Corruption during the Economic Transition in China

In the spring of 1989, university students, joined later by workers, civil servants and journalists, held massive demonstrations in the Tiananmen Square in Beijing. The demonstrators had two prominent demands—democratic reforms and an end to corruption. Despite the apparent success of the economic reform in rapidly raising the standards of living for the vast majority of Chinese, by the late 1980’s, there was a growing public perception that corruption had gotten worse. In particular, the dual-track system, the hallmark of the Chinese reform, was widely believed to have fueled a particular form of corruption—diversion of under-priced in-plan goods to the market by officials (Yang & Li, 1993). On August 15, 1989, two months after the suppression of the demonstrations, the Chinese government launched a nationwide anti-corruption campaign, apparently aimed at soothing public outrage over corruption.