From: Grant Callaghan (email@example.com)
Date: Thu 14 Nov 2002 - 21:13:36 GMT
A major meme change for the Communist Party in China
From the Far East Economic Review
16TH PARTY CONGRESS
Jiang Ensures Party Endures
Before he leaves, Communist Party boss Jiang Zemin unveils a raft of reforms
to please business and foreign investors. His legacy lies in his dismantling
of ideological barriers to the party's survival
By Susan V. Lawrence/BEIJING
Issue cover-dated November 21, 2002
JIANG'S BIG PROMISES
-- The party will allow private businesses to compete on a more level
playing field with state-owned firms.
-- Private capital will be allowed in more areas.
-- Discriminatory rules on investment, financing, taxation, land use and
foreign trade will be revised.
-- Fuller legal protection for private property.
FINALLY, PRIVATE-SECTOR tycoons got invited to a Communist Party ball, and
they wanted everyone to know they had arrived. Men such as Jiang Xipei, who
made a fortune producing power cables, and Qiu Jibao, whose Feiyue sewing
machines racked up $100 million in exports last year, sneaked out of staid,
stuffed-armchair meetings at the party's 16th congress to speak to scrums of
reporters in hallways. They energetically handed out name cards and company
publicity, and even held press conferences to propound, a little recklessly,
their interpretations of party doctrine.
Of the 2,114 delegates to the congress, which meets every five years to
endorse the party's policy blueprint and approve a new leadership, Jiang and
Qiu were among a handful from the private sector. But as the first private
businessmen to be delegates to a party congress, they were the most
high-profile people there after the political leaders, headed by outgoing
General Secretary Jiang Zemin.
The party's goal in inviting such irrepressible capitalists to its premier
political event was to highlight a significant stage in China's
transformation from impoverished icon of collectivized farming and
inefficient state industry to the world's most dynamic economy.
In his report to the congress, which will guide his successors for the next
five years, Jiang said the party intends to allow businesses to compete on a
more level playing field with state-owned firms. Private capital will be
allowed into more sectors. Discriminatory regulations on investment,
financing, taxation, land use and foreign trade will be overhauled. Private
property will have fuller legal protection.
The embrace of capitalism isn't total. State-ownership, Jiang said, should
still play the "dominant role" in the economy. Expanding the state sector
and having it control "the lifeline of the national economy," he said, "is
of crucial importance in displaying the superiority of the socialist
system." In a November 10 press conference, Li Rongrong, director of the
State Economic and Trade Commission, said the party would, in fact, put
private businesses on a completely equal footing only with foreign business,
not with state-owned firms.
But by dismantling many of the remaining ideological barriers hindering
growth of the private economy, Jiang's report opened the way for legal and
regulatory moves that promise to change the business landscape of China.
For foreign business, it is undoubtedly good news. With the private economy
powering China's growth and responsible for the bulk of new job creation,
foreign investors are looking to the private sector's continued rapid
expansion to keep China an attractive place to invest.
Foreign institutional investors eagerly await the listing of a large group
of private companies domestically and eventually on foreign exchanges,
through which they can invest in China's growth. So far, official bias
against the private sector meant almost all companies that qualified for
listings were state-owned. But Jiang's report looks set to change that.
He first raised many of the same ideas he outlined at the congress in a
speech in July last year for the party's 80th birthday. But he did not first
run the proposals past the Central Committee for approval, and they provoked
heated controversy within the party. The significance of Jiang's report to
congress is that it makes them official party policy, which his successors
must commit to carrying out.
Boston University political scientist Joseph Fewsmith, who closely follows
China's ideological battles, said Jiang's speech last year now looked like
an inspired move. "You put all that stuff out front, and then you work you
way up to the 16th party congress and it doesn't seem so startling," he
In fact, Jiang's speech was the finale of a long intellectual journey for
the 76-year-old who became party chief in the aftermath of the Tiananmen
Massacre in 1989. Back then, Jiang appeared to subscribe to the view,
inherited from Marx, that anyone who harnesses the labour of others for
private profit is by definition "exploiting" them, and that wealth derived
from anything other than one's own physical labour is illegitimate. He
insisted to a party meeting in 1989 that private business owners were
"exploiters" who could never be allowed to join the party because if they did, "what kind of party would we be building?"
Then, in 1992, leader Deng Xiaoping urged the nation to stop asking whether
policies were "surnamed socialism or surnamed capitalism." He set off a
surge of economic activity that stunned everyone--Jiang included.
So by the 15th party congress in 1997, Jiang recognized just how much
economic dynamism could be unleashed through a well-thought-through
ideological fudge. His contribution to China's economic transformation in
his congress report that year was the notion that state ownership could be
exercised through majority or even minority stakes in companies, rather than
A corollary was that selling off the state's stake in struggling companies
was an effective way to preserve state assets, which would otherwise
haemorrhage away. In addition, bringing outside shareholders into other
state firms was seen as a useful method of expanding state assets, because
the outsiders would invigorate the company's management and the state's
share would grow in value.
The result of that set of ideas was on display when delegates from China's
largest state enterprises met during the congress. After an obligatory few
minutes praising Jiang, Li Yizhong, president of oil giant Sinopec, reported
on the company's progress since the 15th congress. Stock listings in Hong
Kong, New York, London, and Shanghai, he told them, raised 40 billion
renminbi ($4.83 billion) and "more importantly" diversified ownership, so
the group itself now controls only 55% of its shares.
Sinopec has lined up some of the world's most powerful companies as
strategic investors, laid off 21% of its workforce, or 260,000 employees,
joined the Fortune 500 in 1999 and last year was ranked No. 86, Li reported.
His presentation wouldn't have sounded out of place at a corporate board
Jiang's big fudge this year is that those employed in the private sector,
including bosses, contribute to China's prosperity, and so should be treated
for ideological purposes as fellow "builders of socialism with Chinese
characteristics." He is "saying that the interests of the whole society are
uniform," Fewsmith says. "The elimination of class struggle, as an element
of what socialism is about, is really fundamental."
For those who complain tycoons shouldn't be in the party because they aren't
members of the working class, Jiang has adjusted the party's stated
identity. It is now the vanguard not just of the working class, but "also of
the Chinese people and the Chinese nation."
On the ground, Jiang's report, combined with revisions to the party charter,
should produce stronger protection for private property. And that should
encourage bankers to lend to private businesses, says Andy Rothman, China
head for CLSA Emerging Markets. That matters because the lack of access to
formal lines of credit is the biggest constraint on private-sector growth in
China. Private-property protection will also make it easier for private
firms to list on stockmarkets and eventually issue bonds, he adds.
Jiang's words should also deter corrupt local officials from preying on
private firms with the idea that they had no official protection, Rothman
says. Also look for a greater willingness by local governments to sanction
the sale of stakes in state enterprises to private companies. The private
sector has complained bitterly in recent months that the state has allowed
foreigners to buy stakes in once-sensitive parts of the state sector, such
as banks, while barring domestic private capital from doing the same.
Writing in a leading financial newspaper on November 11, an official with
the State Council's Development Research Office argued for speeding up the
privatization of state enterprises by selling assets to both private
domestic and foreign investors. Highlighting the uneven state of
privatization, he noted that 80%-90% of state enterprises in Chongqing city
in western China had either sold stakes to nonstate actors or privatized
entirely since the 1997 congress. In the central province of Anhui, however,
only 15% of 472 state enterprises had undergone similar reforms, with only
5.5% ending majority state ownership.
The flamboyant private-sector delegates were a very visible reminder at the
congress of the degree to which the party has changed its stripes. Qiu
Jibao, the sole private-sector delegate from private-economy-dominated
Zhejiang province, began his press conference by distributing copies of his
in-house newspaper. It boasted of his delegate status, quoted him as saying
the responsibility was "heavier than Mount Tai," and touted the company's
new meat slicer as an unlikely "gift to the 16th party congress."
Qiu said: "The Chinese Communist Party and the Chinese people are not just
giving this honour to me, Qiu Jibao. It is showing its trust in
entrepreneurs all over the country."
Then he took a punt at explaining the party's revised membership policy. He
joined in 1988, when his firm was registered as a local government affiliate
so as to receive policy breaks denied to private companies.
"The party isn't just the vanguard of the working class. It is also the
vanguard of the Chinese people and it is the vanguard of the Chinese
nation," Qiu began. He then plunged on with an answer bound to anger the
party's Organization Department.
"As I understand it, so long as you are on Chinese soil, or in fact on soil
anywhere in the world, and are of Chinese descent, so long as you accept the
party's programme and will make contributions to the Chinese nation, the
party will welcome you."
STOP MORE SPAM with the new MSN 8 and get 2 months FREE*
This was distributed via the memetics list associated with the
Journal of Memetics - Evolutionary Models of Information Transmission
For information about the journal and the list (e.g. unsubscribing)
This archive was generated by hypermail 2.1.5 : Thu 14 Nov 2002 - 21:16:49 GMT