The Party: The Secret World of China's Communist Rulers

by Richard Mcgregor

  A man who would later become a well-known author, Liu Baiyu, became delusional during his vetting in the middle of this counter-revolutionary campaign, known as the Yan’an rectification. At the direction of a party school official, he wrote and rewrote an autobiography of thousands of characters in length, starting from the day of his birth. He feverishly detailed all he could remember about his past exploitative behaviour, recalling eventually even his remorse at pulling, as a child, the skirt of a maid when she was doing the family washing. Liu later claimed to have seen the light as a result of this treatment. He said the enforced writing of a total of nine drafts of his life story had been the ‘right medicine for the sickness’ of intellectuals like him, and forced him to see the world ‘objectively’. ‘Spiritually, I had undergone my own personal revolution,’ he wrote. The Party approved of his transformation. Under Mao, Liu would later become a vice-minister for culture and party secretary of the Chinese Writers Association.

  For all its imperial antecedents, Mao’s organization department replicated what was known in the Soviet Union as the nomenklatura system. This was the ‘list of names’ of party members who formed the communist ruling class and were eligible to fill prized jobs in government, industry and elsewhere. The system allows the Party to control ‘the appointments, transfer, promotion and removal of practically all but the lowest ranking officials’. China differs crucially from the Soviet Union in one respect: the system is far more pervasive, penetrating deeper into lower levels of government and other state-controlled institutions. ‘China is more radical,’ said Yuan Weishi, of Sun Yat-Sen University in Guangdong, because of the way the Chinese Communist Party exercised authority down to the lowest residential committees and schools. ‘It wants to lead everything. This is the greatest difference.’

  In universities and other key education institutions in the Soviet Union, for example, the party secretary’s job was to oversee party members. In China, says Yuan, the party secretary has the ability to control both party members and appointments and also oversee the curriculum, outranking the titular head of the institution, the president. ‘Things in China are quite ludicrous. Take the hundredth anniversary of Peking University in 1998. Jiang Zemin gave a speech in the Great Hall of the People, instead of at the campus itself. And the person chairing the meeting was not the president, but the party secretary,’ Yuan said. ‘Many of the professors there told me what a funny spectacle it was. The party secretary was waving his hands and moving his feet, at the centre of the action, while the president sat in the corner like a mouse. The system is all from the Soviet Union, but the CCP has taken it to an extreme.’

  Everything from the leadership of associations for the elderly and disabled to appointments of scientists and the heads of national engineering projects, such as the Three Gorges Dam, must pass through the department. The head of the umbrella group for the private sector, the All-China Federation for Industry and Commerce, is part of the elite nomenklatura, making the body a poor independent advocate for business, which, of course, it is not meant to be anyway. On top of its responsibility for appointments, the department acts as a kind of mini-ministry of multicultural affairs, helping allocate positions in government to well-behaved members of China’s 55 designated ethnic minority communities. Tibetans, Uighurs from Xinjiang, Muslim Hui people and the like, all pre-screened for their loyalty to the Party, are handed a small number of largely symbolic posts to give the vast sprawling state a more inclusive lustre. The department also oversees the allocation of the small quotas set aside in government and academia and elsewhere for members of China’s eight so-called democratic parties. These jobs are allocated, without irony, as a reward for the acquiescence of the democratic parties to single-party communist rule.

  The genesis of the unseemly spectacle witnessed by Yuan Weishi at the Peking University anniversary, of the bossy party secretary and the craven president, can be traced to the Party’s response to the 1989 upheaval and the way it played out through the bureaucracy. The department had begun to exercise a lighter touch in the eighties with institutions of higher learning, only requiring universities and the like to consult with the Party on senior appointments. That leeway did not give them a free hand and turn them into hotbeds of democratic liberalism, but it did help to keep direct political pressure at bay. By a single stroke of the Party’s pen in May 1991, the nomenklatura list was expanded to give the department greater control over universities. Around the same time, the Party gained extra leverage over students and intellectuals, by requiring university leaders to attend an annual conference to strengthen party-building in their institutions. This last measure offered some added-value for the Party, by giving it a better platform from which to recruit the brightest up-and-coming brains in the country to its ranks as new members.

  A flurry of other diktats issued around the same time increased the department’s grip of the propaganda network, elevating the journalists’ federation and a number of media outlets into the formal nomenklatura register. The various party bodies controlling trade unions, the youth league and the women’s federation returned to the organization department’s high-level watch-list. The party groupings in government departments, which had been scaled back and in some instances abolished by Zhao Ziyang, were also revived to replenish the political core of the system.

  The secrecy surrounding the precise number and identity of elite positions covered by the Central Organization Department has been tightened at the same time. John Burns, an academic at Hong Kong University, obtained the 1990 list of nomenklatura positions in the early nineties, through access to material from the Ministry of Personnel, the agency which acts as the government front for the party department. A second academic, Hon Chan, also of Hong Kong University, obtained a later list, of the 1998 nomenklatura jobs, but he had to get it through his own sources, as the Ministry of Personnel no longer publishes the information. The increased secrecy, Dr Chan noted, is counter to the Party’s ‘professed interest in increased transparency and open administration’ and the commitments made on its accession to the World Trade Organization in 2001. Dr Burns estimated that in the early nineties the centre directly controlled about 5,000 key party and government posts. Dr Chan, perhaps hamstrung by the heightened secrecy, did not make any estimate at all.

  Outwardly, the twenty-first-century organization department is a very different animal from the arm of state security as conceived in Yan’an. The rules for appointments are codified in more than seventy articles that read much like legislation. Promotions are tied to length of service, education levels and mandatory classes at a party school every five years. Officials holding government posts, such as a governor or mayor, are rated according to an impressively lengthy list of numerical indicators which look like they were drawn up by management consultants. Economic growth, investment, the quality of the air and water in their localities, and public order all theoretically count in benchmarking performance.

  The department has all the trappings of a sophisticated, multinational headhunter, using psychological tests, lie detectors and confidential interviews with colleagues of officials up for promotion. Judging how these rules work in practice, however, is more difficult. The same regulations contain loopholes large enough to push the numerical benchmarks aside. Officials judged to be ‘exceptionally talented young cadres’, for example, can be promoted regardless of seniority. ‘It all depends on whether you get noticed at the end of the day,’ said an adviser to the department. ‘There is no scientific system. Nearly everyone gets the same points in all of these elaborate assessments anyway, because for you not to do so would reflect badly on your superior.’

  Senior leaders in China have long held sway over jobs in select ministries and industrial sectors. Li Peng, the Premier who declared martial law in 1989, was the longtime tsar of the energy sector, in which two of his children rose to hold powerful jobs. Zhu Rongji held sway in the finance sector, which allowed him great influence in choosing the heads of large C
hinese banks and also helped his son become the highly paid head of China’s largest investment bank. And Jiang Zemin reigned over the technology sector, ushering numerous loyalists into important jobs, and allowing his son to become a key wheeler-dealer within the sector in Shanghai in the early part of this century. More recently, Zeng Qinghong, together with Zhou Yongkang, from 2007 the Politburo member in charge of the law and state security, have been key players in the so-called petroleum mafia and influential in senior appointments in China’s energy sector.

  When the Politburo chooses to focus on an issue, the benchmarks set from Beijing can matter a great deal. Jiang Zemin’s directive to wipe out the Falun Gong spiritual movement in 1999 after its followers surprised the leadership with a sit-in outside its Beijing compound galvanized regional party chiefs. Handed responsibility for breaking the movement and preventing its practitioners from coming to Beijing to protest, city and provincial leaders resorted to brutal methods, including torture and murder, to crush Falun Gong at the grassroots. The Politburo has pressed so hard on another issue in recent years–improving mine safety standards–that the city of Linfen in the coal-rich Shanxi province was left without a party secretary for six months in 2009. The potential candidates for the position were all too scared to take it up. A county governor from the city, which regularly disappears from satellite photos because of extreme pollution, said the pressure from Beijing to prevent mine accidents had made being an official in the province ‘a profession of extreme danger–you could go to jail or to your death if not careful’.

  Economic growth, which in the Party’s eyes translates into job creation and social stability, is the most important benchmark throughout China, but it is not enough by itself to ensure a stellar career. If growth alone was the main criterion for promotion, officials from the localities which have outpaced the rest of the country for years, like Wenzhou in Zhejiang province, where the private sector rules the economy, would dominate the senior ranks of the central government. In fact, very few officials from these areas have advanced into the top echelons in Beijing. The performance benchmarks are kept in reserve, to be enforced when they are needed, a Chinese academic explained. ‘Above a certain rank, these tables do not mean much,’ he said. ‘It is in the interest of senior officials to keep it that way, because they can enhance their own individual power and standing. Otherwise, they are hostage to the system.’ The regulations are much like laws in China, he said, for reference purposes only.

  The Party’s most effective tool in elevating competence over cronyism during the last decade has been a practical and resolutely old-fashioned one. The department stress-tests promising officials by rotating them through jobs in diverse parts of the country and in different administrative units, before hauling them back to Beijing into the big league if they pass muster. By the time Chen Deming was tapped to be Commerce Minister in 2007, for example, a key government post which put him in charge of trade policy and negotiations and foreign investment policy, he had already served in three positions with distinct responsibilities.

  In Suzhou, as mayor and party secretary, Chen helped build the city in the Yangtze delta near Shanghai into one of China’s most advanced manufacturing hubs, winning kudos on the ground by standing up for local interests even when it embarrassed Beijing. After the central government had signed an agreement in 1994 to set up an industrial park in Suzhou with the Singapore government, Chen authorized the establishment of a rival locally owned business zone across town. When the furious Singaporeans demanded an explanation, Chen replied that foreign investors had to take into account ‘cultural differences’ when doing business in China. It was an answer that combined palpable disdain with, perhaps unconsciously, deep irony. Singapore’s leaders had spent much of the nineties promoting themselves as the spokespeople for the region, extolling the unique virtues of so-called harmonious Asian values, which they had haughtily contrasted with the crass, confrontational west. Chen displayed both creativity and cynicism to play the culture card against Singapore in return.

  After Suzhou, Chen was dispatched to Shaanxi, where his reputation survived the dirty, corrupt and accident-prone coal industry, an achievement in itself. Finally, Chen was brought to Beijing, and put in charge of the sensitive energy policy area in the Economic Planning Ministry, before being eventually promoted to take charge of the trade portfolio. Carlos Gutierrez, the then US Commerce Minister and his counterpart in the Bush administration, met Chen in late 2007 for the first time and remarked how impressed he was by his grasp of his portfolio after a short period in the job. Chen’s career path, Gutierrez remarked, reminded him of the rigours successful multinationals put their up-and-coming executives through, sending them first out into the field, to difficult regional offices and underperforming divisions, before bringing them back into head office to see how they performed there. It was an astute observation but one Gutierrez could have taken further.

  The organization department moved Chen Deming around as if he was an employee of a company, in this case, the Communist Party of China. Equally, the department treated the heads of state companies in China as if they were apparatchiks as well, to be shifted around at will, whatever commercial conflicts might arise. At a time when the executives at state enterprises had been ordered to behave more like entrepreneurs than politicians, it was inevitable a new set of conflicts would rise to the surface.

  By the time Edward Tian arrived at the Mandarin Hotel in London in November 2004 for a meeting with potential investors in his new Chinese telco company, he had steeled himself for some tough questioning. The day before in China, the Central Organization Department had announced without warning a reshuffle of the top executives at China’s three big state-owned telecoms companies, China Mobile, China Unicom and China Telecom. Two of the Chinese companies were listed on overseas exchanges, and another was preparing to sell shares offshore. The move left investors, and the executives of the companies themselves, agape.

  It was the equivalent of the CEO of AT&T being moved without notice to head its domestic US competitor, Verizon, with the Verizon chief being appointed to run Sprint, at a time when the three companies were locked in a bruising battle on pricing and industry standards. Tian, a returnee from the US lured to head China Netcom, a fourth, fledgling state telco, was in the midst of a global roadshow to promote his company’s upcoming share sale. Tian had heard rumours about the changes but didn’t know for sure what was coming. ‘It was very hard to explain to western investors,’ he said. Over the coming years, it would take Tian a while to understand the appointments system himself.

  Most of the aggrieved foreign investors had never even heard of this strange body with the vaguely Orwellian name, the Central Organization Department. Certainly, the companies, and their bankers and lawyers, had made sure never to mention it ahead of the companies’ billion-dollar share sales. The anger was even more palpable among the many Chinese who had spent years trying to build a genuine commercial corporate culture in the refurbished state enterprises.

  The problem was not so much the disregard the organization department displayed for the edifice of company law and governance painstakingly constructed in large state companies and sold to foreign investors over the previous decade. According to a prominent Chinese banker, it was ignorance. The Party did not even stop to think about the board and its legal responsibility for choosing the chairman and senior executives. ‘The proper process is that the chairman submits his resignation and then the board discusses it,’ the banker said. ‘The Central Organization Department is totally ignorant about such processes. This is not just about protocol. The issue goes much deeper than that. It goes directly against Chinese securities law, enacted by the National People’s Congress, which says the chairman’s job cannot be influenced by any outside body.’

  ‘The idea that the boards really run companies is basically as credible as the constitutional guarantee of free speech and religious freedom in China. It does not happen in reality,’ the
banker said. ‘At all the major state companies, the party meetings are held regularly before the board meetings. Operating costs, capital commitments and the like are discussed at the board meetings, but personnel remains in the hands of the Party. No matter how many independent directors there are and what oversight they provide, at the end of the day, if all management are appointed by the Party, nothing will change.’

  One of the reshuffled telco executives, Wang Jianzhou, who was shifted from China Unicom to manage rival China Mobile, told friends he had had no forewarning of the move. Nor had any of the boards of the companies been consulted beforehand. As an executive of a company listed on the New York and Hong Kong stock exchanges, with all the legal duties such a role entails, Wang hurriedly sought legal advice about the implications of the move. The advice of the lawyer was succinct. He was told: ‘Don’t talk about your old company.’

  The deliberate element of surprise in many of these moves, much as it might enrage the executives and investors, serves the Party’s purposes perfectly, by reminding them who’s boss. The reshuffle sent a simple message to executives of the state companies. Overnight, China Mobile had become the world’s biggest mobile company and the rest of the sector was booming alongside it. Power was increasingly accruing to the companies’ CEOs in a strategic industry with important national security implications. ‘The view was that we have to keep these ones in the box; we are better off running these companies with politicians and not entrepreneurs,’ said an adviser to the companies. ‘The idea was to break emerging centres of power.’