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Graft in China threatens Beijing: OECD

Corruption in China has grown by leaps and bounds during its economic reform period and is threatening the legitimacy of the communist government, a leading global economic organization said yesterday.

Corruption represented between 3.0 percent and 5.0 percent of China's GDP, or between 409 billion yuan and 683 billion yuan (US$50 billion to US$84 billion) last year, the Organization for Economic Cooperation and Development (OECD) said in a report.

"There were big increases in corruption from 1987 to 1992, which was linked to the transition process of the economy," said Janos Bertok, co-author of the report.

"For the rest of the 1990s the level of corruption did not let up ... as China's economy grows the opportunities for corruption also grow," he said.

The government was keenly aware of the problem to its legitimacy and was trying not to only punish corrupt officials but also build a system that prevents graft, he said.

From 1993 to 1997 China investigated 387,352 cases of corruption involving 54,805 officials, the report said, citing Chinese statistics.

Its publication came during an ongoing international symposium on the "Anti-Corruption Initiative for Asia and the Pacific," co-sponsored by the Asian Development Bank, the OECD and the Chinese government.

China was eager to host the meeting to establish better cooperation with other nations as it seeks to repatriate corrupt officials who have fled abroad with vast sums, said Frederic Wehrle, coordinator of the OECD anti-corruption initiative and co-author of the report.

"China wants to improve international cooperation so that they can bring some of these corrupt officials back and recover the lost assets," Wehrle said.

China has extradition treaties with 19 countries, but not with Canada and the US where many officials have fled, he said.

In the first half of 2003 alone more than 8,300 officials fled the country and another 6,500 disappeared within China to escape prosecution for corruption and embezzlement, the report said.

"Roughly two-thirds of the fugitives were senior executives of state-owned enterprises [and] between US$8.75 billion and US$50 billion were supposedly brought out of the country in recent years," it said.

"Despite significant efforts from the CPC [Chinese Communist Party] and government leaders, corruption remains a serious problem for both citizens and businesses, particularly for foreign direct investment," the paper concludes.

"Corruption committed by public servants or the political elite is seen as seriously endangering the stability of the government and of the CPC ... [but] it remains uncertain whether or not China's efforts to combat corruption and bribery bear fruit."
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