Corruption in China

In this annotated bibliography, I will be reviewing the issue of corruption in China. This summary’s significance is to analyze the impact of corruption in China and how integrity can be regained. All the articles have one main topic of discussion, which is corruption in China. The first article discusses integrity-building in China and also globally. The second article evaluates innovation, corruption, and government subsidies, stating shreds of evidence of each in China. The third article is analyzing the reasons why Chinese Anti-corruption has not managed to enhance economic growth. The fourth article accesses an empirical analysis of economic growth and corruption in China. The fifth article discusses the main causes of corruption in China. The sixth article is an analysis of corruption in China. The last article discusses corruption and firm growth with evidence from China.
Corruption has affected many countries in the world, and in several of these countries’ corruption affects their economic growth. The first article, Chinese international outreach, has significantly to the point that it cannot be ignored by developing international actors. Although some of the western political leaders criticize China for undermining governance standards and, therefore, practicing corruption, the article focuses on mapping Chinese actors’, involvement in, motivations, and impact on international integrity-building strategies with a purpose of determining potential entry points for engagement of partners in western development. There are several stereotypes about China’s impact on integrity-building, and corruption on a worldwide scale has multiple features, developing new opportunities as well as risks for different governments. Although China enforces the important international anti-corruption standards, it fails to implement anti-bribery provisions oversees. The author also evaluates how China can expand the anti-corruption campaign overseas.
The second article argues that in any country government is among the most important financiers since they facilitate the innovation of the private sector. Although public funds help to reduce capital constraints and information inequality, they can also lead to political differences. In China, a quarter of the company’s R&D expenditure is from government funding. The article discusses government subsidies, corruption, and innovation, a case study of China. The three are discussed in detail, where the author indicates the first major concern is why there is corruption in the Chinese Government’s subsidies for innovation in China. One of the reasons is that innovation in China is considered as one of the major drivers of economic growth. The other major concern in China’s political leaders is why corruption has been present throughout and how it has managed to spread widely in China. In recent years, President Xi Jinping started an anti-corruption campaign in China, and the campaign led to the prosecution of over one hundred thousand corrupt individuals. This is an indicator that there is uncontrolled corruption in China
The third article discusses the impact of corruption on economic growth and the reasons why Chinese anti-corruption has not yet enhanced economic growth. Corruption practices have been believed for a long time to have an impact on the economic growth of a country. The reasons why corruption affects economic growth is because it violates property rights, increases transaction cost, prevents technological innovations, and destroy talent distribution. While in other countries, anti-corruption campaigns lead to economic growth in China, it is the opposite where there is a negative relationship the speed at which the economy is growing and the anti-corruption efforts.
The fourth article is an empirical analysis of corruption and economic growth in China. The author evaluated various impacts of corruption in China and the direction China will take in the future to deal with the issue of corruption as a global superpower. It begins with a review of the significant literature on corruption and its impact on the growth of the economy, both in China specifically and in general. The other two sections, which are corruption in China and the economic growth in China, evaluates the state of corruption in China and also indicates China’s historic economic growth from the time China entered into the global economy. The author also provides the methodologies and results of the empirical study.
In the next article, the author evaluates in detail factors influencing corruption in China, utilizing two different sets of information at the provinces and cities. It is observed that the regions with histories of British governance, more anti-corruption strategies put into place, more access to media, high wages of government employees, and high openness are less corrupt while the most corrupt regions are social heterogeneity, an abundance of resource, state owned enterprises, and regulation.
Corruption is among the biggest issues being dealt with by the Chinese government, and it has an impact on the economic growth being promoting income inequality and poverty. The sixth article analysis corruption in China especially the Governors and the Guanxi network of Chines high level officials. The issue is difficult to deal with due to its idea of guanxi that emphasizes on the importance of creating and maintaining networks and relationships.
The last article discusses he issue of corruption and organization growth with evidences from China. The article indicates that although corruption can make an economy stagnant, the impact of corruption is different in different countries since it seems to be more harmful to some countries than to others. The author indicates that China is among the firstest growing economies in the world with an average annual growth rate of approximately 10%. With significantly economic growth rate, the issues of corruption also increase significantly. The author discusses the impact of corruption in the economic growth of China, specifically how financial development promotes the former relationship.
Article 1
In the first article the author indicates that before China is engaged in an anti-corruption campaign, one should first understand the meaning of corruption and how it is used in the Chinese political context. In the past bribery, embezzlement, and graft are viewed as criminal acts in the PRC Criminal Law, and it has the same meaning compared to the Western Countries. In contrast, today the term regularly used to refer to corruption in Community Party of China (CCP) is rotten or decay which has a much deeper moral understanding corruption. It specifically relates party and state functionalities deviation and misconducts from corrupt activities as indicated by the party.
The main position of the Community Party of China’s disciplinary apparatus in anti-corruption measures refers to the punishment and prevention of economic crimes such as embezzlement and bribery in a general understanding. The anti-corruption measures against acts of political misbehavior or misconduct such as lavishness, hedonism, or extravagance in Chinese anti-corruption strategies and discourses. IN regard to the Chinese business culture, it is frequently argued that the Chinese culture of creating and maintaining personal networks (guanxi) by giving gifts in away cultivates inside deals, nepotism, and bribery.
The other issue the author discusses is Xi’s landmark anti-corruption campaign which was initiated by Xi Jinping in 2012 after ascending to power. The campaign was going to be one year long and its main purpose was to do away with all unacceptable work styles such as hedonism, formalism, extravagance, and bureaucratism within the CPP. It was resented to the audiences who spoke English as a war against corrupt acts. Irrespective of the international understanding of China’s constant rise, internal governance issues increasing and the central leaders steering power in dealing with the problems such as drug and food safety, social or pollution inequalities was not trusted especially from within. The peak of the campaign was to be reached when the campaign has effectively investigated and prosecuted those who were found guilty of practicing corruption. The article also evaluates expanding the China’s anti-corruption campaign overseas by initiating ‘Skynet’ and ‘Foxhunt’ operations.
China has engaged with international anti-corruption programs. The increasing interest of China in the international collaboration can strengthen the international importance of anti-corruption measures in multiple issues law such as the G20. Western states, have found it difficult to determine areas of shared interests and have been reluctant while it comes to engaging with the Chinese anti-corruption issues fearing that it contributes to lowering international standards. However, the perspective was changed int 2016, when China hosted the G20 and showed its diplomatic capabilities to focus on its own priorities in international documents and at the same time preventing the association of human rights safeguards, normative principles, and decreasing access for non-state anti-corruption enforcers from civil society and business.
China has for a long time been interacting with other countries and the interaction have impacts to the countries. In less than two decades, China has managed to be the biggest trade partner for almost all the regions in the developing world. The trade between China and the developing states is a small share of the international market and also a small share for the China’s global trade. To most of the developing countries views the trade between them and China to be very significant. In Africa China is way ahead of any other state, including the main trader historically the US. Although the value of its trade declined in 2014 due toto the reduction of community prices, and remains their presiding trade partner. China is well known for importing oil and other national resources, especially minerals and exporting manufactured products. There have been raised issues about corruption and governance standards in China as a development actor, especially in Africa. In Africa Chinese development funding have been labelled as ‘The Dragon’s Curse’ or ‘The dragon’s Gifts.’
One of the conspicuous issues of Chinese development funding associated to leading is the lack of international tendering, which can result in reduced quality and increased costs. Therefore, the Organization for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) standards no longer permit financial aid to be utilized to support exporters financially from the donor’s home country. China’s tied aid approach also indicates lack of transparency concerning corruption safeguards and governance standards, because Chinese bidders are normally not held to high accounting standards. There are numerous examples of how tied Chinese financial assistance has inflated costs for the those being funded, although it must be added that Chinese construction firms often offer the most competitive and lowest bid in multi-national tenders for construction financed by international development banks.
Other developing countries have also significantly become potential destinations for Chinese foreign investment and considering this, China is among the several investors investing directly to the developing countries. China does not play a similarly presiding role as it is the case in development finance. In some countries particularly in Asia, China is emerging as one of the major investors. The initiative has a possibility of accelerating in line with the initiated foreign projects by XI Jinping such as the ‘Belt and Road Initiative’ (BRI). There have been reported cases of large-scale bribery especially in Africa involving Chinese firms. But these issues are not unique to Chinese multi-nationals. There has been bribery of government officials in the developing countries by the rich multinational organizations and this is a major issue to the global development.
Article 2
Research and development (R&D) are key to economic growth, although R&D is expensive and in most of the cases causes large positive spill overs to other entities. This can lead to under-investment by the private sector. Due to this, government often subsidize research and development to motivate the investors in the private sector the importance f this activity. The aid is expected to help the companies in the private sectors to overcome their financial difficulties and information inequalities that might hinder highly uncertain investments to assets that are intangible. This article evaluates the existence of corruption-driven misrepresentations in government funding for innovation in China, a natural environment for evaluating these problems for two reasons. One of the reasons is that China has been focusing on innovation to support future development. To push the policies the government provides significant subsidies.
The other major concern is the spread of corruption in China. The anti-corruption that was initiated by President Xi Jinping to deal with the issue of corruption in China. Through the campaign they have managed to conducts investigation to the corrupt individuals and organizations in China. As a result, more than one hundred thousand prosecutions have been conducted and this includes the fall of senior government officials. This is an indicator of how intense corruption in China has become. Corruption is one of the greatest concerns when it comes to research and development subsidies in china since the decisions to permit subsidies are in the hands of government officials instead of professional panels and peer reviewers as it is the case in most western nations. Such setting provides opportunities to the individual government officials to ask and take bribes as well as withdraw rents from organizations looking for R&D subsidies, especially at municipal and provincial levels.
The article undertakes difference analysis to investigate corruption associated misleading in research and development subsidies, and its main focus is on the organization of the anti-corruption campaign initiated in 2012. The author evaluates the changes in the research and development subsidies provided to the organization that were less or more effective at innovation, and also those with unhealthy low or high ETC expenditures. It also evaluates the effect of research and development subsidies on future innovation.
From the investigations the author presents two key findings. One of the findings incorporates the determinants of subsidies. Corruption and organization’s innovative power influences the number of subsidies provided to a specific firm. The two inputs have equal influences, a one standard deviation increases in any of the variables resulting to around 10% increase in subsidies given. The other finding indicates the consequences of the above changes, which were evaluated based on the innovative data and availability of rich and diverse data. The findings indicate that efforts by anti-corruption reduced the impact that corruption had on subsidy distribution and increased distribution efficiency.
The main empirical measure in the article includes R7D subsidies, corruption, and innovation together with Chinese identification approach. One of the approaches is measuring corruption level in an organization by making use of the Entertainment and Travel Costs (ETC). The authors indicate that ETC contains permitted business expenses, put into practice, and there is substantial latitude in how employees and executives claim such kind of expenses. The other approach is research and development subsidies and it is hand collected from the footnotes of organization’s annual reports. The other strategy is organization’s historical innovative efficiency, organization’s future innovative outcome, other variables, and the ats one is descriptive statistics. The authors start by initiating the anti-corruption campaign to carry out the difference-in-difference analysis. The article goes further to conduct a comparison between the before-and-after changes in government subsidies obtained by organizations with low or high innovation efficiency and organizations with low or high AETC. In each organization in the sample, R&D average efficiency is calculated during 2009,2010, and 2011. The findings of the analysis indicated that the anti-corruption campaign is linked to remarkable re-weighing of quality (Research and Development efficiency) and corruption (AETC) in the subsidy making decisions.
The overall results indicated that events lead to reduced possibility of corruption, government officials’ departures or the anti-corruption campaign, had the effect of strengthening the effect of R&D efficiency on subsidies and decreasing the influence of corruption (AETC) on subsidies. Although the analysis found out that both local officials departures lead to more subsidies given to efficient organizations, the results does not imply that more effective resource distribution. One of the alternatives encoding is that officials became lazy and a result, distributed resources to the apparent winners. Such kind of approach not only made them look good but also helped them to escape investigations from anti-corruption watchdogs who could back randomly at any government officials returns on research development subsidies. As a result, effective organization may already have a lot of resources, while some of the organization had financial constraints and they remained under-funded.
Article 3
There has been always a dispute between economic growth and corruption because it is believed that corruption usually has negative impacts to the economic growth of a country. The main ways in which corruption impacts economic growth includes it destroys human rights, affects talent distribution, increases transaction costs, and prevents technological innovation. The article indicates that to achieve effective budget balance, corruption must be dealt with first as well as deal with doing away with ineffective regulations in the anti-corruption policies developed. If the issues of corruption are dealt with, this will promote economic growth. The author indicates that there are lower costs of corruption, inefficient regulations, and superior employment pressure. The current anti-corruption campaigns in China and the campaigns entirely focuses on anti-corruption instead of removing the useless regulations hindering economic development. Such kind of movements lead to the creation of the state-owned organizations at the cost of private sectors’ development. Due to this, the entire economic growth can be greatly affected.
According to the research done by the authors they indicate their methods and result of their research. They combined mixed oligopoly model and analytical methods of game theory. After the research they proposed the following assumptions. One of the assumptions is that there are three significant players in an entry regulated industry which are a government G, a private enterprise P, and a state-owned enterprise S. State-owned is a regime organization of the industry. Private enterprise has the ability of entering the industry through bribing government officials, and then compete with state-owned businesses in quantity of products.
The private businesses and government-owned businesses produces homogenous equivalent products. Both of these products produced by the two entities maintain unchanged marginal cost of production without constant cost of production. The government is risk neutral it is usually concerned with employment and tax revenue. It creates similar tax rates per every unit of sales of the two types of businesses. types of enterprises. The output of the businesses is used to act on behalf of employment since for a business to produce more outputs, more employees are needed. Enterprises have minimal risks and their main aim is product maximization. If the products enter a market through corrupt activities, a specific cost of corruption is usually paid which is regarded to as a percentage of the sales. State-owned businesses are concerned about product and sales scale at the same time, and later shows their political status and social responsibility.
The article indicates that the government faces three types of anti-corruption policies. The first policy permitting the existing of bribery and regulation, and it is referred to as inaction. This can be referred to as a policy of maintaining status quo. The second policy is known as treating symptoms. This is whereby the regulations are retained but the fight against corrupt practices at private businesses and corrupt officials. The third policy is known as treating the root. This type of policy requires an anti-corruption body created to remove unnecessary industry regulations leading to corruption and encourages fair competition between state-owned and private businesses so that they can deal with issues of corruption and bribery effectively.
Although the anti-corruption campaign in China has attracted the attention of the whole world, the public is concerned about the social and political impacts of the anti-corruption with minimal attention focused on economic results. The analysis of this article indicates that, if inefficient industrial regulations have not yet been removed, it is better if corruption fight is not started, due to the reason that, the fight against corruption can result in unemployment and lower production in different industries. The article goes ahead to indicate that to effectively fight corruption it is better conduct removal of regulations and anti-corruption campaign at the same time. According to the authors view, the reasons behind the violent anti-corruption campaign that was launched in China in 2012 does not enhance economic development due to changing regulation policies and unmatching. The authors concluded that under high efficiency for private businesses and condition of immense employment pressure, the government is more than willing to do away with the unnecessary regulations by treating the root by implementing anti-corruption policies. As a result, this can lead to consistency and long-term economic development.