Global Policy Forum

By Geoffrey York

China's powerful gangsters are known as the "black society." And their audaciousness is often boundless. Within plain sight of a toll booth near the town of Pingyao, the local black society has set up its own toll station. Motorists have a choice: pay a toll of 10 yuan (about $1.50 Canadian) at the official booth, or bypass that and pay two yuan at the unofficial toll station on a bumpy dirt road nearby.

If a motorist takes the dirt road but refuses to pay the fee, a girl in the small toll shack calls ahead to the gangsters, who are armed with guns and knives, and usually succeed in getting their two yuan. A taxi driver in Pingyao, an ancient walled town in central China, boasts that his brother is a member of the black society. He says the society's toll station collects thousands of yuan every year, and a third of the revenue is kicked back to corrupt officials in the local village who allow the whole thing.

Even as Beijing frenetically launches new crackdowns and executes dozens of top officials for embezzlement and bribe-taking, the epidemic of corruption continues to flourish. At the local level, corruption is often blatant and easily visible. At higher levels, it is more carefully concealed, yet it has become a serious threat to China's economic boom and the legitimacy of its Communist rulers.

By one estimate, corruption accounts for 15 per cent of China's GDP. To judge by some measures — the increasing size of the embezzled sums and the rising number of corrupt officials fleeing to havens such as Canada — the problem is getting worse. Corrupt officials have stolen billions of dollars from state-owned banks in several recent scandals.

The Chinese government is desperately trying to control the problem. It executes more officials for corruption offences than the rest of the world combined. At least 25 officials have been given the death penalty for accepting bribes or kickbacks in the past four years. More than 846,000 Communist Party members were punished for corruption from 1998 to 2002 alone, and 58,000 officials have been punished in recent years at just two of the state-owned banks.

In some cases, entire governments seem involved. In Anhui province, more than 200 officials were implicated in a bribe-taking scandal, and the vice-governor was executed for masterminding the scheme. In Heilongjiang province, a corruption investigation has brought down almost the whole government, including a vice-governor, 10 mayors or vice-mayors, the top prosecutor, top officials in the high court and the legislature, and 250 other officials.

"Our government recognizes that if corruption is not brought under control, it will threaten our political and social stability," said Cheng Wenhao, director of the Anti-Corruption and Governance Research Centre at Tsinghua University in Beijing. "It's very dangerous. That's why the government has been putting so many resources into this effort for the past two decades."

Mr. Cheng believes that China is making progress in its battle against corruption, but other experts are not so sure. A recent report by the World Bank Institute concludes that China's control of corruption has eroded since 1996. At the grassroots level, villagers constantly cite the corruption of local officials as their biggest single concern Although China is not the world's most corrupt country (it ranks 71 of 145 worldwide countries in a corruption index by the independent group Transparency International), the level of graft in China has a direct effect on the rest of the world because its economy is so influential.

Corruption is one reason for the massive number of non-performing loans at state banks, for example. There is a lingering danger that the bad debts could trigger a collapse of the Chinese banking system, which would devastate China's economy and damage the global economy. Corruption plays a crucial role in the illegal copying of Western products, since counterfeiters often bribe the police to turn a blind eye. And corruption also helps Chinese companies to beat Western companies to the new emerging oil fields of Africa and Latin America, since they are sometimes willing to pay bribes in exchange for access.

In the cat-and-mouse game between Chinese investigators and corrupt officials, both sides are becoming more creative in their tactics. Some officials receive bribery payments on their cellphone accounts, where the money can't be traced. Businessmen sometimes arrange for an official to "win" a VIP lottery draw. Some deliver seasonal moon cakes (similar to the concept of Christmas fruit cakes in the West) that are filled with gold or silver. One moon cake with a golden Buddha inside, intended as a gift to an official, was reportedly valued at $30,000. "There are many innovative ways of evading the rules," Mr. Cheng said.

In response, Chinese authorities are experimenting with new methods. Since corrupt officials are often gambling addicts who steal money to fuel their habits, Beijing has cut off electricity to dozens of foreign casinos that cater to Chinese clients in border zones. In one of the most bizarre ideas, the city of Nanjing issued a regulation requiring all bureaucrats to report their extramarital affairs, since 95 per cent of arrested officials had mistresses.

China has launched a massive education program to warn people against corruption. Television commercials show heartbreaking scenes of a tearful child running after the police car that is taking away his father on corruption charges. Anti-corruption information has been added to the school curriculum in some cities. Many analysts believe, however, that the Communist Party's anti-corruption campaigns are doomed to failure as long as China retains its current system, with its dangerous blend of state power and cultural materialism.

Chinese bureaucrats are more powerful than those in most other countries, so they will always be approached with bribe offers. And in a society where religion and ideology have largely vanished, there is little to deter officials from the temptations of money.