The fight against corruption, officially launched six months ago by President Xi Jinping in all the Chinese government’s and Party’s apparata is a strategic and geopolitical fact of extraordinary importance.

The CPC General Secretary Xi Jinping wants a radical war against corruption especially for some important reasons, which regard both China’s current position in the world and its unity and stability.

Let us analyze them: a) all corrupt power networks, in China and elsewhere, distort the fundamentals of the economy and facilitate the penetration of foreign speculative capital, as well as the transformation of incomes in speculative, unearned and unproductive rente.

In addition, b) corruption makes the various peripheral or secondary power circles autonomous from the national and Party central leaderships. Corruption is the expression of an illegal rebellion of peripheries against the political and administrative Centre.

As always happens in these cases, every corrupt Chinese leader is a power autonomous from the Party’s and State’s chain of command.

Moreover, each corrupt network creates hidden power centers which do not respond to the Chinese Party’s and State’s normal channels of communication and control.

Finally, c) the corrupt networks deplete the Chinese cash reserves because, as always happens in these cases, they are interested in the outflow of their illegal funds from the country as quickly as possible, by also bearing high costs.

Every kind of corruption generates an uncontrollable irrationality in the cost-benefit analyses.

Moreover, China’s public accounting is based on Leontief’s cycles – namely the criteria of general equilibrium and input-output analysis – and each hidden or illegal transaction distorts this type of calculations.

Therefore President Xi Jinping really wants to free China from its ancient tradition of confusion between private interest and public offices. A country where the Centre does not know its peripheries and hence is bound to weaken ever more, as in the traditional imperial dynasties.

Mao Zedong – of whose political choices even a  reformer like Deng Xiaoping used to say that “70% of them were right and 30% wrong” – was a staunch supporter of centralization, along the lines of the Emperor Shi Huangti, whom the Great Helmsman liked very much – the Emperor of the “Terracotta Army”, the first who unified Han China under one Empire after the “Warring States” period.

President Xi Jinping does not want China’s fragmentation and this is the reason why he fights so hard against corruption.

President Xi Jinping wants to fight corruption because he wants to build a united and strong political system, capable of facing the economic and political-military tensions looming on the horizon, in Asia and in the rest of the world, operating with a streamlined and centralized chain of command, without personal economic interests which may be used and exploited by China’s competitors or opponents.

For President Xi Jinping fighting corruption means above all to restore the primacy of national interest.

As the current economic theories – from Lambsdorff to Wade – teach us, each corrupt action leads to a dangerous and irrational allocation of the resources available, which pushes the best options and the most rational investment out of the market so as to favour the “intermediation and brokerage costs” and, finally, unearned and unproductive income and rente.

Hence every economic and political system generating a high level of corruption is doomed to self-destruction.

Obviously President Xi Jinping unites both struggles, namely the one against corrupt bureaucrats and the other against his enemies within the Party and the State.

Probably only Mao Zedong, during the “Cultural Revolution”, had succeeded in concentrating in his hands as much power as Xi Jinping’s today.

It is a phase in which China is ready for finally opening to the market-world and, as evidenced by what happened in Italy after 1992, corruption favours bad globalization as against “good” globalization”, the one which fosters nations’ economic and productive expansion.

Hence the more China shall open to the market-world, the more it shall build a reliable and centralized political system, not influenced by blackmail, bribes, corruption attempts, as well as autonomous centres of legal or illegal power.

The survival of the State and, above all, of the Communist Party of China depends on it.

President Xi Jinping’s policy line was made explicit in his recent year-end speech: to ensure the success of economic reforms which enhance the interaction between China and the West; to stabilize the yuan as a global reference currency; to reduce the Chinese economy’s dependence on public and private debt, as well as support the Asian Infrastructure Investment Bank.

Clearly none of these objectives can be achieved without a strong and continuous fight against corruption.

Corruption increases the economic activities’ dependence on public and private debt, stultifies the infrastructure investment which will be decisive for making China come out of its geostrategic isolation and finally does not allow to exert a joint and vertical control over the country, which will be essential to prevail within the Shanghai Cooperation Organization and over the West.

The “Twenty Years of Opportunities” proclaimed by Deng Xiaoping are now over and, if corruption were to permeate society, China’s politics and economy would go back to the “hundred years of national humiliation”.

The data and statistics of the anti-corruption campaign launched by President Xi Jinping are already remarkable: over 100,000 Party’s and State’s officials have already been inquired and investigated. In 2014 the share of cadres against whom sanctions and penalties were applied amounted to 3.14% and this means that 232,000 local and central officials were judged corrupt.

The “Eight-point Regulation” stipulated and announced by President Xi Jinping is now well-known throughout China: it imposes restrictions on the excessive use of funds for food and beverages; on the use of public funds for private travels, in China or abroad; on the improper use of vehicles made available and supplied; on unauthorized construction of buildings; on improper payments or illegal advantages and benefits; on luxurious gifts made or received; on too expensive weddings or funerals; on the breach of discipline and rules at work.

These are the guidelines used by the Central Commission for Discipline Inspection (CCDI), the CPC’s agency which operates autonomously and independently, but following the directives of President Xi Jinping’s leadership team.

Without a firm and definitive fight against corruption, China’s globalization will mark the end of its national autonomy and of government’s ability to manage its economic choices. As at the time of the  “Opium War”.

As we have witnessed also in Italy, it is worth reiterating that corruption makes a country leave “good” globalization and pushes it into bad, self-defeating and self-destructive globalization.

But what is the extent of corruption in China? It arises from the fact that the development resulting from the “Four Modernizations” was driven by public bodies and by government spending, the only available in China at that time.

In the 1980s some economic analysts even maintained that corruption itself was a kind of stimulus for the economy, since it obviously increased the aggregate demand and the level of consumption.

Nevertheless corruption blocks stable growth, while favouring unproductive spending and accelerating economic and business cycles.

According to most Western experts, corruption in China accounts for 3% of the current GDP.

Hence President  Xi Jinping is right in fighting to eradicate corrupt practices inside and outside the Party because, considering the size of the phenomenon, they are carried out both by high-raking officials (the so-called “tigers”) and by the low-ranking ones (the so-called “flies”) who lurk in the apparata and, in all likelihood, are the cause of the recent decline of the GDP growth rate.

Therefore if the growth rate of the Chinese economy were to decrease further, also due to the 6% fall in foreign direct investment recorded in recent months, the very legitimacy of the CPC to rule China may fade away: it is precisely thanks to its extraordinary economic growth that the Party retains its large base of popular support, which could shrink if corruption were to block the rapid expansion of China’s GDP.

Hence, for President Xi Jinping, the fight against corruption is the most important part of the current reform of the Chinese economy and of China’s integration into the market-world.

Giancarlo Elia Valori
Giancarlo Elia Valori

Giancarlo Elia Valori (twitter-logo@GEliaValori)

Honorable of the Académie des Sciences of the Institut de France.