China and Corruption: CMC Prof. Quoted in The New York Times

Today, Claremont McKenna professor, Minxin Pei, was quoted in The New York Times about the arrest and detainment of China's second richest man, Huang Guangyu.

Apparently, the Chinese Communists are cracking down on corruption in China, or at least that's what they want us Westerns to think when we go and invest our money (really, theirs, come to think of it) in their country. Says Minxin Pei,

In the case of Mr. Huang, the electronics billionaire, for example, state-run media say a number of other high-ranking officials with longstanding ties to him have also been sacked and arrested in what looks to be a Communist Party power shuffle.

China does not have an independent police or judicial system; party leaders order investigations. “It’s a very politicized process,” says Minxin Pei, a professor at Claremont McKenna College in California and author of numerous studies on corruption in China. “If your patrons do not protect you, you’re toast.”

Of course, that's much the same way it works here in the U.S., with our heavily politicized Justice Department, to say nothing of the Daley or . (Although, I do happen to know a tax cheat or two who is in the Obama administration, come to think of it...)

The real reason that the Communists are cracking down on is that they are losing substantial money from the bribes that businessmen are willing to pay the low-level bureaucrats that populate the Chinese government. These businessmen take advantage of bribes or tariffs to reduce the amount of money the government is able to take in through imports. (For more on this, read the Freakonomics-like book, Economic Gangsters.)

I suspect that the reason this round up is occurring is they paid the wrong bribes to the wrong people, not that they paid bribes, generally. Given the crony nature of the government in China, it might be difficult to tell just who are the criminals and who is the government. Pei points it more charitably,

Experts say corruption is thriving here because relatively low-paid government officials wield enormous power over business and resources. “The key variable is the extent to which the government gets involved in business in China,” says Professor Pei at Claremont McKenna.

. . .

Analysts say there is another reason change will come slowly: because officials seek power precisely so that they can form alliances and make the decisions that will eventually make them rich.

“It’s now a recruiting tool,” Professor Pei says of the promise of future graft. “Corruption is the glue that keeps the party stuck together. Getting rid of it is not possible as long as they keep this system.”