DP12634 Leniency, Asymmetric Punishment and Corruption: Evidence from China
Fostering whistleblowing through leniency and asymmetric sanctions is regarded as a potentially powerful
anti-corruption strategy in the light of its success in busting cartels. The US Department of Justice
started a pilot program of this kind in 2016. It has been argued, however, that introduced in China in
1997, these policies did not help against corruption. We map the evolution of the Chinese anti-corruption
legislation and aggregate enforcement data, documenting a large and stable fall in prosecuted cases after
the 1997 reform. The fall is consistent with reduced corruption detection, but under specific assumptions
also with improved deterrence. To resolve the ambiguity, we collect and analyze a random sample of case
files from corruption trials. Results point indeed at a negative effect of the 1997 reform on corruption
detection and deterrence, but plausibly linked to its poor design: contrary to what theory prescribes,
it increased leniency also for bribe-taking bureaucrats that cooperate after being denounced, enhancing
their ability to retaliate against whistleblowing bribe-givers.
