SHANGHAI — Shortly after Huang Guangyu was named the second richest man in China by Forbes last October, the 39-year-old entrepreneur disappeared.
Nearly a week later, Beijing’s Public Security Bureau issued a brief notice saying he had been detained on corruption charges, the first indication of his whereabouts.
Soon, other prominent individuals were arrested or charged with corruption or bribery: Rixin Kang, the former head of China’s nuclear power agency; Chen Tonghai, the former chairman of Sinopec, the state-owned oil company; the head of Beijing’s Capital Airport (who was executed last month); and the former mayor of Shenzhen, one of the country’s biggest manufacturing centers.
Chinese authorities say the arrests are part of the Communist Party’s latest anticorruption campaign — and they include the arrest last month of four employees of the British-Australian mining giant, Rio Tinto, on bribery charges.
But analysts say that prominent corruption cases in China are often the outgrowth of power struggles within the Communist Party, with competing factions using the “war on corruption” as a tool to eliminate or weaken rivals and their corporate supporters.
In the case of Mr. Huang, the electronics billionaire, for example, state-run media say a number of other high-ranking officials with longstanding ties to him have also been dismissed and arrested in what looks to be a Communist Party power shuffle.
China does not have an independent police or judicial system; party leaders order investigations. “It’s a very politicized process,” says Minxin Pei, a professor at Claremont McKenna College in California and author of numerous studies on corruption in China. “If your patrons do not protect you, you’re toast.” This may help explain one of the enduring contradictions of China’s political and economic system: the government regularly publicizes an astounding number of corruption cases, yet little progress seems to be made in uprooting corruption.
But as China prepares to celebrate the 60th anniversary of the Communist victory here, Beijing is growing increasingly worried that rampant corruption is eroding public trust in the party, hurting the economy and threatening social stability.
In a recent government poll, 75 percent of those surveyed listed corruption as their No. 1 concern. And this year, public outrage over corruption has caused mass demonstrations — like one in June, when thousands of people in the eastern city of Shishou rioted after a cook died mysteriously in a hotel believed to be controlled by corrupt officials.
“The public is fed up with corruption,” says Gao Quanxin, a senior fellow at the Chinese Academy of Social Sciences in Beijing.
China’s top leaders, including President Hu Jintao, have called on the Communist Party to strengthen its fight against graft.
Experts say one of Beijing’s objectives in the current crackdown is to send a message to officials who overstep some unknown acceptable level of graft or who too ostentatiously flaunt its rewards and, second, to reassure an increasingly angry public.
The problem is apparently so large that even selective enforcement results in about 150,000 officials being punished every year for bribery, corruption and other offenses.
China is paying a hefty price for corruption, analysts say, through the misallocation of resources, and the health and safety threats that can arise when regulators, for instance, are paid to look the other way.
A 2007 study by the Carnegie Endowment of International Peace estimated that in 2003, corruption cost China about $86 billion, or about 3 percent of gross domestic product at the time.
“Corruption has not derailed China’s economic rise,” says Professor Gao at the Chinese Academy. “But it’s rotting the establishment of a rule of law. The Chinese government has more than 1,200 laws, rules and directives against corruption, but implementation is ineffective.”
Experts say corruption is thriving here because relatively low-paid government officials wield enormous power over business and resources. “The key variable is the extent to which the government gets involved in business in China,” says Professor Pei at Claremont McKenna.
Many officials come up with ever more imaginative ways to gain wealth, like setting up private foundations to accept bribes or encouraging entrepreneurs and companies to bankroll the education overseas of family members.