BEIJING — Corruption costs China more every year than it spends on education and is one of the most serious threats to the country’s political stability, according to a report from the Carnegie Endowment for International Peace.
The report said the graft problems would continue because the ruling Communist Party was unlikely to carry out the political reforms needed to fight corruption because of fears of losing its grip on power.
“Corruption has not yet derailed China’s economic rise, sparked a social revolution or deterred Western investors. But it would be foolish to conclude that the Chinese system has an infinite capacity to absorb the mounting costs of corruption,” said the report written by Minxin Pei, a senior associate at the Washington-based think tank.
Pei calculated that roughly 10 percent of government spending, contracts and transactions is estimated to be used as kickbacks, bribes or simply stolen.
The amount of money stolen had jumped “exponentially” in recent years, said the report, issued just before the Communist Party holds a twice-a-decade meeting next week to decide on policy for the next five years and select some new top leaders.
“Even after adjusting for inflation, the sums of money looted by government officials today are astonishing. Even a relatively low-level official can amass an illicit fortune in tens of millions of yuan (dollars),” it said.
The report said the direct cost of corruption in 2003 equaled 3 percent of gross domestic product, or US$86 billion, “an amount exceeding the government’s entire spending on education in 2006.”
Pei said the vast scale of corruption was possible because of extensive state involvement in the economy despite decades of economic reform, lax law enforcement and the party’s reluctance to adopt needed reforms.
This was compounded by collusion between officials that “has transformed entire jurisdictions into local mafia states.”
“Combating corruption is perhaps one of the toughest tasks ahead because it requires politically difficult reforms so far eschewed by Beijing for fear of undermining the supremacy of the ruling Chinese communist Party,” the report said.
Communist Party leaders have repeatedly warned that corruption threatens social stability.
They admit corruption within the party has not fallen despite several high-level arrests, including the party boss in Shanghai, Chen Liangyu, and a vice mayor of Beijing last year.
Chen was toppled in a scandal linked to the misuse of billions of yuan (hundreds of millions of dollars) in city pension funds, some of which were illicitly invested in dubious real estate and other projects.
Chen was the highest-level party official to be ousted in a decade.
In July, China also executed Zheng Ziaoyu, the country’s former top drug regulator for taking millions of yuan (dollars, euros) in bribes to approve substandard medicines, including an antibiotic that killed at least 10 people.