Budgets,Extra-budgets,and Small Treasuries: Illegal monies and local autonomy in China

In the wake of repeated crackdowns on the 'three disorders' and 'small treasuries', it is obvious that local governments in China collect substantial amounts of illegal monies. What is not immediately obvious is how illegal monies matter. In this article, I assess both the amount of illegal monies that local governments collect and their significance relative to local autonomy. I find that because illegal monies are not rival to legal monies but rather complementary, although illegal monies may give local governments a greater ability to pursue their own particularistic agendas, they do not fundamentally alter the principalagent structures that link the localities to the center.     

Win,lose, or draw? China’s quarter century war on corruption

In 1982, the leadership of the Chinese Communist Party ordered a crackdown on corruption. As China’s war on corruption enters its 25 year an obvious question is whether the party winning? Because there is no direct way to measure the actual rate of corruption (ARC) and the data we have on the revealed rate of corruption (RRC) may not perfectly reflect changes in the ARC while changes in the perceived level of corruption (PLC) may be subject to subjective distortion, trends in the RRC and the PLC may not provide reliable answers. The mathematical relationship between the ARC and the RRC, however, can be defined as a function of risk. Increases in risk can be interpreted as signaling a narrowing of the ARC–RRC gap. Decreases in risk can be interpreted as signaling a widening of the ARC–RRC gap. By combining data on changes in risk with data on movement in the RRC it is possible, therefore, to assess (in broad terms) the movement of the ARC even though it remains technically unknowable. Using data on the lag between when officials first engage in corruption and when they are prosecuted to measure changes in risk, this article raises doubts about whether Chinese Communist Party (CCP) is winning its war on corruption.     

Agency and fiscal dependence in central‐provincial relations in China

The incremental decentralization of economic and fiscal authority within the Chinese state has led to a debate over the extent to which the central government retains authoritative control over the provinces. Using detailed budgetary data, this paper argues that even though fiscal reforms may have given provincial governments independent sources of income, they remain dependent upon the center for budgetary subsidies and that without central subsidies provincial government would face serious budgetary shortfalls. This is true not only for provinces that receive more in central subsidies than they transfer to the center, but also for provinces that were net exporters of funds to the center prior to the 1994 fiscal reforms. Fiscal dependence is important because it gives the center a source of leverage that supplements the political leverage it gains from the nomenklatura system, allowing it to not only punish insubordinate provincial leaders as individuals, but to also punish recalcitrant provincial governments as institutions by either cutting or withholding budgetary subsidies.     

Anticorruption Campaigns and the Intensification of Corruption in China

Despite repeated crackdowns, over the past two decades corruption in China has become steadily more ‘intense’ as the amounts of corrupt monies and the number of senior cadres implicated in corruption have increased dramatically, leading many to view China's ‘war on corruption’ as half-hearted and ineffectual. In this article, I analyze the efficacy of China's campaign-style anticorruption strategy using a combination of formal modeling and empirical data. The analysis suggests that while this sort of strategy may succeed in keeping corruption ‘under control’, it is likely to do so by deterring low-level corruption, but not high-level, high stakes corruption, and may encourage inflation of the size of bribes. The article thus concludes that campaign-style enforcement may have actually contributed to the ‘intensification’ of corruption.     

The Challenge of Commercial Bribery and Organized Crime in China

Corruption has been classically defined as the misuse of public authority for private gain, which implies that corruption necessarily involves official authority and hence public officials. Bribery, however, often involves transactions between officials and private interests, including business interests, whereby the private party seeks to bend public authority to their advantage by paying off their official interlocker. Even in its classic form, therefore, corruption often spans both the public and the private. Public officials are not, however, alone in exercising authority. Managers and corporate officers also wield authority or fiduciary responsibility on behalf of others and can abuse that authority for private gain, not only in transactions involving public officials, but also in transactions with private parties. This article examines how China's anti-corruption institutions have dealt with ‘commercial corruption’, including both public-to-private corruption and private-to-private corruption. It also examines the linkages between organized crime and corruption in China.     

Incompetence, Noise, and Fear in Central-Local Relations in China

In this article, I analyze how the structure of the Chinese state affects the probability that local cadres will comply with the directives of the center. Because the Chinese state consists of a five-level hierarchy of dyadic principal-agent relationships, the existence of even moderate levels of routine incompetence and noise ensures that compliance will be less than perfect due to simple error. Moreover, because the center cannot perfectly differentiate between simple incompetence and willful disobedience, the structure of the state enables cadres to engage in strategic disobedience. I thus conclude that the complexity of the linkages between center and locality are a major factor in the observed persistence of corruption and institutional malfeasance. Andrew Wedeman is an assistant professor of political science at the University of Nebraska, Lincoln. His research focuses on the political economy of reform in China and specifically on the effects of corruption on development, both in China and elsewhere in the developing world. Recent publications include: “Budgets, Extra-Budgets, and Small Treasuries: The Utility of Illegal Monies”,Journal of Contemporary China; “Agency and Fiscal Dependence in Central-Provincial Relations in China”,Journal of Contemporay China; “Stealing from the Farmers: Institutional Corruption and the 1992 IOU Crisis”.China Quarterly and “Looters, Rent-Scrappers, and Dividend-Collectors: Corruption and Growth in Zaire, South Korea, and the Philippines”,The Journal of Developing Areas.