Report 5.29 Party Presentation in Chinese Economy
May 29, 2013
Key Points of Part I, II and III [Page 2]
Report Part I & II [Page 4-27]
Report Part III [Page 28-36
SOE Decision Making Process Rule [Page 36-45]
Opinion on expanding Party in private company [Page 46-end]
Key ideas in Part I and part II
1. In2005, the legislator for the first time asked company to provide “convenient” for the operation of the Party organization in Company LawKey ideals about Part III
2. Labor Union has a unique position in socialist China. The early CPC activities were closely tied up with labor union movements. After 1949 new socialist China, Trade Union Law (1950) even adopted prior to the creation of 1954 Constitution. Trade Union Law imposed criminal and administrative law liability on companies who prevent the operation of labor union.
3. Trade Union Law particularly requiring labor union UPHOLDING the leadership of CPC, which never found similar request from any other law, even 1982 Constitution.
a) Constitution never adopts the expression “upholding CPC leadership,” or even upholds any principals, like Four Cardinal Principals, that incorporate the ideal of “upholding CPC leadership.”
4. 2012 May Party opinion provided us a clear guidance of Party’s expansion plan in private company. The guidance also highlight the opportunity of networking with Party committee could be a benefits for setting up Party organization
5. Party activities in Sino-Joint ventures are more concentrate on party line education, environment protection, charity and CSR related events.
1. The bottom line is, under current Party-State structure, Party organization in private company would not likely to become the instrumentality for Party to influence the operation of private economy. In other words, Party has more efficient way of affecting the operation of private company other than the setting up the Party Organization.
2. There are three styles of Party organization functioned in current Chinese company operation practice, which could be named as: SOE mode, Wenzhou mode and other private company mode.
3. In both SOE mode and Wen zhou private company mode, party organization leadership overlapped with corporation leadership structure. In SOE mode, SOE became the instrumentality for Party authority to realize its economic and politic goals. In wen zhou mode, Party organization became the instrumentality for some Wen zhou private companies to realize its corporate expansion goals through the communication channel with Wen zhou party authority.
a) Wen zhou mode is a special case, it is hard to create spillover effect to other private companies in other regions.4. The cases of Foxconn riots in 2012 and Carrefour’s constant product quality scandals unmistakably indicate that Party organization in Wenzhou mode is a special case. Party organization in third mode neither can’t function as Party’s instrumentality to control private economy nor been utilized as instrumentality by the company to gain private gain.
5. Theoretically, Party can influence the operation of a private company without the involvement of Party organization in that company. Also, Party even can’t project real influence to the operation of Party organization in private company.
Party’s presentation in Economy sector (I & II)
Table of Content
I. Legal bases for CPC’s presentation in China’s economy
A. The process of creating a Primary Party Organization in a company
1.Structure of Primary Party Organization
2.The structure of the Committee of General Party Branch and Party Branch
B. Party’s de factor representative: Labor Union
II. CPC’s presentation expansion in Non-public Economy sector
B. Party’s official plan of expansion
C. Cases of Party Organization in private company
Abstract: If we generalize CPC and CPC’s socialism believes as a product, then the prosperity of CPC is depended on the popularity and market base of such products. As many successful organizations around words, CPC knew to sell their products to particular groups by differentiating its branding. In China’s society, CPC product is carried out by different brands, which are “Party organization”, “the Communist Youth League”, “the All-China Women’s Federation”, and “All China Federation of Trade Unions (Hereinafter ACFTU).” As you can read from the name of these ‘brands,’ different party organizations target different groups of the people and social units. Normally, all these ‘bands’ could represent Party in China’s economy sector. This article, particularly concentrated on “Primary Party organization” subordinated to the “Party organization” and “Trade Union,” which are the most related party organizations to the operation of factories and companies.
The first part of the article purely concentrates on the theoretical aspects of Party’s presentation in a company, which involves the legal bases and process of creating “Primary Party organization” and “trade union” in a company. This part suggests that Party’s presentation in China’s economy sector is guaranteed by both legal mechanism under State Law and policy mechanism under Party rule and policy. The second part of the article turns the focus on the practice aspects of the operation of the “Primary Party organization,” which involves Party’s plan of expanding “Primary Party organization” in Non-Public economy sector and real case of creating Primary Party organization that appeared on Chinese media. The second part suggests that Party organizations in Non-Public companies not only served as a Party education and promotion center but also a channel for investors and shareholders lobby their interests and a internal department for company to organize CSR related events.
I. Legal bases for CPC’s presentation in China’s economy
CPC’s presentation in China’s economy sector is not only a long term strategy for Party to consolidate its leadership over China’s society and tailor China’s economic and political resources for Party’s line and Police, but also a fact exists with solid legal bases that be supported with both legal mechanisms from the State and policy mechanisms from the Party network. In practice, depends on the number of Party member in a economic unit, the form of CPC’s presentation could be either carried out through the establishment of a Primary Party Branch under the Company Law of the People’s Republic of China and Party Constitution; or through the establishment of a trade union that subordinate to All China Federation Trade Unions under the Constitution of the Chinese Trade Unions. As I will explain later, there is not much difference between these two forms because trade union is a de-facto Party organization. Borrow words from the Vice Chairman of NPC Standing Committee Legislative Affairs Commission, the Trade Union has been considered as a “bridge” that abridges the process of setting up party branch in a social organization.
I. Legal bases for CPC’s presentation in China’s economy
The Company Law of the People’s Republic of China is the only state law that China’s legislative body ever created to formalize the legal foundation for CPC’s presentation in economy sector. Such legal foundation was created in article 17 since the law was adopted in 1993 and never been changed until 2005. The article 17 provided that:
[T]he primary organization (grass-root organizations) of the Communist Party of China in companies shall carry out their activities in accordance with the Constitution of the Communist Party of China.The plain meaning of article 17 merely concentrated on the Party organizations’ responsibilities of obeying Party Constitution, which created an awkward feeling for first time readers because this rule appeared to be oddly fit in a company law where companies’ and shareholders’ responsibilities are supposed to be the concentration. This changed in 2005, the 2005 Company Law amendment not only rewrote the language of article 17 by article 19 with key word of “setting up” but also emphasized that company has the responsibility of providing convenience for Party Branch operation:
[I]n companies, Communist Party organizations shall, in accordance with the provisions of the Constitution of the Communist Party of China, be set up to carry out activities of the Party. Companies shall provide the necessary conditions for the Party organizations to carry out their activities.
Compared with the article 17 in 2004 Company Law, there were two major changes made by article 19. First, it not only stated the fact about the existence of party organization but also clearly pointed out key words “set up”. Second, it specifically required the company provides convenience for Party Organization’s activities. Although no law discusses the liability if a company violates article 19, this major change had dynamic effects on China’s society. For the first time in the history, companies are asked by law to support Party organization’s activities with certain convenience. According to the reports from CPC Central Organization Department, CPC core department that responsible for managing party official and party member, Party Organization established in Non-public economy sector increased from 15.8 million to 38.4 million since 2005 to 2007.
Chart recreated from the data of Non-Public Economy Sector Party Organization Research
A. The process of creating a Primary Party Organization in a company
Although, Article 19 of 2005 Company Law vaguely made companies be responsible for offering necessary convenience to set up a Party Branch, the technical questions of when, how and who to set up a Party Branch in a company is governed by the rules that detailed in Party Constitution and other Party documents. Article 29 of Party Constitution set out the threshold for setting up a Primary Party Organization:
[P]rimary Party organizations are formed in enterprises, rural areas, government organs, schools, research institutes, communities, social organizations, companies of the People's Liberation Army and other basic units, where there are at least three full Party members.
Under article 29, theoretically, Primary Party Organization could be set up in any social unit where there are at least three full Party members.(Not including probationary Party member) Based on the rules and real life practice, as you can read from the diagram below, there are four steps to set up a primary party organization.
1. Structure of Primary Party Organization
Like different corporations have different corporate structure, the structure of primary party organization depends on two factors: number of the party members involved and volume of party work involved. Generally, with the approval of higher party organization, Committee of General Party Branches or Committee of Party Branches could be set up under the structure of Primary Party Organization when there are more than one hundred party members. When there are less than one hundred but more than fifty party members, a committee of Party Branch could be set up under the Committee of General Party Branch. When there are less than fifty full party members, setting up a Committee of Party Branch is sufficient for the party work. Party members will join to a most related party organization when there are less than three full party members. Due to the volume of the party work and in special cases, instead of following the rules stated above, one could merely set up committee of party branch when there are more than one hundred or fifty party members. Or one could just set up primary party organization or committee of general party branch.
Diagram of Primary Party Organization Structure provided below:
2. The structure of the Committee of General Party Branch and Party Branch
As the above diagram indicates, the pyramid structure of the primary party organization is very much like the structure of the state legislative power. Like NPC is the highest state power, General Membership Meeting (GMM hereinafter) is the ultimate leadership organization in the primary party organization. The committee of Party Branch is an administration body that served similar function of the Standing Committee of NPC when the GMM is not in session. The branch committee, elected by GMM, is in charge of the daily operation of the party organization.
B. Party’s de factor representative: Labor Union
All Chinese Federation Trade Union (ACFTU) is a de factor Party organization in companies where there is insufficient number of party members existed for setting up Primary Party Organization.  Under the Constitution of the Chinese Trade Unions’ definition, “The Chinese trade unions are mass organizations of the Chinese working class under the leadership of the Communist Party of China and formed by the workers of their own free will. They serve as a bridge and link between the Party and workers and an important social pillar of the state power and represent the interests of the trade union members and workers.” Moreover, the Article 32 asked the trade union cadres to “study diligently Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and the important thought of “Three Represents”, the scientific outlook on development” and “Party’s basic line and various principles and policies.” CPC administration body even issued guidelines and rules to its cadres that take the trade union as the first step of setting up future party organization. Last, Trade Union Law is particularly requiring trade unions to UPHOLD leadership by CPC, which Chinese people in general has no such duty under Chinese Constitution. As a matter of fact, historically, legally and politically, trade union plays a major role in Party’s presentation in China’s society.
Since the creation of CPC in 1921, CPC had heavily involved in trade union organizing (Rudolf 2011). CPC’s political presentation in China’s regime during the 20th century was largely expanded and carried out through controlling of the network of Labor Union and its movements. After the establishment of socialist China, ACFTU became Party’s representation in economy sector, which played the role of implementing socialist lifelong employment benefits and socialist industrialization by participating management of factory production. ACFTU’s role of representing party was largely replaced by Primary Party Organization when State-Owned economy system replaced all pre-existed private economy at the time.
However, the increasing prosperity of private economy after State-Owned economy system reform by Zhu rongji in 2000 created an outlaw kingdom, where most private social units out of the control of party’s representatives like Primary Party organization and trade union. This outlaw kingdom raised the alert from both State legislature and Party authority, which result stronger law to secure the operation of trade union in economy sector. In 2001’s Trade Union Law amendment, the legislature provided legal mechanism to secure the operation of trade union in company by pursuing administrative or even criminal liabilities of the company when they try to prevent trade union activities. For example, Articl3 and Article 50:
[A]ll manual and [I]tellectual workers in enterprises, institutions and government departments within the territory of China who rely on wages or salaries as their main source of income, irrespective of their nationality, race, sex, occupation, religious belief or educational background, have the right to organize or join trade unions according to law. No organizations or individuals shall obstruct or restrict themCompared with pre-amendment Law, 2001 amendment for the first time imposed criminal and administrative liabilities on the company for preventing trade union activities indicated authorities’ concerns of losing control of Non-public economy sector. Moreover, this also the first time that state law clearly requiring trade union uphold “the socialist road, the people's democratic dictatorship, leadership by the Communist Party of China, and Marxist-Leninism, Mao Zedong Thought and Deng Xiaoping Theory, persevere in reform and the open policy.”
[A]ny organization or individual that, in violation of the provisions of Articles 3 and 11 of this Law, obstructs the workers' and staff members' from joining or organizing of trade unions in accordance with law or the effort made by trade unions at higher levels to assist and guide the workers and staff members in establishing trade unions shall be ordered to by the administrative department for labor to make rectification; if it refuses to do so, the said department may apply to the people's government at or above the county level for solution; where grave consequences are caused as a result of the use of such means as violence and threat in obstruction and thus a crime is constituted, criminal responsibility shall be investigated according to law.
The most significant part about article 4 is the requirement of asking trade unions uphold the leadership by the Communist Party of China. Although, the language organization of article 4 is very much similar to the expression adopted by Constitution, the Constitution has never requiring people to UPHOLD the leadership by the Communist Party of China. Relevant context provided below for comparison:
[t]he Chinese people of all nationalities will under the leadership of the Communist Party of China and the guidance of Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory and the important thought of Three Represents… [W]ill continue to adhere to the people's democratic dictatorship and the socialist road, persevere in reform and opening to the outside world, steadily improve socialist institutions, develop the socialist market economy…Summary
CPC’s presentation in China’s economy sector commonly carried out in the form of Primary Party Organization and Trade Union. Company Law and Party Constitution provided legal bases for the establishment of Primary Party Organization in a company. The Primary Party Organization’s structure is very similar to the structure of state legislative body NPC. Committee of (general) Party Branch is the administrative body of the organization under ultimate leadership of General Party Membership Meeting. Historically, legally and politically, trade union played critical role for party’s presentation in China’s society. The newly amended Trade Union Law not only criminally or administratively prosecute companies interfere with trade union activities but also solely requiring trade union UPHOLD leadership by CPC. Under the concerns of losing control of increasing economy power of the Non-public economy sector, both state law and CPC policy strengthened the control and operation of trade union in China’s economy sector.
II. CPC’s presentation expansion in Non-public Economy sector
In part I of the article, I introduced and explained the legal bases and process of creating two kinds of Party Presentation in a company. In part II, I will particularly focus on the operation of Primary Party Branch in Non-public economy sectors. I will first explain the background for Party’s interest to private companies. Then I will introduce Party’s official announcement for expanding Primary Party organizations in Non-public economy sectors. Last I will provide cases to explain Party organization’s activities in the Company.
There is a visible improvement for the reputation of Non-public economy sectors in China. At the early days of the socialist China, persuaded by CPC, the society in general accepted the ideal the Non-Public economy is the evil representative of Capitalism and thus should be responsible to the poor living conditions of people. Until the 3rd plenary session of the 11th Central Committee of the CPC re-directed party policy with more liberalized and practical approach to the market economy, the term “private economy” for the first time backed to the state Constitution. In 1993, “Market Economy” had been officially announced as China’s economy system.  In 1999, The Constitution recognized “private economy’s role as important component” of socialist economy.  In 2000, Jiang zeming for the first time of the history announced that ‘all kinds of enterprises, whether they were SOEs, foreign enterprises or private-owned enterprises, were all contributors to the socialist construction’.  In 2004, the state legislature finally admitted China “encourage” the development of private economy.  Party and State’s practical and liberalized approach to the private economy not only brought diversity and vigor to the prosperity of China but also created environment that hatching new social groups that constituted by college graduates and entrepreneurs, who have never pledged to be a true socialist Party member but controlling increasingly expanded economy resources that out of Party’s realm. These groups and their economy power has become a noticeable factor to both stability and prosperity of China’s society and has bring the entire social structure into a more complex and diverse level. As I detailed explained in first section, both State and Party took measurements in response to such transformation. State legislature body restructured the law to incorporate this important social group as the “builder of socialism.” CPC is concerning the vacancy of its role in such increasing influential social power. It started new policy of recruiting influential actors in this new social group and expanding its network among this new social group.
B. Party’s plan of expanding Party organizations
For the past few years, it is not new for CPC issuing documents that requests local Party office to support the expansion of Party organizations in private companies as well as Sino-Foreign Joint ventures and foreign owned companies. The latest Party document General office of CPC Central Committee’s Opinions on Improving and Strengthening Party Organ’s Establishment in Non-SOEs provided us a great sample to study such trend.
The opinion provided a clear guidance to local Party office on creating Party presentation within the private companies’ structure. First, Special initiatives were recommended for carrying out the duty of creating Party presentation. Under the jurisdiction of each Party office, the initiative will create networks of communication points to support the job of creating Party organization in private companies. For example, each industrial park would consider as a communication point that helps to build Party organizations in companies that located in the industrial park. In Beijing, the Beijing Investment Promotion bureau Party office will responsible for Foreign owned companies’ Party organization construction. Second, the opinion targets the quantity and quality of the Party organizations in private company. It suggests that local Party office should make it possible to have at least one party member for every 50 employees. Party office should try to contact major “shareholders and investors of large and socially influential companies”and professionals like “lawyers, accountants, realtors and stock brokers”; and persuade these people appreciate Party policy and even join Party organizations. Third, the opinion concerns the candidate for the Party organization’s leadership when such organization existed in private company. To be an influential part of companies’ operation, the opinion particularly suggested having ‘reliable’ candidate as private companies’ Party secretaries. “SOE managers, professional Party officials, ex-military personnel” are recommended on the list as “desired” Party secretary. 
CPC understand it is a tough sell to have Party organization in a private company. To attract private companies voluntarily create Party organizations, the opinion suggests “Stimulation package.” The stimulation package functioned like a membership privilege. It took the advantage of Party’s strong political influence and private companies’ needs for such influence. Party organizations in companies and Local Party office could jointly hold discussion forum that invites investors and major shareholders’ to participate. As a privilege, private companies could lobby their interest in Party’s decision making process, in some cases, even in State legislature’s decision making process:
[T]he operation of Party Organ in Non-SOEs shall concentrate on the company’s interests.… On the other hand, party organ should seek to build communication channel that allow party organ leader involve in critical managing decision process of Non-SOEs. The purpose is to improve party members’ influence over Non-SOEs’ economic activity.
[L]ocal Party organizations and Party Branch organizations in Non-public economy sectors should frequently contact reputable companies to participate communication forum to learn their opinions to the operation of Party works. Especially during the process of drafting social or economy policies, local Party Organizations should listen to the opinions from the investors of these companies and assist the companies solve the developing issues.
Chart recreated based on the data from News of the Communist Party of China. “China’s Party members reached to 72.391 million by 2006.” Last visited May 16th http://cpc.people.com.cn/GB/64093/67507/5978358.html
C. The case of Party organizations in private company
Many people assumed that it is harder to have a Party organization in foreign company than a domestic private company; however, many large multi-national corporations in China had already established Party organizations in their corporate structure, such as Alcatel, Standard Charted Bank, Wal-Mart, Hyundai, Toyota had Party organizations at least more than five years. Under Party’s official document, these Party organizations in private economy sector help Party “educate and promote private economy owners and employees understand and support socialism and Party policy.” Party organizations in foreign and domestic companies are not rare and in practice, Party organizations’ activates are more than education and promotion of Party line.
Party organizations in private economy functioned like a channel that linked private companies with Party’s enormous political and administrative resources. The Party document officially suggests local Party office to attract private companies by providing lobby channels. The most typical story line from Party propaganda news agency is the Party organization communicates with government administrations to speed up the process of solving company’s financing or licensing issues.  Besides help companies solving their issues with government agencies, the most common activities for Party organizations is charities, environment protection, culture events and other activates closely tied up to a Corporate Social Responsibilities. For example, Primary Party organization in Standard Charted Bank (Shanghai) organized charity program that donate computers to local unfounded schools and free community serve to local nursing homes. Some Party secretaries even use social media to promote and communicate Party works to the society. Below I provided a small story about Party secretary Ms. Shen
The Story about Hongse Xiaowu (Red house)
Judged by current social standard, Ms. Shen seems to be a classic white color office lady among China’s increasing middle class. She is young and well-educated. She works in a foreign-owned corporation in Shanghai and passions about charity and environment protection. However, unlike other people among her generation who either don’t care about politics or extremely cynical to the current government, Shen is an active CPC party member. In fact, Shen is a party branch secretary who works in PTC [Parametric Technology Corporation of China, PTC China]. Her title of ‘party branch secretary’ means she is the responsible leader for all the party works in PTC party branch.
In Shen’s generation, most people don’t take party or party’s policy seriously. Shen is different because she is a party advocator in PTC. She even utilizing social media to promote and communicate with everyone about PTC party branch’s operation. Her weibo account named as PTC Hongse Xiaowu, which means PTC Red house. From her posts on Hongse Xiaowu, one may surprise that she does not sounds like those traditional party secretaries with long and dry ‘Red Policy’ from party line.
Hongse Xiaowu delivered fresh, relaxed, and positive experience for its readership. The profile picture of Hongse Xiaowu is a cute red dress carton girl standing beside a giant red heart. The introduction of the account simply put “Red House: Cozy as a warm home.” Hongse Xiaowu followed 74 people on Weibo, most of them are party members under her party branch, and some of them are independent writers or NGOs.
Until 4/22 the latest updated, Hongse Xiaowu had 41 posts since 2011/12/ 30. The first post was about PTC party branch won honor title on two consecutive years. Among 41 posts, about 1/3 posts were about introducing new party members with new members’ personal info and picture. 1/3 posts were about charity and environment protection. For example, organize donations, offer free English class to low income family’s children and hold environment protection discussion forum. 1/3 posts were about study party policy, attend CPC municipal committee meetings. Without the mention of CPC party secretary background, one may thought Ms. Shen is organizing a private club. As Shen introduced in her account “Cozy as a warm home,” PTC Hongse Xiaowu presented an un-conventional image of CPC secretary and with warmness and coziness.
With the development of the private economy, Party can’t ignore the rising economic power in China’s society without Party’s presentation. Party’s 2012 opinion officially announced its goal of increasing its presentation in private economy sectors. Under the legal bases of State Law and supports of local party office, the number of Party organizations in private economy sector indicated the trend of increase. Party’s presentation in the companies normally carried out by the “Primary Party organization” or “trade union.” To create a Primary Party organization, the company must meet the threshold of three full Party members. Primary Party organization not only served as a Party propaganda center but also a channel for investors and shareholders to lobby their interests with Party or even State; and a internal department to organize CSR related activities for the company.
Party’s Presentation in China’s economy III
Party’s influence over company operation
Part I and part II of Party’s Presentation in China’s economy sectors discussed Party’s plan of expanding its presentation in Chinese private economy sectors as well as the legal basis of such practice. I also provided examples of typical Party organization activities in private company. In Part III of this report, I will highlight Party’s influence over Chinese company’s operation in connection with the presentation of company’s Party organization. Based on three kinds of corporation leadership structure, the analysis of how Party affect the operation of Chinese Company in Part III will be divided into three parts, which suggested the different level of Party influences to company operation.
A. SOE and Party influence
Due to historical and corporate structure reasons, Party has the strongest influence over the operation of Chinese SOEs. Such influence could be expressed as SOE governance structure became the instrumentality for Party to realize its political and economic goals. Party’s control of such instrumentality, SOE, is largely depends on two key aspects. One is the control of SOE leadership arrangements; another is the control of decision making process. With the guarantee of institutional rules, SOE Party organizations are the critical roles in assist Party master these two aspects.
1. SOE’s unique corporate structure
From Part II of the report, we learnt that Party encouraging leaders, chairmen, managers of a company run the campaign for Party secretary. Such opinion was not a new creation; on the other hand, it was a long time practice of SOE Party organization during the history of P.R.C. In fact, such practice is an efficient solution for Party to impose control over SOE in response to SOE corporate structure reform. Prior to the market economy and SOE corporate structure reform, there were no modern corporate structures for SOE. Party Committee, Trade Union and Representative meeting of employees replaced the responsibility of Board of directors, Shareholder meetings and Board of supervisors. Such unique structure was convenient for Party to control SOE. However, this was not a practical option for SOE to participate modern Market economy.
In order to continuing Party’s control over SOE as well as creating new modern SOE corporate structure with the adoption of BOD, Board of Supervisors and Shareholder meeting, Party organization in SOE makes Party secretaries and other Party organization officials became the Chairman, managers, members of BOD or Board of supervisors. Prior to the SOE corporate structure reform, SOEs were managed by Party secretaries and other Party officials. Thus, it was easy to make these old managerial talents became the new Chairmen and mangers.
During the beginning of SOE reform, the adoption of modern corporate structure seems like just change the titles for SOE Party organization. In practice, the members of BOD, BOS (Board of Supervisors) are perfectly matched with the members of Party secretaries, deputy secretaries and Committee representative members. For example, the Party secretary of one SOE could also serves as chairman or president of SOE. Or the deputy secretary served as chairman or the president and sectary served as vice chairman or president.
2. Party organization’s participation in SOE operation
The arrangement of making Party leader became corporate leader perfectly solved the issue of creating modern corporate structure as well as preserving Party’s control. Party’s control of SOE leadership position is only one part of Party’s capacity in influencing SOEs. Controlling of the SOE decision making process is another critical part for Party’s influence over SOEs. Under Central Office of Central CPC’s opinion on SOE Decision Making Process, State council and CPC explicitly requested all major SOE operational decisions must be consulted with SOE Party committee. For example, provision 13 provided us a good example:
For matters within the scope of the “Three critical and one important”, BOD, managerial class (BOD unavailable) shall consulted with Party Committee (Party organ) first. Party member served in the BOD or managerial class shall implement Party line and Party decision. Party organization in the company shall lead all party members and employees to push forward Party decision, point out and make complaints about any company acts that alienate from the policy, rules and laws of Party and State. When company not responds to the complaints then Party organization should file the complaints to higher Party organization.
Under the definition of this guideline, “Three critical and one important” includes decisions regarding 4 aspects: First, decisions need to be approved by BOD, BOS or Shareholder meetings under the PRC Company Law, SOE Law, Insurance Law, Commercial Bank Law and Securities Law;  decisions regarding critical personnel appointment; decisions regarding large projects construction or large monetary transactions. Obviously, with the rules stated above, Party organization in SOE has very strong capacity to control the operation of SOE though the control of managerial staff appointments and decision making process.
There is one more step before SOE party organization’s control over SOE transferred into Party’s control over SOE. As you can read from the diagram below, SASSAC is the state agency that decides the appointment of presidents or chairmen of SOEs. However, appointment decision in SASSAC will also subject to the control of party organization in SASSAC. Party organization in SASSAC, who control the future of SOEs’ leaderships, actually is subjected to the control of Party Organization Department. Under such arrangement, officials in SASSAC will be evaluated by CPC Organization Department on their capacity of enforcing Party line as well as improving SOE management. Officials in SOEs will be evaluated by SASSAC on their capacity of improving SOEs’ profits as well as the enforcement of Party line. Thus, under such mutual interest relation, leaders in SOEs have strong incentive to act consistently with the interest of Party.
Organization Department decides the leadership position in Party structure. Decisions regarding the promotion, removal, and appointment of SOE leadership are evaluated by candidates’ capacity of enforcing Party policy as well as promoting SOE profits. High percentage of Party members in SOE as well as high percentage overlap between company leadership and party leadership structure create mutual interest between SOE and Party, which leaders from SOE have strong incentive to comply with Party in consideration for future promotion.
Wenzhou Mode and Party influence
The development of Wen zhou private business
During the history of P.R.C., the private economy sectors in Wenzhou are very unique. By the 70s when private economy activities were considered illegal, farmers in Wenzhou tried to formed small family business. To make their illegal activities appeared to be legal, many small business owners worked with the officials from governments to register or form their business under the cover of rural collective owned enterprises. With the cover of local government, their illegal business developed as the first generation of Chinese private enterprises. Although 1988 Constitution recognized the legitimacy of private business, their businesses still subject to numerous limitations from the overall environment. To gain advantage in market competition for favorable policy of capital, land, tax and labors, some of the Party member business owners started to utilize their connections with the government party officials. With the favorable policies, these businesses expanded dramatically and later developed as giant private companies with national branches.
The most significant element in the development of Wenzhou private business was business owners’ exploiting of Party membership connections with local government Party officials. Moreover, local governments’ supports and acceptance were also a critical factor for the success of Wen zhou business. To fully exploit the connection with Party officials in local government, Wenzhou business owner established Party organization in their enterprises as SOEs. Unlike other regular private companies, the leadership structure of Party organization in Wenzhou business is very much like the one in SOEs. The president of the enterprises will serve as the Party sectary. With the title of Party secretary, these business owners could enter into Party congress meetings, which provided a channel to connect with local Party officials. Thus, in Wen zhou mode, the private companies established overlap leadership structure between Party organization and corporate administrative system, such overlap allow business owner utilize their Party membership title to lobby for their business interest. In other words, as you can read from the diagram below, Party organization in SOE functioned in a way that make SOE become the instrumentality for Party to realize its political and economic goals; Party organization in Wenzhou mode functioned in a way that make Party organization became the instrumentality for business owner to realize its economic goals.
Party organization leadership structure in SOE mode
Perfectly match between the Party leadership structure and company leadership structure. SOE became the instrumentality for Party to realize its economy and politics goals.
Party organization leadership structure in Wen zhou mode
Partially overlap between company leadership structure and Party leadership structure. Party organization became the instrumentality for company to realize its economical gain.
As Cao (2004) and Liang (2004) pointed out, Party organization (in Wen zhou business) created channel for networking with Wen zhou Party officials, which provided valuable lobby opportunity for Wen zhou businesses’ expansion period. However, as many Wen zhou business owner believed, with years development, the expansion period is over. Moreover, when Party organization had become a mainstream, the advantages of creating Party organization no longer exist. (There is no privilege when everyone has privilege)
Other private companies and Party influence
The development of Wen zhou business showed us how Party organization became the instrumentality for Business owners to realize its economic interest by creating network with local government officials. However, Wen zhou mode does not have real spillover effect, at least, not yet. We never heard business owners outside Wen zhou gain discretional favor for their business because of the existence of Party organization in their company. On the other hand, as I will discuss, there are cases showed the existence of Party organization did not bring economical profits or PR advantage to those companies. The different results between Wen zhou mode and other private companies could explained by the different leadership structure of the Party organization.
No overlap or match between Party organization leadership structure and company leadership structure. Party organization can’t affect the operation of the company.
As you can read from the diagram above, the Party leadership structure in private companies are different compared with SOE or Wen zhou mode. There is no matching or overlap relationship between the Party leadership structure and company leadership structure. The Party organization is merely attached to the structure of a company, which means it is uncertain whether the Party has capacity of entering into the daily operation of a company.
The different arrangement of the Party organization structure also result different business strategy. In Wen zhou mode, the business owner eager to join the Party because first, the Party secretary title enable him lobby advantage for the interest of the business; second, Wen zhou local government historically has tradition of supporting local business. In other private companies mode, the business owner dose not has interest of join Party mostly because first local government has no history of supporting local business as Wen zhou government; second business owner has no experience of networking with local Party official as Wen zhou business owner does. Due to these factors, Party organization in other private economy can’t function as the SOE or Wen zhou mode. Party has no direct control over the operation of private company due to lack of high level managerial Party members in a company. Also, for the same reason, company can’t take advantage of Party organization to lobby for their business interest.
Cases of Foxconn and Carrefour
The case of Foxconn and Carrefour would be best example to illustrate the reality of Party organization in this mode.
Last year summer, the new Iphone 5 been exposed with serious surface painting defects, which Apple requested the manufacturer, Foxconn, re-manufacturing these products. Under urgent and strict due date by Apple and without proper training and communication with workers, Foxcnn not only refuse to pay for workers who produced defects parts but also refuse them to have rest during national holiday. The angered workers, about 3000 to 4000 workers have days of protest and riots against the business owner. Ironically, Foxconn is the first Taiwaness factory in Shen zhen that established Party organization in 2001. There are five Party Committee, 405 Party Branch committees, and 13000 Party members in total. The existence of Party organization in Foxconn did not create any Harmony environment to easy Foxconn’s historical labor issues. As someone pointed out, the problem of Foxconn related to two aspects. First, Foxconn’s military managing style resulted a hostile working environment. Second, Foxconn’s Party organization failed to recruit many low level workers, which can’t provide a communication channel between managers and low level workers to solve the problems. Like Foxconn, Carrefour was the first foreign supermarket band that established Party organization in their company. For the past few years, Carrefour constantly subject to the quality scandals. The presents of Party organization did not provide Carrefour any extra privilege to shield from such media prosecutions.
Compared with SOE and Wen zhou business, private companies’ Party organization normally did not have much connection with the Party Committee for one reasons. Most Party organization in private companies are low level Party branches committee, which has no rights to direct contact higher Party organization like municipal or county level Party Committee.
Theoretically, Party can’t project direct authority toward the operation of a private company. CPC could only refuse the proposal of new Party secretary of the private company Party Organization. CPC has no other authority exist to interfere with the operation of private company. The operation of private company is funded by its corporate funds, the appointment of key positions is controlled by business owner other than Party, and Party organization in private company is funded by company money. Thus, CPC literally can’t directly affect the operation of the company.
However, Party could indirectly affect the business of a private company through the control of government agency. As I explained before, CPC Organization Department controls the appointment authority of SOE and government agency. The future of SOE and government officials depends on their capacity of enforcing Party’s interest. Thus, as you can read from the diagram below; when Party wants to affect the operation of a company, Party could signal the relevant government agency. The government agency will be the instrumentality of Party to enforce the will of Party by utilizing discretionary administrative power to affect the behavior of a company. The most representative case of such practice would be the Google China issue.
Red line indicates mutual interest relationship
The leadership position in private company is not decided by Party, thus there is no mutual interest connection between Party and private companies. However, private company still subjects to the administration and regulation of the government. Party could theoretically affect the operation of a private company through the control of the government. Thus, when Party tries to against a private company, it starts with the government regardless of Party organization’s presentation. The Google case perfectly illustrated such process.
Central Office of Central CPC Committee, State Council Opinions on further encourage State Owned Enterprise implement “Three critical and One Importance” policy
1. This document explicitly prescribed the scope of corporate decisions that need to be consulted with corporate Party organization as well as explicate decision making procedures that SOE administrators need to follow, which provided one of the general guidelines on examining how SOEs corporate operational structure became the instrumentality for Party to realize its police and lines. Relevant provisions had been highlighted for review.
2. SASSAC and organizations performing the responsibilities of State assets investors or capital contributor. SASSAC is the most representative organization both in theory and in practice that performing the responsibilities of State-asset investors. Although one could generally equalize State assets investors or capital contributor as SASSAC, SASSAC is NOT the only representative. Under article 11 of Law of the P.R.C. on State-Owned Assets of Enterprises,
[T]he State Council and local people's government, based on actual needs, may authorize other departments or agencies to perform the duties and responsibilities of the capital contributors of a State-invested enterprise on behalf of the people's government at the corresponding level.
Thus, agencies with government authorization could also performing same responsibility of SASSAC. Also critical news would be highly relevant to understand SASSAC, on May 25th news released SASSAC start drafting process for a new version of Law of the P.R.C. on State-Owned Assets of Enterprises, which about to make SASSAC as the ONLY representative of SOE.
3. To understand rules regarding SOEs’ discipline and supervising (Anti-corruption or Anti-malpractice) mechanism starts from provision IV, one may find following explanation would be helpful:
Supervising agencies means:
1. Party Supervising agencies: CPC Discipline and Inspection Commission (纪委Ji wei)
2. State Supervising agencies: PRC Ministry of Supervision (监察部 Jian chabu)
SOE has its own discretional power during the operation; however, theoretically SOE will not act against the SASSAC. The structure of supervising system for SOEs, on certain level, is similar to internal and external audit system for corporate financial report. SOE corporate supervising agencies are internal audit system that safeguards the legitimacy of corporate action. State and Party Supervising agencies are external audit systems, which has separate staff and separate funding, that serve the same function as SOE supervising agencies. The SASSAC supervising agencies are middle level audit system; compared with SOE, SASSAC is more external; but compared with Party and State, it is more internal.
For more information regarding the nature of SASSAC and SOE, one could find in note.
Central Office of Central CPC Committee, State Council Opinions on further encourage State Owned Enterprise implement “Three critical and One Importance” policy
To fully appreciate the Party line of 4th preliminary of 17th CPC Congress, and practically improve the Anti-Corruption campaign of State Owned Enterprises, in order to further encourage SOE managers improve the quality of decision making, we have following opinions on how to properly enforce managerial power in SOE for Critical administrative decisions, Critical personnel appointment decision, Critical projects and large capital decisions
Promulgate agency: Central Office of CPC Committee, State Council
Date of issue: July 15th 2010
I. Guiding principles and basic line
1) Upholding socialist with Chinese characteristics, Guided by Deng Xiaoping Theory, Jiang-zeming Three Representatives and Hu jingtao Scientific-Development, based on 2008-2012 Working Plan of Establishing Punishment and Prevention Mechanism and Several Provisions on Honest Business Conduct for Leaders of Stated-owned Enterprises, to clarify the scope of the decision rights and process of decision making, and institutionalize the policy of “Three critical and one important.”
2) Principal of Collective Decision Making: Principal of Collective Decision Making: SOE shall institutionalize the rules and process of decision making for “Three Critical and One important” by creating rules about employees’ general discussion, experts’ consultancies and collective’s decisions. SOE’s Party Committee or Party organ, Board of Directors, Managers Class (BOD unavailable) shall avoid over-concentration of decision power on one person or a small special interest group by making decision in accordance with the their relative responsibilities under the corporation internal rules, Party and State policies, rules and laws.
II. The scope of Three Proprieties and One Importance
1) Critical Affair Decision: It means any corporate act need to be approved by BOD, Shall holders meeting, employee representative meeting and Party Committee (or Party Organ) under Company Law, Law of the P.R.C. on Industrial Enterprises Owned by the Whole People, Law of the P.R.C. on State-Owned Assets of Enterprises, and Commercial Bank Law, Securities Law and Insurance Law. Such as major decisions regarding the implementation of Party, State or higher Party committee’s laws, regulations and policies; decisions regarding the corporate expansion, bankrupts, restructure, merge and acquisitions, assets adjustments, transfer of property rights, external investments, re-distribution of profits and restructure of the institution; and decisions regarding the (Harmony) security and stability and Party organizations.
2) Critical Personnel Appointment Decision: it means personnel decisions regarding the managerial leadership position; in particular, decisions regarding appointing, hiring, dismissing the middle above level managerial staff and leadership positions in affiliated company or subordinated company; decisions regarding send shareholder representative and recommend candidate for BOD, Board of Supervisors, Chief Financial officers to the state holding enterprises and enterprise with state equity.
3) Critical project decisions: it means critical decisions regarding the assets scope, assets structure, profits capacities; decisions regarding introduce critical machines or technology that affect the production; decisions regarding annual investment plan, financing, trading options and futures on shares, financial derivatives, major transitions and constructions.
4) Important large monetary decisions: it means monetary decision exceeds the amount of annual budget could be transferred or use by leaders under the rules that prescribed by e company and State Asset Capital Contributor. For example, large value capital transfer and use that exceeds the amount within or beyond annual budget; large value donations or sponsorships.
III. The decision making process of “Three Critical and One important”
1) Before proposal to be voted, serious studies and researches, and strict procedures of verifying should be carried out first. Major investment and Construction project should be consulted with experts. Major or critical personnel appointment should be consulted with SOE (and State Asset Capital Contributor) Party Discipline and Inspection Agency and State Ministry of Supervision. Any decisions regarding corporation restructure (Merger or acquisition), corporate bylaws, or any decision highly related to fundamental interest of the employees, shall be consulted with trade unions, representative meeting of employees or any other channels that could communicate with employees.
2) Voters should be notified in advance with the details of matters. If necessary, participants’ opinion could be heard first before voting begin.
3) Matters within the scope of the “Three critical and one importance” should be decided collectively by Party Committee (Party Organization), BOD and managerial class (BOD unavailable). Personal or small group decision is not allow for matters within the above scope. Any temporal or emergency decision made not in accordance with this rule shall be remedied by special approval procedural, where Party Committee and Party organ, BOD and managerial class (BOD unavailable) recognize the temporal or emergency decision after such decision had been promptly reported to these agencies.
4) For matters within the scope of the “Three critical and one important”, BOD, managerial class (BOD unavailable) shall consulted with Party Committee (Party organ) first. Party member served in the BOD or managerial class shall implement Party line and Party decision. Party organization in the company shall lead all party members and employees to push forward Party decision, point out and make complaints about any company acts that alienate from the policy, rules and laws of Party and State. When company not responds to the complaints then files the complaints to higher Party organization.
5) Establishing Recusal System, Evaluation System and Correction System and Responsibility System for the decision making process.
IV. Supervising and evaluating the implementation of the opinion
1) SOE Party Committee Secretary, Chairman (President) of the company, General Manger (BOD unavailable) is the responsible party for the implementation of this opinion during company’s daily operation.
2) SOE shall promulgating detailed rules regarding the implementation of this opinion and file these rules to relevant State Asset Capital Contributor for approval. Under this opinion, relevant State Asset Capital Contributor agencies shall have clear rules when they create or evaluate SOE’s bylaws.
3) State Asset Capital Contributor shall be responsible for the completeness of the SOEs’ rules regarding the scope of the “Three critical and One important” matters; the strictness of the decision making process, the practicability of the correction system. If these rules are approved, then State Asset Capital Contributor shall supervise the enforcement of such rules.
4) Party and State supervising agencies shall guide and encourage State Asset Capital Contributor supervising agencies to regulate and exam SOE’s practice of “Three critical One important” decision process rule.
5) Based on the rules under Several Provisions on Honest Business Conduct for Leaders of Stated-owned Enterprises, SOE’s supervising agencies will especially evaluate SOE leadership’s practice of “Three critical and One important” in their annual evaluation. Such evaluation should be reported to higher level Supervising agencies and Party organization in the company.
6) The practice of “Three critical and one important” should be listed as one task during inspection and Party Integrity campaign; listed as important content of the meeting of democratic life and the meeting on reporting work and anti-corruption performance, which shall be appraised in Proper scope of groups, except for information considered as confidential under State law and relevant policies.
7) Personnel departments and organizations performing the responsibilities of State-assets investors at all levels shall treat the practice of “Three critical and one important” as an important element for examination and appraisal of leaders of State-owned enterprises as well as an important basis for their appointment and removal; and important consideration for evaluating economic responsibility auditing system.
8) Leaders of SOEs will subject to the punishments of Several Provisions on Honest Business Conduct for Leaders of Stated-owned Enterprises, relevant laws and regulations when they violate the rules of performing “Three critical and one important.” Improper economic gains that leaders of State-owned enterprises obtain in violation of these Provisions shall be ordered to be returned. If they cause economic damage to State-owned enterprises, leaders of State-owned enterprises shall be responsible for economic compensations in accordance with relevant provisions of the State or enterprises.
9) This opinion applied to SOEs and State holding enterprises and state-controlled financial institution.
《 人民日报 》（ 2012年05月25日 01 版）
General Office of CPC Central Committee issues “Opinions on Improving and Strengthening Party Organization’s Construction in Non-SOEs (Temporary)” People’s daily 2012 May 25th.
Translation are omitted for 10, 11 and 20
10 is about education and management of party member, which emphasized providing convenience for Party member when they left from prior position and relocate in a new company and new Party organization.
11 is about encouraging the creation of party organization in company.
20 is about unified Party organization office lay out. Like each McDonalds has a big yellow M, each Party organization branches in Non-public economy sector would better have unified Party logo (a hammer and a sickle), Party propaganda newspaper, Party flag.
Recently the General Office of CPC Central Committee issued Opinions on Improving and Strengthening Party Organ’s Establishment in Non-SOEs (Temporary) and requested all local CPC office shall take conscientious implementation in light of the actual situations. Here is the partial translation of critical information from this document:
Non-SOEs are important actors in our market economy system with socialist characteristic. Thus in order to perfect our economy system, direct Non-SOEs’ healthy development, encourage economy and social development, improve labor-employer relation, we need to improve Party organ’s presentation in grass-root level and to expand Party’s membership with the people. According to the Constitution of CPC and Company Law of P.R.C., following opinions are provided to improve party organization’s activity in Non-SOEs:
I. The nature and function of Party organizations in Non-Public economy sectors
1. The role of Party organizations
Party Organizations in Non-Public economy sectors are strategic bases for Party’s political presentation and guidance to the general employees.
2. Primary responsibility for the party organ:
1) Promotes party policy and party line. Organize party member study Marxism-Leninism, Mao zedong Thought, Deng xiaoping Theory and Three Represents Theory. Applies and enforces Scientific Development, Party line into daily work. Educates Party members and employees to obey the law and regulations. Guides and supervises company operated under the law and CSR requirements.
2) Connects employees. Improves and strengthens ideology education. Deeply involves and sincere concerns employees and party members’ interests. Improves the connection between employees and Party though caring and resolving employees’ concerns.
3) Protects everyone’s legitimate rights: be responsive to people’s concerns. Communicates and mediates different party’s interests. Encouraging company and society stabilization though structuring harmony lobar relation.
4) Cultivates advanced Company culture (Beliefs and Value). Establishes Company culture under socialist core value. Organize various culture activities for better working environment.
5) Model worker. Party members should acts as model workers, who set examples for other employees to improve the productivity of the company.
6) Self-discipline. Improves party organization’s institutionalization system by fully appreciating and supporting the works of party discipline agency within the party organ.
II. Establishing and improving Party organization’s leadership system and working mechanism
3. Establishing a complete Stewardship and managing system. Local party committee at county level or above should establish specialized working agency in charge the Non-SOEs’ party organ’s establishment work. If condition allow, party organ at Non-SOE could set up an individual working environment with party discipline inspection agency. If condition not allowed, party organ could affiliate and work with relevant and similar function agency in Non-SOE.
Special Party Committee organs should be established within industrial parks, where Non-SOEs heavily concentrated. Such SPC specialize the party organ establishment works for Non-SOEs located in the industrial park. The regular township and community (township and community is the lowest level social group in China) party organ will responsible for the party organ establishment work under their jurisdiction. Professional trade association or government regulating agency could also responsible for the party organ establishment work.
4. Creating direct communication mechanism. Generally, county level party committee will responsible for guiding party organ’s operation in Non-SOEs. Country level party
committee is also responsible for the communication, ideology education, leadership appointments for Non-SOE’s party organ. Higher level party committee will involve in above responsibility for large size Non-SOEs with numerous party members.
Expand the party organ’s presentation and coverage among special groups by inviting people in special groups join the party. Maintain the quality of the party members. By quality, it cites the examples of high level managing staffs, professionals. By special group it also includes migrate workers and investors.
III. Improving the expansion of Party’s organization coverage
5. Setting up clear targets: Works hard to make it possible for having at least one party member in companies where there are more than 50 employees.
6. Inviting ‘Qualified Talents’ join the party. Recreating professionals and managers for the party work. Higher level party committee (above county level) should especially invite investors of large and influential company to join the party.
7. Sending instructors to Non-public economy sectors for future communications. The establishment of the party organ in Non-SOEs could start with establishing Labor Union and CPC Youth league.
IV. Exploring the channels for Party Organizations’ operation
8. Party Organ should gain trusts and supports from the investors of Non-SOE. The operation of Party Organ in Non-SOEs shall concentrate on the company’s interests. On the one hand, party organ organize studies to educate managing staffs understand party line and state law and economy policy. On the other hand, party organ should seek to build communication channel that allow party organ leader involve in critical managing decision process of Non-SOEs. The purpose is to improve party members’ influence over Non-SOEs’ economic activity.
9. Explore new forms of Party activities. Besides the activities prescribed in Party Constitution, we encourage other unified activities. For example, takes advantage of the internet. Hold on-line discussion forum, on-line party schools and open weibo accounts.
V. Concentrating on the selecting Right secretary
12. Provide reliable party secretaries. Party secretary normally created by companies’ internal election. Party should recommend candidates from companies’ managers, party officials, SOE managers, ex-military soldiers or college graduates serving in the rural countryside to win the election for the party secretary. For large size corporation with large number of party members, Party should send professional party workers to a company as deputy party secretary when the major shareholder of the company is the party secretary. When the party secretary, deputy secretary is not the major shareholder of the company, he or she should try to run for the election of the labor union chairman or vice chairman.
Party secretary in Non-Public economy sector should study and promote the party line and policy, implement higher party organization’s decision, improve the development of the company and managing good relation between party and employee of the company.
13.Professionalize Party workers. Utilize modern management technics to professionalize the party workers with reasonable structure and sufficient number of workers. Create professional communication forums for Party workers team to improve their working performance.
14. Improve working performance by participating training sessions. Party secretary must join the training session at least once a year. The annual training time should be longer than three days. The new elected Party secretary should concentrate on the studying of party polices and lines, skills about party history and party work, company management trainings.
15. Rating system and working benefits. Party workers and party secretary in Non-public economy sectors will be judged by the company’s party members based on rating system. These party workers can also access to appropriate party benefits. Moreover, local party organization could recommend qualified party secretaries and party workers to serve in the State legislature bodies, such as local NOC representatives and political consultative conference. Higher Party Organization concerns and support Party secretaries when the secretary lost employment due to insisting on the party principals.
VI. Education and guidance to the investors and shareholders of Non-public economy sectors.
16.Improve the training and education by creating Non-public company shareholder or investor education and training system. Non-public companies’ shareholders shall have education of China’s Communist Party and socialism theories and State law and regulations. Party organization should educate and train party member shareholders or investors obeying CPC policy and rules. For non-public member investor or shareholders, party organizations should guide them pursuing socialism belief.
17. Improving the service to the Non-public economy sectors. Local Party organizations and Party Branch organizations in Non-public economy sectors should frequently contact reputable companies to participate communication forum to learn their opinions to the operation of Party works. Especially during the process of drafting social or economy policies, local Party Organizations should listen to the opinions from the investors of these companies and assist the companies solve the developing issues.
18.Strengthening the organization and guidance works. Non-public economy sector’s party organization construction should be incorporated into the local Party Committee’s general working plan. Party agencies, such as discipline & inspection and united front, should work with the state agencies like commerce and finance. Held promoting events to encourage companies to set up a party branch.
19. Financial support for Non-SOEs’ party organ operation: Higher level party committee could decide to return the membership fees to Non-SOEs’ party organ for supporting their operation.
《 人民日报 》（ 2012年05月25日 01 版）
 Trade Union is the Working People’s organization, which serves as a bridge connects people with Government and Party and serves as a critical support to China’s socialism regime. See Wang hanbin. 1992. “Vice Chairman of Commission of Legislative Affairs of Standing Committee of NPC’s Briefing on the Draft of Trade Union Law.” Accessed May 5th http://www.npc.gov.cn/wxzl/gongbao/2000-12/14/content_5002704.htm .
 Gongsi Fa (公司法) [The Company Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat'l People's Cong., Aug. 8, 2004, effective Aug, 2004) STANDING COMM. NAT'L PEOPLE'S CONG. GAZ. 32 (China)
 Id. art.17, § 1 (2004).
 Gongsi Fa (公司法) [The Company Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat'l People's Cong., Oct. 27, 2005, effective Jan1, 2006) STANDING COMM. NAT'L PEOPLE'S CONG. GAZ. 34 (China)
 Id. art.19, § 1 (2005).
 No.2 Organization Bureau of CPC Central Organization. 2012. “Guanyu Feigongyou zhi Dangjian Gongzuo de Diaocha.” Accessed May 10 http://dy.sun0769.com/newsc.asp?id=44398
 Zhongguo Gongchandang Zhangcheng [CONSTITUTION OF THE COMMUNIST PARTY OF CHINA] [Hereinafter The Party Constitution] (promulgated by the 18th National Congress of the CPC . Nov., 14, 2012, effective Nov., 14, 2012), available at http://www.china.org.cn/chinese/18da/2012-11/19/content_27156212_13.htm
 Id. art 29, § 1
 Zhongguo Gongchandang Zhangcheng [CONSTITUTION OF THE COMMUNIST PARTY OF CHINA] [Hereinafter The Party Constitution] (promulgated by the 18th National Congress of the CPC . Nov., 14, 2012, effective Nov., 14, 2012), available at http://www.china.org.cn/chinese/18da/2012-11/19/content_27156212_13.htm See The Party Constitution art. 11, § 2 (2012) (China).
 “In primary organizations, primary Party committees and committees of general Party branches or Party branches are set up as the work requires and according to the number of Party members, subject to approval by the higher Party organizations.” See Art 29, § 1. The Party Constitution.
 Supra. Art 30, § 1. The Party Constitution.
 As one commentator suggested:
“The structure of the ACFTU had been clarified with the congress of 1957 and there was no fundamental change till the end of 1966, when a radical campaign was launched against the ACFTU. Revolutionary groups criticized the labor body for ‘bureaucratism', ‘officialism’ and ‘economism’ and in January 1967, forces within the Cultural Revolution succeeded in closing down the national labor body. A large number of trade unions were disbanded and with them the factory management committees and the staff and workers congresses. Some of the functions of the ACFTU and the unions were carried on by "revolutionary" groups and committees which were set up in factories. Thedismantling of the national labour body contributed to the break-down of labour discipline in many fields and had negative impact on production. Plans were made to restore a national labour body. The rebuilding of trade unions was announced in 1973 and by the end of 1973, all provincial-level trade unions had been put back in place (Lee 1986: 129). The rebuilding of the ACFTU was part of the plan of the ‘Gang of Four’ to get control on trade unions and to widen their power base. The death of Mao and the purge of the ‘Gang of Four’ affected the restoration of the national labor body. The supporters of the ‘Gang of Four’ in trade unions were dismissed. The ACFTU was reconstituted in 1978 when Deng Xiao Ping started its reform programme. It is important to note that the trade unions were rebuilt along the same organizational principles which existed previously and the ACFTU returned to what it had been before 1966 without any major deviation. The same organisational features continued to dominate the practical work of trade unions even in the 1990ies and 2000ies when liberal economic reforms were already in full swing.”
See Rudolf Traub-Merz. 2011. “All China Federation of Trade Unions: Structure, Functions and the Challenge of Collective Bargaining.” Working Paper No. 13 International Labor Office.
 Preamble, Zhongguo Gonghui Zhangcheng (中国工会章程) [Constitution of the Chinese Trade Unions] (promulgated by the Nat’l Cong of Chinese Trade Union., Oct. 21, 2008, effective Oct. 28, 2008) http://english.acftu.org/template/10002/file.jsp?cid=48&aid=469
 “Promote and expand Party’s presentation by first setting up Trade union and CPC Youth League” in the Non-Public economy sectors.” Central working office of Central Committee of CPC. 2012. “Opinions on Improving and Strengthening Party Organ’s Establishment in Non-SOEs (Temporary).” People’s Daily
 It is a very interesting fact that Constitution (Since 1982) there is no language state “Upholding Party’s leadership.” Or even any principal like Four Cardinal principals that incorporate the ideal of Upholding Party’s leadership.
Art 3, § 1. Zhonghua Renmin Gongheguo Gonghui Fa (中华人民共和国工会法)[Trade Union Law of the People's Republic of China] (promulgated by the Standing Comm. Nat’l Cong., Oct. 27, 2010, effective Oct. 27, 2010) [Hereinafter Trade Union Law of the People’s Republic of China]
 Id. Art 50, §4.
 Id. Art 4, §1.
 XIANFA. Pmbl (2004)(China).
 [I]n Article 11 of the Constitution is added a new paragraph, which reads, "The State permits the private sector of the economy to exist and develop within the limits prescribed by law. The private sector of the economy is a complement to the socialist public economy. The State protects the lawful rights and interests of the private sector of the economy, and exercises guidance, supervision and control over the private sector of the economy… See Amendment to the Constitution of the People's Republic of China 中华人民共和国宪法修正案
(Adopted at the First Session of the Seventh National People's Congress on April 12, 1988)
 "The State practices socialist market economy." "The State strengthens economic legislation, improves macro-regulation and control." "The State prohibits in accordance with law any organization or individual from disturbing the socio-economic order." Amendment to the Constitution of the People's Republic of China
(Adopted at the First Session of the Eighth National People's Congress on March 29, 1993)
 "The non-public sectors of the economy such as the individual and private sectors of the economy, operating within the limits prescribed by law, constitute an important component of the socialist market economy." Amendment to the Constitution of the People's Republic of China
(Adopted at the Second Session of the Ninth National People's Congress on March 15, 1999)
 CPC extends presence within foreign enterprise. http://www.globaltimes.cn/content/729232.shtml
 The State encourages, supports and guides the development of the non-public sectors of the economy andAdopted at the Second Session of the Tenth National People's Congress on March 14, 2004Amendments to the Constitution of the People's Republic of China
 XIANFA. Preamble (2004)(China).
 General Office of CPC Central Committee issues “Opinions on Improving and Strengthening Party Organ’s Establishment in Non-SOEs (Temporary)” People’s daily 2012 May 25th
 No.2 Organization Bureau of CPC Central Organization. 2012. “Guanyu Feigongyou zhi Dangjian Gongzuo de Diaocha.” Accessed May 10 http://dy.sun0769.com/newsc.asp?id=44398
 Li dongming. 2009. “Qianshi Jiaqiang Feigongyouzhi Jingji Zuzhi, Xin shehui Zhuzhi Dangjian Gongzuo.” Guangming Daily http://theory.people.com.cn/GB/41038/10502585.html
 Supra Note 6.
 Zhongguo Xinwen Wang. 2012“Zhongguo Chuantong Dangjian Fangshi Mianling Tiaozhan Dang Zuzhi Yingru Louyu Shangquan.”http://news.xinhuanet.com/politics/2011-06/17/c_121549523_2.htm
 See the translation of Central Office of Central CPC Committee Opinion on SOE decision making rule.
 Critical Affair Decision: It means any corporate act need to be approved by BOD, Shall holders meeting, employee representative meeting and Party Committee (or Party Organ) under Company Law, Law of the P.R.C. on Industrial Enterprises Owned by the Whole People, Law of the P.R.C. on State-Owned Assets of Enterprises, and Commercial Bank Law, Securities Law and Insurance Law. Such as major decisions regarding the implementation of Party, State or higher Party committee’s laws, regulations and policies; decisions regarding the corporate expansion, bankrupts, restructure, merge and acquisitions, assets adjustments, transfer of property rights, external investments, re-distribution of profits and restructure of the institution; and decisions regarding the (Harmony) security and stability and Party organizations.
 See Liang xiongjun, “Feigongyouzhi Qiye Dandzuzhi de Zuoyong Fahui yu Neibu Zhili Xiaolv Zengjin—Yi Zhejiang Taizhoushi 18 Jia Feigong Qiye Weili,” Zhonggong Zhejiang Shengwei Dangxiao Xuebao 6 (2004): 49-58; Cao zhenghuan, “Cong jie hong maozi dao jianli dangwei—Wenzhou Min ying Qiye de Chengzhang Daolu ji Zuzhijiegou zhi Yanbian,” Case Studies in China's Institutional Change Vol 5 (2006): 81-140.
 “Workers at Foxconn's Zhengzhou factory strike in reaction to new iPhone 5 quality standards,” Oct 6th,
“Bukan Buzhidao: Fushikang you 5 ge dangwei 405 ge Dangzhibu,” 2010, http://www.aboluowang.com/news/2010/0609/169322.html
 “SASSAC decided to ‘unify’ SOE investor representative by proposal of amending State-owned asset Law.” People’s daily, May 25th, 2013, http://jingji.cntv.cn/2013/05/25/ARTI1369458951037876.shtml
 Chinese people in general is the “OWNER” of SOE, however, this is impracticable in real life. There are 1.3 billion Chinese, which means theoretically, there are 1.3 billion SOE owners! Thus, SASSAC had been created in response to SOE ownership and corporate structure reform during the beginning of 21st century. The relationship between people and SASSAC is like “Trust and Trustee,” SASSAC is the state agency that in charge of the operation of Chinese SOEs. However, there are thousands of SOEs and some of them equipped with the number of employees equal to middle size U.S. city populations. SASSAC is also impossible to manage the details of SOEs’ daily operation.
As the “Ultimate boss” of SOE, SOE possess numerous authorities. Two of most significant authorities are: the authority to promulgate rules regarding the operation of SOEs; and the authority to appoint the CEOs, CFOs, BOD chairman and Board of Supervision.