People & Money

Learning from China: Development-Compliant Corruption

It is not and has never been that undefined and ambiguous word “corruption” that holds back Nigeria’s economic performance. What holds Nigeria back is unwillingness to devolve power from the central dictatorship in Abuja as Deng’s China did and allow federating units to find solutions for their own development.”

On January 21, 2021, the execution of Lai Xiaomin, a high-ranking Chinese public official made headlines around the world. The former head of the state-owned China Huarong Asset Management Co., (think AMCON, but much, much bigger) was convicted of soliciting or receiving up to 1.8 billion RMB ($260 million) in bribes over the course of a decade. Predictably, the spectacle of a prominent former CCP (Chinese Communist Party) member being expelled from the party and executed like a common murderer set tongues wagging for different reasons.

To some, this was yet another instance of the Chinese state’s increasing tendency to solve problems using violence and was not something to be celebrated. To others, this was a sign that the Chinese state under the leadership of Xi Jinping is firmly committed to its anti-corruption fight regardless of how highly placed its targets might be. For many in the African intellectual space, it was – perhaps all too predictably – another opportunity to point out the Chinese state’s purported zero-tolerance for corruption and cite it as a reason for China’s continued surge toward the number one spot in the global economic power rankings.

The problem with orthodox African thinking on this topic is not that it is especially wrong in its observations. It is a matter of historical record that starting in 2012, Xi’s CCP has aggressively pursued Chinese public officials accused of low and high-level corruption, referring to them in his inaugural speech as “tigers and flies.”

Also Read: What Nigeria Needs is Transformational Corruption

It is also a fact that over the past three decades especially, China has recorded the sort of economic results that took other countries centuries to achieve – raising no fewer than 800 million people out of poverty. The problem, however, is the same problem as that of the proverbial blind men touching different parts of an elephant and drawing conclusions about the elephant’s shape that are both technically correct and utterly wrong at the same time. The reason, though simple, is not one that many want to hear.

Correlation does not imply causation

Dr. Yuen Yuen Ang, a professor of political science and an expert on China at the University of Michigan is one of the most knowledgeable resources on the subject of the political and social conditions that gave rise to China’s economic miracle. She has published two very important texts on the subject, both of which provide some very useful perspective on what China did – and did not do – as it rapidly modernised following Deng Xiaoping’s economic liberalisation in 1979.

The first, published in 2016 is called How China Escaped the Poverty Trap. In the book, Dr. Ang outlines the internal policy positions that the CCP adopted to catalyse economic growth in the 1990s and 2000s. The most useful insight the book provides is how the top levels of Chinese public bureaucracy defined government and civil service KPIs with the express and stated goal of helping business and assisting investment. The popular idea of China which exists in the African imagination is that of a country that grew its economy through fervent central planning characterised by strict top-down control of governance and zero tolerance for corruption.

Dr. Ang’s book completely dismantles this notion and – perhaps for the first time ever – presents the true story of how the CCP did it to the outside world. She revealed that instead of strict central planning, Deng in fact transitioned the Chinese central bureaucracy from being a dictator to merely an overseer providing a regulatory platform for local governments to solve local problems using their own initiative, improvisation and adaptation. She argues that this process of ‘Directed Adaptation’ is in fact similar to how the postwar American government went about its business – not by acting as a central planning commander, but rather as a director of innovation and creativity by providing seed funds, collaboration networks and platforms for cooperation.

Most importantly, ‘How China Escaped the Poverty Trap’ reveals that instead of focusing on fighting a narrative battle against corruption during those years and threatening public officials with imprisonment or death as many African thinkers imagine China did, the CCP had other priorities. Public officials were threatened with harsh penalties for not achieving certain economic targets and KPIs. For example, if a city was given a GDP growth target which was typically achieved via new projects in the local construction industry, a city councillor could get penalised for not issuing enough building permits for the construction figures to hit their set targets.

In at least one famous case mentioned in the book, a prominent civil servant in the province of Liaoning who had a reputation for doing everything by the book, taking no bribes or gifts, and living solely off his salary still got disgraced and fired when a vote-buying scandal emerged in Liaoning.

Despite his well-known uprightness and incorruptibility, the Chinese state and the Chinese media were more interested in the fact that things moved slowly under him, leading to weakened economic growth. He was dismissively referred to as incompetent – which in China carries every bit as much of a stigma as being convicted for corruption.

Bo Xilai as a microcosm of China’s attitude toward corruption

Former Chinese Minister of Commerce Bo Xilai, who is currently serving a life sentence at Qincheng Prison in Beijing, offers a clear insight into how China does perceive and deal with different types of corruption and why these distinctions are everything for a developing country that does not want to waste its time chasing its own tail. Understanding the subtle but vitally important differences between so-called ‘Obstacle corruption’ and ‘Access corruption’ is central to grasping why China was so successful at breeding growth while countries like Nigeria struggle along with GDP growth below the rate of population expansion.

The son of Deng Xiapoing’s former Deputy Bo Yibo, Bo Xilai was an academic high achiever who joined the civil service and rapidly distinguished himself, rising through the ranks to become Mayor of Dalian in the Liaoning province. Eventually, he would rise to hold a cabinet position in Beijing and become one of the most powerful men in Asia. Through the course of his career, there were always whispers about his alleged liking for expensive gifts from foreign businessmen that often constituted a conflict of interest with his job as a government official.

For as long as he kept hitting his KPIs and facilitating investment and economic growth, however, Beijing was decidedly not interested in going after him. As explained by Dr. Ang, priority in post-Mao China is always given to economic performance over emotional rhetoric. Bo Xilai’s corruption was a matter of public knowledge for nearly two decades, but nothing was done to him until he switched to the type of corruption that the CCP absolutely would not abide – the type of corruption that obstructs growth instead of facilitating it.

Also Read: Nigeria Rejects Transparency International Latest Corruption Raking

In February 2012, Bo was implicated in the murder of British businessman Neil Heywood by his vice Wang Lijun, who then sought refuge at the U.S. embassy. He was rapidly stripped of his position and charged with corruption and abuse of power. He now sits in Qincheng Prison alongside Tiananmen Square protesters like Miao Deshun, in the very prison where his father once sat, having fallen out of favour with Chairman Mao. The significance of his being incarcerated in a prison famous for housing political prisoners over a corruption case ties in neatly with the premise of Dr. Ang’s 2929 book, ‘China’s Gilded Age: the Paradox of Economic Boom & Vast Corruption.’

In this book, she argues that the dominant type of corruption in China is not petty bribery and violence or outright looting but access money – elite exchanges of power and wealth in return for access to exclusive opportunities to make profit or invest before anyone else. This type of corruption she argues is in fact what differentiates wealthy countries from poor countries. Poor countries are instead characterised by obstructive corruption – the corruption that uses state power to slow down the public’s access to government services so as to create black markets and arbitrage opportunities.

In China, Dr. Ang says, this is the type of corruption that is viscerally frowned upon in general. It is the type of corruption that lost Bo Xilai his career and his freedom after decades of ‘Access corruption.” In other words, the Chinese state and the country’s establishment understand that corruption is a fact of both poor and wealthy countries, and it is in fact the type of corruption that differs. The poor man’s corruption slows down growth and makes everyone poorer. The rich man’s corruption will often actually improve growth and build wealth for everyone.

While to those who are new to Dr. Ang’s work, the idea that wealthy countries are not in fact defined by “fighting corruption” but rather by the type of corruption that exists in those countries might be novel, anyone who has followed Nigeria’s news cycle over the past 60+ years would know all this already.

Poor countries like Nigeria are never short of the political will to grandstand over “fighting corruption” in broad, sweeping, completely unrealistic senses. While they waste their time on the fool’s errand of “fighting corruption” in this scattergun, undefined way, they continue to be racked by obstructive corruption which continues to mire them further in poverty.

And so the moral of the story?

It is not and has never been that undefined and ambiguous word “corruption” that holds back Nigeria’s economic performance. What holds Nigeria back is the unwillingness to devolve power from the central dictatorship in Abuja as Deng’s China did and allow federating units to find solutions for their own development. And perhaps just as important, “corruption” in some sort will always be with us, as it is with even the world’s wealthiest countries including China. We just need to make sure it is the ‘right’ kind of corruption that we have.

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