Corruption is inherently difficult to measure. Gauging how corruption changes over time, how it interacts with economic growth and development, how it influences public policy, state capacity, and much else is highly dependent on how corruption is measured. In several recent studies of corruption in China, scholars have sorted through the evidence to adopt a conceptual approach that might be called “varieties of corruption.” Some forms of corruption involve transactions in which agents take advantage of price differentials to supply more goods to consumers; in other forms, officials make windfall profits colluding to deliver public assets into private hands. Infrastructure projects, whether they are ever completed or not, offer lucrative opportunities for multiple parties. China's three decades of reforms have spawned all these forms of corruption and others. And yet, to date at least, corruption has not spiraled out of control or reversed China's impressive rates of economic growth.
In Double Paradox, Andrew Wedeman offers a systematic and carefully documented argument to show how reforms and corruption have coevolved. Through an innovative use of existing data, Wedeman argues convincingly that during the very periods in which the economy took off, the predominant form of corruption was “degenerative corruption,” similar to that found in “kleptocracies” with low and usually negative GDP growth. Thus, the book's title: a primary paradox of rapid growth with increasing corruption, and a secondary paradox of growth amid a form of corruption that is most often associated with plunder. Recent studies have also noted this transition in the modes of corruption in China from the 1980s to the 1990s. Wedeman's central contribution lies with his claim that corruption in China has attained more or less manageable levels. It has reached a steady state in which officials enrich themselves on transactions that “have fed off the growing economy rather than on the economy's vitals” (p. 141).
The keys to resolving the two paradoxes lie with the timing of reform and with the institutional capacity of the Chinese Communist Party (CCP). The first stage of reform, primarily in the 1980s, generated opportunities for rent seeking thorough price arbitrage. It was crucial that corruption followed in the wake of reforms, emerging in step with the dual price system and creating rent-seeking opportunities for officials. While there is ample evidence of official corruption before the reforms, Wedeman argues that corruption involved relatively low-priced exchanges for access to scarce resources in the planned economy. As such, corruption did not serve as a barrier to reforms. But with the acceleration of restructuring in the state and collective sectors in the 1990s, corruption began to resemble plunder, involving the conversion of public assets (factories, land, equipment, etc.) acquired at artificially low prices by well-connected buyers who could then lease or sell at far higher prices. The boom in infrastructure spending also created vast opportunities for graft and bribery. With the one-off transformation of public assets into private hands now concluded, and infrastructure spending leveling off in its intensity, the author claims that corruption is now primarily transactive rather than predatory: “Corrupt officials are ultimately cashing in on new value created by reform rather than feeding off the existing stock of value” (p. 8).
The important institutional factor in China's sustainable corruption is the ability of the CCP's anticorruption agency and the government's formal prosecutorial bodies to provide at least a credible threat to officials who engage in corruption. Wedeman's claim that enforcement efforts by party and government agencies have controlled the growth in corruption is an important challenge to the work of scholars such as Minxin Pei (China's Trapped Transition, 2006), who have argued precisely the opposite: that weakening enforcement against corruption has led to the rise of “local mafia states” and has jeopardized state capacity. This leads to one of the most significant implications of the book. If Wedeman's claim is valid, then corruption in China has reached a manageable equilibrium in the absence of political reforms that many say are necessary conditions for coping with it: media liberalization, judicial independence, and autonomous anticorruption commissions.
The empirical foundations for Wedeman's claims are drawn from a wide array of official sources. Given the limitations of this data, which the author acknowledges, the discussion in Chapters 4 through 6 makes effective use of information contained in provincial gazetteers issued by the law-enforcement agencies (most commonly, the provincial-level People's Procuratorate), as well as an original data set of 4,040 corruption cases found in media reports from 1978 to 2007. While these sources are not comprehensive in terms of allowing analysts to know the actual rate of corruption—which by definition is an elusive figure anywhere in the world—the evidence does allow Wedeman to come up with tentative measures of variation over time in the forms, amounts, duration, and ranks of officials involved in corruption.
In two chapters that precede the discussion of the Chinese case, the author also provides compelling and meticulously researched comparisons of developmental and degenerative corruption in other countries. The discussion illuminates the relationships among crucial variables of GDP growth, the goals and behavior of political elites vis-à-vis economic activity, and the forms that corruption takes as a result. He illustrates developmental corruption by means of an analysis of South Korea and Taiwan, showing how the foundations of corruption lie in an exchange between politicians and business elites with a mutual interest in conservative economic policies. By great contrast, degenerative corruption resembles actual state-led plunder of physical assets and natural resources, as illustrated by several cases from Africa and Latin America.
In a concluding chapter, Wedeman offers nineteenth-century America as a case seen as broadly but analytically similar to that of China. Both cases share traits of high levels of corruption by local officials who took advantage of massive and rapid structural transformations in the economy, as well as a boom in infrastructure spending. Some readers will find it difficult to agree with the claim that “[i]n some sense, China is now slowly moving toward a type of progressive era” (p. 193). It is still too early to tell, but if this analysis is correct, then corruption would at least stay contained within manageable bounds for the foreseeable future.
The high-profile corruption cases that Wedeman analyzes in a chapter on anticorruption measures suggest just one of two possible conclusions. For the author, the downfall of Chen Xitong and Chen Liangyu, and the cracking of the Xiamen smuggling empire, suggest the capacity and willingness of the party and its anticorruption agencies to act against high officials. Moreover, the 2009 campaign in Chongqing to break up the dense ties between law enforcement and organized crime—a campaign led by Bo Xilai and his chief law-enforcement officer Wang Lijun—is provided as further evidence of enhanced anticorruption capabilities. The sudden and shocking fallout between Bo and Wang in early 2012 came after this book had gone to press, but it highlighted a different interpretation of “successful” anticorruption cases. The behavior exposed in such cases may in fact represent the new normal, and that among the political elite, those who are “caught” attaining vast sums of wealth are only those who have fallen victims to shifting political winds and factional alignments.
Through its systematic treatment of existing evidence, Double Paradox makes an important contribution to our understanding of the sources and forms of corruption in China and its embeddedness with economic reforms. It will serve as a landmark study in the debate over corruption's effects on growth and state capacity, in China and beyond.
