Private Enterprise: The “Other” China and the Chinese Communist Party’s Unsolvable Dilemma?

In this note we observe several developments related to China’s political economy which draw attention to the murky relationship between the CCP and private enterprise (民营企业):

• A recent Yahoo! Finance story, which has not yet gained wider traction, noted that there may be “signs” that the CCP is displeased with Alibaba and Jack Ma for having failed to prevent the publication of the now-infamous March 4 open letter from “loyal Communist Party members” demanding Xi Jinping’s resignation.
• During the Two Meetings political event there were reports (Chinese) that Xi had personally delivered assurances to China’s business leaders assuring them that he would help them in solving their economic difficulties.
• In a largely unaddressed development, private enterprise is now being tapped by the state to improve performance within China’s coastal economic cores (Chinese) and, according to the BBC, the military (Chinese).
• This is potentially a savvy move: despite widespread belief that China’s economic growth has been primarily investment-driven, productivity gains in the private sector have also been among the greatest contributors to growth rates.

The dilemma, then, is this: the wealth of China’s most powerful families, and those they have promoted to serve/succeed them, depends on state-owned enterprise. However, state-owned enterprise appears to be no longer capable of delivering the growth rates needed to maintain political and economic stability. The private sector, to the extent that it is able, may end up being a willing partner in ongoing state efforts to “deepen” reform or — as insinuated by the Yahoo! article — may end up a formidable voice for opposition to Xi’s statist policies.

Here we note the following: it has been alleged for several years at least that China’s most successful entrepreneurs — a group which includes Jack Ma — are intensely proud of their self-made fortunes and see themselves, not the Communist Party’s current leaders, as the best hope for the future of China. Outspoken tycoons like Ren Zhiqiang are not anomalies, in the sense that: a) they are popular figures among ordinary Chinese and “netizens” alike, b) they espouse widespread, though unofficial, beliefs — which we might call ideologies, or even class consciousness — that self-made people and those with business savvy actually know best how to strengthen China’s economy. (Note: it also bears repeating that Ren has a military background.)

This ideological perspective has found little reflection in the annals of mainstream China-watching, which tends to focus primarily (and, no doubt, rightly) on issues of nationalism; the implications of CCP doctrine for economic policy; and trends affecting the educated and the online. We contend, however, that one has to go back to Ogilvy and Schwartz’s China’s Futures — or, more recently, Kleinman et al.’s Deep China — to find an influential study that encompassed the other side, so to speak of Chinese experience: the enduring archetypes of mercantile families and pre-revolutionary private wealth; of resourceful sojourners and native-place associations; of clans and mutual aid; of medieval knights-errant (江湖) and cunning Warring States strategists; of righteous peasant insurrections and overthrowers of “alien” dynasties.

These were arguably the same tropes understood by Mao Zedong and the CCP in its earliest decades, and which were either coopted or suppressed as Mao consolidated his own legitimacy by cloaking himself in the mantle of principled popular revolt. To end on a purely speculative point, one wonders whether tensions between Xi and a more recent former leader, Jiang Zemin, do not in part go back to a fundamental disagreement within the CCP concerning what role private enterprise has to play in China’s future: Jiang seemingly welcoming capitalists into the fold under the cover of his much-derided “Three Represents” (and here we note the potential significance of a recent wave of Jiang nostalgia among online Chinese), whereas Xi appears to hold them at arm’s length when not either publicly castigating them, as in the Alibaba/Jack Ma case, or enlisting them to bail out China’s current economy as lenders to struggling economic sectors and firms (Chinese).

Beneath Xi’s scripted cultural puritanism and personality cult there lies a strong whiff of fear of the Chinese uncanny — the ubiquitous grassroots culture of self-reliance, intimate loyalties of kinship and native place, and idiosyncratic folk heroes. But what if others in the CCP begin to realize — or have realized already — that it is precisely these private, non-state, and highly unpredictable forces which represent the best hope for China’s economic future? And what if, in the figures of China’s titans of industry, they have already found their avatars?

© CORINT 2016