In China, there is a widely popular and frequently used term, Guanxi, which has profound influence on almost all social interactions, whether in government or in business. Theoretically, it is a network of connection and obligation that provide a foundation of societal trust. However, Guanxi in practical sense is a system of mutually beneficial relationship that works as a lubricant for the wheels of business transaction, and is often synonymous with bribery and corruption in China. The system of Guanxi is rampant in Chinese society. Earlier it used to have local implication, but now it has permeated into global markets. Chinese acclimatized to corrupt milieu at home, are now infesting global markets with the system of Guanxi.
Kuwait’s Ministry of Public Works recently disqualified the tender submitted by Beijing Enterprises Water Group (BEWG), the largest sewage water company in the world. BEWG had submitted its bid for setting up a waste water treatment plant for Al-Mutla’s sewage station in Kuwait. The Public Works Authority sent as a technical report to the Central Agency for Public Tenders (CAPT) citing reasons of rejection for BEWG. The report noted that BEWG’s bid was disqualified on the ground that it was earlier involved in bribing Kuwaiti officials to secure Umm Al Hayman project.
The current crown prince of Kuwait, Sheikh Al-Ahmed, known for his tough stand on corruption, has directed investigative agencies to nab those involved in maladministration and misdeeds. China has reportedly been gaining undue advantage in securing projects in Kuwait. This was also cited in Ministry of Public Works’ report that mentioned about Chinese companies indulging in malpractices to win contracts in Kuwait.
State sponsored Chinese companies participating in Belt and Road Initiative (BRI) projects are another manifestation of China’s malafide intentions. There are widespread instances of bribery with a reported 60-85% of Chinese firms paying bribes to secure projects under BRI. Chinese firms are known offenders of peddling influence. Apart from payments to lower-level bureaucrats, there have also been several notable scandals involving senior political figures receiving illegal gratification from Chinese companies. According to Transparency International’s study in 2019 on 100 firms in 15 emerging markets, Chinese firms were among the least transparent. Corruption cases involving Chinese firms in BRI linked projects are innumerable. Poor business practices including delay in completion of projects are endemic to BRI projects. Numerous Chinese firms have been debarred from World Bank and multilateral development banks for fraud and corruption including inflating costs to give bribes.
China Communications Construction Co. (CCCC), among the BRI’S most active companies, was debarred by the World Bank in 2009 for eight years for alleged fraudulent bidding on a highway contract in the Philippines. Its subsidiary, China Harbour Engineering, was accused by Bangladesh Government of offering a bribe to a Bangladeshi official in connection with a construction project.
Case studies of BRI projects in Malaysia and Kenya confirm Guanxi as a State policy of China. Former Malaysian Prime Minister Najib Razak’s ouster in May 2018 was linked to Chinese projects under BRI. Wall Street Journal reported how Chinese poured out money in Malaysia’s state development fund 1Malaysia Berhad, known as 1MDB, by inflating the cost of infrastructure projects. In exchange China received freedom of access to major national rail and port projects in Malaysia. Whereas in Kenya, prosecution of Chinese officials on corruption charges showed that to bypass the systemic procedure, China employed illegitimate tactics. Kenya is facing unimaginable debt resulting from a railway project that has exceeded its budget and yielded unexpectedly low results.
These case studies corroborate the widely held beliefs that China exploits countries to provide impetus to its BRI projects. To build infrastructure projects in other countries, interested party naturally needs to go through sets of official procedures of the recipient country. However, to bypass these procedures, China indulges in corrupt practices and executes projects abroad through unsavory means. The system of Guanxi has become an inherent feature of Chinese projects under BRI in countries around the world. However, with its latest move of excluding Chinese sponsored BEWG for Al-Mutla’s waste water purification plant, Kuwait is on the course of rectifying its past mistakes.