Wednesday, August 07, 2013

Chinese Academics on the Role of the Chinese Communist Party in the Non-State Sector


(Pix (c) Larry Catá Backer 2013)

My research assistant and SJD candidate Shan Gao have been exploring the role of the Chinese Communist Party in the economic sphere after the Opening Up process began almost a generation ago. See, e.g., 
For this post, Shan Gao has produced a note on Chinese academic discussion of the Communist Party's presence in the non-state sector.  We hope to touch on material that are usually unavailable to Western readers and to bring Chinese work more firmly into global discourse.



(Pix (c) Larry Catá Backer)


Academic discussions on Party’s presence in non-public economy sectors
Shan Gao

1. Party Organization’s responsibility in non-public economy sectors
2. Identity crisis and trust issues of Party organization in non-public economy sectors
3. Redefine Party organization role
Summary


In Hu’s report on 17th CPC National Congress in 2007, , he pointed out that the “Open-up economy policy” not only brings the freshness and energy to the Party but also opens the door to various challenges. In responding to those challenges, as he pointed out, one of the actions need to be taken is to improve Party’s control of social orders by encouraging Primary Party organization’s construction among different social institutions, such as schools, private companies, professional organizations and etc.[1].

After 17th CPC National Congress, there was a trend of discussing Primary Party organization in private economy sectors. Most of these discussions were focusing on the challenges and suggestions for the constructions of Party organization in private economy sectors. Such articles reached a peak around 2011. There were also many articles focusing on the regional and local Party presence in private economy or Sino-Foreign Joint ventures (SFJVs) such as: Investigation and Few Thoughts on Sha Men Party Organization’s Presence In Non-Public Economy Sectors (2009)[2], 30 Years Of Party Organization Construction Experience in Fu Jian Province (2009)[3], Case Study Of Wuhan Non-Public Economy Sectors’ Party Organization Construction (2010)[4][5] However, compared to the current trend of discussions, Chinese academics and Party started their attention on non-public economy sectors as early as the beginning of “Open-up” policy. In fact, setting up a Party organization in non-public sectors, such as Sino-Foreign Joint Ventures (SFJVs) and Wholly Owned Foreign Enterprises (WOFEs), is a long term practice since 80s.

1. Party Organization’s responsibility in non-public economy sectors

Prior to 1993 Company Law mentioned Party’s operation in the company, the Organization Department of the Central Committee of the CPC had addressed the issue of setting up Party organization in SFJVs and WFOEs. The 1984 “Few Suggestions on the Party Works in Sino-Foreign Equity Joint Venture” was the first documents detailed rules and principals regarding the creation and operation of Party organization in SFJVs. Under this documents, the Party organization in SFJVs have three major responsibilities: 1, supervising business operation under Party line and state policy and law; 2, ideology education for Party cadres; 3, protecting employees’ labor rights. The leader of Party organization could be served by JVs’ high level Party member mangers or trade union president. Some of the Party work could be done by the president of trade union during their spare time. The first guide line was too vague and too principal to practice. Followed by this document, some local authorities also made their own guidelines regarding non-public economy sectors’ Party organization construction. For example, Guangxi local chronicles indicated that the main responsibility of Party organization were: 1 , supervising and guarantee the business practice is consist with Party policy, state policy and law; 2, educating and supervising Chinese officials in JVs to act in accordance with Party principals and state interest; 3, upholding Four Cardinal Principals and ideology education for employees; 5, organizing employees studying for the modern working skills, 6 strengthen the leadership over the Trade Union and Youth League. [6] The vice secretary of Guangzhou Provincial Party Committee, Zhuang guoying, told reporter that the main responsibility for the Party organization in SFJVs should be “safeguarding state interest and JVs’ employees’ labor rights, supervising whether the business is in accordance with the Party’s open up policy and state law, whether the business is in accordance with their agreements and whether the Party cadres acted in accordance with the law. [7]” If examining close enough, one may find out there are not much differences on the theory of Party organization’s responsibilities. It mainly concentrated on supervising the operation of business in accordance with the state law, policy and Party principals, protecting employees’ labor rights and ideology education.

The practice of setting up Party organization in JVs and WOFEs are very different three decades ago. Currently, the Party organization only be set up in economy institutions have more than three Party members. Thus, there are cases of investors not setting up Party organization because there are not sufficient Party member to form a Party unit. At the beginning of 80s and later 21st centuries, Party organization would be “mandatorily” set up by making investors hiring Party members to meet the minimal requirement of setting up Party organization. For example, As one of the 14 early opened seaside cities for foreign investors, Yan tai municipal Party Committee studied and set up their own rules for the Party organization’s operation[8]:

In order to set up the Party organization in JVs, Party members employees are needed at the time of setting up JVs. Details of setting up Party organization should be requested during the negotiation of Sino-Foreign investment project. In order to maintain the nexus between foreign investors and the Party, the Party would either directly send Party cadres or recommend Party cadres for JVs’ board member.

Obviously, in order to set up Party organizations in these JVs, the authority tried to make these investors hire as much Party members as possible. The authority could do this because China’s private career service and job market was not available or efficient enough for foreign investors to independently hire the talents on their own. Thus, investors had to relying on state sponsored service, which opened the door for setting up Party organization by introducing certain percentage of Party members for foreign investors. [9]

2. Identity crisis and trust issues of Party organization in non-public economy sectors

Many publications and Party cadres realized the issue that Party organization in private company or economy institutions facing identity crisis and trust problems at the beginning of 21st centuries. In 1992 Guang zhou provincial Party Committee vice secretary Zhang provided that “Party organization in Foreign invested enterprises is a new project for us… Some foreign investors would fire or not hire party members.” “Some party members pressured to openly organize or promote Party activities.[10]” In fact, (Wang and Wang, 1992) without legal basis, the operation of Party organization in private economy sectors and Sino-Foreign JVs are much limited on the level of cooperation in trade union. There was identity crisis among Party members as well as Youth League members[11]. Such identity crisis and trust issue was not disappeared through the time. CPC Party Construction Policy Research Office’s 1998 report on Party organization’s construction in foreign investment highly concentrated city Dalian indicated that the issue of identity and trust was still very common among the investors and Party officials. As the report provided that “Yet, some government officials concerned the request of setting up Party organization in foreign investors’ enterprises would disturb their interest, which ultimately affect the development of Open-up economy policy.” “There is no place for Party organization in foreign invested economy sectors because economy profits and job creation should be their priority.[12]”

There were also many scholars analyzed the reasons for the existence of such issues. Xiong zhixiang (1994) believed factors contributed to the slow development of Party organization operation in Sino-Foreign JVs and WFO enterprises are premised on the relationship between Party member employees, private business investors and CPC. On the part of foreign investors, there are trust issues because they had no experience with CPC before. Given the fact that CPC traditionally unfriendly toward capitalism and bourgeois, such identity crisis and trust issues are not hard to understand. On the part of CPC and Party members, they suffered from identity crisis. In post-culture revolution and “open-up economy era, CPC itself is also under structure reform of withdrawing their interference with state management and economical activities. In the process of reform, CPC itself need time and experiment to restructure its relation with private business owners and state agencies. Yet the Party’s presence in Sino-Foreign JVs and WFOEs could not fully develop before the Party finished its own structure reform. On the part of Party members who worked in SFJVs and WFOEs, they worked in a new eco system, which their welfare is determined by the investors rather than Party secretaries. The willingness of open their political identity is depended on foreign investors’ attitude toward CPC and socialism. Risk their career future for Party work is not an option.

Other scholars like Lv younggang (2012) believed the underdevelopment of Party organization’s presentation resulted from illogical identification of its role in corporation. He criticized that most Party organization’s operation in non-public institutions either ignore the institutional internal interest or ingratiate itself with the institutional interest disregard their Party principals. Lv believed that the issues for the under development of Party organization’s presentation in non-public economy sector are rooted in the fundamental contradictions of traditional institutional structure of CPC and modern corporation ownership structure. As he analyzed that current CPC institutional structure was founded during revolutionary era. Such structure is premised on hierarchy system with vertical and enclosed leadership arrangement, which is a highly centralized to its internal members. The modern corporation structure evolved hundreds of years from the western society with different culture backgrounds, which also has its own leadership system of maintaining corporate operation[13]. Lv’ insightful understanding of the issue clearly outlined the reality most scholars failed to notice. The modern corporation has its own eco-system, governed by its own institutional interest, which may not properly coordinate with the Party organization. As a result, for the past three decades, Party organization in non-public economy sectors existed as a political unit attached to corporation externally rather than internally, which inevitably causing the a peripherization status for the Party’s operation within corporations.

3. Redefine Party organization role

Although Party’s organization in non-public economy sectors faced many issues, Party did readjusting the relation between Party and private business owner. During Jiang zeming’s visitation of Jiang su, Zhe jiang and Shagnhai in 2000, he pointed out Party’s presentation in non-public economy sectors is necessary for consolidating economy orders under the primary stage of socialism, improving the nexus between the Party and employees of Non-public economy sectors, and Party’s ruling basis among new social class.[14] In 2001, celebration of July 1st, Jiang provided that “recruiting new Party members should judge whether the person could pursuing and fighting for the Party line and principals.” Later his Three Representatives Theories opened the discussions on the relationship between private business owner and CPC, which ultimately led to a visionary political reform of allowing private business owner join the Party.

There are many reasons for the Party to reconsidering the role of private business owner in China’s economy and politics. Since China’s joining WTO and Party’s liberalizing market economy and restrictions on private economy, the non-economy sectors had dramatic development, which ultimately transformed China’s society and social classes. The inconvenient truth is that the increasingly powerful private economy sections are creating a visible structure vacuum for Party’s control during the past three decades. It becomes visible on multiple levels. Unlike decades ago, Chinese majorities are hired by private economy sectors rather than state economy sectors. In Kun shan city, every 8 ($1) out of 10 ($1.25) RMB GDP was coming from the non-public economy sectors.[15] Every 7 out of 10 Chinese is hired by non-public economy sectors.[16] (Wang, 2007)” Yang shuying (2010) suggested that CPC claimed itself the vanguard of working class. However, the constituent of the working class had transformed dramatically during the course of economy development and globalization. The newly raised social class, constituted by private business owners, professionals, and technicians are mainly employed by non-public economy sectors, which became more and more influential[17]. Party’s control over Chinese majority is largely diluted by these private economy institutions as the welfare of Chines future middle class is relying on CEOs rather than Party secretaries. Moreover, during the pre-market economy era, illegal business practice is monopolized by state economy sectors on a much smaller scale with limited affect to the public. Social order was mainly maintained by the Party through political campaign and ideology education within the Party organizations in those state economy sectors. Nowadays, like any developing countries adopted market economy around globe, Chinese social order is troubled by labor rights issues, corruptions, fraud and other illegal business practice, which joined by private business owners on a much larger scales with more influential side effect to the public. Without the presence of Party in those private institutions, social order is largely maintained by Justice System and individual’s moral and self-discipline.

Under such reality, there is a common sense of recognizing private economy’s contribution to China’s modernization and economy growth under the context of improving Party’s presentation in private companies. In CPC official Li yuanchao’s article, he gave high opinion on the contribution of private companies.[18] Such compliments was not merely based his personal working experience as provincial governor in private economy denominated Jiangsu but also represented Party’s perspective on private economy. For example, Xi was in the same line with Li on this premise. Xi provided that the “private economy contributes to job creation and GDP growth, the quantity and function of private economy determined our mind of pay more attention...[19]” Li believed the justification for Party’s expansion is based on the reality that first, more educated people are working in private economy sectors without the guidance of the Party; second, Party has unique advantages in resolving issues of private economy, such as corruptions, environmental pollution and labor issues, that challenged Chinese social orders. Hu’s report on 17th CPC National Congress pointed out Primary party organizations among different social institutions would be a way to practice Mass line. Li and Xi further agreed that Party’s presence in private companies could be functioned as an institutional tool to improve the nexus between the Party and People by focusing on two aspects. First, the basis of Party organization’s activity in private company should center on encouraging company’s production and operation under healthy track by promoting Party line, State law and CSR. Second, the strength of Party’ advantage is relying working class. Party organization’s activity should protect the legitimate rights of working class through properly resolving labor issues and ideology education over private companies’ mangers.

However, in order to fully appreciate the operation of Party organization in non-public sectors, there are more works need to be done by the Party. Some scholars argued that the most important issue is to redefine the role of Party organization in non-public economy sectors. Some scholars started with the justification for Party’s existence in non-public economy sectors. For example many scholars held opinions that Party organizations in non-public economy sectors would consolidate Party’s ruling, improving socialism with Chinese characteristic and socialist market economy. Jiang zheng criticized such opinion that they either overlooked certain important issues or held unrealistic ideals about Party organizations’ operation[20]. Jiang believed the justification of Party’s presence in non-public economy sectors has two aspects. Most scholars only opinions justified the legitimacy of Party organizations’ presentation from the perspective of state, society and Party. They only reasoned the functionality of the Party organization externally, which failed to notice the internal needs of Party’s presentation in non-public economy sectors from the perspective of company and institution itself. Lv younggang also held similar ideal that Party organization’s external authority is guaranteed by Party’s leadership position and state law under Party State system. However, the key of the issues is such external authority only served on the theoretical and mandatory level, which could not make Party organization fully function for non-public economy institutions’ internal needs. However, many people did not fully aware of this. Jiang doubted on other scholars’ overoptimistic of Party organization’s capacity of supervising business operation. He criticized that real case of Party organization’s supervising mechanism prevents any illegal business conducts had never even been reported. As for the principal of Party control the process of selecting leaders, Jiang argued that although many Party committee secretary normally conserved as HR manager to select high level managers, the secretary’s authority cannot overwrite the investor or business owner. For Jiang, ideology education for employees could be more practical for Party organizations’ operation.

Jiang further analyzed that CPC’s political line of representing the majority interest of Chinese people is naturally contradicted with the byproduct of market economy, the special interest group. For Jiang, the key of Chinese political reform is premised on the Party’s capacity of incorporating special interest groups into its internal structure without endanger Party’s political principals. Party organization, as Jiang concluded, could be a critical part in creating a balanced mechanism in handling such contradiction. In my view, such interest balance mechanism aimed at redefining the relationship between Party, people and private business owner (special interest group), which could be the critical function of the Party organization in non-public economy sectors under Party’s mass line.

Jiang further suggested that the internal justification and authority of Party organization’s presentation in company is determined by Party organizations’ capacity of resolving institutional interest conflicts. Within the raise of business owners’ economy power, they have stronger democratic participation requirements. Such conclusion is backed up by other scholars’ study on private business owners’ political needs. For example, “Questionnaire for Zhe jiang private business owners indicated that 50% of the private business owners willing to join CPC and 19.8% are eager to join CPC and 5.9% don’t want to join. 54.2% of the private business owner believed it is necessary to set up Primary Party organization and 9.9% believed it is very important. 27.7% are neutral and 8.2% don’t think it is necessary. ” “43.1% private business owner choice CPC as the best way of participate political activities, 21.9% choice NPC or CPPC[21]” Chen jihong’s study also consisted with the questionnaire. Private business owners expressed that wish to have open forums that available for them to communicate with not only state governmental agencies but also the Party Committee. Chen also pointed out that both government and private business owners have wrong impression on private business owners’ agenda of participating political activity[22]. Thus, jiang suggested that For business owner, the Party organization in non-public economy sectors could be served as a channel that creating political path for business owners’ special interest. For employees, it could serve as a balance mechanism to coordinate the conflict of interest between the owners and employees. For the enterprises itself, Party organization could provide communication channel between Party and company in case it need help. More importantly, Jiang pointed out that Party organization in non-public economy sectors has complete different function compared with their local Party committee. Such conclusion is in consistent with Party Constitution. Article 32 of the Party Constitution provided that

In a non-public economic institution, the primary Party organization carries out the Party's principles and policies, provides guidance to and oversees the enterprise in observing the laws and regulations of the state, exercises leadership over the trade union, the Communist Youth League organization and other mass organizations, rallies the workers and office staff around it, safeguards the legitimate rights and interests of all quarters and stimulates the healthy development of the enterprise.

Party Committee should manage political resources and power while the Party organization in non-public sectors should not[23].

Unlike other scholars who focusing on the political prospect of Party organization, Lv took a new perspective, which renovated theory on the identity of Party organization’s function in corporate structure. His visionary ideal argued Party organization’s authority in corporate structure is mandatorily granted by the Constitution and Party state system. Like Jiang, Lv believed the issues of current Party organization are curable with proper renovation and reform. The scientific developments of modern Party organizations need to be premised on the new perspective of their institutional identity. The most fundamental elements of this identity is Party’s capacity of coordinate the conflicts of interests within modern corporate structure. Lv suggested that the dynamic of modern corporate structure evolved with the conflicts of interests between owners, managers and employees. The operation of Party works in Modern Corporation should concentrate on coordinating the conflicts of the interests between different members of the institution. Lv theorized such arrangement as Embedded System. He explained that Party organization embedded with the non-public economy sectors in a way transform Party’s external influence of corporation into Party’s internal influence of the corporation. The foundation of embedded system is premised on Chinese Constitution and China’s Party-State system, where Party organization’s presentation is a mandatory arrangement. The function of Party organization’s embedded system suggested that Party organization peacefully resolving those internal conflicts for the scientific institutional development. Although the authority of Party organization is granted by Party political leadership, the internal authority has to be built through Party’s capacity of coordinate Party interest, state interest and internal interest of different institutional members[24].

Summary

The development of non-public economy gave private business owners not only great economy power but also special attentions from the Party. Although Party gave more attention on the expanding of Party organization in non-public economy sectors, the identity of Party organization still remained unclear. The uncertainty of organizations’ role not only requiring Party to redefine its relationship with the newly raised private business owner but also affect the scientific development of Party organization. Under Party-State system, CPC’s leadership position granted non-public Party organization external authority, which make the presence of Party organization became mandatory among China’s society. However, to truly make Party organization functioned as the bridge connect Party and people under Party’s Mass line, the Party organization need to make effort transform its external authority into internal authority. The key of improving the functionality of Party organization, also the critical part to perform political and democracy reform, is premised on Party organization’s capacity of coordinate conflicts of interest inherited from modern western corporate structure. Particularly, it should focus on the conflict of interest between State, Party, Corporate owner, shareholder and employees.


NOTES

[1] 2007年胡锦涛在党的十七大上的报道 十二、以改革创新精神全面推进党的建设新的伟大工程

Hu jiangtao, Speech on the 17th Party National Congress, 2007, available at http://news.xinhuanet.com/newscenter/2007-10/24/content_6938568_11.htm


[2]以改革创新精神推进非公有制企业党的建设的实践及经验启示—厦门市规模以上非公有制企业党建工作的调查与思考. 厦门特区党校学报. 2009(03)

Shi lunshan, Yang zhengwei, “Yi Gaige Chuangxin Tuijin Feigongyouzhi Qieye Dang de Jianshede Shijian ji Jingyan Qishi” Journal of the Party School of CPC Xiamen Municipal Committee, 03 (2009)


[3]福建省非公有制企业党的建设的历史回顾与现实思考——以改革开放30年为背景

Zhang nuofu, Wen jingyuan, Xubin,“Fujian Sheng Feigongyouzhi Qiye Dang de Jiangshe deLishihuigu yu Xianshi Si kao”, Journal of Fujian Provincial Committee Party School of CPC (2009): 12-18


[4] 武汉市非公有制企业党建工作的调查思考 理论探讨. 2010(03)

Zuo jixiang, Li lushan, Gaobo,“Wuhan Shi Feigongyouzhi Qiye Dangjian Gongzuo de Diaochasikao”, Theoretical Investigation 03 (2009)


[6]广西通志 中共广西地方组织志 第四篇 组织建设 　第二章 整党建党　　第三节 党的基层组织建设Guangxi tongzhi (Guangxi local chronicles) Chapter 2 Party Construction section 3 Primary Party organization http://www.gxdqw.com/bin/mse.exe?seachword=&K=a&A=34&rec=117&run=13


[7]加强外商投资企业党的工作 促进外向型经济发展——中共广东省委副书记张帼英答记者问党建 编辑部邮箱, 1991年06期 岳祖启

Qiu zuqi, “Jiangqiang Waishang Touzi Qiyedang de Gongzuo, Cujin waixiangxing jingjifazhan-CPC Guangdong Provincial Vice Secretary Zang Guoying Press Conference answering questions from reporters” Bianjibu Youxiang 06 (1991): 39


[8]加强外商投资企业党的建设党建研究 编辑部邮箱, 1992年07期中共烟台市委

CPC Yantai Municipal Party Committee, “Jia Qiang Waishangtouzi Qiye Dang de Jianshe Yanjiu”, Bianjibu Youxiang 07 (1992): 41-43


[9]大连市外商党建调查 1998 01组织人事学研究

CPC Central Organization Department Party Construction Policy Research Office , “Dalian Shi Waishang Dangjian Diaocha”, Organization and Personnel Management Studies1 (1998): 36-38.


[10]Ibid note 7.


[11]加强外商投资企业共青团工作的思考青年探索, , 1992年03期 王志雄； 王澍

Wang zhixiong, Wang shu, “Jiangqiang Wangshang Gongqingtuan Gongzuo de Sikao Qingnian Tansuo,” Youth Studies 3 (1992) 27-31.


[12] Ibid note 9


[13]非公有制经济组织党建:一种嵌入性的制度建构 吕永刚2012 11 06 Journal of Shandong Youth University of Political Science 山东青年政治学院学报

Lv younggang, “Feigongyouzhi JIngjizuzhi Dangjian: Yizhong Qianruxing de Zhidu Goujian,” Journal of Guangxi Institute of Socialism 5 (2012): 1-4


[14]论江泽民同志非公有制企业党的建设思想 杨淑英 2010 03 毛泽东思想

Yang shuying “Lun Jiang zeming Tongzhi Feigongyou zhi Qiyedang de Jiangshe Sixiang,” Maozedong Thought Study 3 (2010): 139-141


[15]新苏南模式与良性组织党建运行机制 以江苏昆山市委实例 社会科学2007 10

Wang shiyi, “Xisunan Moshi yu Liangxing zuzhi Dangjian Yunxing JIzhi,” Shehuikexue 10 (2007): 4-15


[16] This data only applied to Kunshan city.


[17] Ibid note 14


[18]“According to the Ministry of Industry and Commerce, there are more than 9 million private companies and enterprises, which up to 70% of all existed companies and enterprises and made contribution to about 60% of national GDP. 184 private ownership companies entered into Chinese Top500” (a kind of company power rank, similar to Fortune 500). It also provided 65% of all intellectual property applications and 60% of Outbound investment.李源潮 以改革创新的精神加强非公有制企业党的建设 党建研究 2012 年 04

Li yuanchao “Yi Gaigechuangxin de JIngshen Jiaqiang Feigongyouzhi Qiye Dangde Jiangshe,” Dangjian Yanjiu 4 (2012): 6-12


[19]习近平 以更大力度扎实做好非公有制企业党的建设工作 党建研究 2012 年 04

Xi jinping, “Yi Gengda Lidu Zhashi Zuohao Feigongyouzhi Qiye Dang de Jianshe Gongzuo” Dangjian Yanjiu 4 (2012): 4-5


[20]内部合理性 : 私营企业党组织存在的理由 蒋政 中州学刊2006 05

Jiang zheng, “Neibu Helixing: Siying Qiye Dangzuzhi Cunzai de Liyou” 5 Zhouzhou xuekan (2006): 22-25


[21]浙江私营企业主政治心理探析 邢乐勤； 杨逢银； 朱群丹浙江学刊 , , 编辑部邮箱, 2005年06期

Xing leqin, Yang fengyin, Zhu qundan, “Zhejiang Siying Qiyezhu Zhengzhi Xinli Tanxi,” Zhejiang Academic Journal 6 (2005): 192-193.


[22]我国私营企业主政治参与障碍及对策 陈李宏 理论学刊2008 10

Chen jihong, “Woguo Siying QIuezhu Zhengzhi canyu Zhangai ji Duice,” Lilun Xuekan 10 (2008): 169-171


[23]Ibid note 20


[24]非公有制经济组织党建:一种嵌入性的制度建构 吕永刚2012 11 06 Journal of Shandong Youth University of Political Science 山东青年政治学院学报





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