Is Corruption Really the Issue?

I recently finished reading a very good book by another American who also lived in China for eight years. In his case, however, he was a journalist so he lived in a very different world than I have as a businessman.

He did, however, raise a very interesting question that every foreigner in China – every Chinese, for that matter – must inevitably face: How do you balance the incredible successes that socialism with Chinese characteristics has achieved with the shortcomings that have – perhaps inevitably – come with it?

China has lifted 300 million people out of poverty in one generation, the greatest economic miracle in history. Life expectancy in China has increased from 36.3 in 1960 to 75.5 in 2013. The number of students graduating from the country’s universities has increased ten-fold in less than fifteen years. It is now the number two economy in the world and the largest global market for automobiles.

But with that progress has come environmental degradation and an unsustainable inequity in wealth and income, in part fueled by unconscionable levels of corruption that has both skewed the distribution of the spoils of success and put the public at risk by allowing unsafe building practices, incomplete research and testing, and ineffective oversight and regulation of both industry and the food supply.

There are solid arguments for biases in one direction or the other, but ultimately neither can be ignored. In the end, everyone got what they asked for whether they knew they were asking for it or not.

I’ve pondered this question for a long time. The skillful author of the book I just finished, however, made me realize, with crystal clarity, that this is the ultimate question that will determine where China goes from here. It will either become one of the greatest examples of civil and economic advancement in history or it will completely unravel, emboldening the Western liberal democracies in their belief that theirs is the only way.

Something tells me that the end result will not fall in the vast middle. With their inductive worldview the Chinese are prolific gamblers who are comfortable with risk. And the political and economic systems they have built reflect that. They are ‘all in’, as they say.

I honestly don’t know any more than anyone else how the future will unfold. I do have a couple of observations, however, that I believe are relevant.

When I first arrived in China in 2007, I, like many of my fellow ex-patriates and other assorted China-watchers, assumed that as China developed it would concurrently Westernize. Subconsciously, I suppose, I arrogantly assumed that their ultimate aspiration was to be like us.

I no longer hold such a belief. China will modernize in a uniquely Chinese way. They may drive the same cars. They may wear similar clothes and increasingly talk in the familiar tongue of English. But they will not become Westerners. There will be exceptions, of course. In the end, however, I believe they will maintain their unique Chinese worldview and their culture and ways of conducting affairs of state and business will continue to be very different from our own for many years to come.

For the most part I have to admit I have reached that conclusion largely on the basis of intuition, that indefinable collection of experiences and observations that we all take to bed with us at night.

There is some tangible evidence to support the prediction, however. In a recent poll of Chinese citizens 84 percent of those surveyed indicated that corrupt government officials were their biggest concern. At one level this is no surprise. But this isn’t the most telling part of the story. The most revealing part of the story is that the people polled were specifically concerned about public corruption. Only 20 percent voiced concern over corruption in the private sector. (Pollution and income inequity were the 2nd and 3rd biggest concerns.)

The fact is that corruption and graft is just as prevalent in the private sector as it is the public sector. It is woven into the very fabric of the economy. Vendors collaborate to rig bids and control markets; kickbacks are routinely paid to buyers; competitors still steal each other’s intellectual property, although with less frequency; and false rumors are as much a part of marketing as the holiday sale.

To be clear, it is not the form of brutal, in-your-face corruption that you may find in a third world dictatorship. It’s just the way things are done. In all of my years here I have never been openly asked for a bribe in my work or my everyday life. It lies below the surface, but it is there nonetheless.

So, why the difference in concern over public and private corruption? The difference is not the form, or even the amount, of the corruption. It is the impact. If a vendor bribes a buyer to earn a supply contract at an inflated price, the cost of the product or service ultimately provided will go up, but the consumer will either pay a higher price or some company along the supply chain will accept a lower margin.

If the milk inspector looks the other way when dairy producers add melamine to their milk to reduce their costs and still meet the national protein standards, however, children die. When brand new bridges collapse, when trains experience what should have been an avoidable collision, when schools collapse in a serious earthquake, confidence is undermined and society suffers in a very direct and tangible way.

Corruption, in other words, is a moral issue but it’s not a moral value in an absolute sense as we in the West often think of it. The moral issue is government accountability and its impact on the quality of life.

There is, even today, corruption in every country. Countries such as the United States have known periods of incredible corruption (e.g. Prohibition) and still suffer from it today, often in legal forms (i.e. loopholes). Absolute values are often just a setup for hypocrisy, as many religious leaders and politicians have shown in their ultimately disgraced personal behavior.

To me, therefore, the future of China will depend less on the elimination of corruption than it will the enforcement of accountability. Rooting out corruption and graft, which President Xi and the Party are actively doing, will certainly help.

But it won’t be enough.

As Confucius so accurately noted, if leaders are not virtuous in their beliefs and their behaviors, no one will follow the virtuous regulations they put in place. Voluntary restraint and cooperation is essential to both economic and social development – much less peace and safety. Government hypocrisy is public enemy number one whether that government was voted into power, appointed by party leadership, or assumed it at the point of a gun.

The conceptual form of the political system, I have come to believe, means little. It is only the government’s behavior, which is, in turn, defined by its collective values and beliefs, which drive social development or decay.

The challenge is that leadership virtue must itself be voluntary. All of the disciplinary committees in the world won’t instill it on their own. There must be a voluntary belief system that promotes virtuous behavior and the accountability to the public good that follows to build upon.

Unfortunately, the Cultural Revolution wiped out much of the religious physical and conceptual infrastructure, including Confucianism, which held China’s leadership virtue in check during its centuries of global supremacy prior to the Century of Humiliation that began with the Opium Wars.

Confucianism is being publicly resurrected today to help fill this void. In the end, however, I believe it will be the success and the context of President Xi Jinping’s Chinese Dream that will determine whether or not the seeds of sound leadership are sowed. Pride and nationalism will not be enough. There must be an element of what the European monarchies called noblesse oblige – the obligation of those in power, however they got there, to lead with virtue.

Personally, I believe President Xi Jinping understands this and that he will ultimately succeed. The drumbeat of society has changed dramatically in my time here. When I first arrived everyone was in a mad dash to make money. Little else mattered. Now, however, I increasingly hear my Chinese friends and colleagues openly reflect on the speed of China’s development and whether or not the price paid has been too great despite the success achieved.

They are not, however, looking to the West for answers or solutions. They want virtue; but that may look a lot different than Western morality. It will be virtue with Chinese characteristics. Which is why it is perhaps appropriate that when the Party investigates graft it never refers to it as corruption; it refers to it as a “serious violation of Party discipline.”

The end-game, however, will be the same – government accountability for sustaining and improving the quality of life for all of society. If they achieve it there will be little question as to which perspective – a focus on the successes or the failures – the citizens will take.

Gary Moreau's latest fictional novel written under the pen name of Avam Hale.
Gary Moreau’s latest fictional novel written under the pen name of Avam Hale.

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Note:  The views expressed in this post are strictly those of the writer acting in a personal capacity.

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