Can China Tame the Corruption Beast?

Mao Zedong famously warned that a single spark could start a prairie fire. Now China's current crop of leaders are worried that the country's ever more numerous sparks of corruption could ignite an inferno--one that might even see the Communist Party go up in smoke. Graft on an unprecedented scale is stretching all the way up from the rice paddies of rural China to high levels of government.

From shakedowns of peasants to massive smuggling campaigns that rob the state treasury of much-needed cash, the scale of graft has reached a level where it may threaten the country's continued economic progress. Indeed, after seeing a top-drawing anticorruption film, Live or Die, in August, President Jiang Zemin described the movie as a ''powerful shock and a profound warning.''

CAPITAL CRIMES. Certainly, the hunt against corruption is increasing in intensity. In late November, Justice Minister Gao Changli disappeared from his job--detained for questioning on corruption charges, Beijing sources say. In mid-September, a former deputy head of the National People's Congress, Cheng Kejie, became the most senior official to be executed since the People's Republic was set up in 1949.

During the first eight months of this year, Chinese prosecutors filed more than 23,000 criminal corruption cases. Reported corruption cases have increased 9% annually and the number of officials under investigation has been shooting up an average of 12% per year, says Pei Minxin, a scholar at the Carnegie Endowment for International Peace in Washington, D.C. In the biggest case in Chinese history, 14 officials and smugglers were sentenced to death in mid-November for smuggling $6.4 billion in goods into China through the coastal province of Fujian. And authorities recently released the results of an investigation into officials in booming Guangdong: The report estimated that corrupt officials purloined $1.9 billion in funds, largely from provincial businesses.

The stepped-up anticorruption efforts reflect fears among leaders that widespread criminality could destroy what's left of the party's legitimacy as the country enters a difficult phase of its economic reforms. China's entry into the World Trade Organization means that millions more workers will lose their jobs as factories are restructured or shuttered. The problem is that corrupt officials are living it up while workers struggle. It's hard to tell steelworkers in Shenyang, to take a recent example, that they're being laid off when a top municipal official lost $1.3 million in stolen funds at a Macao casino.

EROSION. ''People in China can tolerate short-term pain provided there is a sense of justice, that the pains are equally shared,'' says the Carnegie Endowment's Pei. He thinks that a stronger legal system, a freer press, and more grassroots democracy are needed to check corruption. Inevitably, though, those changes would force the Communist Party to surrender its monopoly on power.

Corruption now costs China the equivalent of 8% of GDP annually in lost taxes and tariffs, figures Hu Angang, a senior fellow at the Chinese Academy of Sciences. And it looks set to worsen. China's courts are too weak to fight corruption effectively. Its fitful experiments with local democracy are too small to do the job. Luckily for China's leaders, the sparks of graft in the countryside haven't yet grown into a nationwide fire: That would take a unifying national issue rather than a collection of local grievances. But, there's plenty of kindling in a country tired of being ripped off by its own officials. China's leaders are--and should be--worried.

By Mark L. Clifford in Hong Kong, with Dexter Roberts in Beijing

Endgame for Milosevic?

Despite his hopes for a comeback, the political destruction of former Yugoslav President Slobodan Milosevic is nearly complete. His menacing regime fell to pieces after he tried to steal Yugoslavia's Presidential election in September. Now his Socialist Party of Serbia (SPS) is crumbling, too.

Polls show the SPS may garner only 2% to 3% of the vote in Dec. 23 elections for the regional Serb parliament--below the 5% threshold needed to claim seats in the legislature. More than 60% of the electorate is expected to vote for the Democratic Opposition of Serbia, the coalition that ousted Milosevic by organizing protests and strikes.

Such a strong showing will give a boost to Yugoslavia's new President, Vojislav Kostunica. He needs to consolidate his power so he can purge government ranks of Milosevic's corrupt cronies, prosecute the former President for fraud and abuse of power, and launch reforms to fix the country's ailing economy. But Kostunica is unlikely to ship Milosevic off to The Hague for prosecution for war crimes. That would look too much like caving in to the NATO powers that bombed Serbia during its war with Kosovo in 1999--even though Kostunica is now asking them for economic aid.

Meanwhile, Kostunica faces his own troubles with Kosovo. Militant ethnic Albanians who want independence recently killed four policemen in Serbia. Kostunica will have to walk a fine line: exercising restraint to avoid ruffling NATO troops stationed in Kosovo, even as he tries to maintain security on the Serbian-Kosovo border.