Cause Of Organized Crime In China

Origins and cause of organised crime are linked to Chinese economic reform and a loss of social control. During Mao’s period China had strong social control and a communist regime that despised the use of material incentive. The dominant value during this period was not money but political power. A great deal of organised crime was stamped out during this period. The post 1979 economic reforms re-introduced consumerism thus reigniting the attraction that money and material incentives hold for the populace. However, the market reforms failed to protect the market from being manipulated via illegal and underhanded means; organised crime was not only given the incentive to take off but it was also given an environment within which to flourish.

A study in 1996 estimated that the hidden economy was equivalent to 20% of Chinese GNP. The economic activities controlled by the criminal underworld, or the so-called “black economy” constituted a big chunk of it, in addition to the gray income such as bribes and embezzlements. One scholar affiliated with the Ministry of Public Security estimated that in the late 1990s every year the expenses on drugs could have reached 100 billion yuan. It was also estimated that the sex industry generated revenue of at least 500 billion yuan a year. For many places, “Prostitution promotes prosperity” (PPP) has been an open secret. For example, in 1998, the “sweeping out sex industry” campaign (shaohuang) in Shenzhen drove out thousands of prostitutes and bar girls, with them at least 10 billion yuan of saving deposits evaporated from local financial institutions within a few days. This gave an economic boon to the surrounding cities and forced the Shenzhen municipal government to water down its campaign. Largely to the credit of criminal groups, every year smuggling groups caused a loss of more than 30 billion yuan to the nation; money laundering through underground private banks transferred 200 billion yuan out of the country. As for the piracy, it is generating even more

As ordinary people have no political power (for example, voting rights, freedom of speech and press, etc.) and little access to opportunity in the globalized economy, crime has become one important highway for the desperate to seek social ascendancy and mobility. The Chinese society is facing a danger of criminalization. Chinese organized crime groups have become active in controlling the black markets of illicit goods (drugs, prostitution, smuggling goods, human smuggling, etc.), infiltrating the state (especially the local states) and seeking global alliances with transnational organized crime