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The effectiveness of the fight against corruption in China

Chronic. The anti-corruption campaign initiated by Xi Jinping in 2013 has led to a significant improvement in the financial performance of Chinese public enterprises. This is shown by the study of two economists, one South Korean, the other Chinese, whose objective is not to validate or not the policy of Xi Jinping, but to contribute to the analysis relations between corruption and development in the context of authoritarian regimes (« The Effect of the Xi Jinping Administration’s Anticorruption Campaign on the Performance of State-Owned Enterprises », Kwangho Jung and Long Piao, Asian Survey, September-October 2021).

The first two phases of economic reform in China (between 1978 and 2003) resulted in gradual privatization, which led to a marked rise in corruption. In reaction, from 2004, we observe an absolute and relative increase in the number of public enterprises. It is because this third phase did not significantly reduce corruption that a campaign was carried out from 2013.

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Previous research in several Asian countries had highlighted a concomitance between a high level of corruption and good macroeconomic performance, which had led to the thesis of an « Asian paradox »: in certain authoritarian countries, economic growth is possible despite the presence of corruption; on the contrary, it can even be a source… of efficiency.

A new approach since 2013

Rather than seeking to distinguish between predatory corruption and “efficient” corruption to explain this paradox, Kwangho Jung and Long Piao studied the relationship between corruption and performance at the microeconomic level. They use a database of around 2,500 Chinese public and private companies for the period 2003-2017, which allows them to compare the performance of these two categories of companies before and after 2013.

Not only has the financial performance of public enterprises improved, but it has become on average higher than that of private enterprises, over which the state has less control.

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There remains an important question, which the authors put aside: was this really Xi Jinping’s goal of improving the performance of public enterprises, or were his goals much more political: to consolidate his power by gaining some form of legitimacy, while eliminating its opponents and competitors? What is certain is that this campaign stood out from previous ones, by adopting financial performance as a double criterion for detecting problems and their resolution.

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