Global Courant
In China, one of the consequences of the economic reforms launched in the late 1970s was the re-emergence of private entrepreneurs. Gradually, capitalists were not only encouraged but portrayed as national heroes and included in the system.
On the 80th anniversary of the establishment of the Chinese Communist Party (CCP) in July 2001, former Chinese President Jiang Zemin called for the admission of qualified members of the various social strata that had emerged during the reform period, including private entrepreneurs. CCP.
In today’s China, the private sector contributes more than 50% of tax revenue and more than 60% of GDP each year.
But the attitude of the party-state towards private entrepreneurs remains ambiguous. The regime regularly praises private entrepreneurs for their unique role in bringing prosperity to the Chinese nation. But at the same time, billionaires are regularly and sometimes criticized prosecuted and imprisoned.
High-profile entrepreneurs in the tech industry have been under scrutiny like never before lately. Alibaba co-founder Jack Ma has kept an unusually low profile since October 2020, when the government began taking regulatory action against his companies.
Many other individual entrepreneurs have been forced to leave the public scene in recent years. Political observers have long wondered whether the capitalist class could be a force for democratic change. This debate is still open.
But the question is all the more difficult in the Chinese context, as the private sector did not emerge in opposition to the state, as in the West, but rather as a result of state initiatives. The Chinese state itself encouraged its own bureaucrats to do business.
Most analysts have argued that Chinese private entrepreneurs are a largely atomized group focused on their individual interests and unable or unwilling to take collective action. Private entrepreneurs depend on the party state for their prosperity and are often co-opted by the party.
People stand next to a display commemorating the 100th anniversary of the founding of the Communist Party of China in Shanghai on June 30, 2021. Photo: AFP/Hector Retamal
Since the early 2000s, the CCP has integrated emerging private business elites into the party-state through a variety of formal institutional arrangements, such as granting CCP memberships and allowing them to act as legislators at the national or local level or at party congresses.
Since the early 2000s, the CCP has also taken various measures to expand its control over the private sector. An important innovation was the creation of party cells in private enterprises.
In early 2010, new agencies were set up at the provincial level to specifically implement this. It also sent “party-building instructors” to enterprises, took a business-friendly approach, and provided host companies with meaningful services and tangible benefits.
Partisan organizations within private companies are business-oriented, supporting production services and employee welfare rather than interfering with day-to-day management and strategic planning. The CCP’s presence within companies, from boardrooms to factory floors, is based on several blueprints found throughout the organization’s long history.
The increasing representation of party interests in the private sector is one of the tools Chinese President Xi Jinping has used to make China more socialist.
Xi now calls on China to achieve “common prosperity” (gongtong fuyu) by narrowing a gaping wealth gap that threatens the country’s economic rise and the legitimacy of CCP rule.
In 2021, Xi demonstrated an increased commitment to delivering common prosperity, emphasizing that this is not only an economic objective, but also the core of the party’s governmental base.
To achieve that goal, Xi explicitly encouraged companies and high-income individuals to contribute more to society through the so-called “third distribution” – charity and donations.
Philanthropic action, understood in the context of exchanges between capitalists and the party-state, is similar to a limited redistribution of resources designed to reduce economic inequality.
In response to that call, several tech industry heavyweights, such as Alibaba and Tencent, announced charitable donations from more than 40 million dollars. This is the latest manifestation of a policy initiated more than 10 years ago, notably through the drafting of a charity law in 2016.
The missions of private entrepreneur foundations should align with the state’s core goals in social security: disaster relief, poverty alleviation, aid to the underprivileged, and promotion of education.
After Jiang proposed the “Three Represents” in 2001, the CCP and entrepreneurs entered a honeymoon of more than 10 years. When Xi came to power in 2012, he began to strengthen oversight of entrepreneurs and private organizations.
Recently, the government has pursued the common prosperity agenda with a series of high-profile reforms, amounting to a big crackdown on technologythe platform economy, private education, real estate and financial capital, which led to a dramatic destruction of wealth in the stock market by 2022.
Jack Ma singing at an Alibaba 20th anniversary event in Hangzhou. As Ma became increasingly known as the most recognizable face in Asian business, China’s regulators slammed on the brakes. Photo: AFP/Stringer
These new rules are designed to increase the size of China’s middle class, boost the incomes of low-income groups and curb excessive incomes. But there is a significant risk that it is a crackdown killing innovationcreativity and the entrepreneurial spirit of China’s private sector.
The position of large private companies in China today is that less safe than it has ever been since 1989. State intervention has led to entrepreneurs are losing faith in China’s futurewith some choosing to move abroad temporarily or permanently.
At the same time, the cooperation between the Party and private entrepreneurs over the past decade seems less exceptional if we recognize that red capitalists are a creation of the Party itself.
Gilles Guiheux is a professor at the Université Paris Cité, researcher at CESSMA and senior member of the IUF.
This article was originally published by East Asia Forum and has been republished under a Creative Commons license.
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