Corruption in India & China: Similarities and Contrasts

Ambassador (retd.) Kishan S Rana, Honorary Fellow, Institute of Chinese Studies.

Both India and China rank high on global indices that measure corruption, but even superficial evidence suggests that the nature of corruption in the two countries, especially among officials and politicians is rather different. This is a subject that does not seem to have received much attention. This blog entry is no more than a preliminary set of comments based on personal impressions. Perhaps it can be a start point for discussion and deeper reflection.

I made a first visit to China of the post-Deng era in 1999, after a break of 27 years (I had two assignments in China, in 1963-65, as a second secretary at the Indian Embassy, and then in 1970-72 as first secretary and deputy to the Charge d’ Affairs Brajesh Mishra). I stayed with a friend at Shanghai for a couple of days; he lived in a fine villa in a gated community on the city outskirts.  Observing several luxury cars parked nearby, including a Lamborghini, a Cadillac, a Porsche and a stretch limo, I asked if any belonged to him.  With a laugh, he said they were all part of a car collection of his neighbor, who worked as a deputy director in a joint venture company with a foreign company. I was amazed that such open evidence of living way beyond one’s income by a salaried official, could be put on display with impunity.

Take another example:  about a year back it was reported that a senior PLA General in the logistics department had built himself a luxury residence virtually adjacent to the Forbidden City in the heart of the capital.  Surely many knew about this brazen corruption, but the media, whistle-blowers, and what is otherwise an active social media internet community, all ignored this. Evidently this general’s colleagues also knew about his lifestyle, but they too were not bothered. It is not for nothing that China is today the words biggest market for luxury cars, be they Rolls-Royces or Ferraris, and for most other top-end branded products.

Contrast this with the situation in India, where officials and politicians stash illegal gains in currency hoards, gold & jewelry, or property that is often registered in the name of others, to avoid scrutiny. Flaunting wealth with luxury cars or other forms of ostentatious living is not in vogue, because of the danger of being found out, the more so with an alert media and a strong investigative journalism tradition. One exception is marriage celebrations, which the media seem to treat as off-limits, through some kind of informal code. For example, a few sitting cabinet ministers hold grandly extravagant marriages for their families; no one does the math regarding the cost to ask how it was funded.

Against this background, let me offer some thoughts:

One, the way corruption is practiced in China might be called ‘conspicuous corruption’, or at least that was the case until President Xi Jinping’s crackdown against the ‘tigers’ and the ‘flies’ of what was a thriving ecosystem of ill-gotten wealth. In contrast, what obtains in India is ‘subterranean corruption’, where those officials and politicians with illegal wealth that runs to billions of rupees outwardly lead modest lives, with their monies hidden away, under beds and mattresses, in bank lockers, converted into gold and jewelry, and properties that are often held in the names of relatives and others. Some say that is beginning to change and politicians now openly flaunt their wealth, seemingly in impunity.

Two, China has always had a tradition of feasts and celebrations held at restaurants and public spaces, while in India it is marriage events that witness lavish displays of wealth, with almost no one held to account. Behind these actions is the quantum of ‘black’ or unaccounted money in both countries. It is possible that the total quantum of such funds on which tax has not been paid is higher in China than in India, as a proportion of the total economy, but that needs better study. A 2012 report by an organization, Global Financial Integrity (http://www.gfintegrity.org/) ranked China as the leading country in terms of illegal financial outflows, while India was ranked in the 8th position. But such estimates need closer examination to get to the truth.

Three, how do publics treat the phenomenon of corruption? In both countries their attitude is one of acquiescence, in the sense that they have almost no way of fighting against it. A major saving grace in India is a combative media, esp. the hundreds of private TV news channels that thrive on sensation, and are active in sting operations. Given rigid state controls over TV broadcasts, that phenomenon simply does not exist in China. The Chinese social media are active, but are under constant scrutiny, with discussions and themes deemed sensitive blocked with alacrity. News and information still gets out, but it is a continuous struggle.

Four, consider the institutional mechanism. China has no system of public disclosure of wealth and income, as mandated in the Indian electoral and parliamentary system for politicians and the civil service regulations that are enforced most of the time. In India these do not prevent corruption, but provide a base line that is applied when officials are nabbed for income and wealth disproportionate to their known and declared sources of income. One wonders why such a simple measure is not applied in China.

Five, what role is played by the education system, and how do the values that each country inculcates affect the phenomenon of corruption? No easy answer. But I am reminded of an insight offered by one of the gurus of intercultural management, Gert Hofstede, at a small conference in Malta some years back. He observed that countries that have high ‘power distance’ (i.e. those with sizable social inequality and hierarchy systems), are often the countries with high levels of corruption. He refused to assign any causality, but felt that this parallel is not accidental. Social scientists offer improved education as a possible cure to corruption; perhaps we need to look deeper, to reduction of social inequality as a possible solution as well.

With rising incomes, education and awareness publics are less tolerant of corruption. But are levels going down? Looking to India, it seems difficult to respond in the affirmative.

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