Abstract
In the past four decades, China’s remarkable growth has been nothing short of an economic miracle in human history, despite rampant corruption in the country. This poses a direct challenge to conventional wisdom in the social sciences: that corruption hinders growth. As a result, this has generated heated debate and heterogeneous predictions of China’s future. Furthermore, it remains unclear what motivates Chinese political elites and public officials to adopt a long-term growth strategy rarely seen in developing countries. In China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption, Yuen Yuen Ang answers this question by offering an original theory with rigorous evidence on the co-evolutionary relationship between economic growth and vast corruption in contemporary China.
In the first chapter, Ang clarifies that China is not a ‘gigantic outlier’ with regard to the theory that developing countries are more corrupt than advanced ones. In Figure 1.1 (p. 3), countries such as Singapore and the United States had a higher level of GDP per capita in 2016 and showed a lower level of corruption than China. The riddle that Ang unravels in this book concerns why a highly corrupt country such as China has successfully maintained a high growth rate without changing its political system. By categorizing corruption into four types, Ang finds that Chinese governments at different levels have managed to bring three forms of corruption (petty theft, grand theft, and speed money) under control through rigid administrative reforms (Chapters 2 and 3). The book then proceeds to the profit-sharing model in Chapters 4 and 5, showing how growth-driven tenure promotion and interregional competition jointly encourage Chinse political elites and street-level bureaucrats to exchange their powers at hand for collective and individual rents (fringe compensation and access money corruption). Unlike non-transactional corruption, fringe compensation and access money lead to more investments and thereby sustainable growth.
One of the features I like about this book is the diverse methods used to quantify China’s corruption, which offer insightful and broad implications. In the second chapter, the author presents the results of an innovative cross-national survey to measure the unbundled corruption index. This survey empirically verifies the existence of transactional corruption (access money) and finds that economic growth does not ameliorate this type of corruption (Figure 2.9, p. 48). The book also makes good use of plentiful archival data and in-depth case studies on Chinese corruption as empirical evidence in the chapters that follow. The use of mixed methods allows the author to deliver robust evidence to support her innovative arguments.
The key argument of the book is that access money – the primary form of China’s corruption – can increase economic growth since it builds a profit-sharing model between political elites and private business (Chapters 4 and 5). Ang’s argument is distinct from previous studies (e.g. Andrew Wedeman, Double Paradox: Rapid Growth and Rising Corruption in China, Ithaca, NY: Cornell University Press, 2012) which emphasize that China’s corruption is purely predatory. Having said that, both views of corruption are right in the sense that some cases did contribute to successful economic outcomes while others resulted in economic failure and became purely predatory. Ang’s book assumes that access money does not have the same or similar adverse effects as those produced by speed money, such as increased costs borne by consumers and private companies (p. 12). In reality, however, access money does have adverse effects. For example, Ang overlooked the fact that access money can delay economic growth, especially when political elites and public officials seek huge economic rents while consumers and private companies have to bear the high price of real estate and uncertainties and risks related to the security of projects. In other words, corruption is not a good thing regardless of the types of corruption, even though access money can exist alongside rapid economic growth in transitional China.
The suggestion in Chapter 6 is that the ongoing anti-corruption campaign tends to disincentivize public officials to advance China’s economic development because the profit-sharing model carries risks in the current political environment (p. 174). An alternative explanation could be that economic upgrading from labour-intensive manufacturing to technology-driven industries causes a slowing down of the Chinese economy.
This is an excellent and well-written book suited for a diverse audience in the field of China studies. Despite a plethora of scholarly works on China’s vast corruption and rising growth, the book succeeds in taking a fresh approach to examine this co-evolutionary relationship with convincing evidence. It also makes an innovative contribution to the study of China’s corruption and the political economy of the transitional state from a comparative perspective.