Systemic irregularity and spontaneous property transformation in the Chinese financial system

China Quarterly

Volumn , Issue 163, 2000, Pages 655-676

  Ding, X L ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

BANKING; CORRUPTION; FINANCIAL SYSTEM; PUBLIC SECTOR;

CHINA;

EID: 0033803909     PISSN: 00094439     EISSN: None     Source Type: Journal    
DOI: 10.1017/s0305741000014600     Document Type: Article

References (73)

1. For details visit .
2. 2 May 1998, p. 2.
3. Zhongjiwei Yanjiushi (ed.), Liuzhongquanhui zhuanji (Documents of the Sixth Plenary Meeting) (Beijing: Zhongguo fangzheng chubanshe, 1996), p. 5.
4. Renmin ribao (People's Daily), 24 March 1998, p. 3.
5. Andrew Schotter, "The evolution of rules," in Richard Langlois (ed.), Economics as A Process (New York: Cambridge University Press, 1986), pp. 117-18.
6. William Riker and David Weimer, "The political economy of transformation," in Jeffrey Banks and Eric Hanushek (eds.), Modern Political Economy (New York: Cambridge University Press, 1995), p. 99.
7. Luo Ji (ed.), Tanwu zui (The Crime of Embezzlement) (Beijing: Zhongguo jiancha chubanshe, 1996), pp. 1-7; Ye Huilun and Yu Bin (eds.), Nuoyong gongkuan zui (The Crime of "Temporarily Misappropriating" Public Funds) (Beijing: Zhongguo jiancha chubanshe, 1996), pp. 1-2.
8. Luo Ji (ed.), Tanwu zui (The Crime of Embezzlement) (Beijing: Zhongguo jiancha chubanshe, 1996), pp. 1-7; Ye Huilun and Yu Bin (eds.), Nuoyong gongkuan zui (The Crime of "Temporarily Misappropriating" Public Funds) (Beijing: Zhongguo jiancha chubanshe, 1996), pp. 1-2.
9. See discussions in Luo Ji, Embezzlement, pp. 16-50; Ye Huilun and Yu Bin, Misappropriating, pp. 1-46.
10. See discussions in Luo Ji, Embezzlement, pp. 16-50; Ye Huilun and Yu Bin, Misappropriating, pp. 1-46.
11. Cf. Gregory Grossman, "Sub-rosa privatization and marketization in the USSR," Annals of The American Academy, Vol. 507 (1990), pp. 44-52.
12. See a conference report on China's financial risks, Banyuetan (Semi-monthly Comments), No. 2 (1999), pp. 21-23.
13. Bai Jianjun, Jinrong qizha ji yufang (Financial Fraud and Prevention) (Beijing: Zhongguo fazhi chubanshe, 1994), p. 1.
14. Zhongjiwei yanjiushi (ed.), Ziliaoku 1995-1996 (Material Collections 1995-1996) (Beijing: Zhongguo fangzheng chubanshe, 1997), pp. 155-160.
15. Cases 17, 25, 28 and 47 in Table 3. All the cases so marked in the article are from the author's collection summarized in the table. It is impossible to detail the cases' sources here, but they are available upon request. A few cases are presented below with the necessary details to illustrate typical patterns of irregular property transformation.
16. Under government regulations, a licensed chop-maker must see a written authorization by a local government office when taking an order for organizations' chops. But since the mid-1980s many private operations, mostly run by a single artisan, have entered the chop-making business. They can make a good income largely by providing services to dubious customers. Chinese journalists informed the author that in south-east cities like Shenzhen and Haikou, one can even purchase sham chops of ministries at the price of 2,000-3,000 yuan per piece. The quality of these shams varies considerably.
17. For more details, see Ju Bin (ed.), Fantan gonggao (Anti-corruption Files) (Beijing: Economic Daily Publishers, 1999), pp. 287-306; cf. "No haven for China's crooks," Washington Post, 16 October 1998, p. A29.
18. For more details, see Ju Bin (ed.), Fantan gonggao (Anti-corruption Files) (Beijing: Economic Daily Publishers, 1999), pp. 287-306; cf. "No haven for China's crooks," Washington Post, 16 October 1998, p. A29.
19. For comparable developments in China and Russia, see X.L. Ding, "Informal privatization through internalization," British Journal of Political Science, Vol. 30, Part 1 (2000), pp. 121-146, and Vladimir Tikhomirov, "Capital flight from post-Soviet Russia," Europe-Asia Studies, Vol. 49, No. 4 (1997), pp. 591-615.
20. For comparable developments in China and Russia, see X.L. Ding, "Informal privatization through internalization," British Journal of Political Science, Vol. 30, Part 1 (2000), pp. 121-146, and Vladimir Tikhomirov, "Capital flight from post-Soviet Russia," Europe-Asia Studies, Vol. 49, No. 4 (1997), pp. 591-615.
21. Based on Bai Jianjun, Financial Fraud; the frequency is calculated by this researcher.
22. In Case 3, which incurred a loss of 400 million yuan to the Bank of China's branch in Zhongshan, Guangdong province, one of the two Macau partners was an ex-staff member of the bank branch and remained a close friend of its managers after she had settled in Macau. The other Macau partner ran a property company linked to the Zhongshan city government. The two absconded with the money in April 1995, and the branch managers tried to shift all the responsibility to the fugitives. Here again we observe the parallel between state bank managements in China and in Russia; see "Just follow the money," Newsweek, 29 March 1999, pp. 40-41.
23. Ye Huilun and Yu Bin, Misappropriating, pp. 17-19.
24. Li Xueqin (ed.), Xin Zhongguo fanfubai tongjian (History of Anti-Corruption in New China) (Tianjin: Renmin chubanshe, 1993), pp. 732-33.
25. See legal discussions summarized in Yanjiu wengao (Draft Research Reports, hereafter DRR), No. 15 (1994), pp. 12-15; Chinese Youth Daily, 27 July 1999, p. 2.
26. See legal discussions summarized in Yanjiu wengao (Draft Research Reports, hereafter DRR), No. 15 (1994), pp. 12-15; Chinese Youth Daily, 27 July 1999, p. 2.
27. Renmin ribao, 21 December 1995, p. 2.
28. Jingji yantao cankao (Economic Research Sources, hereafter ERS), No. 44 (1995), pp. 40-41; Jingjixuejia xuexiziliao (Economists' Study Material), No. 55 (1993), pp. 2-26.
29. Jingji yantao cankao (Economic Research Sources, hereafter ERS), No. 44 (1995), pp. 40-41; Jingjixuejia xuexiziliao (Economists' Study Material), No. 55 (1993), pp. 2-26.
30. Quoted from Fortune, 2 March 1998, p. 21.
31. Tequfazhi (Special Zones' Judicature), No. 7 (1995), p. 2.
32. Huasheng bao Electronic Edition (hereafter HBEE), 1 April 1999.
33. See a seven-province conference briefing in Renmin jiancha (People's Procurator), No. 5 (1994), pp. 36-37.
34. ERS, No. 133 (1995), p. 22 and No. 93 (1996), pp. 29-31; DRR, No. 20 (1994), p. 12.
35. ERS, No. 133 (1995), p. 22 and No. 93 (1996), pp. 29-31; DRR, No. 20 (1994), p. 12.
36. ERS, No. 133 (1995), p. 22 and No. 93 (1996), pp. 29-31; DRR, No. 20 (1994), p. 12.
37. Xinshiji (New Century), No. 9 (1998), pp. 2-4.
38. Interviews in Haikou, November 1995.
39. Sweder Wijinbergen, "Enterprise reform in Eastern Europe," Economics of Transition, Vol. 1, No. 1 (1993), pp. 31-33.
40. Based on interviews in Guangdong and the Zhang Qiong case in Yangcheng Evening News (electronic edition, hereafter YENEE), 5 May 1999.
41. See an investigation in Chinese Business Times, 30 July 1996, p. 3.
42. See a disciplinary report in Renmin ribao, 25 August 1994, p. 1.
43. Gitic's 15 billion yuan of debt was largely caused by dubious branching out; see Zhongguo jianbao (China Digest), 30 March 1999, p. 12.
44. ERS, No. 4 (1995), pp. 26-27.
45. The survey was in Renmin ribao, 9 October 1995, p. 9; and New Century No 4 (1995), pp. 5-6.
46. The figures were released by a discipline-inspector in late 1993; quoted from Li Hanlin (ed.), Guoyouzichan da liushi (The Massive Vanishing of State Assets) (Gansu: Lanzhou University Press, 1994), pp. 51-53.
47. The growth rates, as compared with the year before, are 110.7% for 1993, 173.9% for 1994, 115.9% for 1995 and 109.9% for 1996. They are released annually by the SPP and the Supreme People's Court in Renmin ribao (pp. 2-3) during late March.
48. Zhongjiwei yanjiushi, Collections 1995-1996, pp. 427-430.
49. Renmin ribao, 21 March 1999, p. 2; South China Morning Post, 14 October 1999, p. 12.
50. Renmin ribao, 21 March 1999, p. 2; South China Morning Post, 14 October 1999, p. 12.
51. YENEE, 5 September 1999; Ming bao, 3 September 1999, p. A20.
52. YENEE, 5 September 1999; Ming bao, 3 September 1999, p. A20.
53. YENEE, 29 October 1999.
54. For the convenience of textual interpretation, this section mostly uses the word nuoyong. It is based on the summary of legal discussions in Ye Huilun and Bin Yu, Misappropriating, pp. 1-66; and Lang Sheng (ed.), "Jueding" shiyi (Interpreting the "Resolutions") (Beijing: Zhongguo jihua chubanshe, 1995), pp. 170-180.
55. For the convenience of textual interpretation, this section mostly uses the word nuoyong. It is based on the summary of legal discussions in Ye Huilun and Bin Yu, Misappropriating, pp. 1-66; and Lang Sheng (ed.), "Jueding" shiyi (Interpreting the "Resolutions") (Beijing: Zhongguo jihua chubanshe, 1995), pp. 170-180.
56. See especially Ye Huilun and Yu Bin, Misappropriating, pp. 20 and 6-9. The legislation also states that if the diverted public funds serve a programme which is a crime in itself (e.g. smuggling), Conditions 3 and 4 are not necessary for indicting the perpetrator for nuoyong. In 1988, the top judicial bodies also decided to keep the previously set tentative quantification in effect; that is, "a relatively large amount" starts from 5,000-10,000 yuan, "a large amount" starts from 50,000 yuan, and "a particularly large amount" starts from 100,000-200,000 yuan. But these figures quickly became irrelevant to the administration of law after the early 1990s, as numerous cases involved many millions of yuan.
57. In February 1995, this legislation was extended to cover corporations with mixed ownership. Its fundamentals were further preserved in the 1997 amended criminal law (Lang Sheng, Interpreting, p. 288; Renmin ribao, 15 March 1997, pp. 1-2).
58. In February 1995, this legislation was extended to cover corporations with mixed ownership. Its fundamentals were further preserved in the 1997 amended criminal law (Lang Sheng, Interpreting, p. 288; Renmin ribao, 15 March 1997, pp. 1-2).
59. DRR, No. 20 (1994), p. 12; ERS, No. 133 (1995), p. 22.
60. DRR, No. 20 (1994), p. 12; ERS, No. 133 (1995), p. 22.
61. Nanfang zhoumo, 9 April 1999, p. 1.
62. Eirik Furubotn and Svetozar Pejovich, "Property rights and economic theory," Journal of Economic Literature Vol. 10 (1972), pp. 1137-62;
63. Oliver Williamson, The Economic Institutions of Capitalism (New York: Free Press, 1985), pp. 26-27.
64. There is strong evidence to back this explanation. In 1998, the State General Anti-Corruption Bureau was convicted of diverting confiscated crime funds for its staff. In June 1999, the Ministry of Water Resources was found to have diverted more than 3 billion yuan of flood-control funds into speculating (Renmin ribao, 21 March 1999, p. 3; HBEE, 16 August 1999).
65. There is strong evidence to back this explanation. In 1998, the State General Anti-Corruption Bureau was convicted of diverting confiscated crime funds for its staff. In June 1999, the Ministry of Water Resources was found to have diverted more than 3 billion yuan of flood-control funds into speculating (Renmin ribao, 21 March 1999, p. 3; HBEE, 16 August 1999).
66. Joseph Stiglitz, "Second-generation strategies for reform for China," http://www. worldbank.org/html/extdr/extme/jssp072098.htm (1998), pp. 8-9.
67. Louis Putterman, "The role of ownership and property rights in China's economic transition," The China Quarterly, No. 144 (1995), p. 1051.
68. See contrast of the two in Armen Alchian, "The basis of some recent advances in the theory of management of the firm," Journal of Industrial Economics, Vol. 14 (December 1965), pp. 30-41; Williamson, Economic Institutions, pp. 8-9.
69. See contrast of the two in Armen Alchian, "The basis of some recent advances in the theory of management of the firm," Journal of Industrial Economics, Vol. 14 (December 1965), pp. 30-41; Williamson, Economic Institutions, pp. 8-9.
70. The author is indebted to an anonymous reviewer for suggesting this summary.
71. See the special issue of American Journal of Sociology, Vol. 101, No. 4 (1996).
72. See "Where did Russia's money go?" Newsweek, 4 October 1999, pp. 16-21; "Russia probe focuses on brash banker," AWSJ, 27-28 August 1999, pp. 1/10.
73. See "Where did Russia's money go?" Newsweek, 4 October 1999, pp. 16-21; "Russia probe focuses on brash banker," AWSJ, 27-28 August 1999, pp. 1/10.