Double Paradox: Rapid Growth and Rising Corruption in China; Capitalism From Below: Markets and Institutional Change in China

In This Review

Double Paradox: Rapid Growth and Rising Corruption in China
by Andrew Wedeman
Cornell University Press, 2012
272 pp. $26.95
Capitalism from Below: Markets and Institutional Change in China
by Victor Nee,Sonja Opper
Harvard University Press, 2012
431 pp. $45.00

The politicization of prosecutions for corruption in China makes official data untrustworthy, but Wedeman has still found plausible ways to assess different types of corruption and their frequency. Starting in the 1990s, privatization transferred public assets into private hands, and the officials guiding that process exacted a price. As the transfer process peaked, that type of corruption tailed off. Much of what now goes on in China is not “degenerative corruption,” which eats away at an economy, but “transactive corruption,” which takes place when officials and businesspeople cooperate to promote growth and consider it reasonable to share the proceeds. Despite conventional wisdom to the contrary, Wedeman contends that the Chinese Communist Party’s anticorruption campaign has been effective enough to keep the party from becoming a predatory institution. He sees the country moving into a U.S.-style “progressive era” of even more effective anticorruption measures.

Nee and Opper come at the question of business-government relations in China from a different angle, but their findings converge with Wedeman’s. Their main point is that the Chinese market economy was created not from above, by the state, but from below, by entrepreneurs. The state came in later, to legitimize and regulate the institutions that the economic actors created. This is not a new idea, but Nee and Opper’s extensive interviews with entrepreneurs in the Yangtze Delta region give a detailed picture of how it happened. Like Wedeman, Nee and Opper find that political connections were valuable to entrepreneurs when the state began privatizing its assets and that well-connected individuals have been better able to acquire land-use rights and credit from state banks. But they argue that success in the private sector is “increasingly independent of the direct involvement of politicians.” Rather, it comes from building a reputation for trustworthiness among networks of business peers.

As a society, the Chinese are still working out the norms they will use to distinguish acceptable from outrageous behavior by government officials. But on the evidence of these two works, runaway corruption may not be the Achilles’ heel that the regime seems to fear and that its critics hope for.