Mon, Sep 30, 2013 - Page 8 News List

Corruption is destabilizing China

By Sushil Seth

A New York Times investigation found that former Chinese premier Wen Jiabao’s (溫家寶) family had also built up a fortune in questionable ways. Another investigation by Bloomberg dug up evidence of corruption by Chinese President Xi Jinping’s (習近平) family. Whether or not it these claims are true is irrelevant. If a party leader falls out of favor, they will pay a terrible price. Yet, corruption is so entrenched in the system that most CCP officials participate.

Official corruption and extravagant living is common knowledge and the people’s cynicism is understandable. Even the mighty People’s Liberation Army is infected with it. Take the case of Lieutenant General Gu Junshan (谷俊山), till recently deputy chief of the general logistics department who left his post in February last year without any official explanation. He will likely be charged with corruption in the near future.

Senior Colonel Gong Fangbin (龔方濱) said in an interview with the official Global People: “When corruption has become a type of culture and has developed to a certain level [at the top], change becomes very difficult.”

The seriousness of corruption in the military was highlighted by General Liu Yuan (劉援), son of former Chinese president Liu Shaoqi (劉少奇), who reportedly said in December 2011: “No country can defeat China. Only our own corruption can destroy us, causing our armed forces to be defeated without fighting.”

In the midst of it all, the example of Western liberal democracy — even with its many faults — is terribly destabilizing for China’s political system. The CCP leaders seem quite worried about this. In this connection, the New York Times has quoted from a memo referred to as “Document Number 9,” apparently emanating from the top levels. It cautions CCP cadres against perils threatening the system. These reportedly are: “Western constitutional democracy,” “universal values” of human rights, Western-inspired notions of media independence and civil society, ardently pro-market “neoliberalism” and “nihilist” criticism of the CCP’s traumatic past.

The document goes on to say: “Western forces hostile to China and dissidents within the country are still constantly infiltrating the ideological sphere” as well as stirring up “trouble about disclosing officials’ assets, using the Internet to fight corruption, media controls and other sensitive topics.”

An important element in this hypersensitivity is that the country’s economy is at a critical point.

“The credit-driven growth model is clearly falling apart. This could feed into a massive overcapacity problem and potentially into a Japanese-style deflation,” said Fitch rating agency senior director in Beijing Charlene Chu (朱夏蓮).

The problem is compounded by the parallel shadow banking system.

“There is no transparency in the shadow banking system and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is,” Chu said.

Therefore, it is not surprising that the top party leadership is worried at the complex interplay between the country’s economy, social stability and the latent threat to the political system.

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