a uniform entity, whilst in reality it is very diverse – there are 31 provinces and 656 cities. There are seven major dialects, and 80 languages spoken. Economic development and growth has not been uniform. Economic and investment opportunities are not uniform. Despite the appearance of a strongly centralised state, decision-making is highly decentralised.

The power of central government is much exaggerated. Local governments have much power. And they are largely corrupt. Its an enormous challenge to address corruption in China. Impossible I would say. What is often forgotten is that in existing and former Communist states, corruption was endemic too. Trying to reverse 50 years or more of this in China, Russia, Ex-Soviet Union is proving extremly hard/ nigh impossible. The whole system of public administration, armed forces, law and order etc has corruption as an integral part.

The comments to this entry are closed.


  • TEST

  • Subscribe in NewsGator Online

Economist Weblogs


  • This is a personal web site, produced in my own time and solely reflecting my personal opinions. Statements on this site do not represent the views or policies of my employer, past or present, or any other organisation with which I may be affiliated. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities.