China's Communist Party Opens Its Doors to Capitalists
By JOSEPH KAHN, New York Times, Nov 4, 2002

UNMING, China — Wu Kegang is a globe-trotting businessman who lives in a hilltop home in Hong Kong. He owns a vineyard and a yacht-engine factory on the mainland, runs a trading company in the United States and sends his son to Swarthmore College in Pennsylvania.

He also pays his dues — 3 percent of his annual salary — to the Chinese Communist Party.

Party leaders are courting entrepreneurs like him, trying to keep control of a society that depends more on capitalist dynamism than on government dictates.

When party delegates convene in Beijing on Nov. 8, they plan to take the rare occasion to hand authority to a new generation, from Jiang Zemin, the man who has served as China's president since 1993 and leader of the Communist Party since 1989, to a hand-picked set of new leaders, headed by the largely unknown Hu Jintao.

But more than that, the party will be looking to transform itself to hold on to power at a time when the rhythms of capitalism are pulsing through Chinese society. The party leaders intend to enshrine Mr. Jiang's theory of the "three represents," declaring that the party now represents capitalists as much as the workers and peasants who formed its base for more than 80 years.

For now, people in private business will probably represent only a small minority of the party's 66 million members. But already entrepreneurs are on their way to replacing barefoot doctors and selfless soldiers as party icons. A few could even find themselves elevated to the Central Committee.

With the opening to business leaders, China's leaders are blurring the class distinctions they once considered sacred, perhaps jettisoning ideology altogether in a race for relevance.

"Our party is doing what it takes to survive," Mr. Wu said during a visit to his wine-making operation in Kunming, which is about 800 miles west of Hong Kong. "It is attracting the people who have the social status and the economic clout to govern."

That is a gamble, even some in the party concede. For one thing, such a bald association with the rich could strip the party of the last shreds of popular support and worsen already rampant corruption. Party leaders are also trying to diversify their ranks and the economy without eroding their monopoly on power.

Influential business people have responded by joining hands with what they often describe as a pragmatic dictatorship that has shed its revolutionary politics and is refashioning itself, willingly if clumsily, to guide a market economy.

Some have done so opportunistically, for the access and influence that the party provides. Others resist the party, wary that it is more interested in harnessing them than in setting their talents free.

Zou Zongshen, for instance, tries to avoid political entanglements for his prosperous motorcycle business in the southwestern city of Chongqing. His crosstown rival, Yin Mingshan, also runs a thriving motorcycle maker, but enthusiastically devotes half his time to what he calls "political work."

Mr. Wu began his career as a party official in the southern special economic zone of Shenzhen. In the early 1990's, he abandoned that life and "jumped into the sea," as the expression went at the time, to become a private businessman. Now, he has a bit of both identities, having re-established links with his original party organization.

Mr. Wu, 50, has an oversize, gold-embossed name card that lists 12 companies he runs in Hong Kong, the United States and China, including those specializing in engines, wine, real estate and electronics. His wine company, Yunnan Red Wine, is expected to be listed on the Hong Kong stock exchange in several months.

Chinese entrepreneurs once dodged anything to do with politics. But in a lunchtime interview, after a meeting with province party officials, Mr. Wu quickly warmed to the subject.

"It is only logical that there be more connections between business and political life," he said. His hair was slicked back in the style popular in government service. Only the jade bracelet dangling from his wrist suggested another line of work.

The party's new acceptance of capitalists, he predicted, will clear a path so that private entrepreneurs and executives from state-run companies can assume high government posts, like provincial chiefs, mayors and heads of important ministries.

"The more entrepreneurs who move into the government power structure, the more optimistic I am about the future," he said.

The party began allowing capitalists to take over chunks of the state-controlled economy in the 1980's, a direction that paid off handsomely; the economy now is 20 times larger than it was in 1980, and private industry has become the main engine of growth. It accounts for one-third of economic output today, compared with almost nothing 20 years ago.

There were fears that the emergence of a business class would create a Faustian bargain for the party. Yet instead of becoming antagonists, business people and the party have become co-dependents. At least for the immediate future, they appear to have more to gain by cooperating than by competing.

This is true because the government controls much more of the economy than statistics suggest. It closely regulates many industries and bans competition in areas deemed politically sensitive, like military goods, telecommunications, steel production and the media.

Politicians vet land sales and set zoning rules. They decide who gets bank loans and who can list shares on China's stock markets. Tax rates are usually subject to negotiation. Businessmen need political connections to thrive.

China's leaders also need capitalists more than ever. With most state-owned companies in terminal decline, the government desperately relies on private sector tax payments, and that is no easy challenge in a society that has poor record keeping and a history of tax dodging.

The government has also turned to private businesses to absorb millions of workers laid off by state companies. Without such help, the risk of urban unrest would soar.

Zhou Yiling, who founded a private advertising company in Nanjing after losing her job at a state-run hotel, sees the private sector and the state as inextricably intertwined. So much so, she says, that she hires only fellow state workers who, in the popular euphemism, are off-post.

"The era of state-owned companies is ending, and it is time for private companies to take their place," she said.

Ms. Zhou is also one of the first entrepreneurs in the eastern Chinese city to apply for party membership, a status she never had when she worked for the state. She is now asked to attend long classes to study Communist Party theorists from Marx to Jiang.

Party officials handling her application often visit her office in a converted three-room apartment, decorated with pink curtains. More than a dozen employees — Ms. Zhou calls them comrades — sit shoulder to shoulder laying out advertising inserts for local newspapers.

Ms. Zhou is hesitant to talk about her party ties before she becomes a member. But she does reflect on the benefits she could receive. "We do much of our business with state-owned newspapers," she said. "The editors are all party members, and my own status will advance greatly in their eyes."

The party has promoted its mission of helping such business people, but that has ignited vocal objections from party members and political theorists. If the Communist Party has anything left to offer Chinese people, some argue, it is its founding pledge to defend the interests of workers and peasants against people who would exploit them for profit.

Hu Angang, a left-leaning political and economic theorist in Beijing, wrote of the party's plan to admit capitalists, "Some people in the party really hope to mainly represent the interests of entrepreneurs, and not the broad interests of workers and peasants."

Many entrepreneurs turn a cold shoulder to the party's entreaties. Some say politics bores them, and others chide the culture of soliciting and giving bribes, which already infects many aspects of business life.

Mr. Zou, 50, runs the motorcycle company that bears his given name, Zongshen, in Chongqing, the Detroit of China's motorcycle industry. Once a motorcycle repairman, he started his factory a decade ago. Today, he is one of China's richest men.

Party officials have long urged him to become active in political meetings. He sometimes obliges. "If they have a three-day meeting, I'll attend one day," he says. But he decided against applying for party membership.

"It's a waste of time," he said.

Mr. Zou draws slowly on his cigarette and talks in short sentences when asked about politics. He says years of butting heads with the bureaucracy persuaded him that "it's best to keep some distance." He says he avoids under-the-table deals. He will not hire government officials to represent his company, he says.

"It's best if business is business and the party is just a regular ruling party," he says. "We should keep things separate."

Across town is Mr. Zou's mirror image. Mr. Yin runs the rival motorcycle company, called Li Fan, and he is also a wealthy man.

But in the lobby of Li Fan's headquarters, alongside an exhibition of three dozen motorcycles, is a display of photographs of Mr. Yin receiving the Communist Party elite — Li Peng, Zhu Rongji, Qiao Shi, Li Ruihuan, all current or former members of the Politburo.

Mr. Yin estimates that he spends half his time running his company. The other half is for political work.

This now includes being chairman of the Chongqing chamber of commerce, a quasi-government association, and serving as vice chairman of a government-run newspaper in which he has invested. His highest honor: Beijing recently appointed him provincial chairman of a national organization designed to represent all walks of life to central leaders.

Mr. Yin, 64, receives visitors in his boardroom, which can seat 50 at an oblong table. He wears a black suit and a tie on a Saturday afternoon. During an interview, he asks his assistants, also dressed formally, to fetch articles he wrote or speeches he gave. He quotes his own aphorisms, like "Pure gold fears no fire," which are printed on his factory walls.

His ardor for politics seems paradoxical. He was persecuted under Mao, labeled a counterrevolutionary and spent 18 years doing forced labor.

An edict issued by Deng Xiaoping in 1979 freed him, however, and earned Mr. Yin's loyalty. "Deng is history's greatest man," Mr. Yin said. "I ended up doing well because of the policies my country followed."

Today, he said, he has a chance to influence policy. He has helped fellow entrepreneurs get loans from state banks after intervening with the mayor of Chongqing. He even had a chance to buttonhole Zhu Rongji, the prime minister, on a business concern close to his bottom line — big city restrictions on motorcycles. "There has been some improvement since our talk," he said.

In return, he has urged entrepreneurs to hire more laid-off workers, keep better records and pay more taxes.

Capitalists, he said, have moved to the center of Chinese life. "The base of the party is increasing," he said. "Had they tried to keep us separate from the mainstream, it is the party that would have been weakened.
http://www.nytimes.com/2002/11/04/international/asia/04CHIN.html

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