Abstract: Corruption not only hinders economic development but also jeopardises the quality of government governance.The literature on corruption of countries in transition argues that the lack of market competition is an important cause of frequent corruption,which means that market-oriented reforms and the role of the market rather the power in resource allocation can curb corruption to a great extent.However,since the market reform in China,corruption has shown an upward tendency.This has led the public as well as some scholars believe that marketization is the cause of corruption and thus question its legitimacy.Based on the examination of 3 843 corruption cases from 1993 to 2013,this paper concludes that half-hearted incomplete market reforms not only increase the probability but also the severity of corruption.However,once the reform programs ended,the corruption activities were also significantly reduced.A series of heterogeneity and placebo tests provide further support to this conclusion.The above findings imply that the institutional root of corruption in the process of marketisation lies in incomplete or half-hearted reforms rather than marketisation itself.Therefore,only by adhering to market-oriented reforms can we gradually eliminate the ground for rent-seeking and thus effectively curb corruption.The conclusion of this paper provides an empirical basis for the connection between deepening marketization reforms and the anti-corruption struggle since the 18th National Congress of the Communist Party of China.

Key words: marketization reform, corruption, resource allocation