For those who haven’t seen it already, last month the International Consortium for Investigative Journalists (ICIJ) released a highly detailed report on the extensive offshore holdings of China’s “princelings” (close relatives of China’s political elite), and other relatives and close associates of the leadership. It’s worth a read. I doubt anyone who follows China even slightly will be terribly surprised to learn that friends and family of the Communist Party elite have stashed billions of dollars in shell companies and offshore bank accounts, but the level of detail—and the naming of names—is impressive. And while nothing in the report directly indicates that the money is the product of corruption or other illegal activity, as the saying goes, where there’s smoke…
A few quick thoughts on the report:
First, although the natural instinct is to focus on what these revelations show about the extent and magnitude of corruption in China, the report usefully reminds us of the complicity of both the “haven” jurisdictions (like Hong Kong, the British Virgin Islands, and Samoa), and also the banks and other intermediaries in countries that tend to get sterling marks on the usual corruption perception indices (like Singapore, Hong Kong, Switzerland, and the United States), in creating a system that facilitates the secret holding and transfer of wealth derived from, shall we say, suspicious sources.
Second, the report highlights (indirectly) the deep ambivalence among China’s political elite about the corruption problem. On the one hand, the Chinese Communist Party elite seems genuinely concerned about the threat that corruption poses to its legitimacy, and hence to its grip on power. And maybe we shouldn’t be too cynical: perhaps Chinese leaders (at least some of them, some of the time) really view high-level corruption as morally wrong and bad for China. On the other hand, the degree to which members or relatives of the Chinese political elite seem to be enriching themselves, almost certainly at the expense of the Chinese people, is staggering. This makes it hard to tackle high-level corruption for at least two interrelated reasons: (1) many of the people with the power to do anything about the problem are either directly implicated or have relatives and associates who are; (2) revealing the extent of the problem might trigger precisely the legitimacy crisis the Chinese leadership wants to avoid.
Third, the ICIJ report is a reminder of just how important independent investigative journalism is as an anticorruption device. The report itself is an example of good investigative journalism, and China’s suppression of similar journalism domestically is probably one of the reasons that the current degree of (likely corrupt) wealth accumulation by associates of the political elite is politically sustainable. Now, there’s actually a lot more open discussion in China about a range of topics, including corruption, than people who haven’t spent time there might think. It’s not a totalitarian police state, where Big Brother is watching your every move. But there are certain subjects that are absolutely taboo, and one of them is the corruption and the massive wealth of the senior leaders and their associates.
GAB | The Global Anticorruption Blog 
Yesterday a group of Chinese scholars came to Harvard and discussed major problems in China, one of which was corruption and President Xi Jinping’s anti-corruption campaign. I would like to share their opinions with everyone who reads this blog.
One expert said that the rampant corruption problem in China is only a result of a deeper problem: the lack of a congressional budgeting system. The National People’s Congress has no power on how much money the government can spend in a given year, and the government always exceeds its budget by two to three folds. The figures this expert gave were shocking. In a word, the government is taking too much money from the country’s economy, having more money than it can spend in ordinary means, and encountering no checks in its spending.
Another expert said, Xi is using a revolutionary approach (meaning profound, forceful, even antagonistic) to initiate reforms, including fighting corruption. He is concentrating as much power as he can to implement his plans, but the resistance is equally strong (princelings, army, vested interests). China has been caught in a dilemma for quite a while: devolution of power through concentration of power. It seems the only way, but is is a way at all?
I think this post is very interesting. I agree that Chinese leadership is concerned with the perception of corruption, especially given the vastly different living standards in China and the low social mobility (intergenerational elasticity is 60% in China, compared to 47% in the US). The outrage sparked by rich, second generation princelings is a constant reminder of the inequality of society. There are signs of unrest in more remote cities. Last week in Guiyang, the provincial town of Guizhou, a man set a bus on fire allegedly to take “revenge on society”. Nor are these kind of attacks novel, Shanghai Daily reports “On June 5, 2009, a bus in Chengdu caught fire and left 25 passengers dead. Police concluded the fire was deliberately set by an unemployed man who died in the fire.”
Reports such as the ICIJ report on offshore holdings are likely to intensify discontent. I would argue that this is a good thing. Even though the causal link between economic growth and corruption isn’t clear-cut, at some point of a country’s development pressure on corruption ought to set in. The stuff stance on corruption taken by the new government is a good sign. There is a general feeling that President Xi, with his family background, wields much greater power than any of the previous two presidents. I am cautiously optimistic.