Corruption
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The conventional definition of corruption is the use of an official office for private gain, a definition that does not include private sector crimes such as embezzlement and fraud. The Chinese context is much more complicated because managers in state-owned enterprises, who report to government ministries rather than private investors, have opportunities for embezzling state funds that are not available to their counterparts in more market-oriented firms. Given these complexities, the Chinese use the term "economic crimes" to cover virtually all types of white-collar crime, including corruption.
ommon in China. Unlike the members of many authoritarian governments, China's leaders openly acknowledge that it is one of China's biggest economic and political problems. This attitude is in response to polls and surveys indicating that corruption is the source of tremendous resentment toward the Chinese Communist party. Because China is a one-party state, much of the corrupt activity in China is undertaken by Party officials, meaning that attempts to battle corruption require the Party to police itself. Corruption has worsened since the economic reforms began in the late 1970s; during the Tiananmen student protests of 1989, corruption was one of the major themes of the protesters. Pre-reform corruption did exist, but because China was poorer and much more tightly controlled, bribes came in non-monetary forms, such as better housing and permission to travel abroad. The corruption problem is now so severe that it has led some to argue that the only solution is political liberalization leading to a multi-party state.
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One of the driving factors of the Tiananmen student protests of 1989 was corruption.
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Aside from the ethical and legal dimensions of the problem,
{Dis: is bribe-paying good business practice? What are the business arguments against it?}
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Corruption is difficult to measure directly. Those who pay and those who receive bribes are both committing illegal acts that they want to keep secret, and most of the time both sides are satisfied with the transaction. Surveys instead measure perceptions among diplomats, academics and executives, a practice that can be misleading. Increased arrests and convictions, for example, can mean an increased commitment to fighting corruption, but it can also create the perception that the problem is getting worse. In any case, the Chinese widely believe that arrests for corruption are politically motivated, and often interpret a major arrest as a sign that the target of the investigation, while certainly guilty of corruption, has also lost out to powerful political enemies.
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Transparency International |
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Transparency International (www.transparency.org) is an international, non-governmental organization that is devoted to combating corruption. It aims to bring civil society, business and governments together in a global coalition.
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Most experts agree that China's corruption epidemic is the result of the transitional nature of China's economy. Pockets of tremendous entrepreneurial vitality exist in an overall environment that is still subject to heavy government control, creating perfect conditions for corrupt activity. A manager in a private firm, for example, is faced with a long list of regulations, taxes, licensing fees and fines, sometimes reaching the point where financial obligations to the state exceed their total revenues. A close relationship with a local government official is an obvious solution; the forms of corruption can be as simple as a one-time bribe payment or as complex as a partnership in the business. While these arrangements are illegal, it is often argued that they are necessary in order to develop the private sector. Moreover, as long as the official's gains are modest, the chances of detection and punishment are very small.
e aware of the Foreign Corrupt Practices Act, which effectively criminalizes the paying and taking of bribes among Americans and American firms. Some American executives say that the FCPA greatly simplifies their work in China, eliminating a time-consuming, awkward and unpleasant part of their jobs, while others complain that they lose business to other foreigners who can legally pay bribes. Westerners accuse Asian firms of paying bribes more readily than other foreigners, but the Asians reply that the Chinese demand bribes from them more often.
As corruption has become a public issue in China, with frequent news reports of major arrests, it has become more subtle and difficult to detect. A direct payment from a foreign firm to a local official in order to avoid a new tax, for example, may attract too much attention. Instead, hiring a retired official from the same tax office, who then serves as a liaison between the two parties in exchange for a "consulting fee," serves the same purpose but is much more ambiguous.
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