Teaching Comparative Government and Politics

Tuesday, May 20, 2014

So much corruption that inflation is muted

If a Chinese official gets a big bribe, what does he do with the money? One official piled it up at home.

A Ton of Cash Reported in Official’s Home

The tempo of corruption investigations in China is so rapid that the cases begin to blur…

Investigations against high-ranking officials, the “tigers,” are generally announced on weekends, which the party mouthpiece speculated was to allow citizens more time to digest the news…

Sometimes the details bring home the staggering gains that can be ill-gotten. That appears to be the case with Wei Pengyuan, a deputy chief of the National Energy Administration’s coal bureau. Caixin, the respected financial news magazine, reported on Thursday that… [in] his house investigators uncovered a trove of renminbi [Chinese currency] so massive that it took 16 mechanical bill counters to tabulate it — and four of the machines burned out in the process.

The total amount in cash was more than 100 million renminbi, or $16 million, the magazine said, citing unnamed investigators.

China's largest denomination, the 100-renminbi note

China’s largest bill is a 100-renminbi note. That creates enormous headaches in an economy where cash is preferred… That problem multiplies when one is trying to conceal a stash of millions. Several Chinese newspapers published estimates on Friday that 100 million renminbi in cash would weigh more than a ton.

The author Yu Hua wrote last Sunday in an Op-Ed piece for The New York Times that the hoarding of cash by corrupt officials might even be a factor in keeping price inflation under control in China, as vast amounts disappear from circulation…

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