All FSI News News May 21, 2021

The Role of Corruption in China's Speedy, Risky Boom

Is corruption the reason behind China's booming economy? Professor Yuen Yuen Ang explains its role in China's massive economic growth.
Cover of "China's Gilded Age" by Yuen Yuen Ang

On May 5, 2021, the APARC China Program hosted Professor Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan for her program, "The Role of Corruption in China's Speedy, Risky Boom." Based on her recently published book, China's Gilded Age, Ang explored the impact of corruption on China's economy and how it compares to other countries around the world, including the United States during the late 1800s. Professor Jean Oi, William Haas Professor of Chinese Politics and director of the APARC China Program, moderated the event.

While corrupt countries are usually poor, China is an exception. President Xi Jinping acknowledges that corruption in the country has reached crisis proportions. If this is true, Ang asks, why has China nevertheless sustained 40 years of economic growth and deep transformation?

To answer this question, Ang outlines several different types of corruption which exert different effects on the economy. She argues that, as in 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). Simultaneously, beginning in the 2000s, the central government effectively curbed directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion. Access money fueled commerce by rewarding politicians for aggressively promoting growth and connected capitalists for building more and taking on more risky ventures. Such corruption also produced systemic risks, distortions, and inequality—problems that define China's Gilded Age under Xi'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, Ang argues, contemporary China and 19th century America share some striking commonalities. Watch now:

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