Teaching Comparative Government and Politics

Tuesday, October 03, 2017

Private business in China

Beijing tries to win over entrepreneurs with praise and promises
The Communist Party… said it will support and protect entrepreneurs in the first such directive to safeguard China’s private business owners since it took power in 1949.

The guideline – issued by the Central Committee and State Council – praises China’s business people for boosting national economic growth.

“Lots of entrepreneurs … have made a great contribution to the accumulation of social wealth, to job creation, economic and social development,” the directive says…

It also promises to protect their legitimate rights and interests, ensure fair market competition and strengthen protection of intellectual property rights…

The promises come at a time when the authorities are in dire need of more investment from the private sector to support growth…

Overall investment in China went up 7.8 per cent in the first eight months… State sector investment grew at 11.2 per cent, but investment growth from the private sector slowed to 6.4 per cent in that period…

“China’s economic growth can’t rely on government-led investment as it is unsustainable,” said Lu Zhengwei, chief economist at the Industrial Bank. “Private investment still has huge scope to grow…

China’s political ruling class has had an on-again off-again attitude towards the country’s private business sector… After Mao Zedong took power in 1949, the new regime set about confiscating assets from the bourgeoisie and forcing many private businesses to enter “public-private joint ventures”. Private entrepreneurship was wiped out in the ’60s and ’70s under a centralised command economy that took the country to the brink of collapse before Deng Xiaoping revived it with his liberalisation policy in the late ’70s. Jiang Zemin went further, allowing private capitalists to join the party in the 1990s – a major ideological breakthrough for the sector.

Many Chinese tycoons are among the richest people in the world, and the party is generous in giving honorary titles to loyal entrepreneurs – the parliament’s largely ceremonial advisory body counts a long list of billionaires as members.

At the same time, business people often find themselves dependent on the whims of the authoritarian state and haunted by the so-called original sin – problems that emerged in the early days of the private sector…

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