The political economy of corruption in China: the principal-agent dimension

Abstract

The Open-Door Policy was adopted more than three decades ago. During this period, Chinese society has become more open and reasonably affluent. While economic performance has eclipsed other forms of collective endeavour, institutional progress has not been altogether absent. A rule of man has given way to a rule by law, albeit not a rule of law in the strict sense of the term, and State failure has selectively been grappled with. However, corrupt practices have not diminished materially and continue to pose manifold risks. Considerable headway has been made in exploring them from a political and sociological perspective, but economic insights have been slower to emerge. The principal-agent model has been invoked with a degree of consistency and methodically in recent years and may contribute to the understanding of the subject if applied across the entire organisational spectrum, market and non-market, and within an effective problem-solving framework.