At the moment the Communist Party dominates and controls China. But what kind of Communist Party is this? The CCP has over 85 million members.[50] Since at least 1949 the Party has been a haven for opportunists looking for a career in the state bureaucracy, and has a long history of corruption. In 2001 the Party launched a campaign to co-opt so-called “red capitalists” drawn mainly from larger enterprises. At the time this was not considered a major decision because these people were, in their vast majority, Communist Party members, state officials and their relatives. But this group of entrepreneurs has taken on a life of its own within the CCP, and become a powerful force representing the non-state sector of the economy.[51]
The 16th Congress of the CCP (8-14 Nov. 2002) carried out a major reform of the Central Committee and Politburo, strengthening the Party’s pro-capitalist representation. A number of prominent capitalists were elected to the CC, further consolidating the weight of the bourgeois within the Party. For ordinary Chinese, joining the CCP is a lengthy, bureaucratic and formal process involving having a sponsor who is already a Party member, having a track record of supporting the Party’s policies, and attending an interview that includes questions on which approved texts have been read. After that there is a probationary period. Nevertheless, 6% of the population are members of the CCP, but by 2004 the Party included as many as one third of all private entrepreneurs.[52]
Large numbers of these were already CCP cadres, senior managers of privatised SOEs, who, by definition, became entrepreneurs on privatisation. It is this group that has been favoured for membership of local people’s congresses and other bodies with responsibility for leading local privatisation measures, for health and safety policies in the factories, etc. The CCP’s strategy appears to have been to provide political advancement for so-called “crony communists” as a means of controlling the rate of economic change and to prevent non-CCP elements from using official institutions to pursue any alternative political agenda.
The efforts made by the CCP to build a market economy are the means by which it justifies and sustains its rule and protects the privileges and properties of its members. Hu cites the so-called ‘Prince Party’, a grouping within the CCP consisting of the offspring of the older generation of leaders who have been appointed to occupy top political positions to protect the vested interests of Party members.[53] About half of China’s most senior leaders fall into this category.[54] Today, the CCP is being used by those at the top, who have state power in their hands, to defend the interests of the bourgeoisie, because they, themselves, belong to that category.
The CCP has demonstrated an astonishing tolerance at the bribes Party members have been given by the business sector. Bribery is widespread, offered as payment of tuition fees at overseas schools for children, stocks and bonds allocated to family members, etc. The rise of TVEs in rural China and the privatisation of SOEs in the mid-1990s, allowed many Party cadres to benefit personally, and sowed the seeds of the tolerance that prevails today.[55]
In 2002 there were three, as late as 2005 only ten, but in 2014 China had over 150 US$ billionaires, second only to the United States. The familial ties linking Party tops to these super rich are often very direct. In 2005, the richest of all was Larry Rong Zhijian – son of a former Vice President of the PRC and leading “red capitalist” Rong Yiren, who did a great deal to open China to the global market.
A New York Times investigation found that the close family of Wen Jiabao, China’s Prime Minister until November 2012, had wealth amounting to around US$2.7 billion. The family of the new President and anti-corruption hero, Xi Jinping, has interests including investments in companies with total assets of US$376 million; an 18% indirect stake in a rare-earths company with US$1.73 billion in assets; and a US$20.2 million holding in a publicly traded technology company. Control of the communications industry and state censorship ensures information such as this is not available in China.
Because in China there is no significant divide between Party and state there are few, if any, effective checks and/or balances on top officials so corruption is absolutely rampant. It is true that the government has a policy of “killing the chicken to frighten the monkey” and occasionally demotes, imprisons or even executes an official as a warning to others, but the money to be made is so fantastic and the chances of being caught so small that these measures are generally ineffective. An accidentally leaked PBOC report revealed that between 16-18,000 CCP officials that have fled China in the last 20 years, took a total of about US$160 billion with them!
Given that most, if not all, state officials are considered corrupt, corruption charges are a means of dealing with one’s opponents. Two recent and major trials fall into this category. Zhou Yongkang had been a member of the 17th Politburo Standing Committee (PSC), China’s highest decision-making body, and Minister for Public Security with responsibility for overseeing China’s security apparatus. At the 18th Congress of the CCP in November 2012 Zhou was removed from the PSC.
Zhou, it appears, was an opponent of Xi Jinping who attempted to build a power base in the CCP to challenge Xi’s election to leader. He also opposed moves to further reduce state support to the remaining SOEs, many of which are controlled by the Party elite. Zhou lost the faction fight and with his removal from the PSC, there was a purge of those he had placed in senior positions, particularly in the oil and gas industry.[56] However, as Minister of Security, Zhou had gathered a lot of dirt on senior Party officials and there was a fear of what he might do with it. Xi took on this “tiger” to consolidate his own authority, safeguard the reputations of his colleagues, gain respect within the CCP and break the opposition to his economic policy. Officially, Xi was “scrubbing the party clean”, but really he was purging his political enemies.
Zhou was convicted of abuse of power, accepting bribes and revealing state secrets, the last being a certain indication that more than corruption was involved. He was sentenced to life in prison.
At the same time Bo Xilai (ex-Minister of Commerce) a fast-rising protege of Zhou was waging a controversial war against organized crime in Chongqing, a major city in south west China. Bo introduced a comprehensive surveillance system that monitored all phone calls and internet communications, but overstepped the mark by tapping into phone calls to and from President Hu Jintao, and using information gained against fellow Party members. The Party tops rallied and in a short time Bo Xilai was brought to trial for having taken bribes in the form of, amongst other things, a luxury villa in France. He was sentenced to life in prison.[57,58]
Of course smaller “flies” get caught up in the anti-corruption measures. Wei Pengyuan, Deputy Chief of the National Energy Commission, had generated a local scandal when he publicly threatened to kill his mistress. A police raid on his home followed in October 2014, and found the equivalent of US$30 million in cash at a time when the average salary in China is less than US$5,000.[59] Wei was subsequently charged with corruption, found guilty and jailed for life.
How serious President Xi is in tackling corruption can be seen by the arrest of three anti-corruption campaigners: Liu Ping, Wei Zhongping and Li Sihua, who dared to ask for China’s top 200 officials to disclose their assets. They were initially arrested on charges of subversion, later changed to illegal assembly. The court in which they first appeared was surrounded by lines of police and independent observers denied access. Just to make clear the position of the government their lawyer was subsequently harassed by the police, including being detained for questioning.[60] In June 2014, Liu Ping and Wei Zhongping were each sentenced to six and a half years in prison and Li Sihua to three years.[61]
The stench of sleaze and vice hangs over the super rich leaders of the Chinese bourgeoisie, an all-pervasive corruption flourishes at every level, an inevitable consequence of a bureaucratic and totalitarian regime that is founded on the consumption of an undue share of the wealth created by the working class. The super rich are supported by a stratum of wealthy Party and state bureaucrats, their corporate partners. Private entrepreneurs and compradors serve multinational corporations some, such as Foxconn, are economic giants in their own right. Next comes the “new middle class” of cadres, business people, managers, professionals, and academics, large in absolute numbers – estimated at 100-200 million – though still proportionately quite small. It is these well-to-do strata who are the most enthusiastic about the new capitalist economy.[62]
As long as the economy continues to develop at a sufficiently fast rate, the Party leadership will be able to contain the situation and maintain a certain stability within society and within the Party. However, the CCP is not a political party as usually understood, it has been an integral part of a state apparatus since the 1930s and contains within itself representatives of all the political currents within government and the state. Any major economic crisis would be accompanied by major class, national and social conflicts which would be reflected within the Party which, in turn, would be subject to strong centrifugal tendencies. Groups who felt their vital interests were threatened would surface as factions threatening the unity of the Party, and its grip on the state could be broken. In the case of the Russian bureaucracy this happened in a convulsive way. The old, monolithic, Stalinist party shattered into numerous parties representing different interest groups. For the moment the Chinese Party remains in control.
China is a huge country and the different provinces and even different regions within provinces have significant leeway in the interpretation of Beijing’s directives. Chinese history shows that the bureaucracies of the different provinces inevitably have different views and interests. There are divisions within the Party hierarchy over proposed anti-corruption measures and in proposed changes in the laws governing property rights, both of which would impact on the more acquisitive wing of the Party. Xi Jinping and the majority of the bureaucracy appreciate the dangers of an accelerating class polarisation and call for a clamp down on the most flagrant examples of corruption, for social reforms and increased social spending to soften the blows being experienced by the masses and give the appearance that the regime is listening to the masses and can self-correct.
Present conflicts within the CCP are not between those who want to “go back” and those who want capitalism, but rather about how best to maintain the stability and continuation of the present system. Capitalist relations have been established and, inevitably, this process has been accompanied by differentiation between wage labour and capital. The bureaucracy of the CCP in its overwhelming majority stands on the side of capital. The irony is that in the long run this process will tear the CCP apart. The key element in such a situation is that the link to the state could be broken.
Of course there will be elements within the CCP that genuinely wish to serve the people, but the fact such elements exist does not alter the real nature of the CCP. It is highly likely that opposition to the current leadership of the Party will dress its ideas in Maoist rhetoric, harking back to a period when the masses had job security, better welfare coverage etc. Thus, striking miners in the coastal province of Shandong protesting wage arrears placed a large picture of Mao at the front of their demonstration on 22 March 2015.[63]
In 1995 direct foreign investment was about 5% of national total investment, by 2002 it was about 12% and by 2012 the level was about 20%. It is important to realise that over 80% of investment in China’s capitalist industries came from within China, from primitive capitalist accumulation.[64] The monies invested by these entrepreneurs was from the high rate of surplus value extracted from the workers because of state enforced low wages, high rents paid by urban workers and robbing workers of their pensions, medical and housing schemes.
Many wealthy Party members began to acquire fortunes when they gained control of successful TVEs. The ownership of nominally collective enterprises was gradually consolidated in the hands of their managers or local Party officials, often the same person.[65] In towns, many Party and government officials were able to translate their managerial positions into ownership of privatised SMSOEs. Party cadres, generally, found the property sector a particularly fertile ground for amassing quick riches. Permission for construction projects valued at billions of dollars depended on the say-so of local Party tops who, not surprisingly, soon acquired extensive property holdings. On 12 September 2014, CNBC News claimed the number of dollar millionaires in China had reached more than 1 million. Many of these, if not the majority, are CCP members who use the loophole of a lack of central land records to salt away their ill-gotten gains from bribery and corruption, buying the leases of prime city-centre apartments under pseudonyms.
Outside of the Party many capitalists emerged in private retail and business services, beginning as small tradesmen or professionals. A good example of how crony capitalism and the end of central planning combined to enable the meteoric rise of those with good Party connections is Liu Yongxing. In the early 2000s, the China Aluminium Corporation (Chinalco, an SOE), had a 98% share of the aluminium market in China. The central government gave Chinalco exclusive rights over all national bauxite deposits. Yet, by 2008, the market share of Chinalco had dropped to less than 50%, due to the entry of large private firms into the aluminium market.
Liu Yongxing, the moving spirit of the East Hope Group understood the Achilles heel of Chinalco; that its exclusive right to purchase Chinese bauxite was given by central government and not the local governments that had actual physical control over the minerals. With the end of central planning, the East Hope Group went to the local government of Sanmenxia, a mid-size city in Henan Province with large deposits of bauxite, and effected a deal with the local Party secretary who had strong links with Li Keqiang, Chinese Premier. The East Hope Group started to produce aluminium in 2005 and today Liu claims to be worth US$5 billion.[66]
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