China Policy Institute: Analysis



Fake Wine in China

Written by Anqi Shen.

The wine market has grown rapidly in China. Associated with middle-class consumption, imported top-end wine has increased in popularity, to the extent that China is now one of the largest wine consuming countries in the world. Where there is a high demand for branded wine, there is an incentive to produce fakes. While it is hard to gauge the scale of wine counterfeiting in China, journalistic and anecdotal sources estimate that 30% of all alcohol in China is counterfeit and 70% of wine is fake. Continue reading “Fake Wine in China”

Eating and Drinking in Chinese Officialdom

Written by Jiangnan Zhu and Xiaoming Zhong.

In the period leading up to Xi Jinping’s ascension, banqueting had become both prevalent and lavish in Chinese political circles. These banquets instilled a culture of extravagance among officials, breeding corrupt behavior and squandering public resources. By 2012, nationwide annual public expenditure on eating and drinking by government officials had reached a total of RMB 300 billion. Continue reading “Eating and Drinking in Chinese Officialdom”

China and the UN Convention Against Corruption: A 10- year appraisal

Written by Konstantinos Tsimonis.

The tenth anniversary of China’s ratification of the UN Convention Against Corruption (UNCAC) offers a timely opportunity for an appraisal of its engagement with the global anticorruption regime. Two questions are important in this regard. Has China’s socialization in the UNCAC framework initiated the adaptation of its anti-corruption policies to international standards and best practices promoted by the Convention? And what is China’s role in UNCAC’s institutionalisation  process? 

UNCAC is the most comprehensive international anticorruption instrument. Its 71 articles, compared to just 17 in the OECD Anti-bribery Convention, significantly expand the definition of corrupt activities, provide a framework for states to address cross-border corruption, and create a platform for international and bilateral cooperation in asset recovery and extradition. The Convention has 140 signatories and includes key countries, notably China and India.  Continue reading “China and the UN Convention Against Corruption: A 10- year appraisal”

Corruption and the Death Penalty

Written by Bin Liang.

On Monday, July 4, 2016, Ling Jihua was sentenced to life imprisonment by the No. 1 Intermediate People’s Court of Tianjin after a closed-door trial. He was convicted of taking bribes, illegally obtaining state secrets and for abuse of power. Upon hearing his sentence, Ling read aloud from a prepared script stating that he did not contest the conviction and “thanked” the court and the lawyers for their work. Ling is a former Chinese politician and one of the principal political advisers of Hu Jintao, the former President and General Secretary of the Chinese Communist Party. He served as the Director of the General Office of the Communist Party from 2007 to 2012, and was seen as a promising candidate for promotion to the top leadership at the 18th Party Congress in 2012.

Continue reading “Corruption and the Death Penalty”

As Chen Yunlin Falls From Grace, Beijing Shows It Still Doesn’t Get Taiwan

Written by J. Michael Cole.

According to reports in Taiwanese media on 4 September, China’s former point man on Taiwan affairs, Chen Yunlin, may have become the latest target of President Xi Jinping’s “anti-corruption” campaign. In an odd twist, Chen also appears to be blamed for stalled progress in cross-strait relations and Beijing’s efforts to win the hearts and minds of the Taiwanese.

In the current political environment in China, there is nothing overly surprising about the former head of the Taiwan Affairs Office (TAO) and ex-chairman of the semiofficial Association For Relations Across the Taiwan Straits (ARATS)—as well as his spouse, Lai Xiaohua—coming under scrutiny by the  Central Commission for Discipline Inspection (CCDI) for possible misappropriation of funds. The Chinese system is such that virtually any official will at some point have done things that constitute corruption. Under President Xi, such infractions are then investigated and brought to light whenever an official has fallen out of favour, a process rise and fall that is reminiscent of the fate of many an official under the U.S.S.R.’s Joseph Stalin.

Far more interesting is the fact that revelations that Chen is being investigated come to light amid a series of internal reports, requested by Mr. Xi, into the reasons why the unification of Taiwan remains as elusive a goal today as it was seven years ago before the “China friendly” Ma Ying-jeou assumed the presidency in Taipei and launched a series of measures to improve ties with Beijing. Mr. Chen was deputy head and then head of the TAO during the Lee Teng-hui and Chen Shui-bian presidencies, and headed ARATS from 2008 until 2013. Conceivably, it the 2008-2013 timeframe constituted the critical period in cross-strait relations, with the signing of several agreements, the opening of tourism, and the relaxation of various rules concerning investment and exchanges between people on both sides of the Taiwan Strait. As chief negotiator, Mr. Chen visited Taiwan in November 2008, sparking mass protests and arguably sowing the seeds of future action by civil society against the government’s dealings with China.

According to the high-level sources quoted in the local media, Mr. Xi ordered the reports after the Chinese Nationalist Party’s (KMT) unexpectedly poor performance in the 29 November 2014 “nine in one” local elections, in which it also lost control of Taipei City. Mr. Xi and his close entourage reportedly were fed poor intelligence about the KMT’s prospects in the race and were taken aback when the KMT was pummelled at the polls. The KMT’s Sean Lien, the closest thing to a Taiwanese “princeling” who like his father, Lien Chan, enjoys a close relationship with officials in Beijing, fared poorly in Taipei against Ko Wen-je, a political neophyte who was running as an independent.

What has also troubled Beijing has been the lack of palpable progress on the “re-unification” front, a situation that was driven home when tens of thousands of student-led protesters in March and April 2014 occupied and surrounded the Legislative Yuan in Taipei to block implementation of the Cross-Strait Services Trade Agreement (CSSTA) and a subsequent Trade-in-Goods Agreement. Though it may have come as a surprise to Beijing, the Sunflower Movement was both a manifestation and source of a new identity among the Taiwanese which emerged in large part due to the greater contact that had occurred between China and Taiwan since 2008. President Ma, whose ability to deliver what Beijing wanted was already weighed down by democratic checks and balances, never fully recovered from the occupation. From that moment on, progress in cross-strait relations not only lost its momentum: it practically came to a standstill. As a result, Beijing increasingly showed signs of impatience and accused the Taiwan side of dragging its feet, such as on the planned opening of reciprocal representative offices.

Initially, the individuals who were asked to prepare a report for Mr. Xi explaining what had gone wrong blamed this on the opposition Democratic Progressive Party (DPP), which presumably had “misled” the Taiwanese. Mr. Xi would have none of it and ordered that the drafters return to the drawing board. After several iterations, the approved report drew an accusatory finger at Chen Yunlin, who supposedly had relied “too heavily” on personal networks and contacts in the business community (evidently this would have greatly facilitated the corruption he stands accused of). The conclusion of the report was that Chen Yunlin’s “comprador”-based approach to cross-strait relations had failed to convince the Taiwanese of the material benefits of “peaceful” relations with Beijing and had in fact backfired by creating mounting resentment against China.

In other words, Chen Yunlin had “lost Taiwan,” and by becoming highly unpopular, President Ma had contributed to that outcome.

For all his faults, Mr. Chen is being unfairly accused by a regime that, despite multiple occasions to learn from Taiwan’s open society, stubbornly refuses to acknowledge the drivers of Taiwan’s distinct identity. Beijing seems to regard the trend lines that indicate a rising self-identification as Taiwanese and single-digit support for unification as a sign that it—the TAO, ARATS—has failed to properly communicate with the Taiwanese people and explain why its Taiwan policy, which is largely influenced by a belief in economic determinism, should be embraced by its 23 million people. The problem is that Beijing appears to have become a victim of its own propaganda, a phenomenon that may have been exacerbated by the authoritarian nature of its political system which discourages officials from providing their superiors with information that doesn’t fit the accepted model.

The reality is that most Taiwanese, even if few have actually reaped the benefits, already have a pretty good idea of the material advantages that might accrue from closer economic ties with China. However, while most are amenable to liberalized economic ties, only a very small number of them are willing to sacrifice their nationalism at the altar of economics. Thus, even if the segment of Taiwanese society that benefits from closer economic ties with China were substantially enlarged, it is unlikely that this would have a major incidence on self-identification and desire for unification. No amount of suasion by TAO or ARATS officials will change the fact that “Taiwanese consciousness” is informed not only by the island-nation’s separate rule since 1895 but, increasingly, by a “civic nationalism” that draws from Taiwan’s liberal democracy and the public expectations of transparency, fair play, justice, and accountability, all of them key ingredients of the Sunflower Movement recipe. For some reason, the leadership in Beijing, as well as those who keep it informed about developments in Taiwan, have failed to treat economic matters and nationalism as one and the same, or assume that the former could have primacy, and eventually substitute for, the latter. Although Mr. Chen may have played a role in reinforcing the myopia (and it is not inconceivable that his partners in Taiwan misled him into believing that he was on the right track), he can hardly be singled out for being wrong about Taiwan.

Thus as he faces investigation and a fall from grace, Mr. Chen stands as a convenient fall guy for a Taiwan policy that drew from the centre’s ideology and which never had a chance of succeeding. Mr. Chen may fall into oblivion (or worse, end up in jail), but as long as Beijing remains unable to appreciate the dynamics of Taiwanese identity, his successors at the TAO and ARATS will continue to get it wrong, and all of them will also one day stand accused of “losing Taiwan.”

Michael Cole is a Senior Non-Resident Fellow at the China Policy Institute, an Associate researcher with the French Centre for Research on Contemporary China (CEFC) and Editor in Chief at Thinking Taiwan. Image Credit: CC by VIA Gallery/Flickr.

Medical corruption in China: the views of the general public.

Written by Neil Munro.

China’s public hospitals are notorious for such unethical practices as offering treatment and diagnostic tests which are not medically indicated and taking extra payments (such as the ‘hongbao’ or ‘red envelope’). Such practices present patients and their families with a dilemma: how to ensure that doctors offer, at a reasonable price, the same quality of care as they would for their own family? Citizens have available a variety of strategies to deal with this kind of “agency risk”, varying from passive to active, from the universal to the particular, and, in Hirschman’s terms, between exit, or changing providers, voice, or seeking to change the terms of the relationship with an existing provider, and loyalty, or just doing as the provider says. Data from a nationwide survey carried out in China in the winter of 2012-13 provides us with the opportunity to examine two questions. Firstly, how likely do Chinese citizens perceive unethical practices to be in their local hospitals; and secondly, what strategies do they prefer to deal with the agency dilemma. Citizens’ preferences reveal a great deal about the health care system—to what extent patients are disempowered, how modern the system is in the Weberian sense, how flexible provider behaviour is and to what extent market mechanisms provide an exit from the agency dilemma.

The Chinese health care authorities have been struggling with unethical practices in the health care system for more than thirty years. During the 1980s, they focussed on developing a normative framework for medical ethics, and on different methods of institutionalizing it in hospitals and health care administration more broadly. During the 1990s, medical ethics were made a compulsory part of physicians’ professional education. But the development of ethics training coincided with market reforms in the health care system, which changed the nature of the doctor-patient relationship. The essential problem was not marketization per se but distortions of the market caused by government policies, which set the price of medical labour below cost, whilst encouraging hospitals to make money from drug sales and diagnostic procedures. To make up their meagre salaries, doctors relied on bonus payments linked to the amount of revenue they generated for their department. The aspirational declarations in medical ethics codes were in direct conflict with the real incentive structures which exacerbated price inflation and unethical practices.

The health care authorities have been struggling to find a way to change these incentive structures without taking on too much of the costs of delivering health care. At primary care level, they began paying primary health care providers a fixed per capita fee to deliver a defined package of basic public health services.  Furthermore, they introduced a zero-profit drug policy and tied the allocation of public health budgets to annual performance assessments. However, the Gordian knot is in reforming public hospitals, which provide 90% of inpatient and outpatient services. Based on the results of experiments in a number of cities, the Ministry of Health has started to implement case-based charging with treatment protocols.  They also introduced a National Essential Medicines List with capped prices, extended the zero-profit drug policy to county hospitals, and begun to raise the prices of hospital services. It has also redoubled its efforts to strengthen the ethics of the health care industry. However, in nearly all Chinese cities, hospitals still retain their profits and physicians’ income is linked to profits.

Our survey shows that unethical practices commonly reported in the media are perceived as widespread by the public as well. Sixty-one percent consider it likely that in their local hospital patients will be required to undergo comprehensive check-ups even when the diagnosis is perfectly clear. Fifty-seven percent consider unnecessary prescription of medicines not covered by insurance to be very or somewhat likely. Thirty per cent consider taking bribes or the aforementioned ‘hong bao’ to be likely. Seventy-two percent of respondents see at least one form of unethical behaviour as likely.

Our survey prompted respondents to recommend a course of action to minimize agency risk in three different situations. The first question concerned a surgeon who tells the patient that he cannot guarantee the success of a life-saving operation. Whilst this may be a perfectly ethical and responsible thing to say, we were interested in how many respondents would interpret it as a cue to do something to minimize agency risk. Only one third of respondents said they would recommend just undergoing the operation at one’s own risk. Just over a quarter of respondents recommended changing to another public hospital. One in ten would use connections to find another surgeon. If a doctor prescribes a lot of expensive medicine which is not covered by insurance, even when cheaper alternatives are available, slightly less than a quarter of respondents would just buy the medicine prescribed. The same number would ask the doctor to change it. Just over one in eight recommend changing to another public hospital. If a public hospital requires unnecessary diagnostic tests, slightly less than one third would recommend doing the tests anyway, just under a fifth think that asking the doctor to keep the tests to a minimum would suffice. Slightly less than one in eight would recommend changing to another public hospital. These three strategies—doing what the doctor recommends (“loyalty”), changing to another public hospital (“exit”) and asking the doctor to change their behaviour (“voice”) are the three most popular. Another four types of strategies – using connections, going to a private hospital, complaining to the hospital administration and paying bribes—are clearly marginal, since around 90 per cent of respondents would never recommend them.

Analysis of the socio-demographic correlates of the different strategies suggests that the more educated and the higher the income of the respondents, and the more developed the area in which they live, the more proactive they are in dealing with unethical practices.  Privileged groups are also generally more likely to opt for exit strategies. The oldest Chinese are less inclined to use particularistic strategies (bribery, connections, asking for favours), and, except in the case of surgery, less likely to voice their concerns.

It is probably too early to tell what the effects of recent changes to the incentive structures in Chinese hospitals have been. Our survey, conducted more than three years after the start of the latest round of reforms, showed that in the eyes of the public, unethical medical practices are still prevalent. They are part of a culture of health care seeking and medical treatment in which agency risks are shifted onto patients and their families. Most patients see no alternative but to accept these risks, testifying to the existence of a trap of low expectations with respect to medical ethics.  The market does not seem to offer solutions to the problem of unethical practices. The well-to-do are more likely to deal with agency risks pro-actively, including by changing providers, but this still leaves the bulk of the population vulnerable. Empowerment of patients within the public hospital system seems to offer a more promising way forward. It is striking how few respondents believe that complaining to the hospital administration can help them deal with unethical practices. There is a clear need for regulatory institutions which command public confidence. It would be desirable, for example, to establish a system of patients’ ombudsmen, perhaps chosen from amongst local people’s congress delegates, who stand at arms’ length from the medical profession and have real powers to investigate and punish doctors who transgress codes of conduct. Another possibility is to use the internet to develop whistle-blowing platforms and to gather intelligence about ethical violations. Finally, there is a need to educate the public about their rights when seeking medical treatment, both in order to lower unrealistic expectations and to provide guidance on how to seek effective redress.

Dr Neil Munro is a Senior Lecturer in Chinese Politics at the University of Glasgow.  A more detailed account of the survey reported in this article will appear as a chapter in Public Health Policy in Asia, ed. Pitman Potter. London: Routledge, forthcoming. Image Credit: CC by · · · — — — · · ·/Flickr

Blog at

Up ↑

%d bloggers like this: