Dictatorial decision-making?

China is required some legal changes due to its new World Trade Organization membership

By Willy Wo-Lap Lam
Senior China Analyst

(CNN) -- A little known episode in the southern city of Guangzhou last month has shown China's flourishing private businessmen have yet to enjoy the trust of the Communist party leadership.

The Guangzhou Association for Research on the Development of the Non-state Economy had invited a number of noted intellectuals from Beijing to take part in their forum on the future of private enterprises.

These liberal economists and thinkers included Li Rui, Zhu Houze, Yu Guangyuan and Du Runsheng.

While these intellectuals have long retired from party and government posts, they are well-known advocates of radical economic -- and most significantly -- political reform.

For example, Li, a former secretary of Chairman Mao Zedong, is an outspoken critic of what he calls "dictatorial decision-making."

And Zhu, a former head of the party's Propaganda Department, was partly responsible for the short-lived Beijing Spring of the mid-1980s.

'Tourist' status required

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The party leadership, having got wind of the guest-list, put pressure on the organizers to withhold the invitation -- on the dubious ground that the out-of-town participants needed to be vetted by the relevant departments.

The upshot was that while most of the liberal scholars did show up in Guangzhou, they went as "tourists" and could not attend the opening ceremony of the conference.

"Apparently to satisfy the authorities, the organizers suggested that we go to the local zoo to make us look like tourists," said a Beijing economist who attended the session.

"It is quite laughable that China having got into the World Trade Organization, Beijing should want to stop the free flow of ideas between different cities in China."

The real reason for the leadership's nervousness was that the private businessmen might feel emboldened enough to lobby for political power that is commensurate with their fast-growing economic clout.

Non-state sector 'discriminated'

China's economy is estimated to have grown by 7.3 percent in 2001

For example, at another forum on the non-state economy held in Shenzhen last November, more than 100 businessmen asked for an amendment of the constitution to guarantee the inviolability of private property.

They complained that while foreign businesses were granted national treatment post-WTO, members of the non-state sector still suffered multiple forms of discrimination when compared with state-owned enterprises.

For example, private firms faced much more difficulty in securing loans from banks -- or in getting a listing on the country's two stock markets.

In a manifesto endorsed at the Shenzhen meeting, the "red capitalists" demanded more representation in the political system, at least within the National People's Congress, China's parliament.

According to social scientist Cao Siyuan, who was a forum speaker, it was high time that Beijing recognized the political rights of the leaders of the non-state economy, which accounted for about 60% of the nation's GDP.

"Both the party and state constitutions should be revised to take note of the rising status of non-state businessmen," Cao said.

"Moreover, given Beijing's commitment to market forces, the pace of privatization should be speeded up. There should, for example, be private banks, which might be in a position to treat private businessmen better."

Post-WTO

To be sure, President Jiang Zemin granted a new deal to non-state entrepreneurs by announcing last July that they could become Communist party members.

And there are signs that, to justify the party's mandate of heaven in the post-WTO world, the leadership is mulling plans to broaden its basis of support.

For example, a substantial proportion of government positions up to the level of heads of bureau and department are now being recruited through open examinations.

Beijing is also trying to hire a dozen odd overseas-Chinese professionals to fill vice-ministerial level positions in financial departments.

However, said political sources in Beijing, Jiang and company wanted a gradualist approach in inducting qualified private businessmen into the councils of government -- a pace that was deemed too slow by the red bosses.

'New Classes' of businessmen

China hosted last year's APEC meetings in Shanghai

One reason is fear that granting political rights to the "new classes" of businessmen and professionals would exacerbate feelings of jealousy and betrayal among the gonglongbing, a reference to workers, farmers and soldiers, who have been the party's traditional pillar of support.

A just-released study by the Chinese Academy of Social Sciences divides China into ten social strata, with the "new classes" becoming the cream -- and future -- of Chinese society.

By contrast, proletariats, the erstwhile "pace-setters of the revolution," risk being marginalized as more workers and farmers join the ranks of the unemployed.

More importantly, the party leadership is disturbed by signs that private businessmen are using aggressive -- and politically destabilizing -- means to grab power.

Political liberalization

Dozens of cases of the red bosses buying up positions up to the rank of mayors and vice-mayors of medium-sized cities have in the past year or so been reported in areas ranging from well-heeled Guangdong to poor Sichuan.

Moreover, even prosperous cities such as Shenzhen are becoming increasingly dependent on taxation from fast-expanding private firms.

"In rich as well as poor regions, the owners of a big private company are in a position to hold the local administration hostage by threatening to move to a rival city," said a Guangdong province economic planner.

He added while Beijing was happy that total taxation last year breached the 1.5 trillion yuan mark, the leadership was keenly aware that much of the revenue was coming from the private sector.

The Jiang administration is understandably worried that the red bosses might team up with liberal intellectuals to jump-start political liberalization.

After all, it was for the same reason of guaranteeing their economic -- and political rights -- that China's first generation of private entrepreneurs threw their support behind the student protestors in the heady days of 1989.