Earlier this month, the General Office of the Central Committee of the Chinese Communist Party released new guidelines on the relationship between the Party and private businesses. The guidelines called for increased Party control over entrepreneurs and private enterprise and directed businesses to utilize Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as a compass. Titled “Opinion on Strengthening the United Front Work of the Private Economy in the New Era,” the report indicates the revanchist attitude of the Party under Xi towards the private sector. At the New York Times, Chris Buckley and Keith Bradsher write that the directive is oriented towards increasing economic growth and Party control over private enterprise:
More broadly, the instructions reflect a long-running debate within China about the role of private business in a country where the government still controls crucial levers of industry. China emerged as a global economic power in large part by freeing entrepreneurs to open factories and find markets around the world.
That freewheeling approach has long unnerved some Chinese leaders who want businesses to hew more closely to the party’s strategic goals, which can range from strengthening sway abroad to lifting people out of poverty in underdeveloped parts of the country.
“It has been an ongoing dilemma about co-optation and ensuring loyalty, while allowing sufficient autonomy to develop a competitive economy,” said Kellee Tsai, a political scientist at the Hong Kong University of Science and Technology who studies China’s private entrepreneurs, in a telephone interview. “I think it really reasserts the party’s leadership and authority. I think that’s really the primary message.” [Source]
There are clues in the guidelines that the Party is also concerned about shaping a younger generation of tech founders, such as Zhang Yiming, the 37-year-old founder of ByteDance. Compared with someone like Alibaba founder Jack Ma, who has long been seen as an informal ambassador for China, Zhang has always emphasized the global reach rather than the Chinese roots of his tech empire. He drew flack at home last month for a statement that appeared resigned to a forced sale of TikTok to a US firm in order to continue its global success—and that failed to thank China.
China must “strengthen the cultivation of young entrepreneurs…guiding them to inherit and continue the great tradition of listening to and following the Party” the decree said. [Source]
Chinese entrepreneurs with global aspirations may be dismayed at the government’s public assertion of control over their businesses. Tiktok, a subsidiary of Zhang Yiming’s ByteDance, has already faced intense scrutiny over its relationship with the Chinese state and the Party.
Officials doing the cfius and national security review for the tiktok deal might have a few more questions https://t.co/g7XvMabxcH
— Bill Bishop (@niubi) September 15, 2020
This seems like saying the quiet part out loud.
(Also: excellent timing if you want to alleviate concern about private Chinese tech companies following the CCP's line…) https://t.co/u5vyOBzYF0
— Sheena Greitens (@SheenaGreitens) September 15, 2020
(CDT has previously tracked ByteDance’s evolution from a company on the receiving end of regulator’s ire to one promoting campaigns to “Pass Down Red Genes, Use Tech to Boost Patriotic Spirit.”)
Nonetheless, the Party intends for increased United Front work to be mutually beneficial for both the Party and business. Bloomberg reports that companies with stronger ideological adherence will receive greater state backing, citing the Economist Intelligence Unit’s Yue Su’s explanation that “the document shows China is trying to mobilize more resources around the national strategy amid the economic slowdown caused by the pandemic and the deterioration of diplomatic and trade relations with the US [….] The authorities will give priority to companies that assist in realizing policy goals when allocating financial and policy resources.”
Although the Opinion clearly defines the Party’s ambitions, it is light on details of possible future policy actions. In an effort to clarify which mechanisms the Party may use to exercise control, the blogger Youshu analyzed and shared a full machine-translation of a speech by Ye Qing, Vice Chairman of the All-China Federation of Industry and Commerce. Ye’s speech distilled the future direction of United Front efforts to three fields: human resources, monitoring of behavior, and improving the Party-led union. You Shu comments that Ye “calls for ‘a working mechanism for the Party to lead the human resources department and giving full play to the leading role of Party organizations in selecting and employing personnel.’ So, Party people will end up controlling hiring and firing? Sounds like that’s where we’re going”
Long before the September release of this opinion on United Front work, Xi Jinping had been angling to reinsert the Party into all aspects of Chinese society. A Made in China Journal essay by Jude Blanchette of the Center for Strategic and International Studies explained in April last year that the Party’s drive to insert itself into everything is part of a drive to stave off atrophy:
I argue that the campaign to enlarge the reach of the CCP into private companies cannot be separated from its much wider campaign to increase the Party’s governance over all institutions under its purview, be they state-owned enterprises, law firms, educational institutions, non-governmental organisations, and even within government bureaucracies. This development, in turn, is closely related to the Party’s decades-long campaign to arrest the organisational atrophy that accompanied the post-Mao economic reforms initiated in the late 1970s. Seen in this light, the expansion of Party organisations within private firms is not a discrete effort to infiltrate the private sector per se, but rather is a manifestation of the CCP’s desire to have insight and input into all economic, civil, and political activity within the country. [Source]
Xi summarized his own ambitions when he revived the use of the phrase, “Party, government, military, society, education, east, west, south, north, centre, the Party leads all.” In their China Neican newsletter, Adam Ni and Yun Jiang give the historical background of the phrase:
The formulation of “The Party leads all” was actually first used by Mao during the 1962 Enlarged Central Work Conference (aka the “Seven Thousand Cadres Conference”). This is the famous conference that saw a broad pushback against Mao and his radical leftist policies that left tens of million dead during the Great Famine (1959-1961).
In early 2016, Xi revived this formulation as one of the Party’s political principles. This was cemented at the 19th Party Congress in October 2017, when it was written into the Party Constitution (Chinese/English) [….] [Source]
An August report by the Economist analyzing China’s robust version of state capitalism captured the spirit of the new era:
Last year Zotye, a carmaker, used it to tackle weak sales, and Wuliangye, a distiller, to improve the quality of its baijiu; it helped Zheshang Bank to digitise its operations and catalysed the development of energy-saving technologies at China National Nuclear Power. “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” is, on the basis of these companies’ annual reports, quite the business-practice panacea. [Source]