Crime boss's death sentence and lessons for China's economic development

On 23 December 2019, the People's High Court of Yunnan announced its new sentencing of crime boss Sun Xiaoguo, following a retrial of his case going back to 1997, involving rape, assaulting women, intentional injury, and disturbance of public order.

The latest sentencing overturned the previous rulings of Sun's case in March 1999 and September 2007 on grounds of wrongful application of the law. It upheld the death sentence given by the Kunming Intermediate People's Court in February 1998, and took into account an earlier 25-year prison sentence for involvement in organised crime and gang-related activities. Sun's political rights were revoked, and his personal property was to be confiscated.

Sun Xiaoguo was sentenced to death over 20 years ago for his crimes, but miraculously escaped the law and was released. He became the boss of restaurants, night spots, and bars, living the high life and continuing as a leader in organised crime. His bizarre case, worthy of a novel or a movie, became a hot topic in China.

Now that Sun has once again been sentenced to death, justice has been served, albeit belatedly. The case is a showcase of China's targeted fight against crime, highlighting the urgency and necessity for high-level governmental involvement and efforts towards this fight. It has also prompted people to think deeply about China's legal system, making it a landmark in China's legal reforms.

However, Sun's case is significant not just in the legal domain, but also in economic development. It is not just a legal case, but an economic incident, in two ways.

First, Sun was already up to no good from over 20 years ago. But his mother and stepfather bribed their way to get officials on their side, forcing an opening in the law. Sun escaped death and got away scot-free. Clearly, if those irresponsible officials dared to do what they did when human lives were involved, nothing would be beyond them when it came to socioeconomic management.

The fact is, even if Sun was jailed at one point, he could still apply for fake patents and use them as credits to get a reduction in his sentence. This was a travesty of the patent system. In other words, this case has exposed the damaging effect of a corrupt judicial system on socioeconomic growth, at least back then.

Second, and more importantly, when Sun escaped death and was released from prison, he was able to rapidly set up a food and beverage company, run multiple night spots and companies, and earn all the money he wanted. If not for anti-vice efforts, he might still be thriving in the market, deceiving everyone under the guise of a successful entrepreneur. A death row convict who secretly led an organised crime outfit, and who continued to swagger his way around in business - surely this exposes the gaps and filth in the business environment previously.

Imagine, if the business environment could allow a hooligan like Sun to do whatever he wanted, would the law-abiding businessmen be able to survive? Again, this shows the damage of corruption on socioeconomic growth.

Thus, sending a hooligan like Sun to jail is equivalent to clearing the likes of him out of the business arena. Removing officials who protect unlawful businessmen, collude with them, and accept bribes, is also re-establishing the authority of the law and the credibility of policies. It also builds a more transparent, just, and credible environment.

The significance of the fight against vice and corruption is not just political, but also economic. It is a necessary and urgent step in China's efforts to improve the economic growth environment, drive economic structural reform, and encourage industry transformation and upgrading.

Since its reform and opening up, China's economy has seen over 40 years of rapid growth, with almost miraculous successes. However, it cannot be denied that previously endemic corruption is a hidden threat to the healthy and sustainable long-term growth of China's economy. If law and justice are not maintained, some errant businessmen would take advantage and seize resources such as mining produce, land, and roads. They would also hurt the legitimate interests of other people and businesses and seriously damage the ecosystem and social justice for the sake of profits, while twisting the distribution of market resources and its value system. This would lead to bad money driving out good money, otherwise known as Gresham's law.

Some of the aggressive and unsustainable economic practices in China that were damaging to resources, the environment, and justice, were to a great extent, due to corruption in the legal system and other areas. This corruption-fed growth model, no matter how rapid, is an unsustainable short-term strategy.

China has to go deeper into economic structural reforms, step up industry transformation, push through new concepts of innovation, improve coordination, go green, open up, promote sharing, and reach for high-quality growth.

This calls for the urgent treatment of both the symptoms and root causes of the accumulated long-term problems in economic development, highlighting the importance of the fight against corruption and vice. Not only do unlawful businessmen like Sun Xiaoguo need to be removed, more importantly, errant officials who bend the law to their own advantage and disrupt the workings of the market also need to be cleared out. This would safeguard the orderly growth of the market economy and improve the economic growth environment, and allow national economic policies to be implemented.

Obviously, now that the aggressive growth models built on corruption have been cut down and cleaned up, it is like scraping poison from the bone or removing a tumour. This has hurt economic growth, and is a key reason for the slowdown in China's economic growth figures. But it is always better to make a painful but necessary quick move, rather than to drag out a problem. In the long term, this will help ensure the transformation and upgrading of China's economic growth.