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uncovered more than one million cases of illegal acquisition of land
between 1299 and 2005. (Pei 2007, 3)
The tentacles of corruption invade most sectors of the Chinese
economy, but in the financial sector it is especially serious:
Kickbacks for loan approval, massive theft by insiders, misuse of funds,
and large-scale fraud are routine in Chinese banks, brokerage houses,
insurance companies, and rural credit cooperatives. In 2004, China's
banking regulations uncovered 584 billion yuan in misused funds; in
2005, they found 767 billion yuan in misused funds. A large number of
top executives in China's largest banks have been jailed for corruption.
(Pei 2007, 5)
Corruption does in fact harm China in very real terms and could
become politically dangerous for the Chinese Communists if it leads
to popular discontent and turmoil:
The total costs of corruption in China are huge. The direct economic loss
owing to corruption represents a large transfer of wealth—at least 3 per-
cent of GDP per year—to a tiny group of elites. This annual transfer,
from the poorer to the richer, is fueling China's rapid increase in socio-
economic inequality and the public's perception of social injustice.
Corruption at the local level sparks tens of thousands of riots and vio-
lent collective protests each year, undermining social stability and
necessitating extra spending on internal security. Corruption has also
contributed to China's massive environmental degradation, deteriora-
tion in social services, and the rising costs of housing, health care, and
education. (Pei 2007, 5)
Corrupt Chinese government officials are nothing new. Bribery was
so common during late imperial times that the Qing government paid
its officials “integrity nourishing allowances” to supplement their
regular salaries and, hopefully, keep them from taking bribes. But even
so, paying off government officials was so extensive that the Qing
government usually looked the other way at what John K. Fairbank
of Harvard called “the squeeze”; that is, unless it became so outra-
geous that it led to popular unrest and came to Beijing's attention. If
it came to Beijing's attention, the corrupt official in question would
be in real trouble. The trick was, accordingly, to maintain bribe-
taking and other corrupt activities at just below the boiling point.
Corruption in late imperial times was not limited to officialdom. On
the local village and small town scene, members of the gentry class, or
those who had passed at least one of the three rungs of the imperial civil
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