Yea, corruption is a big problem. Bribery, or gift giving, is a way of life for many Chinese people. When I was in elementary school, my mom made me bring food over every time I went to a friend's house. I'd show up ready to play Nintendo with a bowl of fried rice. It's part of the culture. It's a problem the Chinese government needs to work on.

BTW, bribery is alive and well in the US too, but it's wide open (suppose to be, anyway) and it's called "lobbying" or "campaign contributions".

I don't know what to call it -- corruption seems to be the best word for now. For our purposes an academic elite is the same as a political party -- it holds political power.

Whatever it is, the problem it presents is that there is not a single amount of predictable payments that can be made to create an economic transaction -- it's all up to the whims of the people who are involved. I guess it's possible to predict to some degree if you know all of the players, but there is no competition for doing it another way without the payments -- the same party owns the game, the tables, and all of the cards. I'm no expert either, but it seems that corruption in the states is of such a lesser degree to be of a different type altogether, at least as far as startups go. Likewise, corruption in some third world countries is so bad to make even the most trivial of enterprises fraught with hidden expenditures.

Here, if I want to make a startup to, say, sell fried chicken on the street corner, I've got 2 or 3 political people to meet and make happy. Now there might be lots of crooks in the local government, but each local government can be of a different political party, as can the state and federal governments. Even in a completely crooked world, that provides incentives for each section of political power to lower corruption, at least in sections controlled by the other guy. You simply do not have that somehow-it-works setup in China. And I think it's going to be a limiting factor in their growth.