Broadly defined, three types of corruption are common in China: graft, rent-seeking, and prebendalism.
Graft is the most common and refers to bribery, illicit kickbacks, embezzlement, and theft of public funds. Graft involves something of value given to, and accepted by, public officials for dishonest or illegal purposes. It include officials spending fraudulently or using public funds for their own benefit.
Rent-seeking refers to all forms of corrupt behaviour by people with monopolistic power. Public officials, through granting a license or monopoly to their clients, get "rents"—additional earnings as a result of a restricted market. Rent-seeking happens when officials grant rents to those in their favor. This is akin to cronyism. In the Chinese case, public officials are both rent-generators and rent-seekers, both making rent opportunities for others and seeking such opportunities to benefit themselves. This may include profiteering by officials or official firms, extortion in the form of illicit impositions, fees, and other charges.
Prebendalism refers to when incumbents of public office get privileges and perquisites through that office. Controlling an office entitles the holder to rents or payments for real or fake activities, and organizations are turned from places of work into "resource banks" where individuals and groups pursue their own interests. Prebendal corruption doesn't necessarily need to be about monetary gain, but may include usurpation of official privilege, backdoor deals, clientelism, cronyism, nepotism.
Corruption in the PRC has developed in two major ways. In the first mode, corruption is in the form of ostensibly legal official expenditure, but is actually wasteful and directed toward private benefits. For example, the increasing number of local governments building massive administrative office buildings that resemble luxurious mansions. At the same time, many corrupt local officials have turned their jurisdictions into virtual “mafia states,” where they collude with criminal elements and unsavory businessmen in illegal activities.
While the state and its bureaucrats are major players in the reform-era economy, new interests and concentrations of economic have been created, without legitimate channels between administrators and entrepreneurs. A lack of regulation and supervision has meant these roles are not clearly demarcated (Lü Xiaobo in his text titles one section "From Apparatchiks to Entrepreneurchiks"). Illicit guandao enterprises formed by networks of bureaucrats and entrepreneurs are allowed to grow, operating behind a facade of a government agency or state-owned enterprise, in a realm neither fully public nor private. More recently, Ben Hillman has shown how official corruption is facilitated by enduring patronage networks. Crisscrossing Party and government, and emerging in response to weaknesses in the formal political system, patronage networks facilitate the transfer of spoils and protect transgressors from disciplinary action.
The PLA has also become a major economic player, and participant in large- and small-scale corruption at the same time. Inconsistent tax policy, and a politicised and poorly organised banking system, create ample opportunities for favouritism, kickbacks, and "outright theft," according to Michael Johnston, Professor of Political Science at Colgate University in Hamilton, New York.
Corruption has also taken the form of collusion between CCP officials and criminal gangs. Often hidden inside legitimate businesses, gangs had infiltrated public offices and worked closely with the police. The Telegraph quoted an employee of a state company saying: "In fact, the police stations in Chongqing were actually the centre of the prostitution, gambling and drugs rackets. They would detain gangsters from time to time, and sometimes send them to prison, but the gangsters described it as going away for a holiday. The police and the mafia were buddies." In some cases, innocents were hacked to death and dismembered by roaming gangs whose presence was allowed by regime officials, according to the Telegraph.
Read more about this topic: Corruption In China
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