This paper examines China's corruption problem with the help of several simple economic models. The concepts of implicit corruption and explicit corruption are proposed. The granting of privileges has directly created implicit corruption in China's socialist market economy. The long-term existence of the same privileged group in Chinese society has led to widespread collusion among its members, and as a result, these privileged group members, by utilizing their monopoly power, are able to seize almost all the wealth created by the ordinary Chinese people. This seizure is accomplished by means of a two-part tariff in pricing their administrative service, which is the essence of the explicit corruption. Because both implicit corruption and explicit corruption are generated by China's political system, which grants and protects privileges, unless a political reform is initiated and privileges are eliminated, China's problem of corruption will never be solved.