The latest figure to hit the front pages about China’s corruption problem is that $120 billion have been embezzled and smuggled out of the country since the mid-1990s, according to a Chinese government report.

The corrupt officials who took the money (there are over 16,000 of them) are now living in countries like the US, Australia, Canada, and Holland.

China’s corruption problem is well-known, particularly among the Chinese themselves.  On a trip to the Bahamas, I met a Chinese architect who made his living exclusively designing houses for these wealthy expats. 

On a trip to Florida, I think I met one of the corrupt expats.  We were on a boat tour together when I discovered that he spoke my regional dialect (not a common one in the US).  Almost without fail, that automatically leads to a deep conversation about where he went to school, what city he came from, and what he did for a living.

This guy, however, was very guarded.  His reservation and other factors led me to believe he is one of them.

The point is that corruption is everywhere in China.  Everyone knows someone who does it.  Everyone has been a victim of it.  And even though everyone complains about it, almost everyone has been the beneficiary of it at some point in their lives.

In fact, if a person ascends to a position of political authority, he is heavily pressured by his family and close friends to abuse his position to either do favors for them or to outright embezzle money. 

I knew someone who won a minor post in a city and then largely avoided corruption.  His family members, including his parents and children, heavily persecuted him and thought he was stupid.

Yet, when you ask a Chinese person for his number one complaint about the government, it’s corruption.  Not democracy, not freedom of speech, but corruption.

Some Western economists call this the “guanxi economy” and chalk it up to cultural differences.  But the reality is that it’s simply corruption.

Corruption is holding back China economically.  On the local level, it might mean subpar services for all things government related unless you pay a bribe or know someone.  On the national level, it might mean corrupt Bank of China loan officers making questionable multi-billion loans.

And as I mentioned before, it’s making people very angry.  The Arab Spring was sparked by a corrupt police officer confiscating the electronic scale of a produce vendor in Tunisia.  These types of incidents happen in China all the time and could potentially provide the spark for unrest.

Corruption is not unique to China.  In fact, most third-world countries are corrupt.  It was even a problem in the US 100 years ago when the country was poorer.

Some economists believe widespread corruption is a function of poverty; once average income rises above a certain level, corruption naturally fades.

America, for all its corruption problems, rose to be the dominant superpower of the 20th century.  Now, corruption isn’t such a big issue. 

It remains to be seen if China can follow a similar path to prosperity.  Meanwhile, authorities have a vested interest in combating this problem and not letting it get out of hand for the sake of societal stability.