12 January 2021

The Guardian: “How the state runs business in China”

Xi’s shadow now looms increasingly large over private firms as well. In March 2012, a few months before taking over as general secretary, Xi delivered a speech in which he stressed the need to increase the number of party bodies inside private business. Around the same time, new details for “party building” in enterprises were released, calling for the party secretary to participate in and attend important executive-level meetings.

The party’s efforts to place itself inside private companies have been, according to its own figures, very successful. One recent survey by the Central Organisation Department, the party’s personnel body, found that 68% of China’s private companies had party bodies by 2016, and 70% of foreign enterprises. Although these figures sound high, they don’t match the targets the party has set for itself. In Xi’s old stamping ground of Zhejiang, for example, officials set a target in August 2018 to have cells inside 95% of private businesses. There was a need, the survey said, to retain the revolutionary spirit inside the companies as their ownership was handed on to the next generation.

The party’s overarching aim, though, has remained consistent: to ensure that the private sector, and individual entrepreneurs, do not become rival players in the political system. The party wants economic growth, but not at the expense of tolerating any organised alternative centres of power. During the 1990s, Chinese leaders watched in horror as the Soviet Union disintegrated and its assets were privatised. Having seen business threaten to take over the state in Russia, Beijing has been determined to make sure that the same disaster does not befall China.

Richard McGregor

Fast-forward a year and a half, the iron grip of the Chinese government on its business sector has only tightened. These past months alone, Chinese regulators regulators abruptly suspended the massive IPO of Ant Group, and issued new anti-monopoly rules seeking to restrain the growing influence of corporations like Alibaba and Tencent. Many of these actions seem targeted at billionaire Jack Ma, who regularly spoke against the government and centrally controlled economy. Recently, some publications noticed his sudden absence from the public sphere, and speculated that he is keeping his head down to avoid further crackdown.

Xi Jinping at 20th anniversary celebrations of Hong Kong’s handover
Xi Jinping at 20th anniversary celebrations of Hong Kong’s handover, June 2017. Photograph: Keith Tsuji/Getty Images

These measures by the Chinese government could have a chilling effect on the economy, on foreign investment and local entrepreneurship – the government is basically signaling to business executives that they are free to make money in China, but they are not permitted to use their financial power to challenge the Party’s political power, nor to second-guess its decisions. A stark contrast to the United States, where Twitter and Facebook recently removed the sitting President from their social networks. The fact that this could never happen under China’s current regime is the best argument why banning Trump is not in fact censorship, but the exact opposite.

As a side note, there was some outrage online because Twitter’s Jack was also nowhere to be found during these turbulent events – but it turns out he was simply enjoying a vacation, not possibly under house arrest.

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