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A vendor works beside Hong Kong newspapers showing photos of Zhou Yongkang on Wednesday. China’s Communist Party said on Tuesday it had launched a corruption investigation into former domestic security chief Zhou, one of the country’s most influential politicians. (BOBBY YIP/REUTERS)
A vendor works beside Hong Kong newspapers showing photos of Zhou Yongkang on Wednesday. China’s Communist Party said on Tuesday it had launched a corruption investigation into former domestic security chief Zhou, one of the country’s most influential politicians. (BOBBY YIP/REUTERS)

Massive corruption has a long history in China Add to ...

The scale of China’s corruption problem roared into view this week, when authorities announced an investigation into Zhou Yongkang. The country’s former security czar and powerful Politburo Standing Committee member, Mr. Zhou is suspected of masterminding a network of friends and family who together pilfered money and assets worth billions of dollars.

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The announcement came amid a sweeping anti-corruption campaign that has led graft-busting teams to question hundreds of thousands of Chinese functionaries, and the system they occupy, in the past 18 months.

But corruption, large and small, is not only alive and well – a complex latticework of graft that undergirds the Chinese economy and diverts vast sums of money out of state-funded highways, rail lines and hospitals, and into the pockets of bureaucrats and officials – but has a long history.

“Corruption is the oil that makes this deeply defective machine possible. Corruption is not just a little bit of grit in the machine,” said Frank Dikotter, a historian who is chair professor of humanities at the University of Hong Kong. “It is the backbone of the economy of the country.”

Corruption in China dates back thousands of years, a fact of life in the various imperial dynasties – much as it was in many Western monarchies throughout history. But Prof. Dikotter points to 1949, the year Mao Zedong and the Communists took power, as a turning point in China’s lust for ill-gotten gains.

“Corruption is endemic to any one party state, in particular with a command economy. From the moment the red flag goes up over the Forbidden City in Beijing in 1949, corruption becomes a key issue,” he said.

Mao waged war on free speech, stifling the ability of citizens to speak out against wrongdoing. He instituted a command economy that placed commerce and property in government hands. He centralized authority, investing more power in the state then ever before. And he made life in China so difficult that people had no choice but to turn to corruption for survival, during the food shortages of the Great Leap Forward and the political witch hunts of the Cultural Revolution. It was survival.

“When you give an egg away to your local cadre, he will allow you to bring the entire chicken to market and make some money,” Prof. Dikotter said.

At the same time that local cadre, like functionaries today, was a person with great power but little income. Though information on official pay in China is hard to come by, earlier this year hackers discovered salary information for bureaucrats in Lengshuijiang, a mining city in southern China. Most public servants there made the equivalent of just $350 to $530 a month; they oversaw an economy with immense opportunity to skim additional funds.

What makes China different from other Communist societies, all plagued by similar issues, is the scale of the problem, rooted in the sheer amount of money pouring through and out of state hands. By 2009, capital spending in China exceeded $2-trillion (U.S.), higher even than the United States. In 2013, China spend $104-billion on railways alone.

When the dollar amounts get that high, graft can accumulate on a massive scale.

With “these mega industrial projects, if you only take 0.5, or 1 or 2 per cent, you are talking about billions and billions of dollars,” said Steve Tsang, director of the China Policy Institute at the University of Nottingham.

Foreigners doing business in China often profess shock at the scope of corruption. One lawyer spoke of a tender for a Chinese construction project that was posted online for anyone to see. The bids, when they came in, were all ranked according to cost and the credibility of the company behind them. The process looked like it was all above board.

But when it came time to pick a winner, it wasn’t the best bid that succeeded. “The Chinese conglomerate wanted at any cost to use the firm that we ranked No. 4,” said the lawyer, who represented a Western firm that was involved. it later became clear why: bid No. 4 had ties back to the Chinese conglomerate.

“They let these companies win, and the companies subcontract the work to private firms, and in these private firms maybe officials have shares,” the lawyer, who asked not to be named due to the sensitivity of the topic, said.

Against that backdrop, can Mr. Xi succeed in snuffing out graft among, as he has said, low-level “flies” and high-ranking “tigers” like Mr. Zhou? Prof. Dikotter is skeptical. The tigers-and-flies vocabulary, he points out, was used by Mao himself, who launched his own first anti-corruption campaign in 1952, just three years after the Communists took power.

And though Mr. Xi may be taking down some high-profile figures in his current campaign, he is also eliminating rivals and consolidating power.

“It’s politics. And it’s nothing more,” Prof. Dikotter said.

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