- April 1, 2015: Vol. 7, Number 4

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Perilous path: Economic rebalancing while stamping out corruption poses challenges for China

by Jack Rodman

Anyone who reads the newspaper (Western papers or China Daily) knows a key programme of Chinese President Xi Jinping is to eliminate the fraud and corruption that has plagued the government for decades. From lowly local government officials (who own 10–20 residences) to the highest echelon of the Central Committee of the Communist Party of China elite, no-one seems to be exempt from investigation. Average Chinese citizens enthusiastically support the president’s efforts to stamp out, or at least reign in, corrupt officials; however, like most things in China, one must be careful of what one wishes for.

Most Chinese economists would acknowledge that for the past two decades, one of the foundations of Chinese economic growth was fixed-asset investment — real estate and infrastructure — fuelled by expansive bank credit policies and government stimulus. But what many fail to recognise is the significant impact “corruption” has had in fuelling China’s econom

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