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Costs of corruption far outweigh benefits

By Yao Yang | China Daily | Updated: 2015-05-14 07:44

President Xi Jinping's anti-corruption campaign, which has already brought down many "tigers" (corrupt high-ranking officials), has been widely touted as a key component of the deep structural reforms that China needs if it is to build a more sustainable, inclusive and market-based economy. But worries abound that, in a country where government officials play a major role in promoting economic growth, rooting out corruption might undermine prosperity.

Some have cited the recent struggles of luxury hotels and restaurants (which, in China, depended heavily on government spending) as evidence that the anti-corruption campaign is discouraging growth-enhancing activity. But the decline is likely to be temporary, with new groups of customers emerging after a period of adjustment.

A more credible concern is whether efforts to root out corruption weaken the incentive for government officials to promote growth. After all, high levels of growth translate into large rents that can, through corrupt practices, be distributed among officials themselves, as well as passed on to their friends and proteges. Eliminate such practices, the logic goes, and officials will be unable to reap large rewards from economic growth and thus will be less motivated to encourage it.

Costs of corruption far outweigh benefits

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