China is investing more than $140 billion in its race to dominate the semiconductor industry, aiming to close the gap with giants like TSMC and Intel. On paper, it’s an ambitious leap toward technological self-sufficiency.
In reality, though, it is a race held back by something far more corrosive than American export controls or geopolitics. It’s an internal and systemic problem, and something the Communist Party rarely admits to.
It is corruption disguised as tradition.
Nowhere is it more damaging than in science and research, where China’s ambitions to lead the world in innovation are constantly undermined by a system that rewards connections over merit.
Two of China’s most prominent and respected scientists, Yi Rao of Peking University and Yigong Shi of Tsinghua University, spoke out about how decisions on government funding had little to do with scientific need or creativity. Instead, grants are given to researchers with the right political ties or personal relationships.
Major research grants, sometimes worth tens or hundreds of millions of yuan, are not awarded based on peer review or national priority. They are often directed toward projects that benefit the careers of bureaucrats or reflect the narrow interests of a small group of politically connected scientists.
The committees setting the guidelines for funding are rarely transparent and rarely open to outside input. The result is a system where real research potential is sacrificed in favor of playing politics.
I have spoken to scholars who admitted that they had to change their entire research agenda just to stay eligible for funding. One scientist, working on water scarcity in Qinghai and Ningxia, said he could never get climate-related projects approved. Instead, the government favored dam-building initiatives that made for better propaganda but often worsened the problem.
In China’s system, many professors earn about $700 a month — barely enough to live on. Winning a major grant can transform not only their research capacity, but their personal livelihood. And since the process favors relationships, professors are forced to spend more time building those relationships than doing research, publishing, or mentoring students.
For that reason, many scientists quietly admit to bribing committee members or tailoring proposals to satisfy irrelevant political criteria. They don’t challenge the system, because doing so could mean losing everything.
At the heart of the problem is a concept that foreigners in China hear about constantly: “guanxi.” It is often described as a cultural cornerstone, a system of personal connections and mutual favors that is essential to navigating Chinese society. It’s portrayed as something subtle, even admirable. But in real life, guanxi is often little more than organized corruption wearing the mask of tradition.
I experienced it firsthand while living in Beijing. At the time, city regulations had changed, banning large dogs. This meant that my golden retriever suddenly became illegal. A security guard in my building approached me and offered to “protect” my dog from the police, but only if I paid him the equivalent of $500 a month. When I stopped paying, that protection disappeared. A few weeks later, a police officer came to me with a new proposal. I could resume protection, but this time for a smaller payment and by tutoring his daughter in English. I went along with it. My neighbors told me I had good guanxi.
The same dynamics show up everywhere, even in the most vital corners of Chinese life. In hospitals, it’s common for patients or their families to hand doctors red envelopes filled with cash in hopes of getting better treatment. I have seen families agonize over how much to pay to ensure a loved one gets the operation they need — guanxi is often the only way to cut through the red tape. Sometimes the envelope is offered before a surgery, sometimes during a consultation, sometimes just to make sure a loved one is assigned a decent hospital room. These practices are technically illegal, and many doctors disapprove. But in an overburdened system with little oversight and even less trust, they continue.
This isn’t just unfair — it’s dangerous. In a system where who you know or how much you can offer determines the quality of your care, equality is basically a fantasy. Those with connections or cash get better treatment. Everyone else waits, suffers, or goes without.
This is where the Chinese Dream hits a wall. President Xi Jinping’s vision of national rejuvenation hinges on both collective strength and individual prosperity. But for millions of Chinese citizens, that prosperity feels out of reach. It’s not because they lack talent or ambition, but because they don’t have the right connections. In a system where bribes and influence matter more than ideas and loyalty outweighs merit, upward mobility becomes a myth.
If China truly wants to compete with the U.S., it needs to let go of the myth of guanxi as harmless culture. Until it does, its potential will remain limited by a system that punishes integrity and rewards those who know how to work the system.
The story of China’s rise isn’t just about having the world’s second-largest economy; it’s also about the millions of individuals striving to realize their version of the Chinese Dream—and the corruption disguised as culture that keeps holding them back.
Derek Levine Ph.D., is a full-time professor at Monroe University and the author of “The Dragon Takes Flight: China’s Aviation Policy, Achievements and Implications for the United States and Europe” and “China’s Path to Dominance: Preparing for Confrontation with the U.S.”
