The Origins and Dynamics of Crony Capitalism in China: Insights from Prosecuted Cases of Collusive Corruption

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The Origins and Dynamics of Crony Capitalism in China: Insights from Prosecuted Cases of Collusive Corruption

Corruption in the post-Tiananmen era exhibits distinct characteristics not found in the 1980s, such as astronomical sums of money looted by officials, their family members, and their cronies in the private sector, large networks of co-conspirators, and the sale of public office. By examining the evolution of Chinese economic and political institutions since the early 1990s, we can trace the emergence of crony capitalism to two critical changes in the control of property rights of the assets owned by the state and the personnel management of the officials the ruling Communist Party. The cumulative effects of these changes have dramatically decentralized the control of public property without clarifying their ownership and granted local party chiefs unprecedented personnel power. Consequently, local political and business elites gain greater incentives and opportunities to collude with each other in looting the assets nominally owned by the state. The insights from a sample of 260 prosecuted cases of corruption involving multiple officials and businessmen suggest that crony capitalism in China has evolved into a decentralized kleptocracy with its own market rules and dynamics.

This talk is also being presented at Australian National University on Tuesday 21 March and The University of Sydney on Wednesday 29 March.

Professor Minxin Pei is the Tom and Margot Pritzker '72 Professor of Government and directs the Keck Center for International and Strategic Studies at Claremont McKenna College.

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