CHINA: Private sector gets thumbs up from CPC


At its 16th Congress five years ago, the Communist Party of China (CPC) amended its constitution to allow the admission of capitalists to its ranks and to legitimise the swelling number of capitalists already in its membership. Today, 3 million of its total membership of 73 million are capitalists — over 4%.

Two years ago, the State Council — China's cabinet — issued its first document that pledged "equal treatment" for both public and private enterprises, a retreat from its assurances during the 1990s that the public sector would remain the economy's mainstay. At the CPC's 17th Congress, which took place October 15-21 in Beijing, the party's constitution was amended again to catch up with government policy putting the private sector on par with the public sector.

An October 21 commentary in the official Xinhua news service noted: "This is the first time in its history that the CPC mentioned public and non-public sectors in the same breath in its Constititution established 85 years ago when private economy had been strongly repulsed as a dreg of Capitalism."

Xinhua proudly announced that "China's previously monolithic public ownership has been gradually shattered, with 57% of local companies or 4.95 million being privately owned by 2006, contributing nearly one-third of the country's total tax revenue".

Congress spokeperson Li Dongsheng claimed on October 21 that "private entrepreneurs were also builders of socialism with Chinese characteristics" (as the CPC dubs the process of reintroducing capitalist economic relations). He said they are "just like workers, farmers, intellectuals, cadres and army men — the traditional backbone stratum of the CPC".

For years, official documents have scrapped even the formal trappings of Marxist analysis, replacing the previous ostensible method of class analysis with categories such as social strata. But this stylistic change in presentation can't cover up the reality of burgeoning capitalist exploitation.

A September 29 article in the People's Daily recognised many contradictions in Chinese society today, such as huge income gaps, a rural crisis, "heavy pressure in the workplace" and an "incomplete" social security system. Instead of holding the last two decades of pro-capitalist policies responsible, the paper blamed the "planned economy" and the "immaturity" and "incompleteness" of the market economy.

While Beijing remains unswerving in its drive to eliminate the vestiges of the post-capitalist economy that was the legacy of the 1949 socialist revolution, the social unrest unleashed by government policies is undeniable. In fact, CPC general secretary Hu Jintao, who assumed the position at the last congress and whose position was reaffirmed at the 17th Congress, has put the need to tackle these contradictions high on his agenda over the last five years.

Hu has stated that the problems would be solved if China reaches the goal of building a "socialist harmonious society". The congress's more than 2000 delegates approved the inclusion of this goal into the party's constitution.

A September 29 People's Daily article explained that a "harmonious society" will "put people first and make all social activities beneficial to people's subsistence, enjoyment and development. In a harmonious society, the political environment is stable, the economy is prosperous, people live in peace and work in comfort and social welfare improves." The article claims that such a society is already taking shape, and that it features "orderly competition and honesty".

The congress also witnessed a major reshuffling in the party's top leadership, including the selection of two candidates for the party and state's top jobs. An age-based, fixed-term tenure system introduced in 1992 for top party assignments, after a 10-year transition, means that Hu, 64, will not be able to retain his position as party chief after the next congress. Hence possible successors were lined up at the congress and given strategic positions to establish their authority over the next five years.

To ease the power transition, it is desirable that prospective candidates be young enough to serve in the top position for more than one term. Two of the four members newly elected to the Political Bureau Standing Committee (PBSC) seem to fit the bill — Xi Jinping, 54, and Li Keqiang, 52.

Xi, a party chief in Shanghai only since March but who ran Fujian Province (which neighbours Taiwan) for 17 years, was an alternative member of the 15th Central Committee and a full CC member over the last five years. He is a son of party veteran Xi Zhongxun (1913-2002) who was purged both during the 1940s and again during the Cultural Revolution but joined the Political Bureau during Deng Xiaoping's reign.

Li is party chief of Liaoning Province, where many key heavy industries are based, and has been a full CC member over the last 10 years.

Other new faces on the PBSC are 63-year-old He Guoqiang, head of the CC's organisational department, and the public security minister Zhou Yongkang, 64.

The remaining members of the nine-member PBSC are Hu (also state president and chairperson of the Central Military Commission); Premier Wen Jiabao, 65; Wu Bangguo, 66, chair of the standing committee of the National People's Congress; Jia Qinglin, 67, chair of the national committee of the Chinese People's Political Consultative Conference; and Li Changchun, 63, chief of the CPC's publicity and ideological work.

Conspicuously not reelected to the PBSC was 68-year-old Zeng Qinghong, ranked fifth in the party hierarchy and a long-term offsider of previous party chief Jiang Zemin. There had been speculation that Li Keqiang, believed to be a Hu favourite, would hold the prime spot as the likely successor. However, Xi turned out to be higher in the succession ranking — widely speculated to be the condition that Zeng imposed in exchange for his own retreat from the top body.

The influence of Jiang's faction — dubbed the Shanghai Gang — seems to have waned since a key faction leader, Chen Liangyu, was purged last year due to alleged embezzlement of pension funds in Shanghai. This has strengthened Hu's wing of the party, a bloc associated with the Chinese Communist Youth League (which Hu led for many years). However Xi's outranking of Li seems to indicate that Jiang's faction still holds considerable sway.

Mao Zedong and Deng Xiaoping — what China called the "core" of its post-1949 first- and second-generation leaderships — attempted to anoint their successors, but with no great success. In the wake of the 1989 Tiananmen student protests and the subsequently massacre, Deng eventually anointed Jiang Zemin as the "core" of the third generation leadership.

In 1992, Deng practically handpicked Hu and put him on track as the fourth-generation top dog, a step that Jiang didn't have enough influence to overturn. Hu was made a PBSC member in 1992 at the age of 49.

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