China will commemorate its 60th anniversary on October 1st. Everything is ready for the national parade to celebrate it however the perfect training, order and equilibrium seen in rehearsals are not replicated and share no parallel in the country’s political performance. Although China has not seen the effects of the current international economic recession in the same degree as the United States and Europe, it has undergone its own crisis in different areas.

Firstly, China’s overall rise would be sustainable if the capability of the political leaders to manage urgent domestic issues becomes successful in the medium term. Then the increasing gap between rich and poor, the social unrest manifested after the events in Xinjiang province last July, the corruption and the big concern about environmental threats that not only pose a problem for the Chinese population but also allow for conflict with other neighbouring countries are only a few examples of the challenges that the Communist Party of China has to overcome.

The People’s Republic of China has moved on far passed the collectivization and success obtained after the first Five Year Plan and also from the Great Leap Forward of 50 years ago. Since the late seventies the communist leaders have promoted a “capitalism with Chinese characteristics” that has given the country an increase rate of 9% GDP annually for more than 20 consecutive years. Nevertheless, rampant corruption came hand in hand with this rapid economic growth, and this has become a liability for China’s economy as well as a significant obstacle to long-term political and social development. Furthermore, corruption has caused considerable economic losses but what worries the CCP leaders is that it has also become a serious challenge to the legitimacy of the government as well. Despite the fact that China signed the UN Convention against Corruption and the UN Convention against Transnational Organized Crime, in 2000 and 2003, respectively, misappropriation is one the major forms of fraud. Thereafter, the proportion of officials receiving bribes has risen gradually. On average, 6,000 senior local officials were prosecuted for corruption every year between October 1997 and September 2002. According to Transparency International, bribery is concentrated in personnel appointments, public procurement and contracts, banking and administrative monopoly industries. Corruption in personnel appointment is increasingly severe, and it seriously damages the image of the government.

According to the Global Corruption Report released this year China is in the 72nd place out of 180 featured countries. Although the clear and constant examples are seen at the local level. From October 1997 to September 2002, 28,996 cadres at the xian (county) and chu (division) levels as well as 2,422 officials at the tin (department) and ju (bureau) levels were prosecuted for corruption. Recently some scandals shed light on the dimension of the problem. As an example the case of the former Taiwanese president Chen Shui-bian who was sentenced to life in prison earlier this month after being found guilty on charges of money laundering, bribery and embezzlement of government funds. His wife and son were also involved.

Corruption not only fuels social unrest and contributes to the rise in socioeconomic inequality within China but has major implications beyond its borders for foreign investment, international law, and environmental protection. Indicative is the fact that local officials use illegal (and sometimes violent) means to acquire farmland at low prices and later sell the user rights of the land to developers in exchange for bribes. Therefore protests over rural corruption and illegal land seizures have become very common. Moreover, China’s corruption also harms Western economic interests, particularly foreign investors who risk environmental, human rights, and financial liabilities, and must compete against rivals who engage in illegal practices to win business in China. Cooperation is the clue. At the political level the creation of effective commissions of control. On the other hand the improvement of the corporate governance in the private sector. All will lead to better economic result, transparency and more confidence when investing in China.

From the Chinese perspective the absence of competitive political processes and free press make these high-risk sectors susceptible to fraud, making transparency an important goal to achieve. Credibility both inside and outside the country could affect China’s economic and political sustainability. A responsibility held by all, but mainly by the communist leaders.