By Fareed Zakaria
There was a blockbuster article in the New York Times recently that details the extent of the private wealth amassed by the family of Chinese Premier Wen Jiabao. The story is already creating huge waves in China, and although Chinese authorities have reportedly blocked the paper’s site, the story is still being discussed in a million different, quiet ways.
“A review of corporate and regulatory records indicates that the prime minister’s relative – some of whom, including his wife, have a knack for aggressive deal making – have controlled assets worth $2.7 billion,” The New York Times reported. “In many cases, the names of the relatives have been hidden behind layers of partnerships and investment vehicles involving friends, work colleagues and business partners.”
What this highlights for me is not that China is especially corrupt, although corruption there is (as elsewhere) a genuine problem. Instead, this report underscores the answer to a question many of us have been wondering over the years: is China somehow largely immune to the kind of corruption that afflicts developing countries?
Certainly, China has often seemed smoothly technocratic compared with the messy, chaotic, highly corrupt reality of India. And there’s still some truth to this observation. Bureaucratic institutions do function better in China, and from what I can tell there is less corruption there than in India in the routine provision of things like licenses and permits.
However, this article underscores that there is extensive corruption in China of a different kind. People that are well-connected – especially the so-called princelings – get favorable treatment in terms of government loans, investment and licenses. And, because of China’s breathtaking growth, such assistance can add up to hundreds of millions of dollars, meaning that the sums involved are more much more massive than the cash in a brown paper bag that would be handed out for a permit elsewhere.
The issue for China is not whether it has a corruption problem – as I have suggested, I would argue that on a day-to-day basis it has less of a problem than nations such as India and Indonesia. Instead, Beijing’s problem is that its closed political system does not have the legitimacy of elections. This could hit the Communist Party hard as it undermines the image the country has of itself as managed by an elite that governs for the greater good, in a highly meritocratic system.
Now, with the revelations about Wen’s family and the case of disgraced politician Bo Xilai, it will be interesting to see how the Chinese handle these disruptions to the narrative moving forward. Given that its leadership does not appear to intend to hold elections, what processes will the Communist Party implement for handling corruption and leadership selection to maintain any semblance of legitimacy?
It will be fascinating to see how the country grapples with this question.