The Economist Recommends - China’s Domestic Challenges

The Economist Recommends, “Six Books to Understand China’s Domestic Challenges” (29 Sep 2022).

“The market reforms introduced by Deng Xiaoping, who ruled from 1978 to 1992, helped China grow rich. They also created opportunities for corruption. But not all corruption is bad for economic growth, argues Yuen Yuen Ang. She breaks down graft into four varieties. The one that most worries China’s current leader, Xi Jinping, is “access money,” bribes or favours offered to senior officials in exchange for contracts, land or other privileges. This type of corruption acts like steroids, promoting investment and economic growth, says Ms Ang. The growth tends to be uneven, though. Ms Ang compares China’s reform period to America’s Gilded Age, when 19th-century robber barons amassed large fortunes using corrupt practices. Mr Xi’s anti-corruption drive, secretive and top-down, hardly represents a new Progressive Era.”

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See also David Rennie’s review of China’s Gilded Age in The Economist (June 2020):

“Arguing that conventional measures of corruption are too crude, Ms Ang ‘unbundles’ graft into four varieties. First there is petty theft. Perhaps involving a traffic policeman demanding and pocketing a fine, such corruption poisons economies. Then there is grand theft, eg, a dictator looting the central bank. That is also toxic to economies. Third is speed money, as when a shopkeeper pays a bribe for a permit that might otherwise never arrive. Ms Ang compares this to a painkiller that eases the agony of bad governance but cures nothing.

Then comes the variety that most worries Mr Xi: access money, or high-level bribes and favours offered to powerful officials and their families, in return for contracts or other privileges. Ms Ang compares this sort of corruption to steroids… Like steroids, access money promotes unbalanced growth, it notes. Often such graft directs funds towards property deals, a swift route to riches for officials in China, where land use is state-controlled…

Ms Ang compares China’s early phase of economic opening to America’s Gilded Age, when 19th-century robber barons suborned politicians to let them build railways, private monopolies and commercial empires.”