China Pursues Anti-Corruption in Business
February 23, 2026
In a recent high profile investigation, Chinese billionaire Liu Han was found guilty of organized crime and murder, resulting in his execution. Liu had been a highly successful businessman and his company primarily focused on mining and telecommunications. However, his business was purportedly run in a mafia-like fashion by illegally monopolizing goods in several areas and terrorizing local businessmen into submission. Liu also had very strong ties to recently-disgraced, former Security Chief of China Zhou Yongkang who is now under investigation. Liu’s execution does not bode well for Zhou’s future.
In some ways this move represents a larger attempt on the part of the Chinese government to reign in the nation’s plutocrats and gain greater control over its businesses. Since President Xi Jinping came to power in 2012, he has run a fervent anti-corruption campaign with the goal of cleaning up Chinese political and business practices. Some cynical observers are quick to point out that President Xi’s anti-corruption campaign has been so successful it has made him the most powerful Chinese leader since Deng Xiaoping or perhaps Mao Zedong.
Whether the anti-corruption campaign is actually intended to clean up Chinese business practices remains unclear, but what is known is that it has resulted in the purging of several high profile Communist Party leaders linked to President Xi’s adversaries. Along with Security Chief Zhou and Chongqing party boss Bo Xilai, a senior official, Su Rong, was recently stripped of his party membership and looks to face trial for corruption during his days as the top party official in Jiangxi Province.
While it is doubtless that President Xi’s anti-corruption campaign will benefit the country as a whole, it is also clear that he stands to gain increased political authority for himself and the Communist Party as well. Not only does this campaign create easy excuses for purging unwanted enemies, but it also raises party legitimacy at a time when economic growth (a major factor in maintaining political legitimacy) begins to wane. In fact, party officials in the central government are encouraging reporters and citizens to report local corruption as a way to root out corrupt officials while simultaneously supporting a modicum of free press and civil society.
Meanwhile, in a widely anticipated decision in the business world, Qualcomm announced that it would pay $975 million to Chinese authorities as part of its settlement for violating the country’s anti-monopoly laws. Qualcomm will also reduce the rates which Chinese companies must pay to use its chips. Although the deal appears massive, many analysts have agreed that the punishment is much more lenient than it could have been – China has only slightly lowered Qualcomm’s royalty rates while still allowing the company to charge for its licenses. For its part, Qualcomm has accepted the punishment because the Chinese market is simply too large to leave.
The Qualcomm case is part of a bigger Chinese initiative to more aggressively scrutinize the business dealings of foreign companies. Not only does this align well with China’s anti-corruption campaign, but it fits into the government’s push for a bigger domestic chip industry; while China is a leading producer of handsets, its companies must purchase the chips that run the gadgets from foreign companies. Many foreign business observers criticize the Chinese government’s activist and nationalist intervention in its economy, frequently pressuring foreign firms to conform. Like Qualcomm, however, most firms find the benefits of the Chinese market greater than the costs of state manipulation.
Nevertheless, the Qualcomm settlement could also hurt China’s smaller smartphone producers. Previously, Qualcomm used cross-licensing agreements; when it agreed to allow a Chinese maker to use its chips, Qualcomm also gained access to the Chinese company’s patents. These patents could then be used by any other company that Qualcomm had licensing agreements with for free. The new settlement eliminates such agreements and will permit patent-holding Chinese companies like ZTE and Huawei to charge for the use of its patents. While this could force some makers out of the market, it will also strengthen the likes of ZTE and Huawei and weaken Qualcomm by making it a less attractive prospect for smaller companies that relied on the cross-licensing agreements.
The Qualcomm settlement, when viewed in the context of the ongoing anti-corruption campaign, is a reminder that the Communist Party is constantly looking for ways to support the Chinese economy. It is a well known fact that Communist political authority is tied to strong economic performance, and as the unparalleled growth of the last two decades begins to wane, the Party must find ways to continually improve economic performance or legitimize themselves in another manner. Stricter regulations on foreign companies accomplishes the former while stemming corruptions takes care of the latter. In the meantime, President Xi continues to consolidate power, and his motivations remain unclear. Whether he will continue to fight corruption and support political reform in a sincere manner once his adversaries are rooted out remains to be seen.
Further Reading:
Qualcomm Settlement
Contributions by Benjamin Mandel, Liam Conway-Pierson, Wooyoung Lee