The FT reports:

Corruption costs China as much as 3 per cent of its economic output, or $86bn in 2003, and poses a “lethal threat” to the country's economic development, according to a report by the Carnegie Endowment for International Peace.

The report by Minxin Pei, the director of the China programme at the Washington-based policy study group, says the sums of money expropriated by corrupt officials have risen “exponentially” since the 1980s and cost more than last year's entire education budget.

Mr Pei said: “Even after adjusting for inflation, the sums of money looted by government officials today are astonishing – a relatively low-level official can amass an illicit fortune in tens of millions of yuan.”

Mr Pei calculated the cost to GDP using a “conservative assumption” that 10 per cent of land revenues, investment and government spending are “stolen or misappropriated”.

This benchmark is difficult to confirm but it meshes with anecdotal evidence from a number of officials, who privately say that about 10 per cent of the value of all contracts is set aside for illicit payments.

To read more:

http://www.ft.com/cms/s/0/3dbe4178-774a-11dc-9de8-0000779fd2ac,dwp_uuid=9c33700c-4c86-11da-89df-0000779e2340.html