Cambridge, UK: Cambridge University Press, 2020. xv, 257 pp. (Tables, figures, B&W photos, illustrations.) US$39.99, cloth. ISBN 978-1-108-47860-1.
In this fascinating study, Yuen Yuen Ang asks the question: Why has China’s economy grown so fast for so long despite vast corruption? This is an important question for understanding China’s development, and developing countries in general. Ang’s argument is that since the 2000s, China has moved from harmful types of corruption, namely theft and speed money, to the dominant form of access money. The latter, defined as business actors’ access to special deals and lucrative rights from powerful officials, stimulates economic growth.
With mixed methods and a wide variety of data, Ang documents the evolution of access money and its manifestation at two levels: rank-and-file employees comprising 99 percent of China’s vast bureaucracy and the remaining one percent comprising national and local leaders. For the first level, fringe compensation is pegged to financial performance, making it an unusual variant of profit-sharing in the public sector and distinguishing China’s bureaucracy from myopic, predatory states elsewhere. For the second level, profit sharing follows the logic of more growth promotion, more rents for elites and their clients.
Ang makes theoretical contributions on two sets of economic relationships. One is between corruption and growth: not all corruption is the same or bad for growth. Another is between corruption and capitalism: capitalism is accompanied not by the eradication of corruption, but its evolution from thuggery and theft to influence peddling. Aptly, she counsels on-the-ground discovery before testing and avoiding the lens of first-world experiences in developing contexts.
Impressive originality and research aside, Ang’s study is not fully convincing. Above all, not all of China’s bureaucracy deals with the economy and not all of the agencies dealing with the economy have “special deals or lucrative rights” (11) to dispense. Most simply handle routine bureaucratic approvals and controls. Here extra compensation from tax revenues and other collections is essentially another form of speed money, though in standardized, predictable, and transparent forms compared with bribery.
Secondly, Ang provides no evidence for what incentivized state agencies do to promote economic growth, and whether they are checked by rule of law or accountability. Based on the “state monopoly and race-to-the-bottom” model of China’s development (advanced by Tao Ran at Renmin University of China), the promotion of development, especially manufacturing investment, often involves land seizures and repression of related social unrest, environmental degradation, and labour suppression. Competition among localities, championed by Ang as a corruption-reducing mechanism, can aggravate those problems by racing to the bottom. In Ang’s own portrayal of one “Mr. Bulldozer,” she details his effectiveness but not his victims.
Thirdly, for state agencies not directly involved with the economy, profit-sharing compensation produces forms of corruption that undermine regime legitimacy. This is the logic behind Xi Jinping’s anti-corruption offensive, which Ang fails to grasp in her chapter on the campaign. If efficient corruption is as prevailing as Ang claims, why has the party launched the toughest crackdown since 2012? The answer is that rampant corruption across state sectors fed on one another and created a political ecosystem that shook public confidence in the regime.
Among non-economic state sectors, some profit-sharing schemes affected ordinary citizens on a daily basis, such as in healthcare, education, law enforcement, and civilian affairs. Others led the public to see the political system as rotten to the core, such as with military businesses or the sale of offices; the latter was widespread and induced in part by the highly lucrative nature of some public offices. Rampant corruption then justified an iron-fisted leadership to rescue the party’s image at all costs, including the bureaucratic paralysis that Ang observes.
The distorting nature of compensation incentives has lately been illustrated by a profit-sharing collusion between local health bureaus and COVID-19 testing firms across Chinese cities. As local bureaus mandate frequent, large-scale, and unnecessary testing, Chinese social media is fuming that such testing has justified never-ending cycles of local lockdowns and testing. Several implicated officials have fallen, including the deputy head of Beijing municipality’s health bureau. Incessant lockdowns, in turn, have stalled economic growth.
At the leadership level, Ang’s analysis is understandably hampered by a lack of insider knowledge, especially when contrasted with the recent account by Desmond Shum, ex-spouse of a power broker in China’s elite circles. In Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China (Scribner, 2021), Shum reveals access mechanisms missed by Ang. First, the red princelings leverage family lineage for monopoly businesses or trade their access to regulatory power for wealth. Here Bo Xilai, one of Ang’s two elite cases, was atypical because he did not personally engage in business and his son was still in school.
Secondly, shrewd brokers like the Shums cultivate key nexuses of power in their pursuit of wealth: top leaders’ wives, bureau chiefs (who control state approvals), and top leaders’ political aides. Here the dealings of Bo Xilai’s wife played a critical role in his downfall, a point neglected by Ang. Thirdly, some leaders keep distance from family members’ dealings, while others do not. Here Bo seemed to have kept distance, expectedly for someone of his political ambition. Thus Bo and Sun Zhengcai—the latter also a rising national leader discussed by Shum and Ang—were brought down not by direct rent collection but politicized anti-corruption moves. This is especially clear when other elites, both former and sitting members of the Politburo, have relatives with dubious dealings but escape guilt by association.
Ultimately, China’s corruption operates in the context of state capitalism, with more state monopolies and whims than America’s gilded age to which Ang compares China. Ang is right to emphasize the value of qualitative discovery in non-Western settings, and her study could benefit from more of it.
Yan Sun
The City University of New York, New York