Does China’s latest corruption purge have any real teeth?

Dark clouds had been hanging over China’s former head of domestic security and state oil chief Zhou Yongkang since he retired in the fall of 2012. Having been in the Communist Party’s Politburo Standing Committee, he had been expecting to join China’s conclave of gerontocrats – but that was not to be.

The first alarm bell came in March 2012 with the fall of Bo Xilai, Zhou’s protege and influential Chongqing party secretary. Zhou had been suspected of scheming to make Bo his successor on the standing committee. But Zhou’s close ties with Bo put him on a collision course with President Xi Jinping. In September 2013, Bo was sentenced to life in prison for embezzlement, bribe-taking and abuse of power. This was a major blow to Zhou which signalled that he could be next.

Zhou had risen quickly in politics, climbing from party secretary of Sichuan in 1999, to the Politburo Standing Committee in 2007. In charge of the police, secret service, paramilitary, judiciary and the prosecution apparatus, Zhou used his influence over the state enterprise sector and national security mechanisms to block economic and legal reform. He helped family members, business and political cronies to enrich themselves massively.

On July 29, the Communist Party announced a formal inquiry into Zhou’s affairs, making him one of the most senior figures in China to be investigated for corruption.  

The Financial Times quoted a memo circulating among Beijing officials about the extent of the Zhou clan’s corruption: almost $16bn. The haul included guns, fine art, armour-plated cars, hundreds of apartments, millions of dollars in cash, gold bullion and equity stakes in hundreds of companies. 

‘From tiger to fly’

Corruption in China is omnipresent, and it runs from top to bottom, or in Xi’s words, from “tiger to fly”. After the egalitarianism and violent political upheavals of the Mao era, former Chinese leader Deng Xiaoping put China on a course to economic modernisation, dubbing it a “socialist market economy”. But this was just a euphemism for lawless state-controlled capitalism under an authoritarian one-party state. It produced 35 years of high economic growth without checks and balances, creating a free-for-all kleptocracy.

Subsequent anti-corruption campaigns were regularly announced, but didn’t go much beyond political sloganeering. The official anti-corruption body was not independent, but an internal, secretive set-up within the Communist Party. And China’s judiciary is not independent, or incorruptible. Huang Songyou, the Supreme Court’s Grand Justice accepted 3.9 million yuan ($634,000) in bribes from lawyers in return for favourable rulings. According to a government report, one in five corrupt officials is a judge.

During the early reform era of the 1980s, the ascendant liberal wing in the Communist Party hoped that a combination of high economic growth, increasing press freedom and political liberalisation would tame corruption as it had done in Hong Kong, Taiwan and South Korea. However, after the 1989 military crackdown on Tiananmen Square student protesters, political, legal and other reforms stagnated.

Corruption then grew unchecked, as enormous amounts of money ended up in overseas secret accounts, disappeared into the underground economy and the criminal underworld. In 2007, Minxin Pei, a leading expert on Chinese governance wrote that bribery, kickbacks, theft and misspending of public funds cost China at least three percent of the GDP. Official sources disclosed that since 1990, 18,000 corrupt senior officials fled China, taking $123bn with them.

Current president and Communist Party general secretary Xi Jinping – no reformist by nature but a hard-nosed realist – is fully aware that Deng’s growth model of heavy reliance on low-cost, low value-added exports and state-led investment in construction is no longer sustainable.

China’s export and construction industries are depressed. The only long-overdue way to reinvigorate the economy is a shift to high value-added industries, services and domestic consumption. To achieve this, it is vital that corruption be brought under control and corrupt officials such as Zhou be rooted out.

The legal system, particularly the judiciary, which Zhou seriously tampered with, must be strengthened. (A top-level national meeting on legal reform has been scheduled for October).

However, President Xi himself appears to be tainted. In 2012, Bloomberg published a well-documented article on the wealth of Xi’s family, Bloomberg’s website was blocked – and continues to be blocked in China. This also applies to the New York Times‘ website which carried a similar piece on the assets of the family of ex-premier Wen Jiabao, totalling $2.7bn. And when a dissident group, the New Citizens Movement earlier this year called on the political elite to disclose their wealth, they received heavy sentences for “picking quarrels and disturbing public order”.

Xi’s predecessor, Hu Jintao used to say: “If we don’t deal with corruption, China will be doomed, but if we deal with it too harshly, the Communist Party will be doomed.” Xi obviously wants to save both China and the Communist Party, but how? Liberal political reform is not on his agenda.

China faces a potentially turbulent decade of transition, both politically and economically. An increasingly highly educated urban middle class is no longer amenable to old-style communist authoritarianism. And neither is China’s semi-advanced economy conducive to the old corrupt ways.

Xi has already proven to be as China’s strongest leader since Deng. If Xi succeeds in tackling corruption, he may yet emerge as an “enlightened despot” in the mould of Singapore’s former Prime Minister Lee Kuan Yew. Singapore is the only non-democratic state among the top five of the world’s least corrupt countries – a model which China could seek to emulate.

Willem van Kemenade has been a foreign correspondent since 1977, based in Hong Kong, Taipei, Jakarta and Beijing. Since 1997, he has been lecturing and writing for think tanks in The Hague, Brussels and Washington and wrote four books on China-Taiwan, China-Japan, China-India and China-Iran relations.