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offices.98 There were eight such cases, involving more than one thousand officials, in our sample of fifty cases. The worst case was the provincial government of Heilongjiang. In 2004, the central government sacked eight senior provincial leaders in Heilongjiang for purchasing and selling government appointments. In these instances, a soft mafia state emerges when a large number of local officials are tied to one another through payments of bribes and other corrupt activities. Two factors are worth considering here. First, because officials who have paid bribes to get government positions regard such bribes as investments, they are motivated to recoup their investments, plus an above-market rate of return is generated. Such a calculation leads these officials to use more aggressive means to maximize their private gains, thus intensifying decentralized predation. Second, as a large number of these officials are tainted by the corrupt means through which they get their jobs, they also have an incentive to protect one another in their corrupt activities and collude to cover up their illegal activities.

Governance deteriorates rapidly in jurisdictions where such incipient local mafia states control power. In many instances, official protection allowed organized criminal groups to penetrate local commerce and politics. Their control of real estate, retail, mining, passenger transportation, produce markets, construction, and loan sharking enabled them to gain significant economic and political privileges. Official press reports show, for example, well-connected mafia bosses were favored in real estate deals. In one case, the Shenyang municipal government gave, for free, 24,000 square meters of prime real estate to crime boss Liu Yong after Liu paid a $100,000 bribe to the executive vice mayor Ma Xiangdong. This was not the only shady deal between a mafia boss and party officials. In 2000, the municipal governments of Shenyang and Dalian both sold leases on land of similar size, but the Dalian government was able to generate 1.7 billion yuan in revenue, compared with only 70 million yuan received by Shenyang.

In other words, assuming equal value of land in the two cities, 96 percent of the proceeds from sale of land leases in Shenyang appeared to have gone to local party bosses and their friends, including criminal elements. 99 Similar large giveaways were reported in other jurisdictions. Wang Huaizhong, a disgraced vice governor of Anhui, whose case implicated more than 160 officials, reportedly allowed his cronies to pocket more than 1 billion yuan in profits from sweetheart land deals. 100 In some cases, well-placed criminal elements even gained access to China’s financial institutions. For example, in Hunan’s Lianyuan City, a local crime boss, Tan Heping, was the deputy director of the city’s rural credit cooperative. Among his supporters in the city government were the party secretary of the political and law committee, police chief, president of the local court, and the chief procurator—all deeply involved in his criminal activities. They were exposed in 2001.101

The alliance between criminal elements and local elites in some jurisdictions facilitated the entrenchment of the power of the local mafia state in two ways. Through their commercial enterprises and insider deals, organized crime bosses generated the funds with which they could bribe local officials and help their allies to purchase promotions inside the government. Once these officials accepted these bribes, they fell under the control of the local mafia.102 Officials beholden to organized criminal groups often returned favors by helping the leaders of these groups to gain political respectability and power, typically through appointing them as local legislators or even placing them in government agencies. Liu Yong, Shenyang’s notorious crime boss and chairman of a conglomerate in real estate and retail, was a deputy in the Shenyang Municipal People’s Congress. In Hclong City, Jilin province, local crime boss Gu Decheng was also a deputy in the municipal People