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How Not to Tackle Corruption

July 20th, 2011

China has had problems with bribery, corruption, and illicit financial flows for years. In fact illicit outflows from the People’s Republic of China have ranged from an annual US$169 billion in 2000 to US$344 billion in 2008. The country is also, by far, the largest transmitter of illicit financial flows in the developing world. And in case it’s not already obvious, let me clarify that these numbers are unbelievably large. For a point of comparison, the PRC’s stock of total external debt in 2008 was $378 billion, just slightly greater than its total illicit outflows in that year alone.

Corruption also costs China’s economy a pretty penny. A report from China’s own central bank estimates that “up to 18,000 corrupt officials and employees of state-owned enterprises” have absconded with 800 billion yuan, or $123 billion, of state money since the 1990s. In a recent speech given to celebrate China’s Communist Party’s nineteenth anniversary, President Hu Jintao specifically addressed the importance of “rampant corruption” and the impetus to create a “clean government.” And Minxin Pei, a former scholar for the Carnegie Endowment for Peace, has called the failure to contain corruption among Chinese officials “one of the most serious threats to the nation’s future economic and political stability.”

I do believe in strong penalties, fines, and other forms of dissuasion to change behavior. I have often argued, for example, the U.S. should consider jail time or disbarment for egregious violations of the Foreign Corruption Practices Act (FCPA). Arguably, one could extend similar logic to cases of corruption, which perhaps should carry steep penalties and fines for the purposes of strong dissuasion.

China has taken it too far.

I’m referring to the country frequent—and public—executions of high-level and mid-level officials for convictions of corruption; sentences that are often met with public cheers. Recently, China has executed the Chief of the State Food and Drug Administration; the head of the Municipal Judicial Bureau of Chongqing City; and the vice chairman of the Standing Committee of the National People’s Congress. All of the officials had one crime in common: taking bribes. And today the PRC executed two former deputy mayors for bribery, embezzlement, and abuse of power.

There is a pretty compelling argument that this is a human rights violation. In fact, groups like Amnesty International favor ending capital punishment entirely, calling it the “ultimate, irreversible denial of human rights.” But even with those arguments aside, it seems pretty clear this approach to tackling corruption is getting it wrong.

China is, in fact, the believed global leader in executions for corruption officials (although we can’t be certain, as China’s statistics on court-ordered executions are not in the public record), yet corruption still runs rampant. Why? Because corruption in Chinais systematic—it is the rule, not the exception. According to the Chinese professor Hu Xing Do, 99% of corrupt Chinese officials are never caught. Even with exorbitant penalties for those who are caught, enforcement is not consistent enough to dissuade behavior.

China needs to develop a more constant, but measured, approach to tackling corruption. The country’s recent initiatives to combat bribery and other forms of corruption have been a good start. But using the death penalty as a tool for tackling corruption is wrong and it isn’t working. China needs to move on.

Written by Ann Hollingshead

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