Pranab Bardhan writes at Yale Global:
Of course, it is well-known that some of the entrepreneurs are in fact friends or relatives of Party officials. ( An article in Der Spiegel, 27 February, 2007, reported a finding by the State Council of the Academy of Social Sciences and the Party’s Central University that of the 3320 Chinese citizens with a personal wealth of 100 million yuan or about $14 million, 2932 were children of high-ranking Party officials). Many SOE's are also controlled by powerful political families.
Thus there is a new political-managerial class, which over the last two decades has converted their positions of authority into wealth and power. The vibrancy of entrepreneurial ambitions combined with the arbitrariness of power in an authoritarian state has sometimes given rise to particularly corrupt or predatory forms of capitalism, unencumbered by the restraints of civil society institutions. Perhaps nowhere has the predation been as starkly evident as in land seizures both in cities and the countryside. In the real estate boom of recent years, for example, the commercial developers in cahoots with local officials have bulldozed old city neighborhoods, residents waking up in the morning to find that their house has been marked for demolition with the Chinese character “chai” – meaning raze – painted in white, with hardly any redress or adequate compensation available.
This corrupt or predatory form of capitalism has also some obvious global implications. When foreign companies try to invest in China or Chinese companies try to acquire holdings abroad the decision-making process can be vitiated by arbitrary political interference, underhand dealings, kickbacks and influence-peddling. Even in matters of foreign aid in Africa a recent New York Times report points to the opacity in the activities of politically well-connected Chinese foreign-aid contractors.
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