By Eric Fish

People don’t seem to trust one another in China and the situation is getting worse.

This was the finding from the Blue Book of Social Mentality recently released by the Institute of Sociology under the Chinese Academy of Social Sciences. The study found that the general trust level in China has fallen more than three percentage points since 2010 to a score of 59.7 out of 100. Less than half of the people surveyed agreed that “most people can be trusted.” Only about 30 percent said that they trust strangers.

The findings are disheartening but not at all surprising. In fact, for political scientists familiar with China’s current environment, the results should be completely predictable. Unfortunately, what’s also predictable is the impact this will have on economic growth.

In his 1995 book Trust, Francis Fukuyama laid out how social trust is critical in a country’s transition from poor to developed. When nations have a high degree of trust, their people have a high degree of “spontaneous sociability” which allows them to form strong relationships outside the family, build large companies and collaborate to stay at the forefront of industrial innovation. Conversely, when there’s little societal trust, innovation stagnates and growth plateaus. 

So where does this trust come from and why doesn’t China have it? Ultimately, it’s a result of political institutions.

A 2002 study by professors at Göteborg University and McGill University found that “A deteriorating biased corrupt administrative system in general goes hand in hand with low levels of social capital, particularly when measured as generalized trust.”

It goes on to say that institutions of law and order are primarily tasked with detecting and punishing “traitors” – people who break contracts, steal, murder or do anything that would mean they shouldn’t be trusted.  If a person believes these institutions work in a fair and effective manner, then they’ll tend to believe the odds of getting away with “treacherous” behavior are small. If this is the case, they’ll believe the incentive to be an upstanding citizen is compelling and therefore, “most people can be trusted.” 

If you’re wronged, going to police and courts only makes sense if you can trust they’ll be impartial and efficient. “If there is ‘common knowledge’ that they are unfair, take bribes and are inefficient, there is no point in approaching these government institutions,” the study says. “In this case, the lack of trust in such institutions, the messages about bribery and corruption, as well as the resulting feelings of a lack of safety will influence one’s generalized trust in other people as well.”

In 2011, McClatchy reported the story of a scrap metal recycler in Shandong who had his shop taken by the local government in exchange for a contract worth 1.17 million yuan and another piece of property. But after the shop was torn down, the man was given a replacement contract worth half the money and no property. The report then went on to describe a different woman who claimed police accepted bribes from a truck driver in exchange for reducing the amount of compensation he owed her family after he’d run over and killed her brother. 

Cases like these are reported almost every day in China, and countless more never come to light. Often times – as was the case with these two people – when justice is sought, the victims are sent back to the very officials they had the dispute with, illegally detained or even violently attacked. Meanwhile, the “treacherous” people go unpunished and can even attain high positions of power.  

This has resulted in a culture of corruption where people at all levels – whether they be in government or private business – leverage their power for illicit earnings in order to stay ahead of the curve and insure their own security. This means that when going about their business, people must factor in bribes, political connections of adversaries and the odds of having their investments arbitrarily seized by vested interests. It’s no wonder that people don’t trust one another in this environment.

In 2012, Transparency International ranked China 80^th in the world out of 174 in terms of corruption perception – a five position fall from the previous year. As China nears the point where it must move to a more innovative and high-tech economy to sustain economic growth, social trust will become increasingly critical. And as the Göteborg/McGill study says, “Government institutions generate social trust only if citizens consider the political institutions to be trustworthy.”