Holistic evaluation of corruption issues in the Chinese public construction sector

Abstract

The social image of the public construction sector has deteriorated because of a growing incidence of corrupt practices worldwide over the past decade, particularly in developing countries such as China. Such corrupt practices are a by-product of continual economic growth and rapid urbanization. According to the National Bureau of Statistics of China, total investment in public infrastructure and construction projects in the country increased by almost 15 times from USD 0.16 trillion in 1993 to USD 2.33 trillion in 2012. However, such huge investments have caused serious corruption in the Chinese public construction sector. The National Bureau of Corruption Prevention of China reported 15,010 recorded cases of corruption in the public construction sector between 2009 and 2011; these incidences of corruption caused an estimated loss of USD 490 million. Given this severe situation, this study focuses on corruption issues in the Chinese public construction sector and aims to address a set of key issues related to the topic, including corruption indicators, causes of corruption, and the prevailing anti-corruption strategies. Qualitative and quantitative research methods were combined to facilitate this study. First, a comprehensive literature review and a series of structured interviews were sequentially conducted to establish and refine the frameworks of corruption indicators, causes of corruption, and prevailing anti-corruption strategies in the context of the Chinese public construction sector. Second, based on the interview results, a questionnaire survey was administered to solicit opinion-based data of corruption indicators, causes of corruption, and prevailing anti-corruption strategies from target respondents. A total of 188 valid replies were obtained. Third, based on the data collected from the questionnaire survey, factor analysis was conducted to consolidate the aforementioned frameworks. Fourth, partial least squares structural equation modeling was applied to investigate the underlying corruption indicators, principal causes of corruption, and the effectiveness of the prevailing anti-corruption strategies. Lastly, an evaluation model was developed by using fuzzy set theory to assess the vulnerability of Chinese public construction projects to corruption. This study revealed five underlying corruption indicators, namely, immorality, opacity, unfairness, procedural violation, and contractual violation. Immorality was found to be the most influential underlying corruption indicator. This study consolidated two principal causes of corruption in the Chinese public construction sector, namely, flawed regulation systems and lack of a positive industrial climate. The former was found to contribute more to corruption than the latter. With respect to the four prevailing anti-corruption strategies, this study found that only leadership received a marginal acceptable evaluation on its effectiveness. The remaining three strategies, namely, rules and regulations, sanctions, and training, were found to be ineffective. The newly developed evaluation model for predicting vulnerability to corruption was also applied in two real-life public projects. Generally, the predicted results conform to reality.