FT.com, 5 December 2012

China has slipped down Transparency International’s annual corruption index, highlighting the challenges facing the country’s new leadership in stamping out graft.

According to annual rankings of 176 nations published on Wednesday by the Berlin-based campaign group, China is perceived to be more corrupt than countries including Saudi Arabia and Italy.

The report, which ranks countries according to institutions’ impressions of how clean their public sector is, comes a month after China stepped up rhetoric on corruption, to accompany its leadership transition. Xi Jinping, China’s new leader, has warned of political unrest if corruption remains unchecked.

Graft is a particularly sensitive topic for the Communist party after a year that has seen the downfall of Bo Xilai, a former political star on charges related to corruption. His wife was convicted in August of involvement in the murder of a British businessman.

The extent of official corruption has also regularly featured among the complaints from foreign investors doing business in China, the world’s second-largest economy.

“The world’s leading economies should lead by example, making sure that their institutions are fully transparent and their leaders are held accountable,” said Cobus de Swardt, TI’s managing director. “This is crucial since their institutions play a significant role in preventing corruption from flourishing globally.”

More than two-thirds of the 176 countries fail to score above 50 points in TI’s rankings, where 0 denotes “highly corrupt” and 100 “very clean”. China ranks in joint 80th place, with Serbia and Trinidad and Tobago, earning 39 points. Last year it ranked 75th out of 183 countries, although TI argues the two surveys are not necessarily comparable because of different methodology.

While neither China nor Brazil score above 50 points in TI’s rankings, they are at least in the top 50 per cent of countries, unlike their Bric counterparts India and Russia. India ties with Greece and Mongolia in 94th place, while Russia is perceived to be as corrupt as Iran and Honduras, in 133rd place, according to the report.

The lower reaches of the index are predictably well populated by countries that are diplomatically isolated or emerging from conflict: North Korea, Somalia and Afghanistan – recently hit with a billion-dollar fraud embroiling its biggest lender, Kabul Bank – tie for last place.
Perceptions of the world’s least corrupt nations are also little changed on last year, with Denmark, Finland and New Zealand topping the chart.
The UK and the US scrape into the top 20, in 17th and 19th place respectively.

The index is widely seen as a useful yardstick on corruption by governments, companies and development groups – although the fact that it is based on surveys of business perception, rather than more objective measures, means that year-on-year movements of countries can be sharp and at times misleading.

Critics say the TI work inevitably draws heavily on western sources – such as watchdogs and development banks – and has to some extent become self-fulfilling, with people forming impressions of corruption partly through reference to the index itself.

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