The Role of the Party

The CCP built a strong position of authority in state enterprises beginning in the mid-1950s, and it has continued to maintain this position into the reform era. The duty of Party cadres located within the factory has been to provide moral and political leadership in the enterprise, often in the context of political and ideological study sessions. The Party has supervised myriad aspects of employee life, in part through its input into the distribution of benefits and in part through its dominance of personnel matters. The personnel manager in state enterprises is almost uniformly a Party member, perhaps the general secretary of the enterprise Party cell and/or the trade union leader. Party cells have controlled many of the key work- and life-decisions affecting employees. Party cells have maintained substantial (at times nearly unilateral) influence over hiring and promotion. These cells have also maintained political or Party dossiers (dang'an ) on each employee via the personnel department (as discussed below). At the height of Party influence in factories, employees had no choice but to cultivate relationships with cadres in order to gain promotions or access to scarce benefits. In many periods, the Party also dominated line management and technical matters via its cells on the shop floor and at general management levels, thereby injecting political criteria into day-to-day decision-making.^[7]

Urban reforms that were announced in 1984 were intended to reduce the role of the Party in day-to-day management and to increase the authority of production managers and technical experts. Evidence from the late 1980s shows that the role of the Party had declined in state enterprises as a result of broad efforts at decentralization. Political study within factories and the monitoring of factory activities by Party activists, both of which were crucial to maintaining political dependence within state factories, had withered significantly. This withering process halted briefly with the Tiananmen crackdown but accelerated with the return to dominance of the economic reform agenda in the early 1990s, particularly in factories in the south-coastal areas.^[8]

But although the Party's role on the shop floor has declined, Party cadres have not relinquished their authority in state enterprises easily.

[7] Although there was some fluctuation in the Party's role in the Maoist era, and although the Party's role varied from factory to factory, it always played a central role. See Walder (1986), p. 98 n. 12; Schurmann (1968).

[8] See Boisot and Guo (1991); Child and Xu (1991); Walder (1991), pp. 474-475; and O'Brien (1992).

They have often struggled to maintain their power through their continuing influence over personnel and benefits, or by accruing more technical skills themselves in order to legitimate their presence as line managers.^[9] Despite evidence of some Party erosion in the late 1980s, it has remained an important institution within enterprises, and Party cadres have continued to hold top posts. Managers have continued to feel pressure to show loyalty to higher-level Party cadres for promotions and to rely on Party contacts in the supervising bureaucracy to carry out their jobs. After the 1989 government crackdown, moreover, Party secretaries in many enterprises were emboldened to reassert their traditional authority as well as some of the previous Maoist norms, suggesting that latent Party authority remains.^[10]

The Party's role in the foreign sector is dramatically less than in state enterprises. In joint ventures, the Party presence has not been eliminated completely, but is quite weak. Where three or more Party members work in a JV, they are supposed to organize a Party cell and, as in state enterprises, carry out the work of the Party. Party members are to recruit and promote other cadres, guide political thought of workers and staff to guard against "bourgeois liberalization" (largely through political study), and ensure that the venture complies with Party and state policy. Although Party secretaries are not allowed as such to sit on JV boards of directors, they potentially have a voice there through the trade union, especially since the Party secretary is often simultaneously the trade union leader. As in state enterprises, moreover, managers in JV personnel departments are often Party members, and can inject political criteria into job promotion decisions.^[11] Foreign investors and managers are excluded from participation in Party activities within the venture. The Party is therefore a clandestine organization within the JV, excluded

[9] The 1984 Enterprise Law, which supposedly had as a central goal the reduction of CCP influence in management, was in fact quite ambiguous about the relative powers of Party cadres and managers in state-owned enterprises. This ambiguity is exemplified by the less-than-clear slogan that Party cadres should be the "core" and managers should be the "center."

[10] On the continuing role of the Party, see Walder (1989), pp. 246-249; Chamberlain (1987); He (1990); and Yeung (1991). Information on the continuing Party role in state enterprises during the reform era was also provided in 1991 by a researcher at the China Enterprise Managers Association (CEMA). Walder (1991a) identifies a genuine erosion in Party power, but not the degree of independence found in the foreign sector.

[11] Two managers in Beijing JVs felt that the Party remained active in personnel decisions. One felt that Party support of a manager was an absolute prerequisite for promotion, while the second thought that, although the Party did not "control" personnel matters, it "influenced" them.

from organizational charts and outside of the direct control of both (non-Party) Chinese and foreign management.^[12]

Yet the Party role in JVs is substantially weaker than it would appear, given its formal role, and its influence has diminished steadily over time. Because the Party is not an open and acknowledged part of the JV organization, it is one step removed from the employees. Its authority is diluted by virtue of the fact that there is a competing, legitimate authority structure. Managers are publicly responsible only to the formal Chinese-foreign management partnership, and therefore can avoid Party sanctions that are inconsistent with the JV's objectives. As JVs have tried increasingly to manage themselves according to international practices, interference by Party members has come to be seen as an illegitimate intrusion. Party secretaries who are not supportive of joint ventures have been replaced. With the exception of a few JVs set up in the early 1980s, most have eschewed a full-time Party secretary. Any Party cadre working in the JV has to maintain a full-time "productive" job. Moreover, relatively little CCP activity is actually carried out in JVs. Some ventures, particularly some of those established in Guangdong Province or other southern coastal areas, have never established Party cells or have only very weak ones.^[13] The same can be said of "greenfield" ventures that are created from scratch rather than through a merger with existing factories, since such ventures avoid inheriting extant Party organizations. Party activities in most other ventures tend to be minimal; as early as the mid-1980s, foreign managers in less than one-third of the JVs could identify any Party activity at all. The Party's voice also is not often heard through labor union representatives on boards of directors, since political study and Party cell meetings, when they are held, are generally conducted after working hours.^[14]

There was an increase in Party activity following the government crackdown in June of 1989. Political study intensified in some (though

[12] Internal (neibu ) regulations from 1987, entitled "Interim Provisions Concerning Ideological and Political Work for Chinese Staff and Workers in Chinese-Foreign Equity and Cooperative Joint Ventures," established guidelines for political and ideological work in JVs. The Party's role is not discussed in public documents, or codified in public laws. Silence about the Party's role is meant to be consistent with the declaration in Chinese law that a JV is an "independent legal person." See Pearson (1991), pp. 186-191.

[13] Party cells in JVs in the coastal areas (particularly in small JVs) tend to be even more productivity-oriented than in inland areas, and so are getting very weak.

[14] When political study was held in JVs, Party members generally were careful that it did not threaten foreign interests. A smaller proportion of JV employees are Party members compared to state factories. One foreign-sector manager interviewed in 1991 reported that 1.5% of employees in his JV were Party members, whereas the figure may be closer to 5% in state enterprises.

by no means all) JVs, and a few ventures in which no Party cell had existed were directed to form one. Chinese managers sometimes came under increased pressure from Party cadres to comply with the cadres' wishes, and grew more reluctant to take the initiative in decision-making than they had previously.^[15] Yet, although they were wary of the repercussions of the leadership crackdown for foreign-backed business, Chinese managers routinely reported that they did not take the content of political study sessions particularly seriously. Some Chinese managers and Party secretaries in JVs even tried to minimize political study in order to avoid the possibility of flight by foreign companies.

Most of this political activity died down by 1991, and the pre-Tiananmen trend to de-politicize joint ventures continued. Chinese managers in JVs, including Party cadres, claimed political activity was minimal. Some political study remained, but it was seen by Chinese managers as a nuisance to be avoided rather than a threat. (Indeed, several managers interviewed in 1991 deliberately scheduled meetings outside the office on Saturday afternoons so that they could avoid political study sessions.) Many Chinese managers described—those from the south with pride, those from the north with envy—how JVs in Guangdong and the Special Economic Zones (SEZs) had succeeded in eliminating Party influence or activity.^[16] By 1995, the Party was essentially absent from joint ventures.^[17]

Chinese managers in wholly foreign-owned enterprises and representative offices all along have been quite unrestricted by Party reins. Because there is no Chinese state participation in these businesses, they need reserve no role, either open or clandestine, for the Party. Some foreign-sector managers working in WFOEs or ROs are at the same time Party members, of course. But they, as well as the non-Party foreign-sector managers who work with them, argue that Party members do not engage in any Party activities during work and make no effort to influence the business of the ROs or WFOEs. Party members say they have neither time nor reason to engage in political activity at work; Party members in ROs are expected to, and do, attend Party meetings outside the workplace. Non-Party managers in ROs, particularly in Beijing, are

[15] Pearson (1990). Efforts to increase the Party presence in JVs and WFOEs after June 1989 are reflected in Liang (1990) and "Party to Increase Profile in Joint Ventures" (1990). These articles do not report on the effectiveness of such efforts, however.

[16] An exception to this sentiment was voiced by one Shanghai JV manager who was himself a Party member. He felt the role the Party played, albeit small, was appropriate and useful. He did not contend that the CCP role should be enlarged, however.

[17] Interviews from 1995.

expected to attend political study sessions at the Foreign Employee Service Corporation (FESCO) each week, usually on Saturday afternoons. If they breach Party rules of discipline they can, in theory, be made to answer to Party authorities in FESCO, though there is no evidence that this has ever happened.^[18] FESCO also expects all employees during office hours to "volunteer" for public causes (such as two days of planting trees in the spring), just as state enterprises do. But even these extrafirm activities are minimal. Those who attended FESCO meetings regularly in the early 1990s—as in JVs, many managers tried to avoid them—reported that the content was normally light. There might be lectures or films with political content, but most meetings consisted of films designed more to entertain than to propagandize. FESCO may also organize "dance parties" or sporting events. Even these low levels of political activity are not sustained in the south. As one SEZ-based interviewee explained with regard to the prospect of "voluntary work," "The government is careful with the foreign businesses because if it asks employees in a foreign business to go for one or two days of voluntary work, the foreigners will fire the manager. So it does not issue such demands."

The Party profile is so low that Chinese managers in WFOEs and ROs frequently cannot identify Party members that may be present in their ranks. They further contend that a Party member who chooses to work in a WFOE or RO is unlikely to be a "conservative" who would hinder the business or make negative reports about other managers to an outside Party organization; because working for a foreign enterprise may be viewed as unpatriotic by older, more conservative Party members, cadres who depend upon these older members for their advancement within the Party are unlikely to risk compromising their Party credentials by joining a foreign business in the first place. Where they can identify Party members in their ROs and WFOEs, foreign-sector managers claim they are not intimidated by them. As one RO manager noted, "There may be a 'spy' here, but it's no problem. If they asked me why you were here talking to me, I'd just tell them the truth, and tell them that there is nothing wrong with it."

Thus, nearly all foreign-sector managers reported that they feel relatively "free" of Party influence. As one said, "We are not completely free. This is China! But foreign companies' offices are much more free.

[18] Interviewees' reports of the expectation that they attend political study at FESCO are confirmed in Xi (1991).

Besides, I lived in a foreign country for [a few] months, and so I don't care [what the Party says]."