The Curious Case of China: How Corruption is Making and Breaking China’s Economy

Connie Shen


As China has risen to economic dominance, the impact and influence of its informal markets has come to the forefront as well. While many scholars agree that corruption cripples economic growth, the extensive role informal markets have played in China’s tremendous success over past decades has challenged this perception. By fulfilling demand in regions neglected due to political reasons or distance, informal markets have become the foundation on which much of China’s economy has rested. However, China’s experience also carries heavy implications on corruption and development for the world overall. Does China represent a new model of economic development? How have informal markets facilitated China’s growth, and is it sustainable? By examining the historical and political conditions in which these markets flourished, I conclude that while informal markets remain integral components of China’s economic success, its unstable and unsustainable nature determines that China’s example should be studied, not followed.


China; Banking; Economic Growth; Development; Informal Markets;


Leff, Nathaniel. 1964. “Economic Development: Through Bureaucratic Corruption.” The American Behavioral Scientist 8 (November): 8-14.

Tsai, Kellee. 2002. Back-Alley Banking: Private Entrepreneurs in China. Ithaca: Cornell University Press, 2002.


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