China’s Losing Battle Against Corruption

China’s rulers rarely wash their dirty linen in public. So the arrest of Politburo member and Shanghai Communist Party boss Chen Liangyu on corruption charges has sent shock waves across the country. Some speculate that the arrest is really part of a power struggle, with President Hu Jingtao demonstrating his authority against a local power broker who had thwarted national policy.

Whatever the truth behind Chen’s fall, and despite the widening corruption probe of other senior government officials, data and evidence recently released by the government and multilateral institutions suggest that the authorities are fighting a rearguard battle against a rising tide of graft.

Consider the grim statistics recently released by the Supreme People’s Procuratorate (SPP). More than 42,000 government officials on average were investigated for corruption every year from 2002 to 2005, with more than 30,000 per year facing criminal charges.

These startling figures do not include economic crimes outside the public sector. For example, in 2005 alone, the China Banking Regulatory Commission (CBRC) unearthed irregularities involving misused funds of RMB767.1 billion ($93.7 billion). The CBRC uncovered 1,272 criminal cases and disciplined 6,826 bank employees (including 325 senior managers). According to Ye Feng, a SPP Director-General, “[a]lmost every type of financial institution has seen the emergence of criminal cases involving the solicitation of bribes in return for loans.”