Xi's Corruption Contradiction

Seven years after he launched aggressive anticorruption efforts in one of his first initiatives as supreme leader, Xi Jinping promised renewed crackdowns on corrupt officials in an "important speech" on "strict party governance" this week to the Central Discipline and Inspection Commission. The crackdown will spare no one--from low-ranking "flies" to high-ranking "tigers." Xi admonished officials to be "soberly aware of the anti-corruption fight's grave, complex, long-term and onerous nature of the anti-corruption fight."

Xi advised Communist Party officials that corruption must be investigated and severely punished because it undermines the foundation of the Party's rule. Xi promised to attack corruption in financial organizations and state-owned companies, to strengthen management of state-owned assets and resources, and crack down on fraud in medical organizations and foreign investments. He warned grass roots officials against stealing money from anti-poverty programs, and he cautioned officials against micro-corruption, shielding organized crime groups, and serving as "stumbling blocks" to policies intended to benefit the people.

Xi cited successes in the anti-corruption fight and claimed China is an example the world can learn from. Propagandists quoted admirers in Nepal, Serbia, Russia, France and Germany who expressed great enthusiasm for Xi's anti-corruption efforts. None of them questioned why corruption is still an urgent problem after seven years of aggressive rhetoric and crackdowns.

The Chinese economic model of giving communist party officials control over the commanding heights of the economy is the likely explanation. Banks, state-owned real estate, companies making multi-billion-dollar overseas acquisitions, and village collective land and businesses are owned by no one and effectively under the control of communist apparatchiks.

Villager in Gansu Province carries his dividend payment from the village collective
under the watchful gaze of communist party officials. From Farmers Daily.

This week's Farmers Daily web site provides a visual illustration of the problem. Xi's anticorruption speech is featured at top of the site's home page along with a directive to study a 6-year-old Xi speech on "sticking to historical materialism" (rural officials are the publication's main audience). The rest of the site features lots of materialism, including a big photo of stacks of cash illustrating an article about a village collective dividend distribution ceremony.

The dividend article features photos of tables piled with wads of cash tied in red ribbons for distribution to 79 families in a "poverty" village located in Gansu Province. Photos show happy villagers carrying bags of cash past village and county officials presiding over the ceremony behind a long table. The article is intended to encourage village leaders to pool collective land to capitalize cooperatives and companies, then wait for cash to come rolling in so it can be distributed to share-holding villagers as dividends. Gansu's Daoping village started a rural tourism venture, a farming cooperative, and livestock farming and e-commerce businesses in 2018. The collective has just distributed 205,820 yuan (nearly $30,000) from last year's profits to 79 village families. This was only about a third of the total of 785,000 yuan in "individual and collective" dividends distributed.

Stacks of collective dividend cash to be distributed to villagers seated in the background. From Farmers Daily.

Under Xi's policies, village, township, and county officials are getting back some of the power and wealth they lost in previous decades when communes were abandoned, collective enterprises faded away, and taxes and fees on farmers were canceled. There was no mention of how much of the Daoping Village dividend money was derived from anti-poverty subsidies, earmarked bank loans, farming subsidies, sightseeing trips to the village organized by other government officials, or from investments in poor regions by outside companies made at the suggestion of provincial officials. With so much cash under their purview, the temptation to skim or divert some of it is strong and ever-present. As subsidies swell and more assets move into the control of officials, the opportunities for corruption expand and crackdowns strengthen in a vicious circle.