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NORTHWESTERN UNIVERSITY Officials’ Promotion Likelihood and Regional Variation of Corruption in China A DISSERTATION SUBMITTED TO THE GRADUATE SCHOOL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS for the degree DOCTOR OF PHILOSOPHY Field of Political Science By Jiangnan Zhu EVANSTON, ILLINOIS December 2008 2 © Copyright by Jiangnan Zhu 2008 All Rights Reserved 3 ABSTRACT Officials’ Promotion Likelihood and Regional Variation of Corruption in China Jiangnan Zhu Though more serious during the economic reform than in Mao-era, corruption has not totally got out of hand of the Chinese Communist Party (CCP). It is not too rampant to control and its destructive effects appear to have been limited from impeding the economic growth. To study the “resilience” that the CCP has shown in controlling corruption, this research starts from the point that most local administrators are agent of the central governments and simultaneously principal of their subordinates at lower levels; and the most important incentive driving the local agents in the multi-layered hierarchy is their concern for career advancement. I argue that the middle level administrators’ monitoring of and involvement in corruption is strongly influenced by their prospect of further promotion, or their “promotion likelihood”, which is mainly determined by officials’ age, education level, local performance, and personal connections with the superiors. Their monitoring effort is lowest and corruption is most likely to be the worst when they have a mediocre likelihood of further promotion. This is because the rising stars often have some distinct advantage that others don’t; and the laggards know that their chances of further promotion are nil without much advantage. On the contrary, the mediocre officials believe they have a chance if only some “extra advantage” can be introduced. It becomes worthwhile for them to generate more achievements by all means including corruption and to cultivate more personal connections, possibly by bribes, to obtain a promotion. In brief, 4 there is an “inverse-U” relationship between officials’ promotion likelihood and the degree of local corruption. Degree of corruption varies across regions according to the local administrators’ career prospects. The causal mechanism is applied to explain the real estate corruption and office-buying-and-selling cases in recent years, utilizing interview notes of fieldwork in China. I also construct an original dataset of estimated corruption based on provincial level excessive real estate investment between 1995 and 2004. Combining this data with proxies of provincial administrators’ promotion likelihood, I statistically test the proposed hypotheses and some existing explanations to corruption. 5 ACKNOWLEDGEMENT I would like to express my very special thanks to my committee members. Professr Victor C. Shih, my committee chair and graduate advisor, has given me his invaluable and meticulous guidance in the preparation and writing of this dissertation. He led me to the research field of Chinese politics, gave me much needed encouragement and inspiration, and generously helped me in every possible way. Professor William S. Reno has offered me unfailing support and valuable insights that greatly broadened the implications of my research and sharpened my analysis. Professor David Austen-Smith has nurtured the basic analytic framework of my research and helped me improve the scientific rigor with his intelligence and patience. I am also grateful to the Department of Political Sciencet at Northwestern University, which has given me continuous support through my years of graduate study. I have learned a lot from all the faculty members and my fellow graduate students. Among them, I want to single out Professor Sean Gailmard, who kindly helped me tackle some methodological issues, and the late Professor Micheal Wallerstein, who first inspired my research interests on corruption and encouraged me to develop my ideas innovatively. I also owe thanks to several of my friends, including Tao Xie, Qi Zhang, Ji Li, Kai Zeng, Birol Baskan, Jean-François Godbout, Claire Metelits, Ato Kwamena Onoma, and Maria Florencia Guerzovich, for their kind help and useful advice and comments. Several organizations provided research facilities and financial assistance for this research. The Graduate School (TGS), the Roberta Buffett Center for International and Comparative 6 Studies, and the Kellogg School of Management at Northwestern University generously sponsored several trips of my fieldwork in China. I am particular indebted to the TGS for awarding me the Alumnae Dissertation Fellowship, which allowed me to concentrate and finish writing the dissertation for a whole year. I thank the University Service Center at the Chinese University of Hong Kong for their great help on data collection. I also thank Professor Cheng Wenhao and Professor Ren Jianming at Tsinghua University for hosting me at the Anticorruption Research Center and offering me valuable research advice. Last but not the least, my friends, relatives, and family members deserve the most credit. Many of my friends in China have either provided me with valuable views or helped me find interviewees in various government agencies. My aunts have helped me collected many data and resources. My husband Dr. Hua Zhang, being a constant source of support to me, carefully read every chapter and made many suggestions. My father, with his unique intellectual insights, aroused my original interests in Chinese politics when I was very young. Unfortunately, he passed away during the first year I was in Northwestern University without a last hug or even a last phone call from me. My mother, holding all the pains of losing her beloved husband, has given me constant support and courage to complete my graduate study. I would like to dedicate this dissertation to my parents and I wish my father were here to see it now. 7 To My Parents 8 TABLE OF CONTENTS Tables and Figures page 10 Chapter 1 Introduction 12 Local Officials’ Promotion Likelihood and Regional Variation of Corruption 14 What Is Corruption? An Operational Definition 20 Variation and Causes of Corruption in Reform China 25 An Analytical Framework: The Principal-Agent Model 44 Research Design 51 Chapter 2 Anticorruption: 57 Party Control and the “Multi-Filter” Working Procedure The Anticorruption Organizations in China 60 Role of the Party Committees in Anticorruption Work 73 Working Procedures of the CDIC and the Procuratorates 82 Summary 122 Chapter 3 Promotion Likelihood and Official Corruption 125 Cadre Management System 128 Incentives as the Constraints of Corruption 140 Corruption Elicited by the Incentive System 146 Corruption and Promotion Likelihood—the Proposed Explanation 151 Summary 174 Chapter 4 Embedded Corruption in Real Estate Industry 175 Urban Housing Reform in the Reform Era 177 Formal Management System of Real Estate Industry 180 Corruption in the Process of Real Estate Development 191 The Role of Local Governors in Real Estate Industry 218 Conclusion Remarks 241 Chapter 5 Gauging Regional Corruption and Hypotheses Test 247 Measuring Local Degree of Corruption 248 Hypotheses and Methodology 265 9 Findings and Discussion 284 Implications and Summary 301 Chapter 6 Corruption as Means of Promotion: 306 A Case Study of the Office-Selling Chain in Heilongjiang Province Sketch of Case-H 308 Why Are Offices for Sale? 313 The Consequences 331 Conclusion 335 Chapter 7 Conclusion 339 Socio-Economic Impacts of Corruption 342 Prospects of Further Research 351 Reform Feasibility of the Anticorruption System 353 References 361 Vita 384 10 LIST OF TABLES AND FIGURES Tables 2.1 Party Disciplinary Actions page 103 2.2 Administrative Disciplinary Actions 103 2.3 Annual Percentage of Senior Officials Filed and Investigated 108 by Procuratorates of the Disciplined, 1988-2005 2.4 Prosecution Rates of Cases and Persons for Economic Crimes, 1990-2001 111 2.5 Comparison of Punishments on Embezzlement and Financial Swindle in the 114 1997 Criminal Law 4.1 High Level Local Officials Involved in Real Estate Corruption in Recent Years 225 5.1 Summary of Major Variables on REI 255 5.2 Correlation between Major Variables on REI 255 5.3 Random Effects OLS Regressions on per capita REI 255 5.4 Summary of RENT it 257 5.5 Minimum and Maximum RENT Provinces, 1996-2004 258 5.6 Summary of Major Independent and Control Variables of RENT 278 5.7 Correlation between RENT and Independent and Control Variables 279 5.8 Impacts of Independent Variables on RENT 280 5.9 Excluded Data from Regressions 283 6.1 Offices for sale in Heilongjiang, Province Municipalities 311 6.2 Offices for sale in Heilongjiang, Municipalities Counties 312 Figures 1.1 Sums of Cases of Bribery, Embezzlement of Public Assets, and Misuse of Public 28 Funds Filed and Investigated by the Procuratorates, 1979-2006 1.2 Number of Senior Officials Filed and Investigated by the Procuratorates, 29 1990-2007 1.3 Corruption Perception Index Scores of China, 1995-2007 42 1.4 Scores of Corruption in China by Various Indicators, 1996-2006 43 2.1 “Dual Leadership” of the DICs and the Procuratorates 79 2.2 Comparison of the Percentage of Procuratorial Filed Officials at Different 109 Levels, 1989-2004 11 2.3 Annual Rates of Prosecution, 1990-1996, 1998-2001 112 2.4 Summary of the Working Procedure of the CDIC and the Procuratorates 118 2.5 Probabilities of Getting Caught and Harshly Penalized by Law for a Corrupt 121 Official 2.6 Probabilities of Getting Caught and Punished by Party Disciplines 122
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