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China's campaign against corruption

Globalaw explains how China's fight against corruption has changed the business landscape for better.

China is taking major steps to deal with corruption Toa55

An un-precedented campaign against corruption has been extensively unfolded in China which has led to a more stable environment to conduct business. On 27 August 2013, The Political Bureau of the Chinese Communist Party (CPC) formulated and adopted a five-year plan (2013-2017)  to end the spell of corruption that has shrouded the country for decades.

The Plan made the punishment of, and prevention against, corruption the responsibility of CPC and the wider Chinese society, realising that the battle against corruption remains protracted and a serious social and political issue in China. The CPC and the whole nation would be seriously and fatally damaged if the battle against corruption is not properly carried out.  

Corruption is a major obstacle to China’s goal of creating a harmonious society and a “clean” Government. The corrupt collaboration between some Government officials and businessmen, the swap and abuse of government power for money and the abuse of administrative powers has caused public discontent. This is in addition to local governments’ misappropriation of peasants’ land, the indiscriminate collection of charges in rural areas, soaring real estate prices, education and medical-care costs. “If the work styles and corruption are not handled properly, they will fatally harm the Party, and even lead the Party or nation to perish," said Mr. Xi Jinping, the President of CPC in his public speech following the Parties Congress. The President reaffirmed that the Party's disciplinary authorities must crack down on both the "tiger" and the "fly".

Corruption cases involving senior officials being transparently reported and brought to the knowledge of the public more than ever before. CPC and the Government have successfully brought the corrupt officials to justice. In 2013, China and CPC took disciplinary actions against a significant number of corrupt Party members and Government officials, investigating 31 officials at the ministerial level suspected of violating laws and/or of acting against Party discipline. Eight officials at the provincial and ministerial levels were removed as well as a number of low level officials who were investigated and punished.

The most notable corrupt officials who have been punished and investigated include Bo Xilai, the former Politburo member and the Party secretary of Chongqing, Liu Zhijun, the former Minister of Railways and Huangsheng, the former Shandong vice-governor. Another senior figure recently reported as being investigated is Su Rong, the vice chairman of the 12th National Committee of the Chinese people's Political Consultative Conference, an official at State level. These investigations have also been extended to military officials.

More significantly, according to a Decision made by the Third Plenary Session of the 18th Central Committee of the CPC, the Party will enhance the supervision system of Party committees, especially standing committees. After consistent anti-corruption efforts, China has achieved a remarkable result in combating and building a clean Government, which has promoted the country’s economic development and social stability.  

According to a survey by the National Statistics Bureau of China, , Chinese people’s index of satisfaction with the work of combating corruption and building a clean government, increased from 51.9% to 70.6%, since the start of the anti-corruption campaign. The percentage of citizens who thought corruption had been kept down to varying degrees, also increased from 68.1 per cent to 83.8 per cent. Moreover, China’s efforts have been well-received by the international community.

China's anti-corruption campaign has reaped benefits for foreign investment into the country. On the one hand, it makes Government operations of civil servants more transparent, improving both the efficiency of operation and quality of service, thereby reducing administrative interference in the enterprise bringing foreign investment. China’s anti-corruption campaign also purports to create an open and transparent legal environment for foreign investors in which to act and operate their business in accordance with the law, no longer relying on personal relationships.

With the more improved, open and transparent legal system, the risk of investment in China is also likely to be more predictable for foreign investors. According to foreign investment statistics of the Chinese Ministry of Commerce, from January to December 2013, Newly Approved Foreign-invested Enterprises amounted to 22,773, down by 8.63%, however the actual use of foreign investment reached USD 117,586bn, up by 5.25 per cent. From January to May 2014, Newly Approved Foreign-invested Enterprises amounted to 8,744, up by 1.6%; and the actual use of foreign investment amounted to USD 48.91bn, up by 2.8 per cent year on year. According to these statistics, total foreign investment in China has been steadily increasing since China’s launch against corruption. 

Yao Liang Law is the Globalaw member for Shanghai China, and as such part of a 115+ member firms.  Globalaw provides global regulatory and compliance cover for its clients throughout the world and provides a one-stop solution for companies needing global support in this key area in over 85 countries worldwide. 

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14 July 2014

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