Ability and performance aside, many Chinese government officials are corrupt. To the extent that the people are very dissatisfied with corruption, it can destroy the social fabric and lead to political instability. The government considers corruption a serious problem and has tried very hard to stop it, but has had only limited success. The reason for corruption is that there are many opportunities for government bureaucrats and managers of state-owned enterprises and commercial banks to confer economic benefits to the population, and thus to extract payments for the benefits they confer. Corruption occurs when payments are extracted against the rules or against accepted practice. This definition depends on the rules or accepted practice under the circumstances corruption takes place.

In general the compensation of Chinese government officials is low as compared with the income of people of similar ability working in the private sector. Chinese citizens will not complain if some government officials extract moderate payments from people in the private sector for rendering satisfactory services according to the rules or accepted practice, payments that the people would almost volunteer to give for the services. They would object and consider it corruption if unreasonable payments were extracted or if government officials diverted large sums of public funds to their personal accounts. Although corruption is a serious problem in China, the vast majority of government officials are not corrupt partly because they do not have opportunities in their jobs to confer economic benefits and partly because receiving a moderate...