Tag Archives: China

Danger of Research in Opaque Contexts

Fascinating article from the New York Times on the difficulties and dangers of acquiring information for corporate due diligence in a country with opaque corporate and credit institutions. I especially liked this comment on when crack-downs occur against investigators who do this work:

An arrest like Mr. Humphrey’s is “never about the legal issues. It’s always about who has an interest in suppressing information,” a Western consultant in Beijing said.

That is, who did he piss off.

The article also discusses how these investigators are particularly vulnerable at the moment because of changes to the formal and informal rules governing access to personal and corporate information that would allow one to detect fraud. This probably also needs to be seen in the broader context of a government crack-down on corruption.

This resonates with dangers of conducting research on other opaque institutions—for example, it’s generally well known amongst those who research mafias and organised crime that one should avoid conducting field research in locations where inter-group territorial conflict is underway.

Article link here: In China, The Danger of Due Diligence

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The Rise and Fall of Bo Xilai

Solid article by Jamil Aderlini on the rise and fall of both Bo Xilai as well as his father Bo Yibo in today’s Financial Times.  It’s been fascinating to follow this case; and it’ll be interesting to see how it finishes.  There was initially quite a lot of dramatic reporting about its implications for the upcoming leadership transition, but this article’s current assessment is that the transition is currently back on track:

Given Bo’s enormous popularity among ordinary people, an unconvincing official account backed by threadbare evidence could lead many Chinese to assume the entire affair was a stitch-up and Bo was the victim of political infighting. On the other hand, if the case against him is presented too fully, with gory details of corruption, murder and plots, then the public may question how someone so craven and deranged could rise to the top of the political system, and scrutiny may turn to other senior leaders. For now, the once-in-a-decade leadership transition scheduled for October or November appears to be back on track. Some analysts are even saying that without Bo’s destabilising presence, a more harmonious and effective leadership will emerge.

The extreme swings in the careers of political leaders that China’s system produces is quite astonishing.

His father during the cultural revolution…

Bo Yibo was sent to prison, where he endured torture at the hands of his fanatical captors, while Bo Xilai’s mother, Hu Ming, killed herself or was murdered while a captive of Red Guards, according to differing accounts.

But after the death of Mao…

His father was the revolutionary Red Army commander Bo Yibo, one of the all-powerful party elders, known as the “eight immortals”, who controlled Chinese politics from behind the scenes throughout the 1980s and early 1990s.

And Bo Xilai during the cultural revolution…

The chaotic tide soon turned against their children and Bo Xilai was thrown into prison at the age of 17. He spent nearly five years in jail and in Camp 789, a labour camp for children of disgraced senior officials.

In the 1990s…

[I]n 1993 Bo Xilai was named mayor of Dalian, thanks in part to lobbying by his father, who by this stage had taken a keen interest in promoting his son’s political career.

But his father’s death in 2003 set him back…

By most accounts, Bo was one of the people considered at the 17th Communist party congress in 2007 for advancement to the nine-member politburo standing committee, which in effect rules China, and he had his sights set on being named at least a vice-premier at that time. But his father’s death in January that year reduced his political clout, and staunch opposition from many serving and retired officials, including Premier Wen Jiabao, ultimately ruined his chances. Bo was sent out to the provinces – to the steamy south-western metropolis of Chongqing on the banks of the Yangtze River.

And before the Heywood case he was tipped to join the nine-member Politburo Standing Committee…

The death of an obscure British consultant had brought down one of China’s most powerful politicians, a man who had been favoured to ascend to the ruling nine-member Communist party politburo standing committee at a once-in-a-decade power transition later this autumn.

Of course individuals rise and fall in democratic systems (the recent Republican primary!), but the swings are certainly not as extreme and the processes driving the swings are very different.

The full article is available here: Bo Xilai: Power, Death and Politics.

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Corruption persists in Hong Kong?

Last week Hong Kong’s Independent Commission Against Corruption (ICAC) charged two billionaire businessmen with paying about $4.1 million in bribes to civil servants in relation to property deals between 2000 and 2009.  Here’s the New York Times:

On Friday, the Hong Kong Independent Commission Against Corruption, or I.C.A.C., charged the two brothers with bribery and misconduct.

The charges accuse the Kwoks and two other men — Thomas Chan Kui-yuen, executive director of Sun Hung Kai Properties; and Kwan Hung-sang, a businessman also known as Francis — of conspiring to provide Rafael Hui, the former chief secretary of the Hong Kong civil service, with the use of two apartments, as well as unsecured loans, in return for unspecified favors.

The case is of particularly interest because Hong Kong’s independent corruption agency is often cited as a model for other countries and Hong Kong is often cited as one of the few countries that have successfully reduced corruption in recent years.  For example, I heard Hong Kong (and Singapore) given as examples of success at a conference last week–see here.   Thus this case could further increase the reputation of its independent agency if it is successful, but I wonder whether, at the same time, it has the potential to partially undermine the city’s reputation as a success case.  I would hypothesise that low-level bureaucratic corruption has been reduced because corruption has been centralized–that a consolidation of political and economic power allowed state institutions to successfully crack-down on low-level (and decentralized) corruption.

New York Times article: Hong Kong Billionaires Charged With Bribery.

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Bo Xilai and the politics of corruption investigations

The downfall of Bo Xilai, the former Mayor of Chongqing (a large city in southwest China), in the past month or so has been fascinating to follow.  This article in the FT by Kathrin Hille provides interesting background on some of the key players and factions: Show of might over Bo’s military allies.  The final paragraphs highlights the role that corruption investigations play in Chinese politics and the leadership transtion:

Sources close to the military say the party bureaucracy has tightened its organisational and propaganda grip on the armed forces since Mr Bo’s replacement as Chongqing leader.

Last week, the Central Military Commission set up an audit steering group which is to examine procurement, construction projects and real estate income in the armed forces, a move seen as a warning to military officers that any disloyalty could be punished with a corruption investigation.

The new committee is also seen as a step by the party leadership to usurp an initiative by a key ally of Mr Bo’s in the armed forces. General Liu Yuan had first spearheaded an unusually high-profile anti-corruption campaign earlier this year.

In January, Gen Liu issued a blunt warning about a “dangerous level” of corruption in the military and pledged to fight it even if it would result in his own downfall.

Shortly after, Lieutenant General Gu Junshan was removed from his post as deputy head of the General Logistics Department in a corruption investigation.

The GLD has long been notorious for corruption in the armed forces because it controls many prized assets and offers more opportunities than elsewhere for officers to make money through kickbacks.

The Communist party has often used corruption investigations to purge officials who had lost support for other reasons. A retired officer who teaches at a military academy says the new audit steering group has the purpose of taking this tool out of General Liu’s hands. “It doesn’t mean he is in trouble. But it reminds us that it is party central who will determine who gets in trouble.”

Update:  This article from The Guardian’s Tania Branigan is also interesting, including quotes from corruption scholars in China and the US: Bo Xilai case shines light on corruption in China.

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New Article on Judicial Corruption in China

Another interesting article on corruption in China, this one focusing on bribery in the courts.   Here’s the abstract:

Despite its rampant presence, judicial corruption in China has often been regarded as the idiosyncratically deviant behavior of a few black sheep eluding prescribed judicial conduct. This entrenched assumption has both discouraged in-depth investigation of the phenomenon of judicial corruption and inhibited proper understanding of the functioning of China’s courts. This article, based on an empirically grounded examination of the processing of court rulings tainted by corruption, showed that judicial corruption in China is an institutionalized activity systemically inherent in the particular decision-making mechanism guided by the Chinese Communist Party’s instrumental rule-by-law ideal. In investigating what has contributed to the institutionalization of judicial corruption, the interplay between law and party politics in China’s courts was also examined. The findings, therefore, also shed light on behind-the-courtroom judicial activities and on the enduring perplexity of the gap between the law in the book and the law in action.

The primary source of data is media reports on 388 cases report in Chinese media between 2005 and 2008 as archived on internet news portals.  I too am using local newspapers to build a database of corruption incidents in Indonesia, but I would have thought that this data source would have been much more problematic in a country such as China than Indonesia.  Of course a more thorough reading of the article is warranted.

The author, Ling Li, is a senior research fellow at the US-Asia Law Institute at New York University.  Here’s a link to the article on Law and Social Inquiry’s website (subscription required) and below is the complete citation.

Ling Li, “The ‘Production’ of Corruption in China’s Courts: Judicial Politics and Decision Making in a One‐Party State,” Law & Social Inquiry (2012),

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New Book on Corruption in China

Andrew Wedeman, Professor of Political Science at the University of Nebraska, will publish a new book on corruption in China on April 3rd.  The political system in China is fundamentally different to Indonesia and I’m keen to learn more about both the implications for corruption as well as the enforcement of corruption laws.  Here’s the publisher’s blurb:

According to conventional wisdom, rising corruption reduces economic growth. And yet, between 1978 and 2010, even as officials were looting state coffers, extorting bribes, raking in kickbacks, and scraping off rents at unprecedented rates, the Chinese economy grew at an average annual rate of 9 percent. In Double Paradox, Andrew Wedeman seeks to explain why the Chinese economy performed so well despite widespread corruption at almost kleptocratic levels.

Wedeman finds that the Chinese economy was able to survive predatory corruption because corruption did not explode until after economic reforms had unleashed dynamic growth. To a considerable extent corruption was also a by-product of the transfer of undervalued assets from the state to the emerging private and corporate sectors and a scramble to capture the windfall profits created by their transfer. Perhaps most critically, an anticorruption campaign, however flawed, has proved sufficient to prevent corruption from spiraling out of control. Drawing on more than three decades of data from China-as well as examples of the interplay between corruption and growth in South Korea, Taiwan, Equatorial Guinea, and other nations in Africa and the Caribbean-Wedeman cautions that rapid growth requires not only ongoing and improved anticorruption efforts but also consolidated and strengthened property rights.

You can pre-order the book on Amazon, here.

There’s a few academics and colleagues here in Oxford working on China (many more than those working on Indonesia!) and so hopefully I’ll be able to post other articles on this interesting comparison.  I hope also to learn a little about India, where efforts to pass an anti-corruption law have torn apart the current government.

h/t China Copyright and Media, here.

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