R&D Spending Plagued with Embezzlement, China Eyes Reform

Published on Author Asher
The disgraced Wang Kewei attending a meeting

Many contributors to this blog have mentioned before Xi Jinping’s expansive anti-corruption campaign (myself, Miller, Helvey, and Brister). China Daily reports that Guangdong official Wang Kewei has become the latest casualty of this purge. Charged with violating Party ethics guidelines and State laws, Wang is the second senior official in the Guangdong Provincial Department of Science and Technology to be expunged since the start of the year. In fact, at least 50 Guangdong provincial and city-level technocrats—responsible for promoting regional scientific research and development—have been placed under investigation in the past year.

This is a positive indicator in that, as I have discussed before, Mr. Xi is serious is his efforts to root out fraud. However it is concerning that the misuse of government subsidies is so widespread, especially given the relative importance of promoting scientific and technological innovation—to prepare for a water and food security crisis, reduce emissions and pollution of farmland and water systems, and improve healthcare delivery (among innumerable other external benefits and policy goals).

Because China’s R&D spending has grown by more than 1500% since 2000 and accounts for almost 2% of GDP, it offers many opportunities for indiscretions. In fact, as much as one third of the Guangdong’s R&D subsidies may be snaffled by the provincial officials charged with allocating them. In 2010, two prominent researchers, Rao Yi and Shi Yigong, opined that “to obtain major grants in China, it is an open secret that doing good research is not as important as schmoozing with powerful bureaucrats and their favorite experts.”

Wang Dong, the deputy mayor Guangzhou, believes that the subsidy-allocation system “must be improved,” and that while the “government annually invests a large sum of money in funding research, we need to introduce effective and concrete measures to prevent the research funding from being misused and siphoned off by corrupt officials.” According to Zeng Fenming, director of the Institute of Modernization Strategy at the Guangdong Academy of Social Sciences, grant approval power needs to be decentralized and subject to greater administrative oversight and review.

As the central government becomes frustrated with stagnating returns on its ballooning R&D budget, these reforms may be pursued at the national level: on the 12th the State Council released new transparency guidelines for the allocation of research funding, and on the 15th the Party’s Central Commission for Discipline announced that, along with a new round of investigations, a “special inspection team” will be formed to scrutinize the Ministry of Science and Technology.

Further reading: The Economist and China Daily

5 Responses to R&D Spending Plagued with Embezzlement, China Eyes Reform

  1. This article reflects a very concerning yet all too often occurring trend in Chinese government in general. While China has experienced rapid economic growth and modernization in the 19th and 20th centuries, it still faces many significant political challenges including, but not limited to, corruption.

  2. I agree with Westerman, this is a historical and perpetuating trend in China. Wang Dong said it right…but saying and doing are very different things. Maybe this issue could even be understand as having roots in the social culture within China; thus resolving it may take an overhaul of a nation’s entire culture – no easy task…

  3. Thanks for your comments. I am not sure about how much this has to with “culture” however–people are the same, but incentives vary. Perhaps instead of trying to change the culture, the government should first focus on a harder line towards corruption.

  4. I think that almost everyone can agree that fighting corruption is a positive thing, but there is a line to be drawn. This fight on corruption seems to be a good thing, but a company should never be punished unless you are sure they are guilty. This fight on corruption in China seems a little bit enthusiastic to me and in some cases sounds like people are being busted for the sake of results.

  5. To take a different tack, why should a developing country be spending money on R&D? Isn’t the priority for firms to learn existing techniques? – few producers in China operate anywhere near their Production Possibility Frontier!