The Role of Corruption in China's Speedy, Risky Boom
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Corrupt countries are usually poor, yet China is an exception. President Xi Jinping acknowledges that corruption in the country has reached crisis proportions. If this is true, why has China nevertheless sustained 40 years of economic growth and deep transformation?
In this talk, Professor Yuen Yuen Ang will analyze how different types of corruption exert different effects on the economy. Reminiscent of America’s Gilded Age during the 19th century, reform-era China has steadily evolved toward a particular type of corruption: access money (elite exchanges of power and wealth). Starting in the 2000s, the central government effectively curbed directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion. But access money fueled commerce by rewarding politicians for aggressively promoting growth and connected capitalists for taking on increasingly risky ventures. Such corruption has also produced systemic risks, distortions, and inequality, however—problems that define China's Gilded Age under Xi Jinping’s leadership. As a result, China today is a high-growth but risky and imbalanced economy.
Despite popular perceptions that China and the United States are two polar opposites, therefore, contemporary China and 19th century America share some striking commonalities.