CCP’s ‘Left’ Turn
During the Jiang Zemin/Zhu Rongji regime (1996 to 2002), an influential section of the ruling bureaucracy openly embraced the notion that a gradual and harmonious transition to a capitalist economy could be accomplished without disturbing the supremacy of the CCP or touching off major social conflict. But it appears that the majority of party functionaries recognize that they would have no role to play in a thoroughly privatized economy. The SOEs are supposed to be profitable—and most have actually made money during the past few years—but their value to the party bureaucrats is not simply economic. They provide the foundation for the CCP’s political power, the primary justification for its existence and a key training ground for its core cadre. All top-level appointments, promotions and dismissals at the SOEs require the approval of the party’s Organization Department and Ministry of Personnel.
SOE managers who want to advance their careers must balance the pursuit of profitability with other requirements laid down by the party. In 2002, two oil executives were up for promotion from alternate to full members of the Central Committee at the 16th Party Congress—Ma Fucai of PetroChina and Li Yizhong of Sinopec. They both had to deal with strikes in their enterprises, but Ma, who had refused to make any concessions to his workers so that company profits would be higher, was passed over and remained an alternate, while Li, who took a conciliatory approach more in tune with the party’s concerns about social cohesion, was promoted to full membership (Erica S. Downs, “Business Interest Groups in Chinese Politics: The Case of the Oil Companies,” in China’s Changing Political Landscape).
Fear of social instability has constrained the CCP’s privatization program. Workers in China’s state sector, which still constitutes the core of the economy, tend to identify state property as their own and feel antagonistic toward private capitalists. A former employee at a state window frame enterprise, witnessing the demolition of his factory after it was sold to a private real-estate developer, remarked bitterly:
“Every inch of grass and every piece of steel in the factory belonged to us workers. They were our sweat and labor. People had tears in their eyes when they saw the fallen pieces of window frames left on the burnt ground. Those were state assets and these officials just squandered them….”
—Theory and Society, Vol. 31 (2002)
In denouncing the incursions of capitalist social relations, state-sector workers frequently employ the CCP’s own socialist rhetoric. When the Changjiang Sugar Factory was privatized, its employees protested:
“How to restructure the form of property should be democratically determined by workers. The county government cannot unilaterally decide it….Workers are the master of the enterprise and the main body (zhuti) of reform. Restructuring without consulting the workers’ and staff council and selling the factory without informing workers are serious violations of workers’ democratic rights. We demand to get back our democratic rights.”
—Modern China, Vol. 29, No. 2 (April 2003)
Such complaints resonate deeply within Chinese society. There is a widespread perception that the government operates as a tool of wealthy and powerful elites who have been enriched by the market reforms at the expense of ordinary working people. The current administration of President Hu Jintao (who is also CCP General Secretary) and Premier Wen Jiabao has responded with the CCP’s first “left” turn since the Tiananmen events, and is attempting to present itself as an opponent of the excesses of the capitalist roaders and a defender of workers and peasants.
The first indication of this shift came in 2004, when prominent intellectuals of what has become known as the “Chinese New Left” exposed the massive squandering of public assets that accompanied the privatization of several prominent state-owned companies. In November of that year, the government halted management buyouts of SOEs—the main mechanism for privatization—while the State-owned Assets Supervision and Administration Commission (SASAC, established in 2003 to manage the SOEs) implemented measures to maximize the value of state holdings and prevent asset stripping. The privatization of large SOEs has since stalled. Foreign ownership of steel companies was prohibited and a number of small private mines (where a spate of deadly accidents had taken place) were abruptly renationalized.
These measures have been accompanied by new restrictions on both the country’s “red capitalists” (CCP officials who become “entrepreneurs”) and foreign investors, the two primary beneficiaries of the WTO-oriented “market reforms.” The central government has been closely regulating urban land transactions and has imposed price and expenditure controls, including on food. Collusion between local officials and private businesses has been targeted, and a massive anti-corruption campaign, focused on the coastal elites, has been launched.
In 2006-07, the CCP imposed new regulations on foreign capital, increased scrutiny of foreign-backed mergers and introduced further restrictions on banking, retailing and manufacturing. These measures, aimed at aiding domestic companies and slowing the growth of poverty and inequality, led Myron Brilliant (vice president for Asia at the United States Chamber of Commerce) to complain: “It’s not only a threat to foreign investors but it also undermines China’s transition to a market-based economy” (New York Times, 16 November 2007).
The curbs on the private sector, while extremely limited, signal that significant layers of the CCP, feeling pressure from below, are uneasy about the pace and extent of “market reform.” In June 2007, state media ran horrific accounts of children and the mentally ill being forced to work as virtual slaves in brickworks in Shanxi, a relatively poor interior province. The revelation that local CCP officials apparently condoned this brutal exploitation sparked fierce popular outrage and renewed public criticism of pro-capitalist “reform.”
A group of 17 senior CCP cadres, including influential retirees from the military and industrial ministries, issued an open letter criticizing the extent of foreign penetration of the economy, the marginalization of the state sector and the low wages that have accompanied the reforms. The authors urged the approaching 17th Party Congress to reverse the pro-capitalist course and return to “Mao Zedong Thought,” i.e., renationalization and central planning. They warned that if the market reforms continue, “a Yeltsin-type person will emerge, and the Party and country will tragically be destroyed very soon” (reproduced on mrzine.monthlyreview.org).
The Maoist oppositionists’ proposals failed to pass. The “conservatives” are clearly a minority within the CCP and the openly Maoist faction smaller still. But the 17 who signed the letter are not minor figures. While it is impossible to know how widespread “conservative” sentiments are within the CCP, the tortured history of China’s property law suggests that they are not insignificant. In 2007, the National People’s Congress overwhelmingly approved a “Property Rights Law of the People’s Republic of China,” by a vote of 2,826 to 37, with 22 abstaining. This legislation, which spelled out the rights of private owners for the first time, had been held up by “conservative” and Maoist opposition for 13 years. As late as 2006, its supporters had been unable to have it considered, so it seems safe to presume that objections are still being aired behind closed doors.
The CCP bureaucracy places a great deal of importance on projecting an impression of stability by maintaining a united public face, but Hu’s left-populist turn appears to have increased internal tensions. The “conservatives” view the highly publicized crackdown on some of the worst examples of unbridled capitalist competition as too superficial to contain the rising tide of plebeian discontent. The capitalist-restorationists, or “neo-liberals,” have the opposite concern: they fear that Hu’s measures may stall the movement toward unrestricted market relations. With the support of some of China’s most prominent economists, they are proposing that the leading “dragonhead” SOEs should be the next target for privatization.