The Economics of Sorruption and Cronyism: An Institutional Approach

Abstract

Moral outrage was the response of the Chinese press, when Cheng Kejie, one of the country's highest officials, Vice-Chairman of the Standing Committee of the National People's Congress (NPC) and former Governor of the Guangxi Zhuang Autonomous Region, was arrested on grounds of corruption on 25 April 2000. Cheng's arrest came amidst a spate of serious corruption cases that reached into the top echelons of China's state leadership (China Aktuell 2000). His case attracted wide public attention in national and international Chinese media because of his high office, the number of officials implicated, and the involvement of his lover Li Ping (dubbed the 'Jiang Qing of Guangxi' by the Hong Kong and overseas Chinese press) (Ming Pao 2000), daughter-in-law of his predecessor in the position of Governor of Guangxi, and for years the most influential woman in Guangxi. This was not just a case of a local official embezzling public funds, but a story of love and greed of a popular political leader, who had achieved much for his province. This was also not the story of an anonymous mistress, but of an ambitious, intelligent and attractive woman using the position of first her father-in-law then her lover to systematically and on a long-term basis exploit the powers vested in the office of provincial governor. The accusation against them focused on three crimes: appropriation and sale of real estate development and construction rights, sale of publicly subsidized goods at market prices and promotion of trusted allies into official positions of power. While the personal details of his deeds and his final execution in September 2000 fascinated the Chinese and Hong Kong press, his case also demonstrates how corruption works in China today (Hendrischke 2001).

Keywords: corruption, China, governance

JEL Classification: M, M10, K42, L2