The Telegraph
Since 1st March, 1999
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- China’s social evolution is a product of the entrepreneurial revolution

The Chinese Communist Party’s decision to accommodate businessmen follows a precedent already established in West Bengal by the Communist Party of India (Marxist). The difference is that while Calcutta’s Marxists and merchants are engaged in a clandestine liaison, Jiang Zemin’s Three Represents doctrine proudly marries communism with capitalism.

No pussyfooting there by bourgeois professionals who hanker to be gentlemen without shedding the ruling communist party’s rewarding patronage. No surreptitious footsy under the table either by opportunistic traders who have latched on to the CPI(M) in West Bengal but are the Bharatiya Janata Party’s backbone elsewhere. “I am a cadre first and an entrepreneur second,” boasts Sheng Wenring, president of a steel conglomerate, with a candour that leading lights of the Indian Chamber of Commerce should note.

Jiang’s strategic coup overshadows the 16th congress’s relatively inconsequential political innovations. Ideology died with the Long March. Democracy in the sense of transparent participative decision-making is unknown. Politics is about personalities, not principles. But as a Chinese Singaporean editor observed, the heir apparent, 59-year-old Hu Jintao, is more apparent than heir. Little is known of the CCP’s new secretary general beyond his predilection for ballroom dancing (does that too strike a bell in Calcutta') and repression in Tibet.

Despite his American cowboy hats and addiction to Western and country music, Jiang has crudely lived up to Mao Zedong’s aphorism about power growing out of the barrel of a gun. Having packed every tier of the power structure with his cronies — 80 per cent of the 198-member central committee, at least half the 24-member politburo, and at least four of nine politburo standing committee members — he remains chairman of the central military commission. That makes him boss of the 2.5-million strong People’s Liberation Army.

Here now is one reason for ranking “the most potent forces of production” — shorthand for capitalists — with peasants and workers among the 66 million party faithful. The PLA controls 15,000 companies with annual sales of around $10 billion. Many might make a loss, but they nicely line the military’s pockets. No wonder PLA delegates enthusiastically endorsed Jiang’s thesis even before the CCP vote. The Three Represents assures the military of its place in the financial sun; it assures the regime (and Jiang) of continued military support.

In fact, the congress was all about constituency consolidation. Peasants and public sector workers are an endangered species. A party that restricts membership to these two declining classes would be without power, money and — ultimately — members.

The official figure of 14 million jobless is probably a gross underestimate. Even the authorities admit that 25 million workers have been laid off in recent years. One expert places urban unemployment at 20 per cent. Another estimates 20 million poor people in the cities. According to Wei Jingsheng, China’s most famous dissident, 200 million farm hands are out of work. About 300 million peasants will be forcibly resettled in cities to provide cheap labour and give a fillip to demand.

Not surprisingly, unemployment is highest in the socialist bastions of the north-east whose bankrupt administrations cannot afford pensions for the jobless. Nor is it surprising that the capitalist provinces are free of labour unrest.

The CCP has therefore set its sights on millionaires and a middle class — still a politically dubious term — that numbers 130 million and is expected to burgeon to 400 million in 10 years. A family income of $14,000 — officially, the per capita income is $840 — permits such status symbols as stylish clothes, locally made colour television, DVD player and the ubiquitous cellphone.

The politburo standing committee confirms that pragmatic communism gives short shrift to both the idea of class warfare and idealization of the proletariat. Hu is a hydroelectric engineer. His colleagues include a geologist and a German-trained metallurgist. The other six are engineers. One specializes in electronics and another in rockets. What could be more middle class than, perhaps, the Bar or teaching.

This social evolution parallels — indeed, is a product of — the entrepreneurial revolution. Faced with rural revolts, Beijing recognizes that only a dynamic private sector can tackle the world’s biggest unemployment problem.

Private enterprise was hamstrung in the Eighties so that it could not challenge state undertakings; now, people are encouraged to set up their own companies. There were only 90,000 private firms in 1998; now there are more than two million. The number of state undertakings has dwindled from over a lakh in the Eighties to 42,900.

But it has taken time to reconcile and rationalize the theologies of capitalism and communism. His physician’s revelations about the ageing Mao confirmed that communist success leads to capitalist indulgence. Then came Deng Xiaoping’s Southern Tour in 1992 pursuing “socialism with Chinese characteristics”. It was glorious, he said, to be rich; it mattered not whether a cat was black or grey providing it caught mice.

Like Mohandas Karamchand Gandhi or Singapore’s Lee Kuan Yew, Deng did not need the trappings of high office to exercise authority. The only position he held latterly was head of a bridge club. Yet, his word was law. His views on moneymaking proved immensely popular, not least because, being a shrewd operator, he made a virtue of necessity.

Apparently, the CCP discussed this shift at its 15th congress in 1997. Jiang Xipei, who runs a cable producing corporation, says that the matter came up at the 13th congress a decade earlier. Jiang’s promise of “policies based on reform and engagement in the world economy” is only the final touch. It could be the end of political posturing.

The spectacular rise of the taizidang (little princelings), as the elite’s pampered offspring are called, struck a blow for realism. According to one report, 98 per cent of the spouses and children of senior officials hold key positions and earn 120 times the national average. About 78 per cent are suspects in fraud cases involving sums of more than $ 600,000. Over 600 reportedly fled the country when charged with corruption.

Such scandals forced the government to take action in the Nineties, even to closing down a company run by Deng’s son where lawbreaking was rampant. Zhou Beifang, son of an important CCP member, was given a suspended death sentence for accepting bribes while heading a major state-run steel firm. And Chen Xiaotong, whose father was disgraced as chief of the CCP’s Beijing unit, was jailed for 12 years for graft.

Today’s princelings are less blatant. Many are educated abroad; most, if not all, run business ventures. Even if they do not epitomize outright nepotism, they reflect the power of privileged birth, high connections and expensive education. They are far removed from the egalitarian ethic of the proletarian paradise.

Jiang’s own son, Jiang Mianheng, a high-tech whiz kid known as the Prince of Information Technology, has a finger in many pies from telecom to computer chips. Zhu Rongji’s son, Zhu Yunlai, heads the China International Capital Corporation, the country’s first joint venture bank, in collaboration with Morgan Stanley. Li Peng’s son, Li Xiaoping, runs a state power giant while his daughter is a senior executive in an energy investment firm.

In a pattern with which Calcutta is familiar, Beijing will now shower land and credit on businessmen, allow them to issue bonds, relax taxation, ease market access, waive import restrictions and grant export incentives. The recipients of lavish favours will, of course, wax even richer. But they won’t all be only the party chief’s personal toadies. Undoubtedly, they will give handsomely to the party. But that won’t be the sum total of their service.

You can bet your bottom yuan that Chinese businessmen who now flaunt the Hammer and Sickle will add value to the economy by setting up factories, adding to productivity and creating jobs. That is the difference between entrepreneurs and comprador-traders, between a purposeful compact and a conspiracy to loot.

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