Corruption costs China as much as 3 per cent of its economic output, or $86bn in 2003, and poses a “lethal threat” to the country’s economic development, according to a report by the Carnegie Endowment for International Peace.

The report by Minxin Pei, the director of the China programme at the Washington-based policy study group, says the sums of money expropriated by corrupt officials have risen “exponentially” since the 1980s and cost more than last year’s entire education budget.