What’s Left of Communism in China?

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Has the Chinese Communist Party (CCP), 100 this year, become capitalist? Since Deng Xiaoping’s economic liberalization reforms were introduced 40 years ago, more than 800 million people have been lifted out of poverty and the one-party state now leads the second largest economy in the world – the largest in purchasing power parity with 18 percent of global GDP. The advent of the market economy and the acceleration of growth are accompanied by an exponential increase in inequality: the Gini coefficient, which measures the extent of inequality, rose by 15 points between 1990 and 2015 (latest available figures)

These changes have facilitated private sector growth, but the state retains direct control over large parts of the economy – the public sector accounts for about 30 percent – which makes China a textbook for state capitalism. In addition, the CCP has largely succeeded in co-opting the elites of this liberalized economy. But when communist ideology no longer influences party recruitment, its Leninist organizational structure remains central to the relationship between state and capital.

The CCP, which continues to grow and now has around 95 million members (around 6.5 percent of the population), has gradually transformed into an “economic organization”. In the early 2000s, then-President Jiang Zemin lifted the ban on recruiting private sector entrepreneurs previously viewed as class enemies so that the CCP would no longer represent only the “revolutionary” classes – workers, peasants, and the military . but also the “advanced productive forces” of the country.

The selected business people become members of the political elite and ensure that their businesses are at least partially protected from predatory officials. Its admission into the CCP has accelerated under President Xi Jinping (from 2013) with the aim of “forming a group of individuals from the business world who are determined to march with the party.”

“Party spirit” asked

As a result, the CCP has quickly become more and more elitist. In 2010, the number of “specialists and managers” with university degrees already corresponded to the number of farmers and workers. Ten years later they have overtaken them and make up 50 percent of the membership, compared to less than 35 percent of the workers and peasants.

While “working for communism” was one of the main reasons for joining the party during the Maoist era (1949-76), today’s motivations are rather pragmatic: primarily to facilitate professional advancement. In fact, internal training shows that the CCP presents itself as a neo-liberal-inspired leadership structure aimed at efficiently managing the population and the economy.

The minimal importance attached to communist ideology, however, does not detract from the high levels of loyalty and “party spirit” required of CCP members. Similar to corporate culture, it is about securing party success by creating a feeling of togetherness. It is also shaped by nationalism. Members are regularly reminded of the party’s central role in China’s transformation, whether through training courses or through the development of “red tourism” – visiting places linked to the history of the revolution.

Internal discipline has also increased under Xi Jinping. The aim is to ensure the morale and loyalty of both leaders and members through a massive anti-corruption campaign. Not only have potential opponents of Xi’s personal power been removed, but control over the officials has increased, as has the fight against the “four bad guys”. [professional] Styles ”: formalism, bureaucratism, hedonism and extravagance.

This commitment to loyalty and professional ethics applies to all of its members, including those in the private sector, in line with the public image the CCP seeks to convey. According to the party’s guidelines, they are expected not only to remain true to the party line, but also to “regulate their words and actions”, “maintain a healthy lifestyle” and remain “humble and discreet”. And those who don’t play the game can have repercussions. The charismatic Jack Ma, founder of the Alibaba Group, is a prime example. After openly criticizing the state’s stranglehold on the banking sector, he was the target of an orchestrated attack by party authorities.

Pressure to show loyalty

The IPO of the Ant Group, a financial subsidiary of the Alibaba Group, was halted in late 2020 and the group was instructed to curtail its operations. This incident shows the CCP’s willingness to exert pressure to ensure the loyalty of entrepreneurs and maintain some degree of control over the financial and technological resources of their companies.

Ant Group holds valuable personal and financial information on hundreds of millions of people who use their payment tools and online loans; the equivalent of billions of dollars flows daily through its platforms. The increased control over the private sector is in line with the CCP’s hegemonic tendencies that are characteristic of the Xi era. The party’s statutes were amended in 2017 to emphasize that “in government, the army, society and schools – east, west, south and north – the party leads on all fronts”.

In companies this means an increase in grassroots organizations or party cells. As early as 2012, the organization department of the CCP, whose task it is to manage human resources, issued a directive calling for “full coverage” of the private sector, and since 2018 companies listed on the Chinese market have been obliged to set up a party cell: 92 percent of China’s 500 largest companies now have one. Although exact numbers have not been released, regular leaks show the high presence of members and cells in overseas companies operating in China.

Extermination of “disloyal” officials

This presence gives the party an influence that extends beyond much of the economy that it owns. The CCP’s disciplinary apparatus, embodied by the Disciplinary and Inspection Committee, is able to extrajudicially punish members who do not obey the rules, and its powers have been enhanced by the anti-corruption campaign. Meetings of criticism and self-criticism known as “democratic life meetings” were revived to eradicate “corrupt” or “disloyal” officials. In this way, traditional Maoist practices are recycled and no longer focus on the ideological purity of party officials and members, but on their loyalty to the organization and its leader.

So far, party cells have played a subordinate role in companies: They mainly recruited members and organized courses or social and cultural activities. With the aim of developing a “modern corporate system with Chinese characteristics”, guidelines have now been issued that oblige private companies to “adhere to the principle that the party has decision-making power over staff”. It is too early to know what this will be like, but it is clear to Ye Qing, vice chairman of the CCP-led China Industry and Commerce Association, that it means the party will have control over the management of the workforce will.

Recruitment and layoffs would require party approval to prevent “managers from recruiting who they want,” says Ye. He also recommends establishing a supervisory and auditing structure in companies under the authority of the party to ensure that companies comply with the law and deal with disciplinary violations and “abnormal behavior” by employees. The party’s disciplinary apparatus thus expands to include everyone, including non-communists.

According to the new guidelines, the leadership of the party cells should be formally incorporated into the company’s articles of association, with a separate budget for its activities. This amounts to a legal codification of the requirements of the CCP so that they are also binding for companies that are not under its direct control. Thus, the role of the CCP in the private sector is increasingly similar to that in state-owned companies. Focused on its own survival, with pragmatism and even an ideological vacuum, it brings a growing number of capitalists into its ranks as it becomes more and more present in companies.

This asymmetrical alliance is found outside the country’s borders: The Belt and Road Initiative accelerates the internationalization of Chinese private and public companies that set up party cells abroad to monitor their employees. While putting aside Maoist internationalism, the CCP is now exporting its organizational form and disciplinary tools.

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