Read The Times Australia

Daily Bulletin

With its corruption crackdown, China is also stamping out innovation

  • Written by: Yuen Yuen Ang, Assistant Professor of Political Science, University of Michigan

Businesses and governments around the world are watching as China grows, innovates and extends its influence. We explore how the country got to where it is and what might be in store for its future in our series Understanding China’s Influence.

Guo Yongchang, party secretary of a rural county in China’s Henan province, did not fit the stereotype of a corrupt Chinese official. Featured in the documentary, The Transition Period, he was revealed as an overworked and genuinely dedicated leader. Every day, he toiled from dawn to dusk, courting investors, inspecting construction projects, and resolving social conflicts, both big and small.

Yet the final seconds of the film reveals a twist: shortly before retiring, Guo was found guilty of taking bribes and sentenced to seven years in prison. Guo’s story reflects a broader reality in China: economic development and corruption goes hand-in-hand. Local leaders take on overwhelming responsibilities. They actively seek out growth opportunities for their locales, exercise power, and in the process, profit themselves too.

Once that’s understood, it’s clear that President Xi Jinping has set himself up with an impossible task: keep the economy humming under state domination, while trying to eradicate corruption.

Xi’s sweeping anti-corruption campaign has stalled economic growth not only by dampening the demand for luxury goods. That’s just a tiny part of the story.

The larger problem is that the campaign has forced local officials to become highly risk averse and unwilling to attempt policy innovations on the ground. But China’s speedy growth in the past decades was precisely fuelled by the bold initiatives and discretionary actions of local leaders.

Take for instance the case of party secretary Cai, the top leader of Blessed County in Zhejiang province, featured in my book: How China Escaped the Poverty Trap. Locals rave about this man’s lasting legacy. In the early 2000s, Cai had the foresight and determination to construct a central business district from scratch, which later on spurred industrial clusters and a vibrant services economy. His forceful program, however, did not go without friction. It met with fierce resistance from some and earned him foes.

Hence, a local entrepreneur remarked with admiration: “Such reforms take courageous leaders, who dare to shoulder responsibilities for taking bold steps.” The current political climate does not tolerate a maverick like party secretary Cai. Today, it would be career suicide to take the risks and bold steps that he did a decade ago.

In other words, setting aside corrupt dealings, all policy innovations entail political risk. Any attempt to make unpopular decisions, try new policies, or engage with businesses – even by genuinely honest politicians – may incur charges of corruption in the ongoing campaign.

Hence, it is no surprise that China’s local officials now prefer to sit on their hands. Doing nothing is the safest strategy. Despite the central government’s approval of trillions of yuan worth of investment projects in a bid to stimulate the economy, local officials have dragged their feet on using these funds, for fear of exposing themselves to political risk.

As local officials become paralysed, China is inadvertently becoming increasingly centralised. Awesome as it may seem, Beijing is incapable of promoting growth by itself, let alone innovating.

What does this all mean? It means that if Xi is intent on having a strictly disciplined bureaucracy, with little room for deviance, then he cannot expect the bureaucracy to accomplish much.

In democratic countries, citizens typically complain and poke fun at lazy, paper-pushing bureaucrats. As James Wilson, a guru of the American bureaucracy once noted, the stereotypical bureaucrats are “lethargic, incompetent hacks [who go] to great lengths to avoid the jobs they were hired to do”. This description is beginning to fit China’s bureaucrats as well.

Crucially, in America, despite complaints and mockery of an unentrepreneurial bureaucracy, the market economy continues to buzz on its own. That’s because the people who operate in markets and take risks are primarily private citizens, not bureaucrats. It is sufficient that the government delivers the minimum; they do not need to substitute for entrepreneurs.

In China, however, we see the reverse: while there is a sizeable private sector, state officials have traditionally played a lead role in the economy. Local governments were the primary agents of improvisation and adaptation to changing conditions. They envision, plan, publicise, allocate resources, raise funds, build infrastructure, and personally mediate private conflicts.

In this context of big government, when bureaucratic entrepreneurship is suppressed, it has a serious impact on development and governance.

President Xi’s campaign wants to have it all: state control over the economy, bureaucratic entrepreneurship, and at the same time, strict adherence to rules. But in politics as in life, nobody – even the most powerful leader – can have it all. In preparation for the next Party Congress, it’s time for the Chinese leadership to ponder what the role of local governments ought to be, and, moving forward, to place realistic demands on its bureaucracy.

Authors: Yuen Yuen Ang, Assistant Professor of Political Science, University of Michigan

Read more http://theconversation.com/with-its-corruption-crackdown-china-is-also-stamping-out-innovation-68223

Business News

Options Available When a Company Faces Financial Distress

Financial distress can develop gradually or arrive suddenly, and when it does, the decisions made in the early stages often determine what options remain available later. Directors who act promptly ...

Daily Bulletin - avatar Daily Bulletin

What Healthcare Teams Look for When Choosing Specialist Surgical Supplies

In clinical environments, small details rarely stay small. A delayed instrument, a poorly matched device or inconsistent supply quality can affect theatre flow, staff confidence and patient outcomes. ...

Daily Bulletin - avatar Daily Bulletin

Reducing Sales Friction Through Centralized Content Delivery

Sales friction appears whenever buyers or sales teams face unnecessary obstacles in the buying journey. It can happen when information is hard to find, when messaging feels inconsistent, when product ...

Daily Bulletin - avatar Daily Bulletin

Why Choosing the Right Bollard Supplier Matters for Australian Businesses and Public Spaces

From busy CBD streetscapes to sprawling warehouse loading docks, bollards have become one of the most essential safety and security fixtures across Australia. Whether protecting pedestrians from veh...

Daily Bulletin - avatar Daily Bulletin

Why Modular Content Is Transforming Modern Marketing Teams

Modern marketing teams are expected to produce more content than ever before. They need to support websites, landing pages, email campaigns, social channels, product pages, sales enablement material...

Daily Bulletin - avatar Daily Bulletin

Everything You Need to Know About Getting Support from Optus

Whether you've been an Optus customer for years or you've just switched over, at some point you'll probably need to contact their support team. Maybe your bill looks different from what you expected. ...

Daily Bulletin - avatar Daily Bulletin

The Marketing Strategy That’s Quietly Draining Sydney Business Owners’ Bank Accounts

Sydney businesses are investing more in digital marketing than ever before. The intention is clear. More visibility should mean more leads, more customers, and steady growth. However, many business ...

Daily Bulletin - avatar Daily Bulletin

Why Mining Hose Solutions Are Essential For High-Performance Industrial Operations

In environments where the ground itself is constantly shifting, breaking, and being reshaped, every component must be built to endure. Mining operations are among the most demanding in the industria...

Daily Bulletin - avatar Daily Bulletin

The Reason Talented Teams Underperform

If you’re in business, you might have seen it before. A team of capable and smart people just suddenly slows down, and things start spiraling out of control. On paper, everything looks perfect, but ...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

Why Stress Relief For Dogs Is Essential For Emotional Balance And Long-Term Wellbeing

Managing emotional health is just as important as physical care when it comes to pets, which is why ...

Australia’s Best Walking Trails and the Shoes You Need to Tackle Them

Australia is not short on spectacular walks. You can follow ocean cliffs in Victoria, cross ancien...

Why Pre-Purchase Building Inspections Are Essential Before Buying a Home in Australia

source Have you ever walked through an open home and started picturing your furniture, family d...

5 Signs Your Car Needs Immediate Attention Before It Breaks Down

Car problems rarely appear without warning. In most cases, your vehicle gives clear signals before...

Ensuring Safety and Efficiency with Professional Electrical Solutions

For businesses in Newcastle, a safe and fully functioning workplace remains a key part of day-to-d...

Choosing The Right Bin Hire Solution For Hassle-Free Waste Management

When it comes to managing waste efficiently, finding the right solution can save both time and eff...

Why Cleanliness Is Critical In Childcare Environments

Children explore the world with curiosity, often touching surfaces, sharing toys, and interacting ...

What to Look for in a Reliable Australian Engineering Partner

Choosing an engineering partner is rarely just about technical capability. Most businesses can fin...

How to Choose a Funeral Home That Supports Families with Care

Choosing a funeral home is rarely something families do under ideal circumstances. It often happen...