China’s Gilded Age: The Paradox of Economic Boom and Vast Corruption; Ang Yuen Yuen (University of Michigan)

Abstract

In 2012, the Chinese Communist Party (CCP) faced its biggest political scandal in a generation: Bo Xilai, one of the Party’s most senior leaders, was arrested on charges of graft and abuse of power. When Xi Jinping was named China’s paramount leader later that year, he warned that corruption would “doom the Party and the nation,” and, soon afterward, launched the most vigorous anti-corruption crackdown in the Party’s history. Decades before Xi, China observers had pointed to the country’s serious corruption problem. According to conventional wisdom, corruption hurts economic growth. Cross-national regressions show a strong correlation between corruption and poverty. For development agencies and many academics, eradicating corruption is a prerequisite for economic development. In recent years, corruption has stoked popular discontent and led to the toppling of authoritarian regimes, including those in Egypt and Tunisia. China, however, presents a paradox. Since opening markets in 1978, China has achieved “the fastest sustained expansion by a major economy in history,” according to the World Bank.6 Why has China’s economy grown so fast for so long despite vast corruption?
This book shows that, in fact, China is not as exceptional as we think it is the closest parallel is the United States in the late nineteenth century, a period characterized by both feverish growth and glaring inequality, conniving plutocrats and corrupt politicians. What we have witnessed since 1978 is China’s Gilded Age in the making. The assumption that all corruption hampers growth is over-simplistic. To explain China, we must fundamentally revise our beliefs about the relationship between corruption and capitalism.

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