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China's corruption problem
TAI Publisher Charles Davidson in Politico: China’s Kleptocrats

TAI publisher Charles Davidson and regular TAI contributor Jeffrey Gedmin have coauthored a must-read piece in Politico about how China’s kleptocratic officials steal from the people. Here’s a taste:

In China, “princelings” is the term popularly used to describe the relatives of top party officials who enrich themelves by using their political connections and then hide their ill-gotten gains from public scrutiny. They’re reviled by ordinary Chinese, who are always on the hunt for signs of corruption. It was Chinese Web users who discovered the lavish lifestyle of a 56-year-old political commissar from the southern province of Guangdong, who managed to acquire 22 homes worth millions while earning less than $20,000 a year. Authorities felt compelled to act.

More often, such abuses go unpunished.

This should concern America because kleptocratic systems preclude the development of democracy. They distort the economy and, for tens of millions of ordinary people, cause untold social and environmental damage (last spring China’s authorities censured for graft and malpractice 63 agencies that carry out environmental risk assessments). Kleptocratic systems empower and protect dictators hostile to American interests and values. They also make for failed states. In his book “Double Paradox: Rapid Growth and Rising Corruption in China” expert Andrew Wedeman contends that corruption in the current Chinese system exceeds “normal” development corruption and may ultimately lead to catastrophic, destabilizing effects.

The piece offers three specific recommendations for how the United States can combat kleptocracies, including increasing the president’s ability to sanction kleptocrats and eliminating shell corporations, and is a timely call for the U.S. to take a tougher line on crooked governance in an era of endemic corruption in Russia and China. Read the whole thing.

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  • Fat_Man

    The article and the ideas expressed in it are just plain wrong. The article seems to be premised on the notion, not argued, that official corruption is a moral evil at all times and places. I do not buy the idea. Using some cash to obtain a permission from a totalitarian government to do something that would be of right in a free country may be deplorable, but I do not think it is immoral. Of course the corrupt official may be acting unjustly, but he may also deserve compensation for running a risk from his superiors for allowing the exercise of what ought to be a right.

    Corruption is unlawful and immoral in rule of law societies. In lawless societies it is one of the few ways for outsiders to cushion the harshness of official whims.

    Further, any Chinese person who can get assets away from a tyrannical and unjust regime should be welcomed. Not harassed.

    Another problem is that it is foolish to think that Xi’s anti-corruption campaign is being run by him to lift the moral standards of Chinese society. It is doubtless being run to focus public anger not on the unjust government as an institution but on those persons who are opponents of Xi or supporters of his rivals.

    What would be immoral would be aiding tyrannical regimes in the persecution of their internal opponents by preventing the opponents from sheltering their assets and their families out of the reach of the regime.

    The whole scheme is just another parcel of the false and poorly thought moralism that plagues American foreign policy. The United States has no interest in in the enforcement of internal party discipline in China and we should mind our own business.

    Finally, the operation of the Delaware Secretary of States Office is exemplary. I know this from many years of experience. No corrupt foreigner would form a US corporation to further his plans. Our tax rates are the highest in the World. On the other hand, there are thousands of reasons to form corporations under US law to facilitate investment and the distribution of capital assets across a nation with 50 states, a bunch of Federal Territories and thousands of local governments. It is beyond stupid to include this as an item in Davidison’s over reaching and foolish agenda.

    • Tom

      (Waggles hand)

      While I understand where you’re coming from, this sentence here: “Of course the corrupt official may be acting unjustly, but he may also deserve compensation for running a risk from his superiors for allowing the exercise of what ought to be a right” is far too kind to the officialdom. Replace the “may be” with “is almost certainly.” Also, I would not be surprised to learn that the corruption runs all the way to the top.

      • Fat_Man

        Most importantly, we have no reason to get in the middle of this issue.

    • Fat_Man

      I feel like I am pulling my punches.

      • f1b0nacc1

        Tell us what you really think!

  • Jacksonian_Libertarian

    It is foolish to think an American President can do much of anything to combat corruption in other nations or cultures. The only strategy that makes sense is the one America is already using, lure other nations into the American Global Trading System, and let the “Feedback of Competition” force positive changes in other nations and cultures. We can all see that China after being uplifted by foreign investors, is now facing the loss of those bleeding edge companies and their capital. $800 Billion has left China in the last year, and it’s accelerating with $250 Billion of that in the last quarter. This is a huge amount of foreign investment to lose, and the expertise and captive markets that are leaving with the investors is of even more significance. China doesn’t have a single recognizable Brand Name like Apple, Intel, Microsoft, Google, Sony, Toyota, Samsung, Kia, etc… All of this indicates that China wasn’t responsible for their so called economic miracle, and their swift rise is about to be followed by a swift fall.

  • Anthony

    “Only a serious, comprehensive, well-coordinated assault led by the United States and other rule-of-law states will allow us to conquer the scourge of kleptocracy.”

    Admirable notions by Davidson and Gedman but realistically are expectations to be implemented via a P5+ 1 instrumentality? Fact is, the People’s Republic of China is an authoritarian state (as authors note) with an administrative system that relies heavily on monetary incentives. The authors state change must come from external sources, U.S. et al. Is it probable?

    “Minxin Pei argues that China’s gradual political transition has resulted in a system of decentralized predation.” Can outside actors force cultural/state change?

    • Fat_Man

      It was only in Germany, Japan and Korea, where the old society had been destroyed by war, and where the US stationed tens of thousands of soldiers for generations, that we achieved any level of success in totally restructuring the political and social order.. There is simply no prospect of that happening in Asia, especially China in the current era.

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