Corruption and local governance: The double identity of Chinese local governments in market reform

This paper examines China's corruption in the context of its changing central-local relations. It contends that it is not so much decentralization as the incompleteness of power devolution that has contributed to the spreading of corruption in China. The incompleteness can be seen in the development of the double identity of local government as both a state political agent and a local economic principal. As state agents, local governments obtain increased discretionary power to make and implement policies and, at the same time, they also assume the role of local economic principals to protect, promote and even directly manage local economies. The dual identity places both broad discretionary power and immediate economic benefits within easy reach of local officials. Focusing on two prevalent forms of corruption in China today, illegal land transfers and 'little money lockers', the paper shows how the deep involvement of local officials in economic affairs, coupled with unbridled discretionary power, provides opportunities and incentives for corruption. © 2006 Taylor & Francis.