Management Corruption in China’s Industrial Restructuring: How and Why State Assets Get Lost

Management corruption, defined as the drain on state assets caused by corruption of public managers, is rampant in China. This study analyzes the rise of management corruption by examining the changing forms and characteristics of corruption in the context of China’s industrial restructuring. It pays special attention to the typical asset-stripping strategies and tactics under certain institutional settings. By focusing on the new incentives and opportunities for management corruption and their linkage with the ownership restructuring scheme in the state economy, the article aims to reach a better understanding of not only management corruption per se but also the ways in which the Chinese state has responded, or failed to respond, to the problems and challenges that have accompanied its reform efforts. The findings of this study reveal the forces at work behind the massive drain on the state assets and point to the tension facing the Chinese state between the need for transforming the state economy and its capacity for monitoring and regulating the restructuring process. Corruption is a matter concerning not just the misconduct of public managers, but also institutional reconfiguration, policy framework, and the government’s regulation of state enterprises.