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Cameron, China & Corruption: some unanswered questions

Written by Robert Barrington on Tuesday, 3 December 2013

As David Cameron promises to create a “partnership for growth and reform” in China is there a risk that a blind eye will be turned to difficult questions relating to issues such as corruption?


As David Cameron promises to create a “partnership for growth and reform” in China is there a risk that a blind eye will be turned to difficult questions relating to issues such as corruption?

Tonight in London sees the launch of Transparency International’s annual Corruption Perceptions Index. China is ranked as 80th out of 176 countries with a score of 40 out of 100 – below the global average of 43 and way below the top-performing countries New Zealand and Denmark, which each score 91 out of 100.

The conclusion, according to perceptions, and according to this widely-respected Index: China has a problem with corruption. It is in the bottom half of the world league table. Not a great surprise for anyone who follows China – but one that is increasingly important as China’s influence in the world increases and we seek to trade with it.

Earlier this week, there was a striking report from the Italian town of Prato illustrating the problem of exporting low standards. A factory, using Chinese workers and Chinese cloth, had been set up there to enable the garments to bear the label ‘Made in Italy’. It also operated to Chinese corruption-resources-corruption-resources-health and safety standards. The result: seven people died in a fire.

The Prime Minister is apparently encouraging Chinese investment in HS2 the UK’s planned high-speed rail link. China’s own high-speed rail link was de-railed by corruption – literally. In the Wenzhou crash 40 people died. The Minister of Railways was tried and found guilty of corruption.

TI’s own index of Defence companies from 2012 assessing them on the basis of evidence of anti-corruption procedures, rated every Chinese defence companies as category F – reflecting no or very limited evidence of procedures to stem impropriety.

Within China, the web of corruption makes it more complex for non-Chinese companies to operate in line with their own domestic laws, and creates a risk of being caught up in politically-motivated investigations – see this blog on the GlaxoSmithKline case.

It would be impolite of David Cameron to mention China’s problem with corruption, so he probably will not. But it is the elephant in the room, and here are some uncomfortable questions:

  • When will China start to apply anti-corruption laws to its own companies operating overseas, so that clean companies – such as those governed by the Bribery Act – can operate on a level playing field? Or should UK companies just ignore such highly destructive behaviour by their Chinese competitors because it is impolitic to mention it?
  • Will it be made clear to Chinese companies operating in the UK that, unlike the shenanigans we have seen in Italy, they must operate to UK standards; and with regard to corruption, who will take charge of monitoring and enforcing this in the absence of an anti-corruption agency in the UK?
  • Will the Chinese government reassure its partners that corruption prosecutions within China will be targeted at all companies – and that they will not be politically-targeted when, for example, the Chinese government wants to negotiate a better price for iron ore or drugs?
  • Is the Prime Minister encouraging UK companies, that operate under the Bribery Act, to enter joint-ventures or other partnerships with Chinese companies – and if so, does he expect those entities to operate in line with the Bribery Act, or is he preparing to turn a blind eye?
  • Is there the political will in the UK to prosecute a Chinese company under the Bribery Act, or will the UK Government fear another ‘Dalai Lama’ response?

The good news is that if companies from a country where corruption is prevalent, like China, start to globalise, then there is an expectation that they will operate to global norms – in areas such as corruption, the environment, labour standards and corruption-resources-corruption-resources-health and safety. They will come under the ambit of laws such as the UK Bribery Act and the US Foreign Corrupt Practices Act.

The concern must be that in the rush to solve the UK’s economic problems and recover from the financial crisis, a blind eye will be turned to difficult questions.

The Prime Minister’s message to Chinese companies should be that they are welcome partners in the global economy, but means playing by global rules. In the effort to win China’s goodwill, we have seen no evidence that this message is being put across.

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Read 5431 times Last modified on Tuesday, 24 November 2015 11:47
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Robert Barrington

Robert is TI-UK's Executive Director. You can view his full bio here, and tweet him @TIukED.

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