Has Xi Jinping’s anti-corruption campaign been effective?
Since 2012, President Xi Jinping has focused on the elimination of corruption in China. The high-profile anti-corruption campaign has led to the investigation and prosecution of numerous officials–corruption convictions have nearly doubled in the past year, according to reports at the recent National People’s Congress.
From the outset, China’s primary land market was singled out as a major target for a clean-up. While the anti-corruption campaign’s overall numbers might look promising, are we seeing the impact of the initiative on the land market? Faced with increasing internal and external uncertainties, the land market could benefit from the establishment of a fairer and more transparent business environment in which cronyism is curtailed. This would have important ramifications on the country’s long-term economy.
To quantify the corruption endemic to China’s primary land market, one of my studies investigated mechanisms of cronyism and its role in land transactions. Using data on over a million land transactions between 2004 and 2016, in which local governments operated as the sole seller, the study found that “princeling” firms – firms linked to members of the Politburo, China’s supreme political elite–enjoyed a sizeable advantage in China’s land market.
Overall, such firms received discounts from 55-60 per cent, thereby paying less than half the price their unconnected counterparts did for land of comparable quality. In addition, the more powerful the princeling connection, the larger the discount–firms connected to a member of the Politburo Standing Committee obtained an additional discount of 17-20 per cent over discounts obtained by those
connected to a Politburo member. Princeling firms also bought more land in their transactions –potentially due to the lower price they secured.
But there has been a significant positive change thanks to Xi’s anti-corruption campaign – our study showed that land transactions post-2012 have seen the magnitude of price discounts shrink by between 11 and 15 per cent. For instance, a princeling firm previously obtaining a discount of 60.1 per cent saw it significantly reduced, by 11.7 per cent after Xi’s campaign was introduced. This puts it much more in line with previous discounts circa 2007.
Even though the price per square metre paid by princeling firms was still 7.5 per cent lower than that paid by other firms, the effect is no longer significant; the discount was vastly diminished.
Another key finding indicated that in return for providing heavy discounts to princeling firms, provincial party secretaries were handsomely rewarded – they were 23 per cent more likely to be promoted to higher positions. The study’s sample of provincial party secretaries showed that 52 per cent were promoted to the Politburo at the end of their term in office.
The likelihood of their promotion also increased with the size of the price discount and the quantity of land sold to the princeling firm. This is significant evidence of cronyism in action in exchange for cheap land deals.
This is not altogether unexpected considering China’s leadership structure and the unique set of circumstances it fosters. Due to the Politburo’s wideranging powers to set economic policy, appoint
personnel and more, connections to members have always been considered extremely valuable.
To forge connections, regional and local officials seeking advancement have an incentive to overstep their bounds to practice price discrimination and capitalise on decentralised and loosely defined rights over resources. While an abuse of power, land sale discounts to princeling firms were conducive to the system and were a widely accepted solution to curry favour among the political elite.
To address this corruption, Xi strengthened the Central Commission for Discipline Inspection and upped the intensity of its investigations so it can better accomplish its goal of ferreting out corrupt officials. In addition, Xi ignored the “diplomatic immunity” that had been implicitly granted to powerful political figures within the party, as he showed a willingness to go after officials whose transgressions may have been ignored in the past. This has significantly reduced the promotional prospects of local officials who previously relied on supplying land price discounts to get ahead.
This was evident in the study, which found significant reductions in corruption in provinces that were either targeted by the central inspection teams or whose party secretary was replaced by one appointed by Xi.
By looking at princeling-firm purchases made during inspections between 2013 and 2017, our research found that the inspection effectively raised the land price by a hefty 42 per cent. Furthermore, transactions that took place in provinces with a Xiappointed official post-2012 saw the price discount reduced by more than 31 per cent.
Xi’s anti-corruption campaign has already yielded significant results that have been more successful than measures that preceded it. While these steps are undoubtedly marked improvements in the right direction, it remains to be seen if corruption can be fundamentally stamped out for good.
Some posit that this is only possible with a complete overhaul of China’s existing institutions, but whether this is true will require another level of investigation. In the meantime, it can be expected that China will continue to target corruption with bold measures that produce results, as Xi continues to consolidate power and elevate China’s position on the world stage.
Dr. Ting Chen Assistant Professor Department of Economics
Original article was published on South China Morning Post on 20 August 2020.
Chen, T., & Kung, J. (2019). Busting the "Princelings": The Campaign Against Corruption in China's Primary Land Market. Quarterly Journal of Economics, 134(1), 185-226.
Ateam of academics from the Department of Marketing has partnered with the Leisure and Cultural Services Department (LCSD) for a collaborative research project on engagement strategy for experience enhancement at LCSD museums. 109 students from the Marketing Management course were invited to participate in the project by visiting the reopened Hong Kong Museum of Art (HKMoA) in October 2020.
The research project was to examine the effectiveness of engagement activities in enhancing visitors’ experience at the HKMoA. The participating students were randomly assigned to one of the three experimental conditions, namely: had an engagement activity before (Group A) or after visiting the HKMoA (Group B), or had no engagement activity but just visiting (Group C).
The study result suggested that the engagement sequence was associated with different reactions in visitors’ experience. Engagement after the Museum visit elicits more favourable reactions than engagement before the visit. The experience of having engagement after the Museum visit is comparably favourable to those with no engagement.
Perceptions of loyalty, servicescape, and intention to revisit did not differ significantly across the three conditions. However, participants with engagement after the visit reported significantly higher level of satisfaction, vitality and evaluation on artifactscape than those with engagement before the visit. Findings also showed that the evaluations made by Group B were not statistically different from those participants in Group C.
Prof. Noel Siu, Principal Investigator of the project*, hoped that “museum management may take this result into account in formulating future related museum marketing strategy. This is also a good example of how research and teaching could work hand in hand, by engaging students in a research project closely relevant to our daily experience.”
Prof. Christy Cheung, Professor in the Department of Finance and Decision Sciences and RGC Senior Research Fellow, was recently honoured with the Reviewer of the Year Award for 2020 by the Journal of Association of Information Systems (JAIS). The award recognises the exceptional number of high-quality reviews Christy has completed. JAIS is the flagship journal of the Association for Information Systems, publishing the highest quality scholarship in the field of information systems.
A highly cited scholar, Christy has been listed as one of the top 2% most-cited scientists in the Information Systems field as shown in a Stanford study published in October 2020. She is also the Editor-in-Chief of Internet Research, and has been President of the Association for Information Systems (AIS-Hong Kong Chapter) since 2017.
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