Crony capitalism Chinese style

In this episode of Up Close, governance expert Professor Minxin Pei describes how collusion between China’s political and business elites have resulted in the privatisation of public assets for enormous personal gain.

He also explains why the current crackdown on corruption is but a bandaid and that a free media and liberal democracy may be the key elements to a lasting solution.

“For all the things we say about corruption in the US, in places like Australia or in Canada, you just cannot compare these advanced wealthy democratic societies with places like China, Russia, Venezuela or Iran where dictatorships actually control huge amounts of public owned wealth and elites who control such wealth can appropriate or misappropriate wealth for their own private use,” he says.

“I think what occurs in democratic societies is petty theft, but what happens in places like Russia, China, is you might call large scale looting.

“One of the best ways of understanding corruption is to view corruption as a market, illicit market, in which favours are exchanged for a price and the price is bribery.

“The most successful primary obstacles or constraints upon crony capitalism. First and most important is a free media because a free media can expose shady deals, can mobilise public opinion, can embarrass politicians and can make them vulnerable.

“In the 1990s, you saw property rights change in China. Most of the most valuable land, valuable assets in China and there are really two – mines and land – that continue to be owned by the government, so nominal state ownership.

“There are no individual owners who would watch the property, but at the same time the Chinese government also decentralised who could dispose properties that nobody owned. So all of a sudden you have a situation in which a lot of officials could steal very valuable property and that’s the source of crony capitalism.”

Episode recorded: 23 March 2017

Up Close producer: Kelvin Param Audio engineer: Gavin Nebauer Banner image: Uwe Aranas/Wikimedia Commons

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