Chinese President Xi Jinping promised to tackle corruption and graft within the Communist Party when he came to power, and the Chinese government now says that it has punished 20,000 officials for breaking the rules set to curb bureaucratic waste such as giving long speeches, holding unnecessary meetings, and using government vehicles for unofficial purposes, Reuters reports.

China

Corruption in China

The Central Commission for Discipline Inspection, which is in charge of rooting out corruption in China, made the announcement, specifying that 5,000 officials had been misusing official cars, more than 900 held overly elaborate ceremonies, and many others officials were characterized as being “mediocre” or “indolent”. No details on the nature of the punishments were released, they were simply described as being administrative in nature.

While it’s easy to be skeptical about government promises, China has gone after some of its own high profile officials such as Railway Minister Liu Zhijun earlier this year. But not everyone thinks the country has done enough. China’s economy is clearly changing, and economist Richard Koo has argued that the country has about 15 years to get its financial house in order if it is going to smoothly transition from being an emerging market to being a developed nation with a healthy middle class.

Low wages in China

As long as Chinese wages remained low by international standards, foreign companies had an incentive to put up with legal uncertainty and corruption, but now that wages are increasing it’s harder for companies to justify the other difficulties they have when doing business in China.

“China, having already passed the so-called Lewis turning point where additional demand for workers pushes wages sharply higher, now has even less time to escape the middle-income trap,” writes Koo.  “Much of China’s tremendous growth over the past 30 years has been fueled by foreign capital, and the nation will have to continue relying on foreign capital if it is to escape this trap within the time remaining… One thing the authorities can do is to minimize the uncertainty stemming from corruption and a lack of legal infrastructure by aiming to become a nation under the rule of law.”