Some of the richest and most powerful commercial barons have been brought to the trial and the most spectacular revelation was that the head of the justice department was the godfather who had provided a protective umbrella that covered the massive network of illicit activities. According to the public announcement made by the chief procurator, over 52 mid and high ranking officials are currently under investigation for corruption charges, and including 29 senior police officers.

So potent was this web of protection offered by the powerful officials that the operator of an underground casino was able to assault investigating police officers with impunity and the main culprit was not arrested until officers from another city were brought in to execute the arrest warrant. While the people of Chongqing applauded this blitz raid on their city’s underworld, this episode exposed yet again one of the greatest challenges facing China nowadays – corruption and the gross inadequacy of the existing institutional framework in dealing with this type of challenge.

China’s endemic corruption is a well known problem to anyone with even a passing interest in China. Beijing is well aware of the severity of the problem and continues to emphasise fighting corruption as one of its main challenges in the new century. Many high-ranking officials in China have fallen under the sword for impropriety, including provincial governors and ministerial office holders.

One of the ways in which the CCP chooses to deal with the problem is through Maoist-style campaigns, blitzing against corrupted officials in certain targeted sectors or locations. This is reminiscent of a similar strategy used in the Chinese criminal justice system, where the government engages in periodic ‘strike hard’ campaigns to clamp down on criminal activities. During the period of the campaign, offenders receive exemplary punishments for their wrongdoings as a deterrent to future activities. Though the periodic campaigns may serve as short-term deterrents, this is no substitute for building lasting institutional capacity to fight this endemic problem.

The Achilles’ heel of the institutional capacity in fighting corruption is the lack of an independent judiciary system. As an important element of the CCP’s arsenal of control, it is unrealistic to expect a judiciary independent of party influence. However, its effectiveness as an instrument against corruption can be greatly enhanced if its current status as an appendage of state bureaucracy can be improved. At the moment, judiciary and procuratorial systems are part of state bureaucracy, without their own independent budget, and they are often held to fiscal ransom by local governments supplying their budgets. The budgetary allocation and personnel appointment powers should rest only in the hands of local people’s congresses, which would serve to minimize the administrative influence from the government, especially at the local and regional level.

Another major institutional deficiency is the current ‘low risk and high return’ arrangement built into the system. According to Becker’s seminal study on crime and punishment, a likely offender’s decision to obey or break the law is dependent on the expected return of an illicit action and its expected cost (fine multiplied by the probability of detection). Though China imposes very hefty punishments for corruption, the rate of detection is much lower. A sound anti-corruption system would require institutional innovation to increase the rate of detection such as the creation of a more vigorous and transparent income and asset reporting system for government officials. Beijing should also encourage the media and the public to play a greater role in scrutinizing its officialdom.

Various opinion surveys in China widely and frequently indicate corruption as one of the most pressing concerns for the Chinese citizenry, if it is allowed to grow unchecked. It has the potential to badly damage CCP creditability as a governing party.