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... outsourcing and partnership that are one of the main causes of bribery, it needs further examination in this study He (2000) and Guo (2008) view globalization as one cause of bribery in China According... most important anti -bribery policy in China By comparing the articles in the criminal law about embezzlement and bribery and private theft and swindling, Manion argues that the criminal law is more... collapse of CCP’s ruling position Jiang Zemin, at the 15th National Congress of the Communist Party of China, stated that corruption is a problem of the life and death of the party and the state
ANALYSIS ON THE GROWTH OF BRIBERY IN CHINA A PRELIMINARY STUDY WENG CUIFEN (Bachelor of Law (Hons.)), Peking University (Bachelor of Economics (Hons.)), Peking University A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF SOCIAL SCIENCES DEPARTMENT OF POLITICAL SCIENCE NATIONAL UNIVERSITY OF SINGAPORE 2010 Acknowledgements It is with great pleasure that I am able to acknowledge the numerous persons that have provided me many kinds of support during the two-year process of study and thesis writing My great debt and gratitude go to my supervisor Assistant Professor Kilkon Ko who has guided almost every step of my intellectual growth since I became one of his students Without his encouragement and insightful, generous, and open-minded guidance, the thesis can never be completed I would like to give my special thanks to Dr Peter Li and Assistant Professor Wang Cheng-Lung who provided invaluable introduction to conducting research in Political Science in their methodology modules Their patient guidance and valuable suggestions helped me tremendously in my researching and thesis writing I am also grateful to Assistant Professor Jamie Davison in whose class I learned how to review the classics in comparative politics Moreover, I owe a special debt of gratitude to Professor Terry Nardin whose encouragement and support has simply made all the difference in my graduate study Special thanks are also due to Associate Professor Chen An who, as the graduate coordinator, has provided great help to me My graduate study in the Department of Political Science at National University of Singapore were greatly enriched and enlivened by my cohort—Han Lulu, Ang Ming Chee, Huang Jing Yun, Paul, Moon Jae Sung, Jimmy, Bejorn, Kai, Diego, Ma Shaohua, Ananya, Yuan Jingyan and Yu Xiao—from whom I got great help and support I want to especially thank Lulu, Ming Chee, Jing Yun and my housemate and shijie Chen Rui whose accompanying and encouragement have helped me to overcome the difficulties I faced during the process of finishing the thesis I would also like to express my gratitude to all the administrative staffs in the i General Office of the Department of Political Science—Stephanie, Noor Sham bte Abdulhamid, Lillian Low, Vijayalakshmi Rehunathan, Mumtaj d/o Haniffa and Sani Bin Sidol—for their patient and generous help in dealing with the administrative issues The Central Library and East Asian Institute Library at National University of Singapore provide tremendous materials needed for the completion of my thesis My gratitude goes to the librarians in these two libraries Finally, my greatest debt and gratitude go to my family, my parents Weng Peiqing and Weng Chuluan and my brothers Xiaomin and Haimin, to whom this thesis is dedicated It is impossible, in such a short paragraph, to express the feelings of gratitude and debt that I feel towards my parents For me, they are the greatest parents in the world They devote all their love to my brothers and me and have never lost their steadfast faith in us With their unconditioned love and support, I can overcome the frustrations even in the most difficult times My lovely brothers have always been the strong supporters of me They make my life more meaningful and enjoyable with their understanding, consideration, creativeness, and cheerfulness I am also indebt of gratitude to my uncles, aunts, and cousins in Singapore With their care and love I have never felt lonely in Singapore ii Table of Contents Summary 1 List of Tables 3 List of Figures 4 Chapter Introduction 5 Chapter Literature Review 12 Chapter Research Questions and Framework of Analysis 31 Chapter Research Design and Method 39 Chapter Has Bribery Worsened in China? 47 Chapter Anti-bribery Policy Design and Bribery 55 Chapter Implementation Problems of Anti-bribery Policies 67 Chapter Government’s Involvement in Economic Activities and Bribery 74 Chapter Conclusion 91 Bibliography 97 Appendix 104 Summary Bribery is one of the most serious types of corruption in China However, what is the trend of bribery over years in China? What are the major factors that shape such trend? These questions are seldom raised in the existing literature This thesis investigates and explores the trend of bribery in China in the period of 1998-2007 by using the official statistics—filed cases of bribery by the procuratorates Possible reliability and validity threats of the data are discussed Several possible factors explaining the trend of bribery proposed in current literature are tested, categorized into internal institutional factors and external environmental factors Specifically, internal factors are factors related to the government itself, including sufficiency of anti-bribery policies and effectiveness of implementation of such policies Effectiveness of implementation is affected by horizontal (lack of independence of juridical agencies) and vertical (central-local relations) supervision External factors are those involve the government and private sectors (or market) The growth of private sectors and their increasing interactions with the government who has control over the market are examined The analysis suggests that bribery has worsened in the period of 1998-2007 Such trend is shaped by two major factors: a) the ineffectiveness of the implementation of anti-bribery policies, and b) the expansion of government’s economic involvement measured by real estate investment and public investment, which provides more opportunities for bribery Changes of provincial governor and party secretary have no significant effects on bribery The result is significant at both the national and provincial levels However, the analysis of provincial-level data indicates that regional variations are significant, implying that there was no single anti-bribery method that would be effective for all provinces Accordingly, when designing and implementing anti-bribery policies, regional variations should be taken into account List of Tables Table Causes of bribery in China proposed in current literature 17 Table Summary of measurement of dependent and independent variables 44 Table Trend of bribery cases over time 48 Table Trend of embezzlement cases over time 48 Table Trend of misappropriation cases over time 48 Table Trend of bribery cases and number of public officials over time 54 Table Number of anti-bribery policies published from 1998 to 2007 57 Table Anti-bribery policies tackling different forms of bribe payments 64 Table Summary of major variables at the national level 76 Table 10 Summary of major variables at the provincial level 79 Table 11 Regression result of Model (national level) 80 Table 12 Correlation coefficients of each explanatory variable (national level) 82 Table 13 Regression result of Model (national level) 82 Table 14 Regression result of Model (provincial level) 84 Table 15 Regression result of Model (provincial level) 86 Table 16 Regression result of Model 10 (provincial level) 88 List of Figures Figure Framework of analysis 33 Figure Official process of corruption investigation and detection 52 Figure The Trend of Prosecutional Bribery Cases (1998-2007) (Unit: case) 75 Figure Trends of explanatory variables (1998-2007) (Unit: 100 million RMB) 76 Figure Trends of prosecutional bribery cases in seven provinces and directly-governed-cities (1998-2007) (Unit: case) 78 Figure Trends of real estate investment in seven provinces and directly-governed-cities (1998-2007) (Unit: 100 million RMB) 78 Figure Trends of public investment in seven provinces and directly-governed-cities (1998-2007) (Unit: 100 million RMB) 79 Chapter Introduction Corruption has been a chronic problem in China From 2002 to 2007, disciplinary agencies have filed 677,924 corruption cases and punished 518,484 party members Every year since 2002, around 100,000 of the Chinese Communist Party (CCP) members (0.16%) were disciplined and punished.1 Among them 32 percent committed crimes and 16 percent are involved in economically corrupt activities in 2006 (Pei 2007) According to Hu Angang, a famous Chinese economist, economic losses caused by corruption accounts for at least 13.2% to 16.8% of China’s GDP in the second half of the 1990s (Hu 2001) Besides the academia, political and public awareness of the problem of corruption is also high Various surveys conducted during the last decade suggested that people from different backgrounds have the same perception that corruption is one of the most serious problems in China For instance, the survey conducted by the CPC's Central Party School every year since 1997 shows that corruption has been ranked by the prefectural or departmental level officials as one of the top three most serious problems in China (Qing and Xie 1999, 2000b, 2000a; Xie 2001; Qing 2002; Xie 2003; Qing et al 2004; Xie 2005; Qing 2006; Xie and Pan 2007) Surveys on university students, urban residents and net citizens also showed similar results, with corruption as one of the top three most serious social problems in China (zhongyang jiwei yanjiushi 2007; Ru et al 1998-2008) Being aware of the public’s concern of the rampant corruption in China, the http://news.hexun.com/2007-10-05/100830177.html central authorities pay attention to the political consequence of it and emphasize that rampant corruption will corrode people’s confidence to CCP and the government and will eventually lead to the collapse of CCP’s ruling position Jiang Zemin, at the 15th National Congress of the Communist Party of China, stated that corruption is a problem of the life and death of the party and the state (Jiang 1997) Hu Jingtao declares that CCP and corruption are as incompatible as fire and water.2 Given its prevalence and negative economic and political impacts, corruption has been one of the major agendas of CCP and the Chinese government The main puzzle here is that expansive anti-corruption measures have coexisted with the worsening corruption over the last three decades In the early reform era, corruption was considered as an individual problem and accordingly, the major countermeasure of corruption was campaign In 1997, CCP leaders officially admitted that corruption was a systemic disease and began to rely more on institutional tools to curb it (Jiang 1997) Since then, CCP and the Chinese government have established and enacted a series of anticorruption initiatives and policies Moreover, general institutional reforms have been introduced, which were expected to reduce room for corruption Regarding the government per se, there have been comprehensive administrative reforms, covering administrative and fiscal decentralization, government procurement, auditing, administrative approval, and civil servants recruitment As for the whole social and economic system, the process of marketization, privatization and globalization have also led to remarkable changes http://news.sina.com.cn/c/2007-10-17/193514108076.shtml Chapter Conclusion This chapter aims at concluding this thesis through checking whether the objectives stated in the introduction of this study have been met To so, the following section will revisit the research objectives discussed in the introduction chapter, summarize the findings of the study and provide conclusions based on the findings The analysis results of the previous three chapters will be summarized in this section Suggestions for future research will be discussed Importantly, the contribution of this research to the current knowledge about corruption and particularly bribery in China and to the practical anti-bribery work will be clarified In addition, the approach of research in this study will be summarized The overall aim of this research was to advance an understanding of the situation of corruption in China, particularly the trend of bribery in the period of 1998-2007 and the possible factors that shape this trend The specific research objectives were to examine whether bribery has worsened or not since 1998 by analyzing the procuratorial statistics, explore possible explanations of the trend of bribery which cover both the internal institutional factors and external environmental factors, and formulate recommendations on practical anti-bribery work and further research To these aims, I first reviewed current English and Chinese literature on the causes of bribery in China According to the current literature, factors that can explain bribery in China can be categorized into internal institutional factors and external environmental factors Internal institutional factors include poor anti-bribery policy 91 design and failure in policy implementation The failure of policy implementation is mainly due to lack of supervision over power both in horizontal and vertical power structure in the political system External factors consist of rent seeking due to greater market exposure, and pre-market reforms such as outsourcing and partnership Based on the literature review, I figured out the knowledge gaps to be filled in: (1) a trend of the level of bribery awaits more empirical studies; (2) there is still a debate on whether the weakness of anti-corruption measures lies in inefficient anti-corruption policies per se or the failure to fully implement these policies, or both; (3) another gap resides in whether the rampant bribery in China is mainly a result of greater market exposure and pre-market reforms rather than internal anti-bribery To fill in the knowledge gaps found in the literature review, I proposed two research questions to answer The first question is whether bribery has worsened in China, and the second one is what the possible explanations for the upward pattern of bribery are Procuratorate statistics are used to calculate the trend of bribery from 1998 to 2007 Statistics of embezzlement and misappropriation were also used to compare with bribery The analysis showed that the number of bribery cases has increased by around forty percent from 1998 to 2007 This result turned out to be valid even after considering possible validity and reliability threats such as political influence, discretion power of anti-bribery agencies, improvement of bribery detection techniques, etc Internal institutional factors and external environmental factors were examined to test whether they explain the increase of bribery in the last decade Regarding the 92 internal factors, I investigated both policy design and implementation problems by qualitative method A series of current major anti-bribery policies at the central level in the period of 1998-2007 were reviewed These policies include: laws, government and party regulations and supplementary documents The finding of this review is that unlike common criticisms on the inefficient anti-corruption policies, current anti-bribery policies are comprehensive in the sense of tackling bribery in different areas, clarifying the coordination of different anti-bribery agencies, standardizing the procedure of anti-bribery work, and covering various forms of bribe payments In the section that followed, I investigated whether there have been changes for the factors that cause implementation failure of anti-bribery policies in the period of 1998-2007 These factors include the weakness of anti-bribery agencies, central-local inconsistency and CCP’s unrestricted power The finding is that the situation of implementation problems has not been improved Instead, the situation has been worsened because the party’s intervention and control of anti-bribery work has been strengthened particularly regarding cases involving high-rank officials Therefore, I conclude that the worsened situation of implementation of anti-bribery policies contributes to the increase of bribery in last decade After examining the internal factors, I turned to test whether external environmental factors contribute to the growth of bribery To this end, several multiple linear regressions were run The dependent variable was the procuratorial statistics of filed bribery cases Major explanatory variables were real estate investment, public investment, and government procurement Both the national-level 93 data and the provincial-level data were used Inflation rate, provincial governor change and provincial party secretary change were control variables in the provincial models The national level analysis suffered from the problem of the sample size and multicollinearity Due to the multicollinearity problem, the estimated coefficients of real estate investment, public investment, and government procurement were inconsistent with the finding in the literature review that the growth of these three factors will provide more opportunities for bribery To overcome these problems, provincial-level models were constructed as time series pool analysis with fixed effect Instead of using the absolute values in each year, differences between years should be examined to weaken the autocorrelation problem Also, the use of panel data at the provincial level can partially weather the possibility of multicollinearity problem by increasing the degree of freedom, which increases consistency of estimates The analysis results of provincial-level models confirmed the finding in the literature review that the increase of real estate investment and public investment, measuring rent seeking and pre-market reforms respectively, provides more opportunities for bribery and thus is positively associated with bribery The negative coefficients of inflation rate in provincial models suggested that Quade’s (2007) finding of a plausible positive correlation between inflation and the revealed corruption cases does not apply to bribery cases Additionally, there was no significant correlation between changes of provincial governor and party secretary and bribery The analysis result also showed that bribery increases every year from 1998 to 2007 at 94 the provincial level, with an average increase of 532 cases if we compare the year 1998 and 2007 Provincial effect was significant, implying that there was no single anti-bribery method that would be effective for all provinces Therefore, when designing and implementing anti-bribery policies, regional variations should be taken into account Accordingly, the increase of briery can be explained by the worsening of anti-bribery policy implementation problems and the growth of real estate investment and public investment There was no significant effect of changes of provincial governor and party secretary on bribery There are several limitations of this study, however First of all, due to the limit of space and research scope, detailed examinations of the content and the relationship of every major anti-bribery policy were not conducted in this research The discussion of changes of implementation problems was not deeply explored, especially regarding the resources distribution and coordination among different anti-bribery agencies Thus, further research is required to provide more detailed examinations of the planning and implementing of anti-bribery policies More importantly, one challenge of the validity of the argument that the worsening of anti-corruption implementation problems explains the growth of bribery is that given the same situation of worsening implementation problems, embezzlement decreases Since this thesis focuses on examining the trend of bribery and exploring the possible explanations of it, anti-embezzlement policies are not reviewed However, one possible answer to the challenge is that, even embezzlement 95 may face similar implementation problems, its decrease is mainly a consequence of the administrative institutional changes Since embezzlement and bribery possess different features, they are expected to react differently to the same administrative changes and changes of the social and economic systems Nevertheless, the comparison of these two types of corruption is out of the scope of this research Another limitation of this study is the incomplete data The sample size at both the national and provincial levels is too small Data are only 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Exploration 1:50-3 Zou, Keyuan 2000 "Why China's Rampant Corruption Cannot Be Checked By Laws Alone." In East Asian Institute Background Brief, National University of Singapore 103 Appendix TABLE Analysis of influential factors of Level of Bribery (Bribery = real estate investment + public investment + government procurement) Model Bribery (1) Real estate investment 0.43 (0.08)*** (2) (3) Public investment 0.62 (0.41) Government procurement Change of provincial governor Change of provincial party secretary Inflation rate (4) (5) 0.67 (0.09)*** 0.03 (0.78) -0.86 (0.25)** 1.52 (0.29)*** 1.43 (2.75) Year (Dummy) Province (Dummy) Constant 7550.36 (579.40)*** -93.02 (6974.17) 8929.86 (330.29)*** Note: Estimations performed using Stata 10.0 * p