THE IMPACT OF CHINA’S ANTI-CORRUPTION CAMPAIGN HAVE “TIGERS” HARBORED MORE “FLIES”? A Thesis submitted to the Faculty of the Graduate School of Arts and Sciences of Georgetown University in partial fulfillment of the requirements for the degree of Master of Public Policy in Public Policy By Jingyu Gao, B.A. Washington, DC April 1, 2017 Copyright 2017 by Jingyu Gao All Rights Reserved ii THE IMPACT OF CHINA’S ANTI-CORRUPTION CAMPAIGN HAVE “TIGERS” HARBORED MORE “FLIES”? Jingyu Gao, B.A. Thesis Advisor: Andreas Kern, Ph.D. ABSTRACT At the end of 2012, the Chinese government launched a nationwide anti-corruption campaign with unprecedented efforts. Led by President Xi Jinping and the party whip Wang Qishan, this campaign has shocked the media and many outside observers. It has targeted officials on all levels of government, even including some top-ranking officials, known as “Tigers,” such as Bo Xilai, Ling Jihua, Zhou Yongkang and Bai Enpei. These observations raise questions about the underlying motives for this surge in corruption scandals. I hypothesize that provinces where the prosecuted “Tigers” once headed local governments have investigated more officials than other provinces. Using province panel data covering all 31 provinces/municipal cities over a period from 2010 to 2016, I found that provinces, including Shanxi, Sichuan, Chongqing, Liaoning and Yunnan, have investigated much more officials than other provinces after controlling for several factors. These five provinces were once governed by Bo Xilai, Ling Jihua, Zhou Yongkang and Bai Enpei. This relationship between “Tigers” and corruption investigations across provinces is statistically significant and robust across different models pointing to the importance of local political networks in the context of corruption in China. iii I would like to express my sincere gratitude to my thesis advisor Dr. Andreas Kern, who has always been patient and supportive to me, particularly during the times when I felt overwhelmed by the complexities of my paper’s topic. I would also like to acknowledge with appreciation the McCourt School of Public Policy and the Georgetown University where I have spent two full years being consistently encouraged to explore my academic interests. In addition, I would like to give a special mention for one McCourt alumnus and my dear friend Mr. Zhengyuan Bo, who provided inspiration for my thesis and has been a role model as a gentleman with utmost honor for the country and people he deeply loves. Last but not least, thanks to my parents, Mr. Zhili Gao and Mrs. Qiuling Zhang, who have contributed all they can to provide unconditional support for my study in the U.S. iv TABLE OF CONTENTS Chapter I. Introduction ................................................................................................................. 1 Chapter II. Literature Review ....................................................................................................... 4 Chapter III. Conceptual Framework .............................................................................................. 8 Chapter IV. Empirical Analysis ................................................................................................... 10 Chapter V. Findings and Discussion........................................................................................... 17 Chapter VI. Conclusions, Limitations and Future Research ....................................................... 21 Appendix ....................................................................................................................................... 24 References ..................................................................................................................................... 30 v LIST OF TABLES AND FIGURES Table A Number of Investigated Officials by Year in China’s Provinces ................................... 12 Table B Description of Variables and Data Sources .................................................................... 24 Table C Descriptive Statistics of Control Variables ..................................................................... 25 Table D Results Comparison between "Allies" and "Tigers" Dummies ...................................... 26 Table E Results Comparison between "Tigers" with/out Jiangxi ................................................. 27 Table F Different Models Estimates Using "Tigers" with Jiangxi ............................................... 28 Table G Different Models Estimates Using "Tigers" without Jiangxi ......................................... 29 Figure A Illustration of "Tiger" and "Allies" Provinces ............................................................... 14 vi Chapter I. INTRODUCTION For observers of Chinese politics, the four years since the end of 2012 have witnessed an unprecedented anti-corruption campaign that has targeted all levels of government. Between 2013 and 2015, the government anti-corruption agency, the People’s Procuratorate (PP, 人民检察院), investigated over 160,000 officials for duty crimes 1 . In 2013, compared to 2012 when the campaign was unleashed, the number of investigated officials increased by 8.4 %, the fastest growth in the past five years.2 Even more stunning, some Party leaders, notably Bo Xilai and Zhou Yongkang, who had served so long in top positions, were prosecuted publicly. In the past, such high-profile prosecutions would have been unthinkable. At the same time, China's performance measured by the major international corruption indices has not substantially improved. In 2015, the country ranked the 83rd out of 168 evaluated countries on Transparency International’s Corruption Perception Index (CPI). Compared to 2013, its CPI score remained almost unchanged 3 . Its percentile ranking in the World Bank’s Control of Corruption of the Worldwide Governance Indicators (WGI) has also stayed around 50th, with minimal improvement since 2013.4 In reaction, the Chinese government harshly criticized the indices’ objectivity and usefulness, arguing that they had not taken into account the efforts made by the government to counter corruption.5 Such a contrast between the current administration's official voice and international 1 In China’s criminal code, duty crime consists of many sub-categories that are usually considered as corrupt criminal behaviors, such as bribery, embezzlement, and abuse of power. 2 Author’s calculation based on Supreme People’s Procuratorate of P.R.C. Annual Reports from 2010 to 2016. 3 Transparency International. http://www.transparency.org/country#CHN (accessed December 12, 2016) 4 World Bank Institute. http://info.worldbank.org/governance/wgi/#reports (accessed December 12, 2016) 5 Tatlow DK and Smale A, “China Loses Ground in Transparency International Report on Corruption,” The New York Times, December 3, 2014, http://www.nytimes.com/2014/12/04/world/asia/china-loses-ground-in-transparency-international-report-on-corruption.html?_r=0 (accessed March 5, 2017) 1 observers’ assessments raises a challenging yet important question: what is the real impact of Xi's anti-corruption campaign so far? This paper will try to answer this question. My central hypothesis is that the on-going anti-corruption campaign’s impact varies across provinces, and is dependent on factors such as the political influence of investigated top officials, in Chinese political language known as “Tigers (大老虎)”. More specifically, I hypothesize that where these “Tigers” worked and have built strong local networks of corruption matters to how the anti-corruption campaign affects investigations locally. Using province panel data, I use a random effects model to estimate the provincial differences. My key findings suggest that in provinces where “Tigers” once headed local governments, 36-43 percent more local officials ( known as “Flies”, 苍蝇) have been investigated than in other provinces. These results are robust across different model specifications. Thus, my findings provide statistical support for the view that the political corruption networks in the “Tiger” provinces are indeed collapsing. With their previous bosses being publicly prosecuted and the top-down anti-corruption campaign being implemented through the unprecedented effort of Xi’s team, local officials who were promoted by bribery to fallen “Tigers” have also been exposed and investigated. My analysis provides empirical evidence for a prevailing argument: that "tiger" provinces are indeed experiencing a "collapsing corruption," a term used by the Chinese media to describe the ripple effect of local corruption investigations after "Tigers" have fallen. Given the non-transparent process of corruption investigations in China, it is extremely challenging to directly observe the underlying factors that contribute to the number and distribution of investigated cases. However, past studies and newly available data may help to answer my paper’s central question. As Xi’s anti-corruption continues to shake different levels of 2 governments, it is a good natural experiment to observe how the fall of “Tigers” may have led to political earthquakes among the “Flies.” 3 Chapter II. LITERATURE REVIEW Existing literature has broadly discussed the effectiveness of China’s Anti-Corruption Agencies (ACA). For example, Quah (2015) concluded that ACAs in Taiwan and Singapore have been more efficient in deterring corruption than ACAs in China, Japan, and Philippines, mainly due to the government’s political will in supporting impartial, independent agencies.