Corruption threatens Chinese economy

Andrew Yeh at the Financial Times today reports the OECD says corruption threatens the Chinese economy:

The severe and widespread nature of corruption in China is becoming a major source of social discontent and poses a threat to the legitimacy of the country's leaders, according to experts at the Organisation for Economic Co-operation and Development.

...“The economy is growing, so incidences [of corruption] are growing too,” said Janos Bertok, one of the OECD researchers in charge of evaluating corruption in China, and one of the authors of this month's ground-breaking report. “The social dimension is equally as important as the economic dimension,” he said.

Mr Bertok said that corruption had already become a “danger to legitimacy” for Beijing because there was much popular dissatisfaction with corrupt officials, particularly in rural areas. He said China's corruption problem presented acute risks for the privatisation of state assets and for the “highly vulnerable area” of the construction sector.

Many of the corrupt are fleeing abroad:

...In recent years, many Chinese officials and bankers have escaped prosecution by fleeing abroad with large sums of money, often to other parts of Asia or to North America. The Ministry of Commerce has estimated that 4,000 corrupt officials have fled the country with roughly $50bn in the past two decades.

Mr Wehrle said officials often fled to countries with which China did not have extradition treaties, and that foreign governments were sometimes reluctant to send people back to China because of concerns that they might be executed.

Transparency International's latest Corruption Perceptions Index rated China at 3.4 out of a possible 10, which ranks it about halfway between the worst countries (Haiti and Bangladesh, both 1.5) and the best (Finland, 9.7). Countries with scores of less than 3 indicate "rampant corruption" according to TI.

Procurement is a key concern. The Global Corruption Report 2005 country report emphasises corruption in China’s booming construction sector. The report's highlights (available here) state:

New guidelines on procurement were also introduced in China in line with the 2003 Government Procurement Law. A key area of concern is corruption in the construction sector, especially given the massive spending on infrastructure for the 2008 Olympic Games. An auditing and supervision department has been set up by the Beijing government and the organising committee for the Games to oversee an estimated US $16 billion of business opportunities for domestic and foreign investors.

Comments

[J. S. Donald]

India and China are competing for the lowest position in CPI!

TI Anti-Corruption Handbook (ACH): National Integrity System in practice - Corruption Perceptions Index (CPI): http://www.transparency.org/policy_research/surveys_indices/cpi

[Aşk mektupları]

Thank you for this wonderful article ... really very nice - there are such things
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