Who pays more “tributes” to the government? sectoral corruption of China’s private enterprises

Abstract

Which industry sectors bribe the government and, in turn, are exploited by the government the most in China? Or, as commonly satirized by the people, which sectors pay the most “tributes” (shanggong) to government officials? This article attempts to answer these questions by proposing a meso-level approach, which examines corruption in China at the sectoral level. We use a firm-level survey from 1997 to 2006 in China and treat two types of payments by private enterprises—public relations–building fees (yingchou) and forced apportionment of funds (tanpai)—as indicators of potential corruption in a sector. We find that the most corrupt sectors are those that rely on scarce and less mobile resources controlled by the government. Thus, further reform in the factor markets is necessary to reduce corruption caused by government intervention in the allocation of important resources.