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

by Richard Mcgregor

  The Russians used…: Thanks to Daniel Wolf for alerting me to this.

  Mao unleashed…: The documentary is Morning Sun (2003), produced by Carma Hinton, Geremie Barmé and Richard Gordon.

  It is a huge…: SARS stands for severe acute respiratory syndrome.

  The sole experience…: Needless to say, media is an important exception to this rule. China has little interest in allowing foreign media into the country to do business, unless they cede all control over content to their local partners.

  That the media and academia…: There are obvious exceptions to this, of course, a number of whom have been helpful in the writing of this book.

  The State Department’s…: Steven Mosher, China Misperceived–American Illusions and Chinese Reality, Basic Books, 1990, Chapter 7.

  Democratic government is…: See Financial Times, 20 October 2005.

  In a country…: The People’s Daily site does have a link to a webpage offering ‘news from the Communist Party of China’. Some provincial parties, such as Yunnan, have their own sites. In late 2009, the Party’s anti-graft body also established its own site. But the central party authorities do not have a stand-alone site.

  The only instance…: Alice Miller, China Leadership Monitor, 11 (2004).

  The Party is very much…: This is one of numerous interviews I conducted with bankers and lawyers in the twelve months from June 2008 about the process by which Chinese companies were listed overseas. In all cases, they insisted on anonymity. A good example is the prospectus for Sinopec Shanghai Petrochemical Ltd, one of the first Chinese state-owned enterprises to list overseas, dealt with in a later chapter.

  In a country which…: He Weifang’s comments here are from a personal interview. The information about the Central Committee debating his arrest is from legal sources in Beijing. The article criticizing He Weifang and the ‘west mountain meeting’ can be found at http://chinaps.cass.cn/readcontent.asp?id=7288.

  But while it promotes…: The figures about law firms come from the People’s Daily, 10 June 2009.

  The Party regularly…: People’s Daily, 18 March 2009.

  This was hugely damaging…: This quote is from a personal conversation. See also Reuters, ‘Ghosts of liberal past trail China contender Li’, 15 October 1997.

  It is buttressed…: Anne-Marie Brady also talks about this bargain in her book, Marketing Dictatorship: Propaganda and Thought Work in Contemporary China, Rowman & Littlefield, 2008.

  when you started a family…: One of the most contentious communist policies, the one-child policy, still remains on the books, although in practice it has long been flexible in some areas. The one-child policy was in fact introduced relatively late in the Party’s rule, in 1979.

  The official name of the…: The Chinese name, in pinyin, is Zhongguo Pudong Ganbu Xueyuan.

  Amidst China’s successes…: The measure used here is the Gini coefficient, a commonly used measure for income inequality.

  In the two years to…: Paper by Bert Hofman, World Bank China economist, presented to Bank of China forum, in Beijing, 2 November 2006. See also Financial Times and Wall Street Journal, 22 November 2006.

  When I met…: The names of the students have been changed at their request.

  CHAPTER 2 CHINA INC.

  Soon after the meeting…: This section is based on interviews with organizers of the meeting and attendees, and also the document itself and critical commentary on it. See ‘Realistic Responses and Strategic Options after Dramatic Changes in the Soviet Union: An alternative CCP ideology and its critics’, Chinese Law and Government, 29 (2) (Spring–Summer, 1996). Translated by David Kelly. Thanks to Ben Hillman for digging it out for me.

  They’ll be the people…: This, and also the figure of 4 million members under investigation, is quoted in James Miles, The Legacy of Tiananmen, University of Michigan Press, 1996, which has an excellent account of this period.

  Chen Yuan seems to have realized…: This anecdote comes from Steven Levine, now of the University of Montana, who attended the lunch, at the Cosmos Club, in Washington, in–he says–about 1985.

  The cage could be…: It was Chen Snr., and not Deng, as is often claimed, who coined the phrase still used today to describe China’s method of reform by experimentation, of ‘crossing the river by feeling the stones’.

  Along with a long-time party…: See the critique by Su Wei, in ‘How the Princelings Launched Their “Political Platform”’, Chinese Law and Government, 29 (2) (Spring–Summer 1996).

  The first wave…: ‘Big Bros’ is a translation of dageda in Chinese.

  The intellectuals and liberal…: See Chen Kuide, ‘A Doomed Dynasty’s New Deal’, Chinese Law and Government, 29 (2) (Spring–Summer 1996).

  Hu Angang, an outspoken…: Hu made this comparison to numerous journalists, including the author, in the mid-nineties.

  China’s myriad economic…: See the footnotes to the paper by Steven N. S. Cheung, ‘The Economic System of China’, delivered at ‘Forum on Thirty Years of Marketization’, 30–31 August 2008, in Beijing.

  The Party’s internal slogan…: Quoted in Anne-Marie Brady, Marketing Dictatorship, Rowman & Littlefield, 2008, p. 49.

  Over the next ten years…: Andy Rothman, Harmonious Society, CLSA, May 2002.

  Zhu Rongji, the blunt…: Transcript of Zhu’s press conference at the close of the National People’s Congress, 15 March 2001.

  Zhu faced legions of…: A view apparently held by Jiang Zemin, quoted in the former president’s authorized biography: Robert Lawrence Kuhn, The Man Who Changed China, Crown Publishers, 2004, p. 354.

  The legacy of years…: Richard Podpiera, ‘Progress in China’s Banking Sector. Has Bank Behavior Changed?’ International Monetary Fund working paper, 06/71, March 2006.

  The front stage of the…: This account relies on Sebastian Heilmann, ‘Regulatory Innovation by Leninist Means’, in China Quarterly (March 2005). Thanks also to Victor Shih on this point.

  Zhu and the Politburo…: For further information about these two committees, and the bodies they covered, see http://magazine.caijing.com.cn/templates/inc/content.jsp?infoid=3322&type=1&ptime=20030405; and http://magazine.caijing.com.cn/20030305/2461.shtml.

  The slick investment…: This section relies on interviews with four advisers to the listing and also the prospectus.

  But apart from…: These directors held positions on the Party’s anti-graft body. In numerous prospectuses I have read, these seem to have been the only party positions declared.

  The total cost to…: Guonan Ma, Who Pays China’s Bank Restructuring Bill?, Bank for International Settlements, Asia and Pacific Office, Hong Kong. 2006. This was calculated in 2006, before the cost for fixing the balance sheets of ABC and a number of other state banks could be taken into account.

  It was only later…: State Secrets: China’s Legal Labyrinth, published by Human Rights Watch in China, 2007, p. 171.

  Formidable publication…: Hu Shuli left Caijing in late 2009 after a lengthy battle with her proprietors over attempts to censor the magazine’s content. She started a new venture in early 2010.

  At the Bank of Communications…: See Caijing, nos 161 (12 June), and 162 (26 June). Also quoted in Nico Calcina Howson, China’s Restructured Commercial Banks–the Old Nomenklatura System Serving New Corporate Governance Structures?, University of Michigan Law School. Sir John Bond declined to comment on the quotes attributed to him.

  Chen Jinhua…: Chen Jinhua, The Eventful Years. Memoirs of Chen Jinhua, Foreign Languages Press, Beijing, 2008.

  But if China was…: These figures come from a report by Wang Tao, China economist with UBS, China Economic Perspectives: How Will China Grow? Part 4: Can Consumption Lead Now?, 5 May 2009.

  In a matter of hours…: Alcoa contributed $1.2 billion funds in the share market raid.

  The political heft behind…: Caijing, 2 February 2009.

  The best way to…: See the account in Finance Asia, November 2000.

  Zhu Feng, at…: S
ome of his comments, and those of other academics on the same topic, were first reported in the Financial Times, 17 March 2008.

  Speaking to leading…: http://www.cbrc.gov.cn/chinese/home/jsp/docView.jsp?docID=20071119665FCF8F1C1598D6FFB023DAE44B8200.

  Around the same…: Reuters, ‘China’s Top Banking Regulator Pushes Marxism’, 1 November 2007.

  Top executives at the…: Caijing, May 2009.

  CHAPTER 3 THE KEEPER OF THE FILES

  The appointment with Wang…: To be fair, when organization department officials met US academics in 2008 in Beijing, they did hand out name cards.

  The department’s general…: In one of the many signs of the way the internet is prising open China, the address of the department’s headquarters in Beijing could be found on Google Map in July 2008. The building is at 80 West Chang’an Avenue. At the Financial Times, we did manage to contact the department when requesting an interview in late 2009. In the end, the department declined the interview request.

  Our Party’s organizational…: ‘Zuzhi gongzuo yanjiu wenxuan, 2006 (xia); Zhonggong zhongyang zuzhibu yanjiushi (zhengce fagui ju); Zhenghedang de zuzhi gongzuo ziyuan wenti yanjiu’ [Second Volume of the Selection of Studies on Organizational Work from 2006; Compiled by the Research Department (Bureau of Policy and Regulation) of the CCP Central Organization Department; Study on Integrating the Party’s Organizational Working Resources], p. 397.

  Many individuals have begun…: Li Yingtian, Neibu Canyue, Renmin Ribao Neicanbu Zhuban, di 43qi, zongdi 836 qi, 2006nian, 11yue, 17ri. ‘Yi dangnei hexie cujin shehui hexie’ de zhuolidian [The 43rd edition, of 836 editions in total. Internal reference by Internal Reference Department of the People’s Daily, 17 November 2006. The Exertion Point for ‘Promoting Social Harmony Through Inner Party Harmony’.]

  The value of the market…: See China News Service, China.org.cn, 13 October 2007.

  He made the Orgburo…: Jerry F. Hough and Merle Fainsod, How the Soviet Union is Governed, Harvard University Press, 1979, p. 125.

  There were no professional…: Laszlo Ladany, Law and Legality in China, C. Hurst & Co., 1992.

  a well-known author, Liu Baiyu…: See Gao Hua, Hua, Hongtaiyang Shi Zenyang Shengqide–Yan’an Zhengfeng Yundong De Lailongqumai [How Did the Red Sun Rise over Yan’an?–A History of the Rectification Movement], Chinese University Press, Hong Kong, 2000. As well as Gao’s book, see also http://news.sina.com.cn/c/2006-08-29/180710863110.shtml.

  The system allows the Party…: Hon S. Chan, ‘Cadre Personnel Management in China: The Nomenklatura System, 1990–1998’, China Quarterly, September 2004.

  The various party bodies…: John P. Burns, ‘Strengthening Central CCP Control of Leadership Selection: The 1990 Nomenklatura’, China Quarterly, June 1994.

  Outwardly…: ‘The Regulations on the Work of Selecting Cadres and Appointing Leading Party and Government Cadres’, issued after the sixteenth party congress in 2002.

  Senior leaders in China…: Just because someone is a crony does not mean, of course, they are incompetent. Li Xiaopeng, for example, Li Peng’s son, impressed many as a competent and committed manager when he was in charge of Huaneng Power. In Beijing, I have often heard that Zhu Rongji disapproves of the way his son has benefited financially from running China International Capital Corporation but there is no public record of this. Jiang Mianheng, Jiang Zemin’s son, is considered to be smart. But as someone who worked alongside him once said to me: ‘There are a lot of smart guys in China.’

  Chen replied that foreign investors…: Far Eastern Economic Review, 8 July 1999.

  There are six functions…: This quote is from an article about the issue in the Wall Street Journal, 29 September 2006. The account here is otherwise based on personal interviews with individuals involved in the process, including Edward Tian.

  Li himself was less…: The subsequent story in the Financial Times on 15 March 2007 canvassed Li’s promotion prospects, although, in retrospect, a little optimistically. Li was promoted into the Politburo, but not the Standing Committee.

  Rather than sacrificing…: See the Financial Times, 3 August 2007, and the New York Times, 7 November 2007, for accounts of Wu’s case.

  Conventional bribery cases…: This account relies on interviews with some of the lawyers for the defendants in the case and reports in the Chinese media, some of which were based on interviews with the prosecutors. See http://www.hlj.xinhuanet.com/zfzq/2006-03/23/content_6553880.htm; http://news.sina.com.cn/c/2005-03-24/14156183789.shtml; http://news.sina.com.cn/c/2005-03-23/15176172792.shtml; http://news.sina.com.cn/c/2005-07-29/07476557245s.shtml; http://news.sina.com cn/c/2004-06-24/03373503585.shtml; http://news.sohu.com.20050411/n225125586.shtml; and http://news.sohu.com/20050411/n225121587.shtml.

  The belief that you cannot…: In Chinese, Zhujing Banzhuren [Director of the Beijing Representative Office], Writers’ Publishing House, 2007. Thanks to Graeme Meehan for pointing out this book.

  The bribery, corruption, treachery…: ‘Zuzhi gongzuo yanjiu wenxuan, 2006 (xia); Zhonggong zhongyang zuzhibu yanjiushi (zhengce fagui ju); guanyu quanmian fangfan he zhili yongren shang buzhengzhifeng wenti yanju baogao’ [Second Volume of the Selection of Studies on Organizational Work from 2006; Compiled by the Research Department (Bureau of Policy and Regulation) of the CCP Central Organization Department; Study Report on Comprehensively Guarding against and Correcting the Negative Problems of Personnel Matters], by the Study Group from CCP Jilin Provincial Organization Department, p. 343.

  In the ‘hurdles’…: A wonderfully cynical version of the same complaint was spread on internet blogs in October 2009 and translated by China Digital Times that month. It purports to recount a conversation with a retired Anhui government official ridiculing the notion that appointments are made on merit.

  The blog said:

  Government officials often state in public that their criteria for selecting officials are ‘appointing people on their merit’. Yet in the real world this is not the case. I met a retired government official from Anhui Province during a train trip. He told me the rules commonly adopted in officialdom in China, which quite enlightened me.

  He said the top criterion is ‘appointing people on the superior’s instruction.’ It means you should appoint whomever your superior asks you to appoint, otherwise you might get into trouble if your superior’s unhappy.

  The second criterion is ‘appointing people from your gang’. Nowadays officialdom is highly competitive and complicated. If you don’t have any buddy around to help you, you’d soon be kicked out, not to mention not able to do your work.

  The third one is ‘appointing people on money’. Money is more important than kinfolk. After all, a relative is someone else, yet money is in your own pocket.

  The fourth in the rank is ‘the ability to flatter’. Now that you’ve stabilized your official position and seized a lot of money, you can enjoy being flattered by appointing some kiss-asses around you. The ass-kissing is actually an art. And you’ll find yourself addicted to it.

  The fifth is ‘appointing on the ability to brag’. The retired official said the GDP growth in his region had all been exaggerated. Every year when it’s time to report the annual GDP, no one wants to be the first to report. Why? If you report your growth as 11%, the one that follows you to report can say 11.5%, which surpasses you on the performance. Your superior would like a fast-growing GDP, yet you can’t exaggerate too unreasonably, otherwise it’d embarrass your superior. Of course you can’t report the GDP as it is as you’d be viewed as dragging your superior’s performance.

  The system of selling…: Tian himself was arrested for corruption in 2003.

  Like many business executives…: See Caijing, 30 June 2006. Other information in this section is from personal interviews.

  CHAPTER 4 WHY WE FIGHT

  On nights before…: Robert Lawrence Kuhn, The Man Who Changed China, Crown Publishers, 2004, p. 193.

  Jiang and Hu broke…: See Alice Miller, ‘With Hu in Charge, Ji
ang’s at Ease’, China Leadership Monitor, No. 13, Hoover Institution Stanford University, Winter 2005.

  When China was at peace…: Qiushi [Seeking Truth], 1 April 2009.

  The signal editorial…: Quoted in James Mulvenon, ‘They Protest too Much or too Little), Methinks: Soldier Protests, Party Control of the Military, and the “National Army” Debate’, China Leadership Monitor, No. 15, Hoover Institution, Stanford University, Summer 2005.

  The 2009 commentary…: CASS Review, 24 February 2009.

  When his first…: See www.chinainperspective.org/ArtShow.aspx?AID=1503, and also, David Shambaugh, Modernizing China’s Military: Progress, Problems, and Prospects Berkeley: University of California Press, 2003.

  As a result…: The 90,000 figure is contained in the chapter by You Ji in Civil–Military Relations in Today’s China: Swimming in a New Sea, edited by David Finkelstein and Kristin Gunness, M. E. Sharpe, 2006.

  It is no coincidence…: For some of the details here, see M. Taylor Fravel, ‘China’s Search for Military Power’, Washington Quarterly, Summer 2008.

  Wang Xiaodong…: For the most recent exposition of Wang’s views, see Song Xiaojun, Wang Xiaodong, Huang Jisu, Song Qiang and Liu Yang, Zhongguo Bu Gaoxing [Unhappy China], People’s Publishing House of Jiangsu, 2009.

  At the time China….: For details of Yu’s career, see Yu Qiuli Huiyilu [The Memoirs of Yu Qiuli], PLA Publishing House, 1996.

  Large bands of demobilized…: Among other sources, see http://vip.book.sina.com.cn/book/chapter_68782_45640.html.

  By its peak in…: The figure for the number of businesses comes from James Mulvenon, Soldiers of Fortune, East Gate Books, 2001.

  The most famous recent…: On top of public sources for this incident, see also http://www.coobay.com/bbs/disp?id=8784587847846001; http://www.eai.nus.edu.sg/BB278.pdf; and http://tt.mop.com/backyard/read_182426.html.