The Hoover Institution announces that issue No.19 of the China Leadership Monitor is available on-line at here. Articles in this issue includes:

Military Affairs–James Mulvenon

So Crooked They Have To Screw Their Pants On: New Trends in Chinese Military Corruption

Corruption is the most dangerous cancer in the Chinese party-state today, and PRC media are replete with new revelations of official corruption at every level of the system. Not surprisingly, the military vanguard of the Party continues to be plagued by the same corrosive institutional corruption as the Party itself, despite divestiture from commercial operations in 1998 and eight intervening years of focus of rapid combat modernization. This article examines recent trends in Chinese military corruption, including the Wang Shouye scandal and the current PLA campaign against “commercial bribery.” It concludes that corruption in the PLA appears to have transitioned from a major, debilitating problem in the go-go days of PLA, Inc. in the 1980s and 1990s to a more manageable issue of military discipline in the new century. At the same time, the complicity of the military leadership in hiding Wang Shouye’s extraordinary extra-legal behavior until one of his mistresses forced its hand suggests that leadership has not institutionalized anti-corruption norms. Accordingly, military leadership analysis is a key element of understanding the depth and breadth of PLA corruption.

Economic Policy–Barry Naughton

Another Cycle of Macroeconomic Crackdown

During the summer of 2006, Chinese leaders focused economic policy on the danger of overheating. As in the previous round of economic contraction, in 2004, policy involved a potent combination of monetary and administrative measures. However, unlike 2004, policy instruments this time have been well coordinated across financial, macroeconomic, and administrative measures, even including a slight acceleration in the rate of appreciation of the RMB exchange rate. The result is an economic policy package that is stable and consistent, but that may not be bold and flexible enough to meet the needs of the extremely dynamic Chinese economy. The recent visit to China by U.S. Secretary of the Treasury Hank Paulson should be interpreted as an effort to nudge China out of this extreme policy stability. Paulson’s meeting with President Hu Jintao injected some flexibility into the balance of forces that determine Chinese economic policy, but probably not enough to result in a major change at this time.

Political Reform–Joseph Fewsmith

Exercising the Power of the Purse?

Over the past ten years, the city of Wenling, in the eastern coastal province of Zhejiang, has been developing a system of “consultative democracy” that has allowed citizens to ask about and express their opinions on subjects related to their interests, particularly investment, road building, and education. Over the past year, this experiment has been extended to include public discussion of the budget process–or at least part of it. In one township, this process merged the practice of democratic consultative meetings with the local people’s congress. These reforms, widely reported in the Chinese press and endorsed at high levels, are still quite limited. But they suggest an effort to make the budgetary process both more transparent and subject to legislative review by expanding the role of local legislative bodies.