2. CORRUPTION AND ANTICORRUPTION REFORM Losing the Country or Losing the Party?  Corruption in mainland China: how serious a problem, comparatively speaking?  Serious, widespread, growing  Dilemma: widespread corruption as an equilibrium  Anticorruption reform: serious effort, seriously flawed  Agency design problem  Institutional design problem  Constitutional design problem

3. CORRUPTION: SERIOUS, WIDESPREAD, GROWING  At highest levels of leadership  Across bureaucracies and down to lowest levels  An economic problem  Loss of state revenues  Lower foreign direct investment  A political problem  Public opinion polls  Urban and rural unrest

4. TRANSPARENCY INTERNATIONAL CORRUPTION PERCEPTIONS INDEX 2005 158 countries surveyed CPI index: 0-10, with 0 most corrupt  Least corrupt country: Iceland at 9.7  Most corrupt countries: Chad, Bangladesh at 1.7  United States: 17th, at 7.6  Mainland China: 58th, at 3.2

5. ANTICORRUPTION ENFORCEMENT, 1979–2000

6. WIDESPREAD CORRUPTION AS AN EQUILIBRIUM  How beliefs sustain widespread corruption  Lower transaction costs  Lower psychic costs  Lower voluntary enforcement by ordinary citizens  Safety in numbers  Anticorruption policy problem  Reducing corrupt payoffs  Changing beliefs, the “folklore of corruption”

7. ANTICORRUPTION: AGENCY DESIGN  Two agencies  Communist party discipline inspection committees  Government procuratorates  Overlapping jurisdictions  Procuratorates: criminal corruption  Party agencies: all misconduct by party members, include crimes  Party agency first-move advantage  Hoarding or appropriation of criminal cases by party agencies  Milder party penalties substitute for harsher criminal punishments

8. ANTICORRUPTION CAMPAIGNS 1982, 1986, 1989: corruption overall 1993, 1995: big sums and senior officials Campaigns as “announcements”  To communist party committees  Increase cases of criminal corruption investigated  To ordinary citizens  Report corruption  To the corrupt  Surrender, confess, rat on accomplices

9. ENFORCEMENT PEAKS IN CAMPAIGNS

10. RESULTS OF ANTICORRUPTION CAMPAIGNS  Enforcement peaks: 1980s, not 1990s  Reporting peaks  Confession peaks but  Ineffective deterrence  No overall trend of increased reporting Failure of enforcement, due especially to failure of agency design

11. OTHER DESIGN CHALLENGES  Institutional design: restructuring incentives  Only in recent years  Constitutional design: constraints on power  An ever more adaptive communist party?