Chapter 2
The Janus-Faced Role of the Business Elite in Chinese History
China's post-Mao business elite is part of a contemporary international phenomenon—the emergence of an international managerial bourgeoisie—but it also has its own long and rich legacy. That legacy as it manifested itself in the middle and late Qing, early Republican, Nationalist, and Maoist eras is the subject of this chapter. We can discern in the historical record an enduring tradition in the relationship between merchants and the state at both the central and local levels. The essence of that tradition is a pattern in which the merchant elite was neither wholly autonomous nor state-dominated but instead sat, Janus-like, between state and society, and at times even blended socially with the official class and carried out "public" (gong ) works. This pattern contrasts with the Western tradition in which the bourgeoisie, "civil society," fought for and gained a lasting independence from the state. In China, the precise nature of the relationship between merchants and the state varied over time, depending on specific conditions. But excepting two extreme conditions—either near total disintegration of central authority (as after the fall of the Qing government) or state attempts to completely eradicate private business (as during the Maoist era)—the Janus-faced pattern endured. As subsequent chapters will demonstrate, the core elements of this pattern have regained their salience in the post-Mao era.
Merchant Life in Qing China
Formal Confucian doctrine disdained merchants (shang ) and placed them in the lowest rank in the social order. The ranking of
merchants in last place after scholar-officials (shi ), peasants (nong ), and artisans (gong ) reflected the view that agriculture, not trade, was the basis of a strong economy. This view was bolstered by the deeply rooted belief that trading activities that redounded to private (si ) gain were selfish and illegitimate, and that a private "society" did not exist autonomously from the state. The lower three categories lacked authority to oppose the state on the basis of autonomous or private interests, and certainly posed no alternative source of authority.[1] Yet doctrinal disdain for merchants, and the state control of them that this disdain implied, failed to fully reflect actual practice. A flourishing private economy with an expansive local rural market system was tolerated and, indeed, was vital to the well-being of the imperial state. Vigorous commercialization in local markets depended on merchants, who "had to be protected and freed as far as possible from the confines of bureaucratic control and taxation to keep trade flowing."[2] Trading guilds also flourished. Originally, guilds were organized along lines of local origin to provide shelter and aid for travelers from the guild's home region, to carry out traditional rites, and to serve as intermediaries between merchants and officials. By the eighteenth and nineteenth centuries, small guilds had grown into larger networks, including regional guilds (huiguan ), and trade or professional guilds or associations (hanghui, gongsuo, fatuan ) organized around production or processing of a specific commodity such as tea and salt. With their origins in native-place or clan-based associations, they operated largely according to norms of personalism, yet without eschewing these norms, they grew into multi-functional and, often, large and complex anchors of the community.[3]
The coexistence of doctrinal disdain of economic activity and a flourishing merchant and guild life meant that the role of merchants was fraught with complexity. In essence, merchants had a dual position com-
[1] On this formal view of merchants in China, see Mann (1987), pp. 18-21; and Wellington Chan (1977), pp. 15-18. Chan finds the roots for a tradition of state intervention and, more generally, an anti-merchant stance in the Legalist (as opposed to Confucian) tradition of the Former Han dynasty (202 B.C. to A.D. 8).
[2] Mann (1987), p. 20. See also Hao (1986).
[3] Guilds, which have been documented as early as the Song period (960-1279), existed alongside a wide variety of societal groups, such as benevolent halls (shantang ), study societies (xuehui ), and agricultural societies (nonghui ). On the development of guilds, see Wellington Chan (1977), pp. 214-216; Elvin (1973), pp. 172, 268; Fewsmith (1985), ch. 1; Gernet (1973), pp. 86-88; Mann (1987), pp. 23-25; and Rowe (1984), esp. chs. 8 and 9.
prised of both autonomy and elements of state control. This dual role was reflected in the juridical framework in which they operated. Guilds were allowed to regulate a good deal of their own trading activity; officials did not interfere, for example, in efforts by guilds to protect their monopsony power or to prevent the formation of competing guilds.[4] Yet even as the court permitted sufficient autonomy for an effective economy, it tried to regulate certain forms of commercial activity, particularly where it involved commodities of geographically widespread (as opposed to local) importance. The court intervened, for example, to regularize the transportation of grain from south to north, and it monopolized important commodities such as salt. The Qing state also baldly discriminated against wealthy merchants, believing that they "privatized public wealth for selfish ends."[5]
The dual role was also reflected, and in an important sense reconciled, in the social blending of the merchant and official (literati) classes. Sons of wealthy merchants moved, via the exam system or the purchase of titles, into the ranks of the literati, while merchants and officials joined common native-place (tongxiang ) clubs. Moreover, because of the risk that literati sons would not pass the exams necessary to preserve their families' rank in the next generation, literati families tried to hedge against the future by amassing wealth. Even though literati families usually tried to mask money-earning activities by using other individuals, companies, or halls (tang ) as "fronts," this blending of literati and merchant classes helped legitimate merchants who followed Confucian codes.[6]
The dual merchant role was also reflected in the growth, as early as the sixteenth-century Ming, of a "public" (gong ) realm.[7] Although some scholars have depicted China's "public" realm as paralleling the growth of the "public sphere" which in Western Europe led to "civil society," that is not the meaning intended here. Unlike the "public sphere" that emerged in Western Europe via the articulation of private interests through public opinion, the gong realm in China arose in the context of management by members of the local elite of essentially official functions. Thus, the gong realm can be conceived of as sitting between the private and official (guan ) spheres; it is "best conceptual-
[4] Rowe (1984), chs. 8-10.
[5] Mann (1987), p. 20.
[6] Mann (1987), pp. 21-23, and Wellington Chan (1977), p. 21.
[7] See, e.g., Mann (1987), ch. 2; Rankin (1990); Rowe (1984, chs. 8 and 9; 1990); and Strand (1990).
ized as an intermediate area of interaction between state and society in which the two sides meet and which neither can claim as completely its own."[8] The Qing court did not formally sanction the gong realm, yet the court at times relied heavily upon it and fostered gong activities to serve its own ends. Lacking the resources to regulate the market economy from within the "official" sphere, the court often devolved responsibility for regulation to merchant elites and their organizations. Using their own resources, merchants performed—and often benefited from—public services on behalf of the state. A regional association might assume responsibility for public works such as the upkeep of canals, fire fighting, or town or port planning.[9]Gong activities by guilds were intended to complement the state's needs; they were not a legitimate center of authority. Through their relations with guilds, officials could informally check on guild members' behavior and call on their help in times of local crisis. Moreover, although on occasion local merchants operating in gong functions did express criticism of the government,[10] the gong realm never connected to an emergent civil society as it did in Europe.[11] Guilds, instead, used gong activities to receive the sanction and patronage of officials. Guilds were not required to register with either central or local authorities, and no laws governed associational life, and yet guilds "regularly applied to local and regional officials to have their corporate existence made a matter of public account."[12] Public recognition legitimated the right of guilds to exist and to operate according to their own bylaws, and provided guilds with allies among officials.
[8] This definition, and an excellent discussion of the meaning of gong , can be found in Rankin (1990).
[9] See Wellington Chan (1975); Mann (1987), pp. 12-21; and Rankin (1990). Rankin (p. 55) cautions that private actors carrying out public taxation were not always working primarily for the state. Rather, the public sphere was "an arena in which elites performed public services on behalf of their localities, and usually, but not necessarily, in cooperation with the state."
[10] Rankin (1986), pp. 147-169.
[11] The concept of the gong realm has been attacked on similar grounds as leveled against "civil society," as discussed in ch. 1. One such attack is Wakeman (1993). Although many of the authors writing on the gong realm draw some inspiration from Habermas's ideas of the "public sphere," most do not argue that it was linked to the emergence of a bourgeois "civil society" in China.
[12] Rowe (1984), pp. 257-258, 334-337. On a similar dynamic during the Song, see Gernet (1973), p. 88. Song guilds, however, were "too numerous and too varied to allow their influence to be felt . . . and the State gave every assistance towards maintaining the requisite sense of duty and obligation" (Gernet, p. 94).
Late-Qing Merchants and Guilds: 1840 to 1911
During the late-Qing period—reaching from the mid-nineteenth century to the fall of the Qing empire in 1911—the place of merchants evolved. Foreign military incursion and domestic rebellion weakened Qing authority, and at the same time the authority of merchants and their organizations increased. Despite the burgeoning merchant power, however, the government continued to try to supervise business in order to harness industrialization and strengthen the state. These trends put a new, more modern face on the merchant-state relationship. Yet the traditional dualism, as seen in the state's regulation of business, the social blending of merchant and official classes, and the separate existence of the gong realm, remained basically intact.
Defeat upon defeat by foreign militaries over the Qing army paved the way for a growing foreign economic presence in China's Treaty Ports. In the Treaty Ports, foreign traders for the first time were free to carry on transactions with whomever they pleased. This development in turn created a new segment of merchants: the comprador bourgeoisie (maiban zibenjia ).[13] Compradors who began as clerks and purveyors under the earlier Cohong (gonghang ) system became guarantors for business transactions between their new foreign employers and Chinese businesses. Increased foreign trade presented the opportunity for compradors to trade exclusively for their own accounts, and as a result many amassed substantial private wealth.[14] . Compradors and other prominent Chinese merchants also introduced a distinctive lifestyle into urban
[13] A "comprador" (literally "purchaser" in Portuguese) was head of a foreign firm's Chinese staff, and performed a multitude of functions: house steward, business assistant, salesman, treasurer, interpreter, freight broker, and intelligence provider. Members of this class came primarily from the coastal regions of Ningbo, Shanghai, Jiangsu, Zhejiang, and Guangdong. See Bergère (1989), pp. 38-40; Wellington Chan (1977), pp. 43-44, 236; and Hao (1970), ch. 4. Classic works on the Treaty Ports include Feuerwerker (1976) and Murphy (1970).
[14] During the early- and middle-Qing periods, Chinese merchants who handled trade with foreigners had been organized into the "merchant guild of Cohong" that was centered in Guangdong. The guild was "licensed by and responsible to the officials, and had a monopoly over all trade with Western merchants" (Hao [1970], p. 2). Bergère (1989) notes that compradors made money not only from their high salaries and business investments, but also from commissions from their foreign employers, interest from their Chinese clientele, and other benefits that accrued from their position.
coastal China. Whereas, previously, merchants had been anxious to blend into the traditional gentry mold, they became more confident in asserting a more cosmopolitan lifestyle. For example, compradors in Shanghai generally preferred, for reasons of convenience, comfort, and prestige, to live in the International Settlement. They chose Western-style houses and clothing (exchanging their blue, floor-length, silk gowns for jackets and suits). Often, they spoke in pidgin English and converted to Christianity or Catholicism (depending upon the religion of their foreign employers).[15]
Business guilds also became more prominent in the late Qing, and they became politically engaged. The decline of Qing authority led them increasingly to participate in the keeping of social order and in major gong works, and at certain times (such as during the 1850s Taiping Rebellion) guilds assumed the powers of municipal government. They resisted efforts by city and provincial governments following the Taiping Rebellion to take over functions that by custom had been the prerogative of guilds. New guilds were founded to resist local officials' demands for payments.[16] During the waning years of Qing rule, merchants also increased their contacts with members of Sun Yat-sen's Revolutionary Alliance (Tongmenghui), and after the 1911 revolution, many merchants, including many compradors, participated in the new but short-lived municipal governments. The nationalism of the business elite was also aroused, though not to the degree of the later May Fourth era. Still, many merchants, including some increasingly nationalistic compradors, protested against the foreign presence in China, particularly (after 1905) the Qing court's heavy reliance on foreign development of railways.[17]
[15] Bergère (1989), pp. 46-51 Bergère argues that the fact that compradors and other members of the business elite were anxious for "modernity"—and that "modernity" was equated with Westernization—is responsible for much of this transformation. Still, she notes that their assimilation of things Western was accompanied by nationalism, leading to a "hybrid culture." The size of the comprador class grew from a few hundred in the mid-nineteenth century to 20,000 by the beginning of the twentieth (see Bergère, pp. 39-40).
[16] On the evolving role of guilds in the late Qing, see Wellington Chan (1977), p. 215; Elvin (1973), pp. 292-293; Fewsmith (1985), ch. 1; Mann (1987), pp. 12-21; and Rowe (1984), pp. 285-286. Guilds also continued to attend to the "three great concerns" (san da shi ) of travelers: food, funerals, and sacrificial rites.
[17] The Railway Rights Recovery Movement (1906-1909) created privately run provincial railway companies in Guangdong, Zhejiang, and Jiangsu provinces. See Liao (1984), pp. 128-146, 240. The United States government's Exclusion Act forbidding Chinese laborers from entering the country was another trigger for anti-foreign protests and boycotts. On the politicization of merchants during this period, see also Fewsmith (1985), pp. 40-45; and Bergère (1989), pp. 48-51.
The decline in Qing strength and the concomitant rise of merchant authority forced government reformers in the late nineteenth century to reappraise China's economic strategy and the role of merchants in it.[18] If China were to industrialize, they reasoned, the country would need to engage the participation of industrialists and other commercial experts. A 1903 imperial edict proclaimed it time to eradicate the attitude of superiority toward merchants and the accumulation of wealth. The anti-merchant tendency was challenged and effectively (if temporarily) eroded. The lifting of restrictions on the participation of scholar-officials in commerce and industry in the second half of the nineteenth century further legitimated the merchant role. In a pattern strikingly prescient of the post-Mao era, some officials-turned-industrialists even relinquished their government posts and created successful businesses using ties to their former colleagues, while merchants were encouraged to participate more in official projects. By 1903, the newly established Ministry of Commerce had announced it would grant titles and ranks to merchants to reward capital investments in modern enterprises. These changes continued to blur the social distinction between literati and merchant ranks. By the early 1900s, a local leadership class of "gentry-merchants" (shenshang ) had emerged.
The view among reformers of that period that China required modern industry (in part to ward off foreign military and economic competition) was accompanied by an agreement that industrialization should strengthen the nation and occur within the framework of state supervision. There was considerable difficulty, however, resolving exactly what form that supervision should take. Late-nineteenth-century proposals for "government supervision and merchant management" (guandu shangban ) and "official-merchant joint management" (guan-shang heban ) both emphasized state control and did not produce successful industries. The officials-turned-entrepreneurs who emerged in the early
[18] Reform efforts began in the conservative Tongzhi Restoration (1862-1874), and at first were limited to borrowing foreign military technology. The scope of reform gradually came to include innovation in other core industries (such as textiles and shipping) and to emphasize industry and commerce as crucial sectors. The newly proclaimed attitudes nonetheless distinguished among merchants; smaller merchants involved in domestic commerce were still held in disrepute, while industrial entrepreneurs and international traders gained respect. See Wellington Chan (1977), pp. 25-57, 239.
1900s occasionally were able to gain the confidence of private investors, as well as to institute a "merchant management" (shangban ) system that was comparatively free of direct bureaucratic supervision but retained official links, used state funds, and received political protection. Some connection with the state remained the norm.[19] In conjunction with the continued state supervision, and even as modernization and industrialization became watchwords of the day, clientelism and personalistic or native-place networks remained salient. As the son of one prominent official-turned-industrialist commented, "In Chinese society, you cannot accomplish anything without having close ties with officials. They can help you or break you."[20]
If the effort to carve out a new role for officials in supervising the economy was not particularly satisfactory, an innovative proposal for using merchant organizations in initiatives to strengthen the state proved more successful. Arguing that members of the local elite, including merchants, possessed expertise that could unleash China's commercial power, reformers proposed that the government create new commercial associations that would both prevent bureaucratic meddling in commerce and promote the trickling up of ideas from merchants to the state. They pointed to the powerful foreign chambers of commerce in the Treaty Ports as models of strength and unity within the business community. A newly formed Ministry of Commerce, supported by a 1904 imperial decree, directed that chambers of commerce (shangwu hui , or shangyi ) be set up in all provincial capitals and major commercial cities, with branches in smaller commercial areas. By 1908 there were chambers in thirty-one major cities.[21] Like merchants and their guilds, these new chambers possessed a dual character. On the one hand, the reformers in the central government had a strong influence in the setting up of these chambers and clearly intended to put them to their
[19] Wellington Chan (1977), pp. 237-241. Most post-1949 Chinese (and Western) scholarship on this era has been critical of its enterprise managers because they came from bureaucracy or government rather than private business, and lacked technological, managerial, and financial skills. Recently, however, historians inside and outside China have come to see more positive features in the earlier period. See Tim Wright (1988); Cochran (1980). It should be noted that a struggle between the central and provincial governments complicated the search for an effective form of state supervision, as the desire of the center to wrest control of industry from provincial governments underlay efforts in the first decade of the twentieth century to set up ministries at the center.
[20] Wellington Chan (1977), p. 57.
[21] See Wellington Chan (1977), pp. 32-33, 216-234; Fewsmith (1985), pp. 25-36.
own purposes; the new bodies were created under rules dictated by the government, usually by co-opting existing groups. The functions of these new bodies, also defined by the ministry, were to improve commercial matters, conduct surveys and channel information to the ministry, sponsor exhibitions, run training programs, notify the ministry of undue interference by local authorities, and pass merchant opinions to the local and central government authorities.[22] On the other hand, once legitimated, these organizations strove for greater independence. Particularly in Shanghai and Canton, the government was forced to allow some autonomy to the chambers in return for their cooperation in promoting modernization.[23] The Shanghai General Chamber of Commerce (SGCC) soon after its founding became active in the nation's political life, as exemplified by its effort to participate in the writing of the constitution promised by the Qing court in 1906. The SGCC, in conjunction with gentry representatives, organized an association devoted to constitutionalism, lobbied for procedural changes in the constitutional process, and participated in drafting provincial assembly regulations.[24] These political moves presaged the short-lived and yet remarkable activity of this and other chambers after the collapse of the Qing government.
During the late Qing, then, industrialization and the foreign threat generated a more sophisticated role for merchants and the creation of new institutions to guide industrialization. Even so, the essence of the old dual pattern—state supervision coupled with limited merchant autonomy, the social blending of official and merchant groups, and the existence of a "public" realm—remained.
The "Golden Age" of 1911-1927: A Push toward Merchant Autonomy
Merchants and their associations, particularly those based in Shanghai, made a strong move toward autonomy and activism during
[22] Once again, an unsuccessful aspect of this plan was a strategy to circumvent the power of provincial bureaucracies that were resisting the court's last-ditch efforts at reform. See Wellington Chan (1977), p. 217 and, generally, ch. 11; Schoppa (1982), pp. 6-7, 34-35.
[23] Bergère (1989), pp. 36-37, 53-55.
[24] The constitutional association was the Association for the Preparation of Constitutionalism (Yubei Lixian Gonghui). See Fewsmith (1985), pp. 43-44.
a "golden age" of the bourgeoisie that followed the fall of the Qing in 1911. Marie-Claire Bergère claims that this era in Shanghai "saw the emergence of the nearest thing to an autonomous society in Chinese history—an urban society dominated by the united front of business circles, well structured and inspired by a modernist and pro-Western intelligentsia."[25] If it was a dramatic era for merchants, it was also exceptional, for merchant autonomy and activism were contingent upon the collapse of central authority in 1911 and, at the same time, upon the appearance of economic conditions under which merchants flourished. The era also failed to usher in a permanent system of merchant autonomy.
The advent of World War I meant that foreign powers, and foreign businesses operating in China, could not keep up with the demand for imported goods. Chinese entrepreneurs, particularly those in the coastal area surrounding the Treaty Port of Shanghai, moved in to fill the niche. War also strengthened the Chinese currency, and opened new export markets. A post-war wave of industrialization concentrated on the production of consumer goods, such as textiles, foods, cigarettes, and confections. As imports and investment into China dropped off, squeezing the traditional functions of compradors, those who survived became increasingly independent, and tended to blend with the rest of the merchant elite.[26] They used their understanding of Western business practices to seize new opportunities in the booming coastal cities. In short, the business class grew wealthier and more professional.
The autonomous organization of merchants and professionals also reached a peak. In Shanghai alone, eighty professional associations existed in 1912.[27] As in the past, these associations very often were formed
[25] Bergère (1989), p. 240. She also argues that the bourgeoisie "was gradually constituting itself as a specific and coherent class" during the 1920s (p. 140). Although merchant groups became more autonomous, other groups, such as students, remained more firmly under government supervision. See, e.g., Strand (1990), p. 4. Moreover, provincial governments continued to exert significant control over business. See Schoppa (1982), p. 7.
[26] The growth of banks, which reduced dependence on comprador guarantees, further curtailed compradors' role. Compradors were replaced in foreign businesses with professional Chinese managers who were responsible for actual administration rather than simply providing guarantees. The term "Chinese manager" (Hua jingli ) was used in part to distinguish the new style of employee from the more discredited—given the nationalist environment—"comprador." See Hao (1970), pp. 59-63.
[27] Shanghai merchants were particularly well organized; compared to their counterparts in, for example, Tianjin, merchant organizations in booming Shanghai grabbed the opportunity created by the weak governing structure to further their own interests. See Bergère (1989), pp. 131-139, 145, 185-186, and 213-216.
along native-place lines, and personal ties continued to be central to their operation.[28] These groups did not remain aloof from domestic politics. While previously they had been somewhat marginal to major political movements such as the 1911 revolution, their political participation intensified to such a degree that they were often at the forefront of movements. They espoused a commitment to modernization and, until the mid-1920s anyway, believed that modernization required vigorous ties to international business. Although strong ties to the foreign community and the Treaty Ports sometimes moderated their ideology, in keeping with the ideology of the May Fourth movement many merchant organizations—even those organized along "traditional" native-place lines—nevertheless became highly nationalistic.[29]
The immediate events of the May Fourth movement sparked several types of political activism. The announcement in May 1919 that the Chinese government had agreed to transfer German rights in Shandong Province to Japan stimulated merchant protests alongside those of students, intellectuals, and workers. Trade groups publicly reprimanded the Beijing government, and promoted "patriotic products" (aiguohuo ). Stores were closed, boycotts of Japanese goods were initiated, and many businesses (especially banks) refused to deal with Japanese companies. The events were condemned in announcements of chambers of commerce and in the specialized press (such as the Shanghai Bankers' Association's Banker's Weekly [Yinhang zhoubao ]).[30] Many of the efforts of the merchants were quite effective. For example, the merchants were partly successful in their demand to participate in the foreign-dominated Shanghai Municipal Council during the height of May
[28] These organizations were "new" in part because they opened their memberships to more than just the merchant elite. See Bryna Goodman (1992).
[29] Bergère (1989), pp. 125, 131-133, 210-211, and 243-268; Bryna Goodman (1992). Bergère argues that those with the strongest foreign ties were not very different from others in the business class in their ideology, and implies that they cannot be distinguished as a separate group during this period (p. 217). Still, it must be kept in mind that the May Fourth and later movements embodied many diverse ideological strands—liberalism, nationalism, and communism—not all of which merchants could be expected to embrace. Nor were merchant groups unified in their actions; infighting (such as within the SGCC) surfaced, while in Shanghai smaller merchants began to organize into even more radicalized street associations and challenged the older chamber of commerce.
[30] See Fewsmith (1985), pp. 51-60; Bergère (1989), pp. 207-217; Cochran (1980), ch. 5; Liao (1984), pp. 73-79; and Remer (1933).
Fourth activities.[31] The actions of business organizations could also be audacious and bizarre: the Federation of Chambers of Commerce, a body established in 1907 to link up chambers from different provinces, called for a national convention (guomin huiyi ) of provincial assemblies and professional and educational societies that would choose a new, largely liberal, governmental regime and reorganize military and financial affairs. When the convention's meeting in 1922 failed to produce results, and a military coup in Beijing ejected the Republic's president in 1923, the Shanghai Chamber of Commerce declared its independence and its intent to organize a government of merchants (shangren zhengfu ), despite the fact that it had no territorial basis or military forces. As dramatic as this move was, it ultimately failed.[32]
Nationalist Suppression and the Return to Dualism
The movement toward a genuinely autonomous business elite that had characterized the exceptional "golden age" was quashed with the coming to power of the Nationalists in 1927. Contrary to historical accounts, on the one hand, of an enduring and friendly alliance between "comprador" capitalists and the Guomindang or, on the other hand, of a complete suppression of business interests, more balanced accounts indicate that Chiang Kai-shek's government brought back the dualism of the merchant associations.[33] There were a number of ways in which business interests were met or shared by the new regime, and
[31] Fewsmith (1985), p. 136.
[32] Bergère, (1989), pp. 219-225. This was a time of great intellectual ferment. Some critics advocated Swiss or American-style federal systems. John Dewey's "guild socialism" was an influential source for ideas of the broader autonomist movement of which this incident was a part.
[33] The question of government-bourgeoisie relations during the Nationalist era has been much debated. PRC historians have argued that comprador capitalists were in full alliance with the Nationalists. This view is described in Tim Wright (1988, p. 189) and is endorsed in Moore (1966, pp. 189 192) and Giesert (1979). Other historians, however, argue that business interests were nearly completely suppressed. See Coble (1986), pp. xii-xiv, 61-65; Eastman (1984); and Fewsmith (1984). More balanced accounts showing both some business autonomy but also strong efforts at state suppression and/or co-optation of business are Fewsmith (1985) and Henriot (1993). Other useful treatments of the relations between government and capitalists are: Bergère (1989), pp. 227-240; Bush (1982); Coble (1986), pp. 25-41; and Cochran (1980), pp. 185-188.
in which the two groups were linked. The Nationalist government was less anti-capitalist than its rhetoric implied, and Nanjing was slow to nationalize key industries. Shanghai's most influential capitalists provided the political and financial backing Chiang needed to rise to power. The capitalists used personal ties—as in the person of Finance Minister T. V. Soong, a member of one of Shanghai's most prominent capitalist families—to influence government decisions. In Shanghai, "local notables" from the old bourgeoisie dominated the municipal councils and had particularly strong influence in their area of business and expertise, namely, finance.[34] Turning increasingly conservative over the course of the 1930s, many in the bourgeoisie relied upon Chiang to restore social order and reduce foreign economic competition.
Yet there was no happy bourgeoisie-Nationalist alliance. The Nationalist government was willing to tolerate neither significant merchant autonomy nor manipulation by the business class. Instead, reflecting the state's effort to re-establish its own pre-eminence, the links between private business and the Nationalist government were tinged with coercion by the latter, and the interests of many in the bourgeoisie, particularly those of medium and small merchants and of those who opposed the Nationalist government, were driven underground. Beyond the voluntary contributions it solicited, the government soaked the capitalist sector for funds, sometimes engaging the services of the underground Green Gang thugs.[35] Merchants engaged in some activism, such as anti-Japanese boycotts, but not without the government's sanction. The regime co-opted much of the technological and professional class into its ranks, most notably through the recruitment into the technocracy of Western-trained economists, engineers, and scientists.[36] Some who were at the very pinnacle of the bourgeoisie retained influence (such as through appointment to Shanghai's Municipal Council), but their influence resulted from their close ties to Chiang and/or their rather full support of the government.[37] Under pressure of the anti-Japanese conflict and subsequent civil war and the increasingly restrictive Nationalist policy, a significant portion of the merchant elite emigrated to Hong Kong and elsewhere.
The government also reorganized merchant organizations to facilitate its control of them. Guomindang branches, beginning in 1925, had
[34] Henriot (1993), pp. 52-54.
[35] Martin (1995).
[36] Kirby (1989).
[37] Henriot (1993), pp. 62-63.
established numerous local, mass-based federations for small and middle merchants as well as workers, peasants, students, and women. Later in the decade, these Guomindang-established federations and some of the still independent federations of small business were merged into the older chambers, while more radical street associations that had spontaneously sprung up were abolished.[38] The more established business chambers, particularly the SGCC, were brought firmly under Nationalist government control by 1929. Key laws governing trade associations and chambers of commerce were revised to limit the functions of these groups to merely assisting the state in management of the economy (primarily by stabilizing the market in tense times) and to submitting suggestions to the government and gathering commercial data.[39]
By the close of the 1920s,, then, the associations born of the "golden age" were once again tied closely to and supervised by the state, though not incorporated into it. The reorganization of merchants under the umbrella of the SGCC created a "unitary, noncompetitive, hierarchical structure of interest organization which was, on the one hand, largely self-governing . . . but was, on the other hand, subordinate to (and indeed brought into being by) state authority"—in other words, a form of state corporatism.[40] The Nationalist government was not fully effective at establishing corporatism; its repression of merchants alienated many to the degree that they ignored Nationalist laws and continued to rely upon traditional family business structures and ties.[41] However, despite the flaws in the implementation of the Nationalist strategy—something we will see again in the post-Mao era—key elements of corporatism appeared. Only one segment of the merchant class, the members of the SGCC, was granted a representational
[38] On the Guomindang-based federations, sec Fewsmith (1985), pp. 103-159. The radical Shanghai Federation of Street Associations (and its branches), formed in 1919, was dissolved outright in 1928. The precise interpretation of these events has been disputed by scholars. To Fewsmith (1985, ch. 6, esp. pp. 161-168), the folding in of the small federations to the central chamber was part of a plan to rein in the authority of local Guomindang branches that had sponsored them. It therefore reflected a victory for the older merchant elite over more radical merchants, and a triumph of the central organization, led by Chiang Kai-shek, over the local party branches. Coble (1986, pp. 62-63) argues, in contrast, that the central Guomindang and its Shanghai branch emerged victorious because they were able to dilute the power of the elite SGCC by blending it with associations controlled by local party branches. In both interpretations, though, central political bodies clearly manipulated small merchant organizations to their own ends.
[39] Fewsmith (1985), pp. 159-166.
[40] Fewsmith (1985), p. 163. See also Martin (1995).
[41] Kirby (1995).
monopoly by the state. The Nationalist government left the merchant organizations intact, but it removed much of the associations' ability to act in the vigorous, self-interested manner of the previous years. The state pre-empted the further emergence of competing, autonomous organizations and demobilized what previously had been a politically active constituency.
The Fate of China's Business Elite during the Maoist Years
The coming to power of the communist regime in 1949 shifted the balance between the business elite and the state to the opposite extreme from that of the "golden age." The Confucian assumption that private interests must be subordinated to state-defined interests was deepened by the Marxian notions of commerce. Profit-taking and "commodity circulation" (activities that produced no "use-value") were to be eliminated gradually, and industrialization was to be supervised by the state under state ownership. Maoist ideology recognized that some individual interests existed but denied that these separate interests could exist validly as a long-term aspect of communism. These Maoist views implied that even the gong realm that had been so useful to past regimes could not be tolerated. Rather, under the united front policy, the state defined the interests of those groups or classes whose interests might be distinct from those of the Party. Under the united front, moreover, the Party-state brought extra-Party groups such as merchants within its organizational structure and put them to the purpose of industrialization, or of other Party goals.[42] Hence, politically "reliable" members of the merchant elite were invited to join the Chinese People's Political Consultative Conference (CPPCC) and such "democratic parties" as the China Democratic League. Federations and professional associations for merchants were established after 1949, or were retained (in form) from pre-revolutionary days. Capitalists who had belonged to Nationalist trade organizations were organized into the All-China Federation
[42] On Marxian notions of commerce, see Solinger (1984), pp. 12-16. On individual interests and the united front, see Burns (1988), pp. 21-22 and ch. 2; Dittmer (1987), pp. 18-23; and Seymour (1987). Prior to 1949, the united front was primarily a wartime strategy for alliance of the weak Communist Party and the Guomindang against the Japanese. However, it also sanctioned Party overtures to non-communist groups, including urban elites. See Stranahan (1992).
of Industry and Commerce (ACFIC). This federation became the capitalists' main link with the new regime and provided a means to harness their expertise. There was no question that this and other such federations were neither equal to the Party nor autonomous from it; the united front policy explicitly dictated leadership by and full loyalty to the Party. United front groups were legitimate only insofar as they mobilized the expertise and support of members on behalf of statist goals. The federations were controlled largely by members of the Party bureaucracy. Potential opposition from these groups was defused further by granting them a highly limited "consultative role" in policy deliberations. Only occasionally were they a forum for the genuine expression of views and complaints.[43] Thus, ACFIC meetings became venues at which Party and state officials transmitted information on policies and mobilized the obedience of business representatives. By the time of the Cultural Revolution, bodies such as the ACFIC appeared to have been transformed fully into "mass organizations" that were firmly within the grasp of the regime and could be manipulated for the purposes of top leaders.
Despite its adherence to a new ideology, then, the socialist regime continued the tradition, established with the chambers of commerce of the late Qing, of sanctioning trade associations and attempting to guide and supervise their activities. By this time, however, there was room for even less autonomy than those earlier organs had possessed, and their form ran closer to totalism than corporatism.[44] Whereas the rather moderate strains created by the united front policy, as well as sympathetic statements by Mao Zedong, had suggested that parts of the Chinese business class might survive the revolution intact,[45] such was not to be. The Party attempted to remold the ideology of members of these
[43] For example, meetings organized by the All-China Federation of Scientific Societies (ACFSS) allowed scientists to speak out on problems in the scientific community in 1957 during the "Hundred Flowers" campaign. See Suttmeier (1987), pp. 128-129, 130-131. Even so, those who did speak out undoubtedly were criticized during the subsequent Anti-Rightist campaign.
[44] Anita Chan (1993) implies that Maoist worker federations were state corporatist, and yet the lack of autonomy and inclusion in all cases as part of the Party-state argues against such an interpretation.
[45] Mao's (1967) 1940 essay "On New Democracy" discussed the need to protect business in the early stages of transformation, and argued against nationalization of industry or the end of capitalist-style production. Mao's (1969) 1949 "On the People's Democratic Dictatorship" declared that the petty and national bourgeoisie (excluding major industrialists) would be treated fairly under the new regime, though it also foreshadowed eventual nationalization.
groups, culminating in the Wufan (literally, "Five-Anti") campaign of 1951-1952.[46] The movement utilized what had by then become the standard campaign methods—of "struggle" and self-criticism sessions led by Party cadres—to harass those who came from "bad" bourgeois classes, including members of what was (incorrectly) labeled the "comprador bourgeoisie." In addition, the first half of the 1950s saw the immediate confiscation of the assets of many of the largest capitalist families. Large businesses were transformed into mixed state-private enterprises that increasingly were controlled by central ministries.[47] Foreign trade was taken over by state organs, while foreign businesses eventually closed or were nationalized.[48] By the time of the completion of the "transformation to socialism," the broader business class was diminished to next to nothing; whereas there had been 8.4 million independent private craftsmen, merchants, and industrialists in Chinese towns and cities in 1953, by 1956 only 160,000 private enterprises remained.[49] Just as significantly, this group now existed and functioned on the state's terms.
Lessons of the Historical Record
As this discussion of merchant-state relations from the late Qing through the Maoist era makes clear, the political role of merchants and their associations has been neither simple nor uniform. Stated in terms of the models set forth in chapter 1, we see in the historical record elements of clientelism, state corporatist strategies, and, though less robust, even civil society. Out of this complexity, several lessons can be
[46] The five "evil" activities targeted were bribery tax evasion, theft of government property, cheating on contracts, and use of economic data for private benefit. The campaign's actual targets became broader than merely those engaging in these activities, however. On the Wufan campaign, see Kraus (1991), pp. 52-54; Gardner(1969). Echoing pre-1949 debates, the regime attempted to distinguish between non exploiting merchants (who were allowed a "legitimate profit" of 10% to 30% annually) and "speculating, illegitimate" businessmen. See Kraus (1991), p. 53; Solinger (1984), p. 136n.
[47] The assets of over 2,800 firms were nationalized. See Kraus (1991), pp. 50-58. For a detailed treatment of textile businesses during this period, see Sears (1985).
[48] The nationalization of foreign assets was completed by 1954. See Thompson (1979).
[49] Owners of remaining private firms were paid an annual fixed interest of 5% of their investment starting in 1955 and continuing for several years. The numbers of private firms apparently rose between 1957 and 1965 to approximately one million, until pressure from the Cultural Revolution again reduced the number. See Kraus (1991), pp. 51-58; Sun (1984), p. 26.
highlighted that will inform our examination of business-state relations in post-Mao China.
First, and most important, although the relationship between merchants and the state was fluid, a Janus-faced pattern emerges that contains elements of both autonomy for a dynamic merchant sector and control and supervision by the central state. Merchant life retained a not insignificant degree of autonomy, and yet with the exception of the "golden age"—the time that came closest to seeing the emergence of civil society—the state maintained a strong hand in the activities of merchants and their associations. This pattern of dualism was evident in the late-Qing reformers' attempts to stimulate industrialization under state supervision and, at the same time, to unleash and yet control merchant energy through the establishment of chambers of commerce. The tradition returned, in a form that had strong overtones of state corporatism, with the Nationalist regime's partly successful effort to co-opt the most powerful of the previously independent merchant associations and, in theory, to focus their energies on modernization.
Second, although this interpretation of the dualism of the Qing and Nationalist eras emphasizes the similarities between these two historical periods, there are of course differences. In the Qing period, the relationship between merchants and the state was comparatively benign. The need to have a vibrant merchant life was reconciled with the desire for some state supervision through efforts of the state to accommodate (in practice and eventually in doctrine) merchant activities. Hence, a good deal of social blending of the literati and merchant classes took place, and some legitimation of merchants and their activities ensued. The Nationalist era, in contrast, was characterized by greater coercion on the part of the state. At the same time, the intent of the Nationalist government to use new state-dominated associations to enforce strong controls and unleash rapid industrialization was not successful in practice. So while state control was a goal in both eras, this goal was met in different ways and produced different results. This difference in "tactics" for reconciling the need for both autonomy and control is instructive as we look forward to the post-Mao era, for it raises the question of whether the post-Mao state will attempt to meet this same goal through the more coercive model of the Nationalists or through the social accommodation and legitimation model of the Qing.
Third, even as merchants became progressively more "modern" and cosmopolitan in their outlook, traditional forms of group organization
and behavior remained at the core. An integral theme of each of the eras considered here, even the "golden age," is the predominance of personal ties and (often family- or clan-based) networks. Sometimes such networks of merchants have been at odds with state goals (as when the Nationalists attempted to reorganize businesses) and sometimes they have been in harmony with the state (as in the performance of gong activities in the Qing), but at base these elements of clientelism have endured.
Finally, the stage at which the merchant elite came closest to seizing political momentum occurred, not coincidentally, with the central state's period of greatest disarray. Why did this bid by the merchant elite fail? A lack of sufficient organization and coalition building was the most immediate cause. Moreover, it seems likely that the efforts of merchants were actually hindered by the disintegration of the state and the country's slide into warlordism; the merchants' push for economic and political liberalism could not survive in the chaos that surrounded it. But Bergère also suggests that, ironically, the merchant elite's failure was largely a result of the perception that the state was too weak to be worth seizing.[50] It will be interesting to consider henceforth whether the post-Mao business elite is similarly halted from encroaching upon the state by the (unlikely) perception that it is only a marginal prize, or whether other factors interfere—opposition by a state still intact, lack of will on the part of members of the business elite, or even the availability of other channels of influence (such as clientelism).
The preceding discussion points out those elements of modern Chinese business history which may be the most significant lessons for the post-Mao era. But how do we know the history is at all relevant? After all, the immediate context from which China's contemporary economic elite and its business associations emerged in the post-Mao era was that of virtually complete state domination by the Maoist regime. Indeed, the presumption that a pattern similar to the pre-1949 dualism was likely to have reappeared in post-Mao China might be challenged by pointing out that the Maoist era represented a more than two-decade interruption, during which links with the past were decisively severed.
[50] Bergère (1989). The attempt to establish a "government of merchants" also showed that, in the absence of an alliance with other elites, merchants lacked the power to set up new political structures. See Coble (1986), ch. 2.
Nonetheless, four specific channels through which historical continuity might be seen to flow, despite obvious changes in the type of regime and the organization of society, seem relevant.[51] First, and most important, both the late Qing and the Nationalist regimes, on the one hand, and the post-Mao reformers, on the other, possess and recognize the same functional need to harness the resources and skills of the merchant or business elite, something that had long been provided in the functioning of gong works. One key way for the state to do this is by forming or by co-opting professional groups of merchants, including merchants with foreign ties, who have enough independence to encourage their expertise but are ultimately supervised by the state. The expectation that co-opted business associations can serve this useful function is therefore likely to have shaped similar policies toward them in different eras. (During the "golden age" the state was not capable of mounting such an effort, while during the Maoist era the strategy of allowing functional groups some independence in exchange for resources was precluded by ideology after the 1956 "transition to socialism.")
Second, there is some continuity between pre- and post-1949 institutions. As noted previously, many federations, such as the business federation, the ACFIC, set up in the early 1950s actually were old associations in new socialist clothing. The ACFIC was once again given updated socialist clothing in the 1980s. This is not to say that they have remained the same organizations; they underwent qualitative changes in goals, methods, and links to the state, especially during the 1956 "transition" and the Cultural Revolution. Yet even relatively weak institutional continuity raises the possibility that an institutional memory of past patterns remains, particularly when the functional importance of the associations has carried over as well.[52]
[51] These channels are presented with the intention of being suggestive rather than exhaustive. It also can be pointed out that the dual pattern re-emerged under the Nationalists after the fifteen-year hiatus of the "golden age." Of course, no history will be mapped exactly onto the present era. The following discussion attempts to make an initial case for elements of continuity despite an obviously changed context. Another effort to draw historical parallels between the state's treatment of merchants during the Qing and post-Mao eras—by emphasizing continuity in strength and functions of the state—is Solinger (1992), pp. 124-125.
[52] On institutional continuity before and after 1949 in the science association, see Suttmeier (1987). Historians of Nationalist and early socialist China are increasingly persuaded that the 1949 revolution marked less of a break with the past than often has been assumed.
Third, and more concretely, the post-Mao reforms have sparked a re-examination by contemporary Chinese scholars of late Qing and Republican merchants, including intensive study of the SGCC. Rather than condemning wholesale the role of merchants and their associations, there is now an effort by scholars to search for what might have been useful.[53] This inquiry, in the context of close ties between scholars and the government, suggests the possibility that there may have been a deliberate attempt by the post-Mao state to apply institutional forms from an era of greater business dynamism to current efforts at modernization.
Finally, an enduring cultural and intellectual context in support of a dual role conceivably militates in favor of similar solutions. In other words, the question of state control of the business elite and its associations has never really left the cultural and intellectual agenda, despite the interregnums of the "golden age" and Maoism. The enduring debate is over how much the state should control business, rather than whether control should exist at all.[54]
[53] Evidence of consciousness of the past role of guilds is found, for example, in Xinhua (1989). On efforts of Chinese intellectuals to learn from the past, see also Tim Wright (1988), pp. 185-214; Edmond Lee (1991).
[54] The fourth hypothesis is suggested in Fewsmith (1991). An attempt to show how Confucian culture shapes business-state relations in Taiwan is found in Zeigler (1988).