Premier: China’s Corruption Fight Crucial to Economic Reform

By Tim Donovan  

Speaking at an early February meeting of the State Council, Premier Li Keqiang linked China’s ongoing fight against corruption to economic reform, saying that the Chinese government has “too much” influence on the country’s economy, making it “easy for corruption to breed.” The remarks, not published by state media until February 23, also noted that government intervention in microeconomic activities hinders the “decisive” role of the market, a key goal of the Chinese Communist Party’s (CCP) third plenum meeting in November.

During the February 11 meeting—which focused on graft—Li described corruption as a key barrier to economic reform. While laying out the latest anti-corruption measures, Li said that the government’s broad regulatory powers over markets enable rampant graft and place pressure on China’s economy. He named bidding for construction projects, government procurement, and the awarding of land-use and mining rights as areas prone to corruption.

During his speech, Li said the key to executing a more effective campaign is for officials to leave little room for interpretation or bribery in the course of regular business, saying that “leading cadres should not meddle.”

Li’s remarks come nearly a month after President Xi Jinping addressed the Central Commission for Discipline and Inspection (CCDI) on January 14. Describing corruption as a “disease that calls for powerful drugs,” Xi promised members of the CCDI an even stronger crackdown on graft in 2014. Li reiterated Xi’s message, saying that the Chinese government will decentralize authority, be more transparent and adopt a “zero-tolerance” attitude to corruption this year as it deepens its fight.

Since Xi and Li took office in November 2012, multiple anti-graft and anti-extravagance measures have been passed by government agencies at the central and local levels. The regulations have allowed the Xi administration to single out officials for punishment, starting at the local level and moving up the ranks of party hierarchy.

A recent survey of Beijing-based junior civil servants found that nearly every interviewee believed the bans to be “very strict,” and said additional prohibitions affected their lives personally and financially. As the survey suggests, the implementation of such bans has left every official vulnerable, helping to create an environment in which the Xi administration has been free to crack down on low-level “flies” as well as high-level “tigers.”

Some of the “tigers” caught up in the CCDI crackdown have included rising party elite and former high-level officials. Recently, a state investigation into Zhou Yongkang, a retired member of the CCP’s Politburo Standing Committee and former overseer of the state’s vast security apparatus, has been gaining media attention, with a number of Zhou’s close allies recently coming under scrutiny. CCDI has yet to announce an official investigation into Zhou, but if he were to face public charges, it would mark the first time since the end of the Cultural Revolution in the late 1970s that any current or former member of the Politburo Standing Committee has been put on trial.

As China’s crusade against corruption continues to intensify, officials will be increasingly dissuaded from exercising their influence in China’s economy, say experts. Speaking at a February 26 anti-corruption program co-hosted by Baker & McKenzie and the US-China Business Council, Baker & McKenzie partner Thomas Doyle said that China’s anti-bribery actions against domestic and multinational businesses are one example of how officials are using the anti-corruption fight to transform the business environment.

“It’s not just a crackdown on corruption … it’s a compliance agenda,” Doyle said.

[author] Tim Donovan ([email protected]) is a research associate at the US-China Business Council. USCBC is the publisher of the China Business Review. [/author]

(Photo by Zhou Ding via Flickr)