HAS CHINA’S ANTI-CORRUPTION STRATEGY REDUCED CORRUPTION OR PURGED POLITICAL RIVALS?

Abstract

1. IntroductionChina is a high-corruption economy and the leading Communist Party (the Party) has made anti-corruption implementation the principal urgency. In the anti-corruption sphere, the Party is firm and groundbreaking in conceiving anti-corruption schemes. China's anti-corruption process displays particular essentia l charact erist ics t hat might be unriva led to the Chinese polit ical setting. The Party is inflexibly in having control over the anti-corruption entities, establishing programs, devising institutions, ordering matters (Popescu, Comanescu, and Sabie, 2016), and regulating the extent and tempo of the implementation. Its domestic punitive inspection panel (jiwei) carries out numerous roles in hindering corruption (Popescu Ljungholm, 2015a, b, c, d) and implementing Party discipline: a deter mining featur e is its expected control over the investigation of corrupt officials of a particular rank and the removal of those cases. (Hualing, 2016)2. China's Party-driven Anti-corruption PatternThe Chinese government has focused on a radical action to curb corruption and further government probity, initiating frequent yet immoderate organizational expulsions (Bratu, 2015), which exposed corrupt party and government officials to severe sentences. Distinct from endeavors to limit current corruption, the aim of probity management is to inhibit corruption from arising. The innovative planned action (Lazaroiu, 2015a, b, c) gives evidence to the institutional malfunction of the previous anti-corruption regime. Notwithstanding resonant anti-corruption efforts, corruption goes on to indicate a tendency of intensification in China. Unsuccessful regulation of corruption manifests not so much feeble political determination in opposing corruption as unsatisfactory administrative capacities. (Gong, 2015) Chinese companies generally opt for expanding a certain political link with the government to obtain returns (Popescu and Ciurlau, 2016; Popescu and Predescu, 2016) when the expense of corruption is somewhat more diminished than to have mor e cutting edge input. Anti-cor r uption ha s noticea bly pr event ed the motivation and increased the expense of companies to try and find political links. In areas with a more advanced market economy, anti-corruption can successfully drive companies towards innovation (Cesaroni, Sentuti, and Buratti, 2015) and cut down r ent seeking. In areas with a less adva nced market economy, anti-corruption increases the expense of political links and therefore the whole expense of companies, which may generate detrimental consequences on their advancement. It would be difficult to enhance companies' innovation proficiency (Popescu, 2015a, b, c) if corruption and rent seeking are not completely eradicated. (Dang and Yang, 2016)Where market entities are better advanced (Panova and Buber-Ennser, 2016), curbing corruption apparently enhances resource distribution efficiency more. If reducing corruption results in officials pursuing undisturbed existence (Zaharia and Zaharia, 2015), this may increase the expense of bribing where market reforms are restricted. Companies established in provinces with more advanced market entities have more beneficial stock price responses when c or ruption decr ea ses. Investor s a ssume compa nies est a blished in provinces where market entities are more advanced to gain from diminished corruption. Declines in corruption are more beneficial to companies in provinces with swifter gross domestic product (GDP) growth, more significant stocks of huma n capital, and more a dva nced ma r ket entities. Limiting corruption is less advantageous to companies established in provinces where market participants are not strong. Corruption affects non-state-owned enter- prises (non-SOEs) more where market participants would have better driven company decision-making. (Lin et al., 2016) The pervasive character of corruption jeopardizes the authority of the Party and hinders China's economic reform. …