Reform, State, and Corruption: Is Corruption Less Destructive in China than in Russia?

Both China and Russia have experienced unprecedented corruption during their transitions to the market, but beneath this similarity lies an important difference. While Russia's economy continues to falter amidst rampant corruption, China's is among the best reformed socialist economies despite a level of corruption that once gave rise to the Tiananmen protests.1 Does the type of corruption make a difference? The debate about the relationship between corruption and growth is old. During the heyday of modernization theories revisionists challenged traditional moralistic views of corruption by emphasizing the utilitarian consequences of behavior, arguing that corruption helped overcome structural deficiencies that inhibited economic and political development in modernizing countries.2 More recent findings, however, show that corruption is never more than a second best alternative to honest public policies and that in the long run it distorts and retards development.3 These arguments are confirmed by analyses of corruption in contemporary China and Russia.4 Indeed, recent interest in corruption, arising from the spread of markets, focuses primarily on its negative effects on growth.5 Yet the paradox of corruption and growth in the Chinese and Russian cases remains perplexing. Within the two countries debates over the benefits and costs of corruption have also become part of elite politics, to the extent of even deciding winners and losers in political battles. In both China and Russia corruption charges have become a favored weapon of conservatives, while corruption's inevitability is a preferred defense of reformers. The most dramatic example was China's Zhao Ziyang, who alienated conservative leaders with his reluctance to fight corruption and lost his position as general secretary after Tiananmen. This article seeks to explain the paradox of corruption in recent Chinese and Russian reforms. It argues that corruption tends to be somewhat less costly in China than in Russia. Its divergent effects are linked to larger differences in the type of transition and nature of the state. In China, where economic reform has preceded political reform, the survival of old politics has not hindered economic reform in part because corruption has helped to turn political forces otherwise hostile to change into participants, while enabling social forces otherwise excluded from power to buy their way in. Both functions are theoretically unnecessary under