cross-posted from: https://scribe.disroot.org/post/2138104

Here you can download the study, The Chinese Communist Party’s influence over businesses (pdf).

[There is no summary on the website https://www.ui.se/english.]

The study on the Chinese Communist Party’s (CCP) influence over businesses analyses, first, how changes in Chinese laws, intra-Party regulations, and policies have created new means for the Party to exercise its influence. Secondly, the study examines CCP influence in practice by analysing three dimensions: ownership, party organisation presence, and political signalling.

Summary:

  • Over the past 15 years, regulatory changes that initially focused on stateowned enterprises (SOEs) have also increasingly affected privateowned enterprises (POEs). Key reforms emphasise mixed ownership and reinforcing Party leadership in corporate governance, blurring the lines between state and private ownership.
  • There are still important differences in Party influence between SOEs and POEs; for example, SOEs have embedded political governance, where the Party organisation is represented on the board, while no such rules exist for POEs. However, SOE policies often serve as models for regulating POEs.
  • Ownership: The mixed ownership reform has resulted in a large number of SOEs acquiring stakes in POEs. This indirectly gives the party more influence over POEs, also sometimes when it is a minority post. The most obvious cases are government “golden shares” in hightech companies such as ByteDance, Weibo, and Tencent. Some of the interviewees also highlighted golden shares as one more direct aspect of the CCP’s influence over businesses.
  • Party organisation presence: By law, all private companies with CCP members must establish party organisations. The extent to which this law has been implemented is not entirely clear, although most large private companies have party organisations. While many observers claim that Party organisation activities are limited to social activities and have little influence over corporate governance, there is also abundant research showing that Party organisation presence in POEs on an aggregate level affects corporate governance.
  • CCP membership among company managers is another possible way for the CCP to influence POEs. Many entrepreneurs actively seek to become party members in order to gain political influence that can help their businesses thrive. However, as the Party continuously tightens ideological and political control of Party members, they might become more incentivised to adapt companies’ activities to be more in line with the intentions of the CCP.
  • Political signalling: The overall influence that the Party exercises over POEs through political signalling is substantial. Chinese as well as foreign companies have to be constantly aware of changes in the political environment. Through new legislation and the publication of Party documents and speeches by leaders, the CCP leadership signals that **private entrepreneurs must follow the leadership of the Party. **This message has become ever more clear and strong during Xi Jinping’s reign.
  • Swedish company representatives emphasised that the fact that the CCP completely dominates politics and society is something that is a starting point when doing business in China and was seldom raised as a problem. However, they acknowledged that the political changes in recent years, including political centralisation and increasing nationalism, were the political factors most affecting businesses.
  • The consequences of political influence over Chinese companies are in some ways more dramatic for Chinese companies outside China than for those within China. As Chinese companies have expanded their presence far beyond China’s borders, the CCP’s obsession with political control increasingly clashes with Western ideals of businesses operating independently from political influence, at least of the CCP variety.