5 - Is it corrupt by design?

Summary

Doing business in China is often associated with informal, “under- the-table” transactions, the vast majority of which constitute corruption by contemporary international standards. A reductive explanation for this phenomenon concentrates on the Chinese cultural concept of guanxi, translated as “relationships” or “connections”, that allegedly creates an inclination towards informality and exchange of favours and gifts. However, the reasons behind China's struggle with corruption are not cultural but institutional and relate to its economic model, weak commitment to the rule of law and opaque governing system. Instead of a traditional culture that breeds corruption, China has a political, economic and legal system that has for a long time encouraged and sustained a culture of corruption. This reality raises many concerns about business and ethical practices as well as the competition standards that the BRI promotes at a global scale.

These fears seem well- founded as China has been criticized for using bribes to advance the BRI on a few occasions. In 2018, Macau- based Chinese billionaire Ng Lap Seng, a businessman affiliated with the CCP, was found guilty of bribing UN officials to support Macau's bid to house the UN Office for South– South Cooperation. In 2019, Patrick Ho, the head of an NGO backed by the CEFC China Energy Company Limited, a Global Fortune 500 energy and finance conglomerate, was involved in multiple corruption scandals in Africa while promoting the BRI agenda. The CEFC founder and chairman, Ye Jianming, who developed important business and political links in the Czech Republic, has also been detained in China since 2018 on bribery charges. In many Chinese- financed projects, from Malaysia to North Macedonia, Sri Lanka to Uganda and Kenya, there have been accusations and evidence of corruption. These cases play into a widespread perception of the BRI as lacking transparency, consisting of shady deals that are poorly regulated and involve illicit transactions.

Although China's own struggles with corruption are well known, corruption in the BRI is ultimately a matter of regulatory and monitoring efficiency of the institutions involved in its development, Chinese and local. Host government capacity in this regard is an important variable in the success or failure of a project, shaping the local experience of the BRI (Song 2015: 33).