China’s Gilded Age: The Paradox of Economic Boom & Vast Corruption | Yuen Yuen Ang

[Music] good afternoon everybody i'm steve orleans president of the national committee on u.s china relations and joining you today from sunny windy new york city um i'm thrilled to have you and with us today she as i was just telling her gave me a lovely weekend by allowing me to read her new book china's gilded age the paradox of economic boom and vast corruption it was such a pleasure to read it because at this time when there's so much discussion of china that is full of heat but very little light this both gives us a different way to think about corruption and a lot of data relating to corruption and then the ability to analyze that data so it's really really a wonderful interesting eye-opening read so those of you who haven't bought it yet i urge you to buy it yet union is a professor of political science at the university of michigan her first book how china escaped the poverty trap which was in 2016 won awards for its game changing and field shifting research and if i'm any judge union this book should win awards too because it really got me to think about corruption and the way it works in china in a very different way um i would give you her full bio but that would take and her various awards but that would take up all of our time so you've been sent the bio in advance so let me turn it over to you in yen who will talk for about 20 minutes more or less i'll ask some questions because i think the book raises tons of questions and then we'll open it to audience questions i see we already have a bunch of audience questions if you have questions in the course of this discussion uh you can go on the q a function type in your question and please tell me who you are i'm not thrilled with anonymous questions i love to know who's asking uh but union thank you so much for being with us thank you for being a public intellectual of the national committee on u.s china relations you were part of the fifth cohort uh we now have had the sixth and soon we'll have the seventh but it's you are fulfilling the mission of the public intellectuals program by educating americans about china but welcome and thank you well thank you very much to the national committee for having me it's been a real honor to be on the pip program and i really appreciate the rich webinars that you've put together during the pandemic i've been on the other side of the screen for many of the programs and have learned a tremendous amount so it gives me great pleasure this time to have the opportunity to share my work with you um as uh and and as steve pointed out the book again it's called china's gilded h the paradox of economic boom and vast corruption um this is this book tells the story of china's gilded age which is the period of 40 years since 1978 a time of rapid growth and vast corruption and a little story here connected to my first talk at the national committee when my first book came out in 2016 i also gave a talk at the committee and steve asked many stimulating questions about corruption and at the time i thought i didn't have enough research and data to answer your questions and it inspired me to go and do more research and answer them and so thank you for inspiring this book and i hope that today i will again benefit from everyone's comments and questions and write a third book but let me first tell you about this uh this second book um first why is corruption and growth a paradox that is because corrupt countries are usually poor while rich countries appear to have little or no corruption and because of this basic pattern we have arrived at the conventional wisdom that corruption is generally bad for growth so when we look at china's case we see that it has the longest sustained economic expansion in modern history but on the other hand it has a serious corruption problem one that the chinese president xi jinping himself had said was a crisis an existential threat to the party when we put the two together it appears to be a jarring puzzle so how do we explain how china's economy has grown despite corruption and this book makes a simple argument it argues that the reason for this is that in fact rich countries have corruption but the kind of corruption that exists in rich countries are of a particular type and i call them access money meaning they are a transactional form of corruption among elites where the more commercial activities there are the more rents can be collected and over the past 40 years what i show in this book is that china's corruption has evolved toward this type of corruption which is the same variety found in rich countries from this from south korea to the united states for example the difference is that if you look at the us access money is mostly legalized and institutionalized whereas in china it still falls under the category of personalized and illegal corruption and in china corrupt officials get rich by promoting growth not by stopping growth i wanted to emphasize however that the book does not argue that corruption is quote unquote good that unfortunately has been a common mis-reading of this book rather i argue that corruption comes in different types with different harms and the analogy i use is that of drugs all drugs are harmful but they do not harm in the same way and the type of corruption that exists in china i compare them to the steroids of capitalism right so access money functions like steroids producing a high growth economy but one that is risky and imbalanced so that is in short a summary of the book's story and i think i will leave more of the time to answer specific questions and to dialogue with the audience one of the things that i had hoped to do in this book in response to steve's comment is i strive to deliver as much data and evidence as i can but in a way that i hope would be accessible to many people and i feel that in this day and age particularly given this age of misinformation that we live in this is an important step to take there are a lot of good research going on on chinese politics on the economy but a lot of this research may be buried on the academic language and i feel that we have really have to liberate that and deliver it in an accessible way to a broad audience so that we can see that evidence and data is actually useful and perhaps even interesting and for that i want to again thank the national committee because as part of the pip program the public intellectual program the mission of that program is to train researchers like me to reach out to the public so i hope to have played in small part that role of using research to inform the public thank you talk to us i guess initially about how corruption has at times enhanced china's growth and at times stifled china's growth and how the book talks about that so the book begins by providing a theoretical framework and it's very simple i call it unbundling corruption and i begin with that because normally when people write about china they take the conventional wisdom as given they assume that china is an outlier and then they go on to tell their stories but what i wanted to do in this book is to begin by saying that our understanding of corruption has been flawed it's flawed in the sense that we've been too focused on the idea of which country is more corrupt than the other so we've been focused on overall corruption scores and we have not paid enough attention to the different types of corruption and the fact that different types of corruption have different consequences so the book begins by unbundling corruption into four different varieties and the four different varieties i begin with corruption with theft so i make a distinction between petty theft so a police officer you know who shakes you down for an extortion you consider that a petty theft because it's a low-level activity and it's a one-way street you don't get any benefit out of that corrupt activity i distinguish that from grand theft which is embezzlement and a classic example is nigeria where billions of dollars are just siphoned out of public accounts into swiss bank accounts and then i make a distinction between two types of bribery and this is an important distinction the most common type of bribery that we all know intuitively is called speed money meaning you pay petty bribes to get over regulatory hurdles right so a low level official tells you if you don't pay me this right i'm not gonna put a stamp on your passport so we pay these petty bribes in order to overcome a burden um a barrier or a delay but that kind of speed money is different from the fourth type of corruption which is the focus of my book and i call that access money that kind of corruption is elite it occurs at a high level it's not extractive rather it's transactional you're paying a bribe not because you're trying to overcome a delay but because you're trying to buy privileges exclusive rights deals and what i do in the book is to show that over the course of china's evolution since 1978 china began with all kinds of corruption in particular it had a serious problem with petty bribery speed money embezzlement was rampant the business environment was terrible and then by the time you came to the 1990s and 2000 a big structural evolution happened you see that embezzlement and petty bribery steadily declined and that was because in the 1990s the central government decided that they had to do a big reform to create a modern regulatory state for a modern capitalist economy so they took very determined measures to build state capacity and fight growth damaging corruption and you actually see that in the data you see the fall in the incidence of embezzlement and petty bribes but at the same time you see that bribery massive graph involving larger sums and more senior officials skyrocketed from around 2000 onwards and that's because markets open you have an even more capitalist economy a larger private sector many more commercial activities and all the time with government officials having tremendous power over that economy so when you have a combination of these two structural changes administrative reforms on the one hand and tremendous market opening on the other you have a switch in the patterns of corruption in china arriving at the form we see today china today um is the type of corruption is very much dominated by high-level transactional elite corruption and this is particularly striking once you compare china to the example of india which on the whole is perceived as more or less equally corrupt as china so if you compare their global corruption scores most people think china are corrupt and more or less as corrupt as india but what i show in the book is that when you actually unpack the structure of corruption the interesting thing is that in china the most dominant type of corruption is access money elite transactions whereas in india the most dominant corruption is petty bribery so low level price that you pay to overcome hurdles so once we understand the evolution of the structure of corruption in china we arrive at the better understanding of why this particular type of corruption functioning as the steroids of capitalism have almost over stimulated local officials to feverishly promote growth but at the expense of creating a host of social problems including environmental damage including social inequality and various other misallocation of capital that has resulted in a chinese economy that has grown very fast but is risky and also imbalanced the gilded age when you call it the gildan age you're obviously making comparison to america's gilded age talk about how that talk about that comparison in terms of corruption i would love to because um you know the title of the book was uh very much um inspired by the question that i received when i gave my first talk on how china escaped the poverty trap and i remember that the question was you know if you had to pick a country that you think is the closest parallel to china which country do you think that is and my answer at the time was and i think the audiences answered by the way i think people were expecting russia or some part of asia and my answer was well i think it's um my you know i think it's 19th century america and and and it came kind of intuitively and i realized with more research that indeed they had many parallels and so that's how i arrive at the title of this book china's security age it was you know it was to capture a kind of intuitive response at the time but i thought it was an app title particularly when i went deeper into the history of america's guilded age and i found the historical parallel so striking they are so similar that you could take a book about america's gilded age and just strike out the name then with chinese characters and names like i did in one part of the book the leland stanford party was it's wonderful you describe that a little to the audience wow um so so this would be a spoiler um but in one part of the book um i i started with a story about this uh extremely corrupt tycoon um and he got rich um from his railway business and he gave bribes company shares to politicians and these politicians were very powerful because they were in charge of the department of budgets and infrastructure and these politicians um had their families in the steel industry so they in a sense um this was a profit sharing structure because they would benefit if the corrupt businessman built railways and over the course of this corruption he had land grants he had lots of cheat loans from the government and the government basically absorbed you know all of his financial risk and by the end of this the railways were built but at an inflated cost and he became enormously rich um and so any person hearing this story would think oh this is you know one of those stories about group tests corruption in china but in fact the particular um businessman whom i was referring to is actually mr leyland stanford right so he is the railway tycoon of um of the 19th century um and and and when i told the story this way um to really surprise the reader on on um to get them to kind of really uh reflect on some of the sort of a historical uh bias of some readers they've forgotten american history and when they read about corruption in china they might think this is exceptional to china so i felt it was useful to remind readers again of american history itself i felt a little bad kind of using mr stamford's story in this way particularly because i attended the university that he founded but i thought that in fact at the end of um near the end of his life mr stanford was um i think i would say almost repentant for his past deeds and and thus generously gave away his wealth to found the university that eventually i became a beneficiary of so i think he wouldn't mind my using his story to make a useful historical point let's talk a little bit about the current anti-corruption campaign uh we're often discussing how much of it is truly anti-corruption and how much how much of it is just political score settling um and is there any way to kind of you know we often joke and try and say well it's 80 20 it's 64. how do you kind of parse that it is a commonly asked question and in the last chapter of the book i focus on the anti-corruption campaign and in that analysis i looked at the career paths of all of the city party secretaries who were in office in 2011 so the year before she began his anti-corruption campaign and then we look at what happened to their career paths over time how many of them fell from office the word fail is the chinese term for investigated for corruption and through that analysis the main question that i wanted to answer is uh what are the factors that most predicts the fall of a city leader is it for example his lack of performance or is it his patronage ties with the higher levels and the conclusion of that analysis is that performance does not matter at all the single most important and powerful predictor is patronage ties whether the patron who appointed the city leader himself fell from office all was protected from investigation so that is the basic finding and it is an important finding for broader reasons because it tells us that in the period after cease anti-corruption campaign the bureaucracy has moved away from being performance-centered to being patronage-centered so personal patronage has become more important undershi and this is a departure from earlier decades where the chinese bureaucracy has always been performance oriented and therefore acquired the reputation of being a meritocracy right so that is the key finding of that analysis and then to come back to your question is anti-corruption a serious effort of fighting corruption or is it just a purge the answer is both and it also varies by time and it varies by case so one good example where corruption is obviously being used to silence dissent is the recent um trial and imprisonment of the political dissident so he would allege corruption and he was imprisoned and in that instance it's it's pretty clear that corruption is being used to silence but that's not to say that there hasn't been real genuine serious institutional efforts at fighting corruption because when she took over the defining moment of his coming to office was corruption and i think many people might not remember this but he came to office in 2012 under extraordinary circumstances it cola collided with the corruption scandal involving boy silai like the fallen chongqing party secretary and so that is why as soon as he became president the first speech he gave to the pilot bureau the the thing that he emphasized was corruption and he said this is the one problem that will be an existential threat to our party and therefore he has made it a cornerstone of his legacy if he really wanted to deal with corruption wouldn't he engage in certain institutional changes so a more open and transparent bidding process a more open and transparent budgeting process a freer media an independent you know the united states relies on the media to uncover lots of corruption um you know an independent judiciary you know where the judea you know if it's a local judiciary the local government is in control of the local judiciary so the opportunity for the judiciary to undercover corruption when their salary is being paid by the corrupt is extremely limited and those institutional reforms would have shown a greater commitment uh to fighting corruption than using this human use of the jung-ji way i completely agree that she as soon as he took office and decided to launch the anti-corruption campaign he chose to reject democratic bottom-up methods and instead use the top-down arm of the party and a little bit of context here would be helpful in fact in the years before c china had already been experimenting with public participation and transparency initiatives and there were calls for public officials to declare their assets and these reforms were um gradual but making progress and there were prior research that found that they actually worked they made people trust the government more and they enhance compliance so it was an encouraging move but when she came along he pushed these reforms aside so and we don't hear of um any more of the calls for transparent assets anymore that's just one example and his preference has always been top down across domains so in anti-corruption he applies a top-down approach he uses the discipline committee in the economy he also prefers a status top-down approach he favors state-owned enterprises so i think you might say that it's it's an extension of his overall preference for a top-down approach but that has been the way he chose um to fight corruption it has been both extremely effective but also has created a lot of problems this new approach that he used it's effective in the sense that it has really terrified corrupt officials and some would argue that that is actually necessary because corruption had become so endemic and that despite the transparency and public participation initiatives are not enough impact was being made to scare and alarm these corrupt officials so um he no doubt terrified them but the side effect of that period of terror is that the bureaucracy has also become paralyzed as a result this paralysis comes not only from the fear of being investigated for corruption but it also comes from um the kind of mounting amount of targets and demands that the central government has put on local officials in the past few years so as a result one new problem arose in the chinese bureaucracy which is called lan zhang which is literally translated as lazy governance and expressions of it include you know billions dollars of investment funds that were not used governments would rather not spend and leave them unused and so this is a brand new problem in china because if anything the problem in the chinese bureaucracy has always been been that local officials were too enthusiastic about promoting growth and we now see the opposite uh problem in action that became so serious that the state council actually called it out and tried to punish a few individuals as a way of warning other officials not question this is actually an unfair question because i i don't think we can know but it's one i've often wrestled with what percentage of gdp in china is actually related to corruption so i look at data sometimes retail data for instance which you look at and go wow how can there be that much spending when this is what gdp is well it's because you're not taking into account that a lot of money is off the books and people are going into gucci's and ferragamo and these other things and making massive purchases of these which then actually shows up in the retail data is there any way we can kind of figure that out i honestly having studied these topics um know that there is no way that you can accurately figure that out so whenever i see the news media cite that you know five percent of the gdp goes to corruption i really question how do you come up with that number you know i'm really baffled um because first of all it depends on what kind of corrupt activities you are talking about so you're talking about embezzled funds so embezzled funds um okay once they are disclosed you may actually know the amount of embezzled funds but when it comes to bribery that's actually very hard to measure even in monetary value because increasingly bribes don't come in the amount of cash they come in very sophisticated uh in-kind forms for instance if um if a businessman wanted to bribe a corrupt official he could give him the keys to a condominium without actually passing over the property to him so how would you compute the monetary value of that transaction right so that's just a simple example so when i add all of that up i find that it's really hard impossible really to put a monetary value on the amount of corruption not to mention that corruption kind of has a spillover effect right and so how do you measure all of that you didn't touch pla corruption i did not uh corruption in the pla was and still is serious um a little bit of context might be helpful i think in the 1980s and 1990s it was particularly bad and it got so bad that um jurong under the administration of chironji and jian zlimming they took it on so from 1998 onwards one of the things one of the bold actions that they took was to divest businesses from the military um i think so far people give them credit for having succeeded on that front um but there are still other forms of corruption going on as we saw in the anti-corruption cases that were reviewed recently which included a number of top military officials yeah and the pay for promotion corruption yeah that in order to get promoted which i assume is that also true in the in government um paying for promotion is a very well-known corrupt problem i did not count them specifically in this study but um that is known to be a very common problem you talk about two issues you you choose two examples the lie case and then the party secretary of nanjing who's less well known as just two examples of corruption and if i recollect right you know the the chinese ultimately accused bocce live 22 million rfp yes of corruption which in the course of the city the size of chun ching is less than a rounding error it's it's it's nothing how much can we rely on the data that is a very good question um the way i would think about this um is that contrary to popular opinion that all chinese data is bad china actually has an abundance of data but of varying quality it has a lot of data because of its communist system communist governments collect a lot of data but the but the quality is varying and so it's beholden on the researcher to know the source and to know how to interpret it some can be trusted and some cannot so corruption is a good example um there are some statements made by the official press that i would not take at face value a good example is the amount of corrupt takings that you had just described in the case of bosilai right um bostilai was rep was had allegedly taken about 21 million which is roughly about 7 million us dollars and as you've said that is only a rounding error the other chinese official he's less well known outside of china but within china he was actually a very famous pro-growth official and it was said that he took 1.6 million us dollars in bribes over the course of his career and i would not take that at face value for the reasons that you've cited i mean 1.6 million dollars is a lot for the average chinese but the ceo of a modest company would make that much in a year right and so i would be very surprised if over the course of his career he made that amount of money and but we can still use their cases to look at the process of corruption the particular activities that they conducted those things we can still trust and they're still of value but there are other types of data on corruption that i think are useful and on the whole we can trust so one of my chapter uses data on the number of prosecution cases and i think that that is on the whole reliable because that data is contained in a legalistic yearbook that's not meant for public consumption right so no one except you know people like me would go to read them um and so and they have been in place for for many years and so they provide a useful view of changes over time what you see with the state media is when they tell you how many officials have been arrested for corruption they do not quote the prosecution data in state they give you the biggest possible number so the official number is 1.5 million officials have been disciplined for corruption and it's not because they make the number up they just use the loosest definition which is even if you're asked to drink a cup of tea that's considered discipline right so so they want to give a big number because in a speech you want to give the impression that look at this crackdown you know we've done so much but when you look at the number of prosecuted cases which means if the case has gone through the entire investigation process and it's actually brought to court the number is much much smaller so that would give you some examples of how we read the data source and how we interpret it i want to get to some audience questions andy rothman asks have you looked at how corruption differs among privately owned companies versus state-owned companies that is a great question not specifically in this book but one of the patterns that do come out is that in the cases involving the bribery of local government officials those bribes almost entirely come from the private sector the state-owned enterprises for good reasons do not need to bribe their way to business opportunities in fact it's often the other way around the heads of the big state-owned enterprises themselves become right takers because of the resources that they are in the position to give out so lai xiang is one of the most notorious corrupt officials who recently fell he was the head of a state-owned lending company and he was investigated for corruption and he's being used as a poster child of the most corrupt official in china uh john do ask does transition transactional bribery bribery in effect exclude better alternatives and therefore harm the society in the long run absolutely and i again wanted to stress that this book does not at all argue that corruption is quote unquote good even in china's case what you see is high growth with tremendous policy distortions and one of the clearest expression of that distortion is in the real estate market so you can see that china has an abundance of luxury properties so rich people can buy up a string of apartments and most of these apartments are empty not because they're not sold but because people don't live in them but at the same time you have tens of millions of regular chinese people who cannot afford a house and this kind of paradox and a misallocation of resources is linked deeply to corruption because real estate and land are the sectors where power is most easy to monetize and so especially in the past i would say 15 years local officials have really invested in stimulating the real estate market right so by no means is this form of corruption quote unquote good it stimulates commercial activities but it creates a whole host of social problems and inequality yeah which is actually charlie wong asks a very similar question which is what is the impact of corruption on wealth inequality access payments can be viewed as a cost of doing business but only the elite with resources can afford such access payments and the influence to keep it quiet outsiders may be shut out of opportunities leading to concentrated wealth and power absolutely and that is why um the two signature policies that she adopted when he became president is anti-corruption and poverty alleviation and it makes sense because when he took office in 2012 china was at that time a very corrupt country as seen in the basilai corruption saga it was also a very unequal country i believe if i remember correctly the genie coefficient which is the measure of inequality in that year 2012 uh china was actually slightly more unequal than the united states and so you can imagine how unacceptable this is for a government that is nominally called the communist party right um and for that reason when he took office he took on the problem of corruption along with inequality and his approach to fighting inequality is to say that he will eradicate all rural poverty by the year 2020 and for that reason until this year we have seen that he has not given up on this goal and he has put a lot of emphasis on getting the bottom um level of poverty out of china mort holberg actually asked hi mort uh a related question you mentioned the disadvantages of the anti-corruption campaign impact on environment and on income distribution i assume you've read barbara finnemore's book will china save the plant planet pointing in the opposite direction china as leading the world in solar and other renewable energy development is that incorrect is that correct income inequality isn't that what dung forecast and permitted since a billion people can't get rich simultaneously those are good questions and the way i i think i would answer it this way um it is a very good thing for china to dedicate itself to climate action and to saving the environment i think that if they could put their authoritarian strength to a good ants of course that's a good thing but as a political scientist and having studied the chinese bureaucracy i would say that we need to be realistic about what they can achieve by marshaling the great power of the state the strength of china's mobilization power is also its weakness so the strength is that when the chinese leader says we are going to do abc they put all their energies into abc right so if it's poverty alleviation then everyone does everything they need to do to get those households out of poverty so if it's climate action they'll do whatever it takes to meet those targets but if you look at the actual process of implementation and this happens across all policy arenas it usually comes with side effects because the local officials will be focused on fulfilling the targets and they'll do whatever it takes to fulfill the targets in the process they usually create new problems so poverty poverty alleviation is one example um local officials will take tens of thousands of families out of remote mountains and put them into towns and down the road that can create new problems you can also have problems of families who do not wish to be relocated but nevertheless are forced to and so that is the double-aged sword of china's powerful bureaucracy it has ambitious goals if it sets its mind on a particular end it will achieve it but it will achieve it through means that are often extreme and these extreme measures that they take can in turn create new problems this is an interesting one from nick borst over at seaford seafair capital partners the regular transfer of power between generations of chinese leaders was often an opportunity to root out corrupt network associated with the old leadership with xi jinping's apparently indefinite hold on power has this opportunity been lost will corruption within sea's patronage network become permanently entrenched it's a good question i'm not so sure that in the past that leadership change was an opportunity to root out the predecessor i actually see it quite differently one of the reasons that the ccp has been able to maintain political stability is that it has an informal system of power sharing right so it has a collective leadership it has institutionalized succession and once you are in the club of the elders there is a kind of informal norm that you will be protected and you will retain your privileges and that you may even get to have the opportunity to influence the selection of the successor so i actually see the past practice as part of a profit of a power sharing system that enabled stability but also as a result encouraged crony capitalism what she has done is that he has dismantled these norms right so he has dismantled the norm of limited tenure he has also dismantled the norm of collective leadership he has even this mental the norm that um retired leaders are basically immune from from investigations so jung kang for instance was one of the highest leader who once served in the pali bureau standing committee who was brought down for corruption the significance of that action is that there was an implicit norm that if you are a party leader you in a sense would be immune but she has dismantled that norm one implication going forward is that should she one day step down from office and the new leader would have come to office does it mean that the new leader could also persecute c if he wanted to right because that norm has already been dismantled previously so when all of these norms have been dismantled it creates a great deal of uncertainty it looks secure now because she is the one in office with all of the power but it opens up all kinds of questions about you know if you have a new leader if there is political change what form is it going to take how is power going to be shared now all of these are open questions which of course when you mention joe young one thinks about wen jabal uh also even more senior in the standing committee and premiere why did they choose never to prosecute him i mean the the new york times stories were fairly compelling i do not know so as a researcher i do not have scoop into who you know who is corrupt at the highest level or you know inside scoop into their deals um so i do not know but we know that one of the reasons that uh jo yong kang was investigated was that he was rumored to be closely linked to boise li that was one of the things that was widely discussed so that could be one of the factors but we do not we never know for sure when it comes to elite politics it's always just full of machiavellian intrigue and it's a black box and we wouldn't be able to really know what the true story is what we can do is to try to understand the institutions and how the rules have changed yeah the book doesn't really talk about the cultural aspects of this that you know chinese society has over centuries had more corruption even though you make the the analogy to the gilded age it just one thinks of it as more corruption i even think about hong kong before even under british rule uh before the creation of the icac so the interna the anti-corruption commission in hong kong that has extraordinary powers to just without warrant without anything we suspect you're corrupt they back during british rule they could go into your office seize your records seize your documents detain you and it actually was incredibly successful in dealing with corruption in what was even though the british were ruling it what was a chinese society taiwan is nothing pretty good though imperfect job singapore has done a very good job but so how much how do we what does it tell you how do you deal with it in this culture i guess is my question it is popular i understand to make cultural arguments about corruption generally i avoid cultural arguments because you kind of go into a dangerous zone of of claiming that china is corrupt because it's china and and so i want to kind of avoid that kind of arguments i think it's a it's a slippery slope and cultural arguments are also very hard if not impossible to prove what i do find in my research is that the factors that shape corrupt behavior is very much and clearly driven by economic and political factors so if you just focus on the structure of the economy and the structure of the politics it already helps you to understand to a large extent why corruption took a particular form in china at particular times without needing to bring out the cultural argument so i'm not sure what culture adds to our understanding except for potentially bringing us in the direction of saying because china the current economic policies are leading to more state participation in the economy more party control over a variety of activities will that increase corruption in my experience when the state participates in the economy in in the economy it gives the state enough the the officials an opportunity to engage in more corrupt activities the one of the key arguments of my book indeed is that the root cause of corruption is the government having too much power over the economy so as long as the government has a lot of power over the economy there will be demand for their favors but this is something that the xi administration does not want to acknowledge right and instead it wants to use um investigation and crackdowns on corruption and his emphasis on ethics and integrity to control the bureaucracy but you're absolutely right as long as the government has a lot of say there will be demand for their favors i think another way to address your question is over the long term in future how will corruption evolve in china and i think that's something that we will have to wait and see because the book ends around 2017 and we know that just in the last two years so much change has happened in china and in the world um there is no doubt that chinese officials today are terrified about the anti-corruption campaign still so i i do believe that they're a lot more cautious than before but to the extent that they continue to exercise so much power over the economy what it might suggest is that corruption would migrate to different sectors and to different forms so that is something that i would watch out for in the coming years it used to be concentrated in land real estate uh the banking sector and mining but we'll have to see in the next few years whether it might migrate into new areas of the economy yeah and we'll need to see i mean the chinese have just announced the fifth plenum of the of the central committee uh on october 26 to 29th which is going to focus on economic policy so we'll see if they will go back to the third plenum and kind of move towards economic reform or will they stay with the current direction of more state control if they were to move back to the third plenum i think and you wrote this book or you do it updated the book 10 years from now you'll see decrease in in corruption because access money would be less valuable um with a more market-driven economy so that would be uh that would be very interesting it'll be that that'll be at the end of next month so we'll we'll see what happens how does this affect u.s china relations um you mean the you mean the book you mean yeah it relates to u.s china yes so how does the corruption that you kind of describe in a different way from the way people have described it up to now how should of it affect the way we think about u.s china relations and what our policies should be going forward i don't think that corruption directly relates to u.s china relations but i do think that a different way to think about um what lesson to draw from the book is that i think in this cold war climate it is important to know that the us and china are more alike than most people think because in this cold war climate we have had too much talk and discourse about how fundamentally different the us and china are and in particular it's been very popular to use cultural arguments and it comes out of both beijing and washington with the claims that china has five thousand years of history if you want to understand china you have to read cons and suns from 2000 years ago and what i'm trying to convey in this book is that you know you don't have to look 2 000 years ago the most important point of chinese history is the past 40 years the gilded age and if you understand china's gilded age and you see its similarities with america's good age i think it helps the american public to see that the chinese are not alien and exotic in some ways their circumstances are relatable and i think we need more of such narratives because if we continue to drive the narrative that uh china the chinese are exotic and different and even scary it lays a dangerous foundation for feelings of enmity and as soon as you realize that you can take stories from america's gilded age and fill in chinese names and they make sense you realize that perhaps we are similar under certain historical circumstances in certain ways but that in a different way i hope would would actually provide understanding that's actually we should make that the clip for for u.s china relations it's a very articulate way of expressing how we need to change the narrative that's currently prevailing i think we have time for one last question which is ruth curse bowers uh so fascinating thank you in the u.s gilded age china comparison who in china would be the muckraker that brought attention to corruption in many forms including public life and helped stimulate the good government movement of the late 19th and early 20th centuries it is a great question i think that in the years before she investigative journalism in china despite the constraints made a great deal of progress and um newspapers such as tai chi made reports that really revealed important problems in china so tyson for instance was the paper that revealed the scandal about the poisonous milk powder which in turn then forced the government to take a series of serious actions to deal with just lack of food safety in china so their efforts have you know revealed scandals and push forward progressive reforms so unfortunately in the past few years under a much tighter political environment those opportunities for expose have dramatically narrowed so it would seem that the hope lies in economic reform the hope that's a really difficult question where the hope lies um you know it's it's maybe it's because i've worked on china for 40 uh getting close to 50 years you know i think china changed so many times i've seen so many cycles i've seen tightening and loosening i've seen focus on market reform and then focus on the state sector and i've seen it and it's always you know it's never been linear it's always been cyclical but if you drew a line through the cycles it would be up and i think economic growth in china will have problems without market reform and ultimately you get some level of market reform having market forces play a greater role and that then spills over into the corruption area that as market forces play a greater role for rent seeking and other corrupt activities is is diminished uh i think the using the as you have suggested using the zhong ji way the disciplinary commission is a is a problematic way yes you really do need exactly what you said you need ty's in to be able to report on stuff freely you need transparency and budgeting so we need to have local governments have transparent budgeting you need to have transparent tendering so when a government offers a tender you know we can see what the bids were so it basically removes the opportunity for corruption we need an independent judiciary that that's independent of the local government so you need to restructure how uh local judges are paid there's a whole host of institutional reforms which could be uh instituted the question that the leadership of china needs to decide is that may not strengthen uh the party it may in fact and it could they may see it as weakening the party i see it as strengthening the party that a more open transparent party will have more support in the people of china and ultimately make their rule more sustainable but in in fact to wrap up the conversation we might say that the key lesson that we can take from america's gilded age is that the accesses of the gilded age led up to the progressive era which was a time of political economic administrative reforms that laid the foundation for america's rise into a modern capitalist superpower and so i've i've seen i see china as having a structural break in 2012 with a new leader and i see 2020 as another structural break i think it's really a turning point in china where they would have to decide are we going forward to a progressive era where we will make the necessary liberalization and changes to move forward or are we going backward so i think we are at a historic moment and we'll have to see what decisions they make and people would probably say the same in the united states we're at a district we're in a historic moment that is true you know i can't thank you enough everybody it's just a must read china's guild in age gilded age thank you so much thank you for being such a great public intellectuals thank you for writing these books thank you for sharing your thoughts with us today but it's it's great to have you as part of the national committee family thank you very much everyone and thank you to the national committee have a good day bye-bye everybody for joining us bye now

Channel: National Committee on U.S.-China Relations

Views: 8,839

Keywords:

Id: 7kaItpDD_Hs

Length: 64min 3sec (3843 seconds)

Published: Fri Oct 09 2020