Corruption as a contracting process - A causal analysis of corruption in Chinas courts

As is generally recognized, the functioning of China’s legal system is seriously impaired by widespread corruption in courts. In this research I identify the systemic causes of corruption in China’s courts by firstly investigating how corruption is carried out in China’s courts.

I begin by developing a typology of various corrupt activities in China’s courts and examine its general patterns finding that corruption takes place in the central court divisions, at almost all levels of the judicial system, regardless of its hierarchical level and geographic location. Such conduct may involve all types of judges, regardless of their competence or salary. However, the prevalence and the features of the corrupt conduct are more closely associated with the nature, range as well as value of the decision-making power held by the offender. I also show that among all corrupt activities corruption conducted in the form of exchange, namely bribery or favoritism, is the most prevalent and resilient type. I consequently focus on this particular type of corruption by introducing an analytical framework. This analytical framework treats corruption as a four-phase contracting process, namely 1) the phase of initiation of the exchange; 2) the phase of negotiation of the exchange; 3) the phase of contractual performance; and 4) the phase of enforcement of the contract in case of non-performance. This framework is employed in an endeavor to analyze the empirical data collected from various sources and to demonstrate in details the features and patterns of corrupt conduct in each of the four phases so as to identify more accurately which factor(s) has(have) facilitated corruption in China’s courts. Two phases are identified as most critical to the completion of corrupt exchange. The first phase is the initiation phase, in which corrupt intent is communicated between potential exchange parties. The second phase is the phase of contractual performance, especially that of the bribed. I demonstrate how these two phases are completed by corruption participants in China’s courts and what factors have facilitated the process and contributed to its “success”.

The initiation phase is facilitated by the omnipresent and omnipotent “guanxi-practice” in China. I find that guanxi-practices are effective in reducing the legal, moral and cognitive barriers that prohibit the communication of corrupt intent and hence have greatly improved the efficiency of the otherwise prohibitively costly initiation phase of corrupt exchange. In addition, the decision-making mechanism in China’s courts is identified as a structural factor, which has facilitated the delivery of corrupt services in courts and resulted in the proliferation of corrupt opportunities. I also discuss the dynamics of corrupt activities in China’s courts, which appear as a multi-player, multi-dimensional and dynamic phenomenon instead of being one-on-one, one-dimensional and static.