From Fear to Behavior Modification: Beijing Entrenches Corruption Fight

Since Xi Jinping’s very first speech as General Secretary of the Chinese Communist Party (CCP) in 2012, he has instituted a sweeping anti-corruption agenda. A decade and four million cases later, anti-corruption is no longer just a “campaign” but increasingly an institutionalized mechanism for enforcement.

Indeed, the “shock and awe” phase in Xi’s first term has yielded to a second phase: formalizing the institutional structure of the Central Commission on Discipline Inspection (CCDI). The agency now has a National Supervisory Commission (NSC) and 47 permanent branches across all 139 central state and Party organizations.

The expanded purview of the CCDI is intended to bolster its two core functions: supervision and enforcement at all levels of Party-state organizations. Our data show three discernible trends that reinforce how the CCDI is coming into its own.

First, the LEVEL of corruption targets has shifted from “tigers” to “flies” (lower-level cadres). Second, the TYPE of investigations is now roughly equally divided between cadre performance and corruption. Third, the next aim of the CCDI appears to be “decoupling” government and business ties.

A Shift from Tigers to Flies

Although the total number of financial corruption cases (e.g. bribery, embezzlement, and preferential treatment) during the 19th Central Committee (CC) rose by 44.3% over the 18th CC (59,430 cases vs. 41,163 cases), what’s notable is the shift in targeting lower-level officials after 2018 (see Figure 1).

Figure 1. The Level of Corruption Investigations Shifted to “Flies” after 2018  Note: This shows total investigations at or below the county level, or the “flies.” The recent spike in investigations can be partially attributed to the fact that CCDI began including performance-related investigations in its official data in December 2019 (see below).
Source: CCDI; MacroPolo.

Since the 19th CC, the number of cases at or below the county level rose nearly 20% from 523,000 in 2017 to 624,000 in 2021. It’s no coincidence that since 2018, Xi has urged CCDI to shift its focus down to the local level (工作重心下移) because he considers grassroots corruption a threat to “social stability and the Party’s legitimacy.”

For investigations that result in punishments, about 70% of them take milder forms such as self criticisms. Although senior officials usually face harsher punishments, such as demotion, expulsion from the Party, and even criminal charges, even there the trend has moderated significantly.

Only 84 senior officials, three of whom were 19th CC members, have been punished with prison sentences in the last five years. In contrast, 145 senior officials, including 42 CC members, were sent to jail during the five-year period of the 18th CC.

A Behavior Modification Machine

If the first phase of the anti-corruption campaign was a fear-inducing machine, then the second and current phase is mainly about turning the CCDI into a behavior modification machine.

That fear factor—embodied in the metaphor of Damocles’ sword that the CCP top brass repeatedly invoked—was effective but unsustainable. That’s because it led to officials taking less initiative for fear of reprisal at any misstep.

So now that the NSC is more institutionalized within the CCDI, it is attempting to modify cadre behavior to ensure that they perform. To do so in the Chinese system means focusing on cadre performance evaluations, or key performance indicators (KPIs) in consultant speak.

Echoing Xi, the CCDI has lately stressed the importance of addressing bureaucratic inefficiency (形式主义和官僚主义), issuing two documents within six months to tackle this problem. In an indication that the CCDI is serious, it began incorporating data on performance-related cases in December 2019. These cases tend to focus on officials’ failure to implement top Party directives, inability to meet minimum KPIs, lack of responsiveness to constituents, and even holding too many meetings.

Figure 2. Performance Cases Now Exceed Financial Corruption (2019-2021)Source: CCDI; MacroPolo.

Not only is the number of performance cases now larger than financial corruption investigations, failure to meet minimum KPIs (e.g. economic development, environmental protection, poverty alleviation, and high-quality growth) made up the bulk of such cases (see Figures 2 & 3).

Figure 3. Not Meeting KPIs Accounts for Nearly 80% of Performance CasesSource: CCDI; MacroPolo.

Up Next: Untangling Politics and Business 

What might CCDI’s next phase look like, if there is one? A big hint came during the 19th CCDI’s sixth plenum, where it signaled that it is likely to align with the recent antitrust and tech crackdown and target the collusion between politicians and private businesses.

For instance, the CCDI recently accused China’s financial regulators of having the revolving door problem with business. It also charged previous Hangzhou Party Secretary Zhou Jiangyong with profiting from supporting the “disorderly expansion of local private capital,” including tracking down Zhou’s family connections in the private sector.

The empowering of CCDI in this regard appears to be part of a larger strategy to use both carrots and sticks to shift the private sector’s focus from leveraging political connections to gain competitive advantages to investing resources into creating better products and market strategies.

None of this will be easy. But for all the perennial critiques that “China has many policies but lack enforcement,” well, the CCDI is that enforcer with newfangled teeth.