A better way to look at corruption, a review of Ang’s China’s Gilded Age.

China’s Gilded Age, The Paradox of Economic Boom and Vast Corruption, Yuen Yuen Ang.

This is now one of my favorite books on China—right up there with Capitalism with Chinese Characteristics (Huang), Anxious Wealth (Osburg), Marketing Death (Chan), Wealth into Power (Dickson), and Chen Village (Chan, et al). It’s not only readable and very interesting but also immediately usable.

This is really two books in one. The first is a discussion of Chinese corruption and the way to understand it more clearly. The second is a remaking of the way that corruption in general should be understood. BOTH are great. BOTH are necessary. But together I think that they muddy the understanding of China more than is necessary.

Two notes on my perspective. First, as a qualitative researcher, I’m less comfortable discussing specific statistical models than I am the qualitative aspects of corruption and business. Second, as a almost 20-year China business veteran I know a lot about corruption firsthand.

I am definitely using this book moving forward in both research and teaching about China. I have already used it in my Developing Business in China (UVU MGMT 4620) class and will continue to assign chapters for students to read and share the corruption analytics in future lessons.

One suggestion/question that I have with methodology is the inclusion of Ease of Doing Business statistics in future comparative analysis. One of the constituent variables in this measure is how often one must interact with various levels of government to set up a business. Is China structurally designed to require more interactions (facilitating more access payments) relative to other countries? Would this be valuable to add to the model? Just a thought.

Another question that I have is the idea of stability. The author notes that nations and their corruption are not stable variables, and that China’s decades of rapid growth highlights this. How do we measure the influence of (in)stability on corruption? Is Thailand, despite dozens of coups in the last 90 years, relatively stable or unstable? This concept seems like it could significantly influence the types and amounts of corruption in a given state. China has had explosive growth and a massive campaign to crackdown on corruption and modernize the bureaucracy, but they are certainly more stable, in terms of whole-government turnover than is Thailand. I’m left not sure how to understand this concept.

The explanation for the development of incentivizing bureaucrats to work for the system and their own interests is also a valuable insight. The process of change, crisis, and co-opting is enlightening in understanding the miracle of Chinese growth from the 80s through 2012. And the chapter on profit-sharing is absolutely essential to understanding the motivations of bureaucrats at various levels—what I margin-noted as “the incentivization of efficient corruption.” In the past I’ve taught China-business from the perspective of China as a corrupted meritocracy—to succeed, you have to be both great at what you do, but with 1.5 billion people and cut-throat competition, you have to have connections (access) as well. One without the other is likely not enough.

One significant concern that I have is that a discussion about corruption (by its very definition, immoral or at least illegal acts) that tries to amorally discuss corruption is fraught with internal inconsistencies. The author, who creates a fantastic new framework for understanding corruption also tires to walk the line of neutrality on a subject that is innately not neutral. Not that Ang tries to negate the significance of corruption but rather that it seems she tries to present it in a context that congratulates China for managing it so well. Almost like, “yes, corruption is wrong, but it’s a reality and China’s really nailed the balance between promoting corruption and harnessing its existence for the good of the country (Party).” She has a point, but I disagree.

Three particular examples will suffice. First, the fact that officials in China do indeed provide a quality service to the general public and are corrupt at the same time does not negate the immoral aspects of corruption. That corrupt officials happen to do well, in their own best interests, seems to me to suggest that an amoral view of corruption (a feature) is to be understood as a success in the case of China. Yet the legalization of lobbying in the US, regularly compared as a similar practice to Chinese access money, is used to point out that China is “similarly” corrupt (a flaw) as other developed states. Tony Soprano ran a legit waste disposal business and successful bar but that doesn’t justify the rest of his life.

Second, differential corruption is still corrupt. That Chinese officials have moved from speed-money type corruption to access money corruption doesn’t make China less corrupt, indeed the monetary amounts are likely larger with access payments, though the number of daily transactions may be fewer. This change in types of corruption is a shift in type only and does not indicate a less-corrupt system. This change actually turns petty criminals (speed money) into felons (access money). Further confusion occurs in how access money is presented.

Third, access money is presented as a more acceptable type of crime since a similar type of influence buying is legal in the US, AKA “lobbying.” The problem with this logic is that it doesn’t hold true across other crimes or systems. Spousal abuse maybe legal in some middle-eastern countries but not in the US. Can we justify the existence of abuse in the US because it’s acceptable in other countries? I fully recognize one of the goals of the book is to contextualize corruption between countries (one of the author’s successes is to dismantle and reconstruct a new and better methodology for understanding corruption), but the US comparison, to my reading actually does the opposite—softening the feel of illegality by putting western dress on Chinese corruption. “China wouldn’t be considered nearly as corrupt if it had US lobbying laws.”

My point is not that there are methodological issues with the book or that it doesn’t do what it claims, but rather that it feels like it soft peddles Chinese corruption as something “sophisticated” and “similar to western models” and “unlike other developing countries” like India or states in Africa. There are straw-man arguments (ch.5) and turns of phrase (p. 33, 52, etc.) that seem to always be in favor of China’s success in managing corruption.

I quite like the detailed discussion of prior incomplete models of corruption. And the detailed descriptions of the (new) corruption rubric makes for visually teaching about corruption much easier. Likewise the pointed discussion about how corruption is not unique to China, though this book is about China, is a necessarily important and well argued point. But again, the comparison with the West (the US in particular), to me seems to legitimize access money in China as a step in the evolutionary process to “modern” state status—a common CCP talking point. I don’t think that the CCP needs or deserves any assistance in making their case for the legitimacy of social evolution.

My key concern is that if access money is sophisticated in China and also legitimated in the US and the West via lobbying, then the implication can be read as “corruption in China is just like in the US.” Which it is not. To her credit, the author takes pains to remind the reader that other types of corruption are still rampant in China, though less than before Xi’s campaign. But, and this is significant, grand theft and speed money are neither legal nor common in the US and access money (lobbying) is also still illegal in China. The two are not similar.

Wording favoring China is also a concern. This is presented repeatedly in the choice of wording about China vs other countries. On page 32 Bangladesh is “the most corrupt” country and Singapore is “the cleanest” country but in the same paragraph on page 33 China “is perceived as more corrupt.” I’m not trying to pick nits, but academics choose their words for specific meaning and, in my opinion the author repeatedly choose words that lessen the significance of corruption in China. Throughout the book there are no wordings that makes China seem worse than it is, only not as bad. Maybe this is my own bias. So be it.

It feels to me reading the book that the author takes pains to make sure that China doesn’t look so bad by comparison. She even goes so far as to note that people in the US only hear about the corruption and not good things and so dislike China more (more than they otherwise would, the author assumes). But what she doesn’t factor in is that there is a large (majority?) of Americans that dislike the power of lobbies in the US as well. Identifying Chinese corruption with legal “corruption” in the US doesn’t, in my mind, make American’s say, “Hey they’re just like us, cool,” but rather “damn it, they’re just like us—but worse!”

Finally, the (should be obvious) idea that western models of reducing corruption to a single variable won’t work in non-western (or even differently western) cultures is now backed with the statistics that anthropologists haven’t included before, and so hopefully will no longer be as easily ignored. Thank you!

And Ang’s mix-method research approach, including document research, statistical analysis, and ethnographic interviews is a standard that I myself and others need to aspire too. Really really great work!

Notes/Summary/Grades.

Mix methods practice and advice, awesome!

"Yea, but the US is corrupt too.” True, but a separate discussion. When discussed simultaneously it distracts from the China argument.

Access money is the main form of corruption in China (and there are nuances to types of corruption). A new analysis of corruption is needed. This is such a great addition to the current lit on both China and corruption!

It takes both competence and corruption to work in China. Corrupt states are often seen as either or, not both. Great work!

Corruption is not unique to China, but understanding its unique nature and practice within China is deeply important to understanding govt and business behaviors in China.

China’s current age is similar to the a past age in the US is a dangerous argument that can too easily be simplified (and often is, by the CCP) as, “China is on the same development path as the US so the world needs to leave China alone.”

China is BOTH a confucian-style meritocracy AND a festering regime that could crumble! Again, the breaking of dialectical thinking is valuable to understanding the nuances of China.

Is China communist? Ang says no, Chinese leaders themselves say yes. I’m personally erring on the side of what the Chinese leaders themselves say—we’ve had almost 4 decades of not reading/listening to them hoping that they’d become what the we in the West wanted/expected. Time to stop this delusion.

Having a better tool to measure corruption is great. But I question the value of finding cultural similarities to corruption across states. That there is access money active in China and the US should not imply that the corrupt behaviors (and corrupt systems) are similar. This is what I thought the opening argument of the book was—corruption can’t be compared without misleading understandings, But the framing of Chinese corruption in the context of the US Gilded Age muddies the message, I think.

China isn’t speed money like India, its access money like the US—again, isn’t this single variable reduction the argument that the author was supposedly trying to discount? Yes, Ang’s new analytical framework is so much better than a single dimension, but I fear the one-to-one comparisons will just be repeated with new vocabulary—they are by the author herself.

Personal experiences/interviews with corruption in China and Thailand

Buying office equipment/supplies and paying for seminars for govt officials in Thailand. (1990s)

Paying to have officials come out to do their job (get approvals for licenses) in Shenzhen. (2000s)

Factories providing blank and signed letterhead and unnamed bank accounts for govt officials to get new factories opened and running in Huizhou. (2000s)

Being offered women while at factory hotels in Zhejiang and Dongguan. (2000s)

Paying police in random stops in Shenzhen and Bangkok. (90s, 00s, 10s)

Having QC employees kidnapped and held for ransom by a factory and not having police help (other than negotiate the fee to release, and keep some of it for themselves) in Foushan. (2000s)

“We thought we paid off all the right people, but we didn’t get what we expected.” (Chinese MNC in Thailand, 2018)

Opening a restaurant in Shenzhen costs 2x what it actually costs due to the access monies needed. (Western restaurateur, 10s)

“If you want to know who’s going to be rich, look at the 5-year plan and then see which govt branch is included in that plan.” (Chinese Shenzhen listed-company CEO, 2017.)