Webcast Recap

Western observers frequently make two assumptions about China's evolution from total state ownership of capital to a more entrepreneurial model of industrial development. The first is that the Chinese Communist Party (CCP) has been a relatively passive actor in the process of reform, preferring to leave business arrangements to emerging entrepreneurs. The second is that capitalism is a fundamentally democratic method of production and exchange. According to this view, the need to access skilled management and labor produces a demand for social mobility that cannot be reconciled with totalitarianism. At the same time, members of an emerging middle class are seen as more protective of their individual status and thus increase their demands for fundamental civil rights. Many have concluded, therefore, that it is only a matter of time before China's shift to a market economy will lead to substantive democratic reform as well.

At the launch of his new book at the Woodrow Wilson International Center for Scholars, Professor Bruce J. Dickson challenged these two assumptions about the relationship between the emergence of capitalism and the prospects for democratic reform in China. Wealth into Power: The Communist Party's Embrace of China's Private Sector (Cambridge, 2008) charts the development of links between the CCP and the business sector in China and shows that the appearance of an entrepreneurial class in China has occurred at the behest of the party, not in spite of it. While the CCP may have abandoned classical socialist doctrine in allowing for greater private stewardship in the economy, it retains its position as a vanguard, reserving the right to guide and mold such developments.

A central feature of Chinese economic development, according to Dickson, is "crony communism," the strategic cultivation of ties between the CCP and major domestic corporations. While the CCP's 2002 decision to allow private business people into its ranks generated ample overseas interest, Professor Dickson's latest research highlights a less documented, but complementary phenomenon. In recent years there has been an increase in the number of xiahai–members of the party who have transferred from political positions into private companies and family members of party officials who either parachute or marry into the business world. The number of xiahai is increasing relative to existing members of the business community who are simply co-opted by the party. At the same time the party has actively encouraged the formation of party organizations within individual business.

According to Dickson, these instances of nepotism and infiltration are an indication of the Communist Party's ability to adapt to a capitalist model yet remain in control. Contrary to those who believe capitalism will destabilize Chinese society and result in greater liberalization and democratization, Dickson sees the relationship between party and business in China as mutually beneficial and inherently stable. Nevertheless, such relationships do give rise to external tensions. Collusion between government and business inevitably leads to charges of corruption, particularly in cases where environmental and social problems arise from excessive industrial development. While the links that the party has cultivated with business provide an efficient mechanism for guiding industrial development in order to correct these problems, excessive party intrusion can lead to complaints from within business circles, which still see growth as the primary objective. Rather than simply instituting capitalist reforms and letting business do the rest, the CCP has therefore actively chosen to engage in a delicate balancing act in order to translate wealth into power.

Drafted by Bryce Wakefield, Asia Program Associate