Political Science: What is the connection between Guanxi and corruption in China?

What is the connection between Guanxi and corruption in China?

It is commonly believed that conducting business justly in China and expecting to make a decent profit is almost impossible. The Chinese business climate is, in common belief, marred with corruption – making it hard for firms that conform to the FCPA (Foreign Corrupt Practice Act) and other limiting regulations to compete effectively. Many people in China rely on guanxi, a personalized network of influence and exchange, to influence an action that favors them. They exploit the concept of guanxi to get jobs, for economic prospects, as well as opening doors to power through paying bribes. This practice amounts to corruption. Guanxi contributes directly to problems of corruption in contemporary China because it allows individuals to utilize personal networks to obtain favors and other benefits not based solely on merit.

Guanxi and Corruption in China

The concept of guanxi has been in existence for a long time in China. It is based on transactions, as well as reciprocity, but the connection between the two parties is not emotional. Trust is a fundamental principle in China, but the Chinese do not trust people beyond a restrictive circle. Connections are founded on the notion of favoring an individual so that he/she can also reciprocate such favor. Corruption is quite prevalent and ingrained in the China culture because most relationships are neither built on friendship nor family ties. Corruption involves leaving the expected standards of action to attain illicit personal advantage. Guanxi is connected to corruption because both parties involved are driven by unethical personal gains. Coercing an individual to present a gift in order to get a service is an act of bribing, which amounts to corruption.

Guanxi is not only practiced in China, but in other countries under different names. For instance, the concept is referred to as rousfeti in Greece, which means reciprocal or special favor. India, Italy, Russia, and Poland, also have their own culture of reciprocity. The concepts of guanxi place relationships and obligations of such relationship above all other deliberations, including the written law. The best guanxi is built over a period. The concept is built on the foundation that if it becomes difficult to trade favors, then it cannot be hard to buy them.

The initial aim of guanxi was to eliminate corruption. The theme was to help a person in the present time so that that person can return the favor in the future. However, what began as a measure to control corruption grew into something big that the current government is unable to eliminate. Guanxi encourages individuals to deal with people that they are familiar to, rather than anyone who require a service. The practice has reinforced corruption practices throughout the Chinese society, where individuals or companies that do not have personal connections are coerced to bribe in order to create connections. When the cultures of offering gifts and returning favors are exploit to gain in business operations, the practice changes to corruption.

Meaning of Guanxi

 Guanxi is a term used in China to describe personal relationships or connections based on mutual favors to influence actions. Anders and Nuijten termed guanxi as a relationship, or connection that encompasses informal practices, based on the theory of gift exchange for affective, as well as instrumental purposes (167). Guanxi describes a personal connection that involves two individuals, in which one individual is capable of prevailing over the other individual to earn a favor. That is, an individual is connected to another because the other individual is capable of offering something.  

Foreigners perceive guanxi as a nuisance to the business culture in China. For them, it does not matter the kind o favor that an individual requires from another, as what matters is the capacity to offer gifts to the individual who is expected to give favor. People began to create emotions based on long-term connections to prevent others from gaining such connections. Guanxi led to the formation of monopolies even though China is considered as a communist country (Gong). Guanxi contributes to corruption to some degree because it falls into the control of individual officials, who interpret the policies of the group. If an individual has a good relationship with the government officials, then he/she can gain immensely through such relationship. If the relationship is weak, then the chances of economic gains are quite low.

Incidences of Corruption in the Contemporary China

Guanxi practices lead to corruption because individuals are forced to bribe so that they are included in the connections. Corruption prevalence is enormous in China. Government officials are involved in the practice of trading their powers for financial gains. According to Black, high-ranking officials have been involved in selling and buying political and military opportunities at exorbitant amounts, and the new recruits have to recover their money through demanding gifts, in addition to bribes from their subordinates. In the past, individuals in the government were rewarded for doing their job, though the effect of such rewards was negligible. However, this practice has attained a level of undermining economic efficiency in China. In 2014, police invaded brothels in Dongguan and sacked the area police chief for failing to curb prostitution in the city (Oster). This is an illustration of corruption in the previous government. 

Corruption in China demonstrates lack of strict government regulations. In the city of Harbin, guanxi networks were a vital part of business practices, as contracts could not be signed through legal means (Anders and Nuijten 169). Harbin businesspeople responded to the shortage of formal institutions by scaling their business transactions to their allies and avoiding outsiders. Through guanxi practice of offering gifts, these businesspeople managed to enlarge their networks of friends discriminatively, allowing them to flourish. Although this practice was considered a normal activity in Harbin, the practice was emphatically condemned as corruption. According to Anders and Nuijten, only the entrepreneurs who had strong guanxi ties were capable of securing bank loans to expand their businesses (174).   

Connection between Guanxi and Corruption

Guanxi aimed at enhancing personal relations, in addition to creating networks for individual benefits. However, these connections have been expanded to incorporate offering of gifts to enhance the opportunity for returning the favor.  Guanxi concept can be measured through social bases of legitimacy, which focus on norms, as well as traditions of a community. Social bases of legitimacy assess whether the community or its practices are perceived as acceptable, where acceptability signifies individual or collective actions that are different from the organization (Patty and Penn 81). The contemporary society does not see any acceptability in guanxi, as people have diluted the initial aim to achieve economic advantages.

 Corruption has become an enormous problem among the Chinese people, and the Chinese Communist Party has made curbing of guanxi and corruption as one of its major objectives. The high level of corruption has threatened the capacity of Communist Party to remain in power.  The government is employing all its machineries in fighting corruption, which has threatened to the economic, as well as political stability of China. Xi Jinping, the Chinese president and the leader of Communist Party, has vowed to fight corruption in his administration by conducting investigations on the top officials who are involved in the vice. The contemporary society has made the concept of guanxi seem illegal due to lack of transparency and failure to consider statistical details. The cultural crash is a hindrance to international business, as foreign investors are concerned in reducing costs, rather than maintaining relationships.

Conclusion

The concept of Guanxi has been blamed for contributing directly to evils of corruption in contemporary China since it allows individuals to exploit personal networks to attain favors and other gains not based exclusively on merit. Initially, guanxi was a concept to eliminate corruption. The practice was carried out to gain relationship and connections that amounted to personal gains where individuals offered gifts to maintain such relationships. However, guanxi changed into corruption when businesspeople exploited the concept for economic gains. If not checked, guanxi and corruption can topple the whole country of China, or the ruling party. The contemporary China does not believe in practices that go against written laws. The new regime under President Xi Jinping has promised to wipe corrupt individuals in order to gain political trust and encourage foreign investors, who feel threatened by guanxi practices.

Works Cited

Anders, Gerhard and Monique Nuijten (ed).Corruption and the Secret of Law: A Legal Anthropological Perspective. Burlington: Ashgate Publishing Ltd, 2008. Print.

Black, Mike. “Gifts, Guanxi and Corruption in China.”Hong Tu-Chinese Language Center, January 3, 2013. Web. 8 Dec. 2014 http://hongtu-chineselanguagecenter.com/doing-business-in-china-corruption/

Gong, Emily. “To corrupt or not to corrupt? The paradox of guanxi.” Zaishangai May 21, 2011. Web. 8 Dec. 2014 http://www.nyuzaishanghai.org/jobs-internships/to-corrupt-or-not-to-corrupt-the-paradox-guanxi/

Oster, Shai. “President Xi’s Anti-Corruption Campaign Biggest Since Mao.” Bloomberg, March 4, 2014. Web. 8 Dec. 2014 http://www.bloomberg.com/news/2014-03-03/china-s-xi-broadens-graft-crackdown-to-boost-influence.html

Patty, John W, and Elizabeth M. Penn. Social Choice and Legitimacy: The Possibilities of Impossibility. , 2014. Print.