Introduction

The transition from planned to market economy that was initiated in China in the late 1970s unleashed one of the most rapid economic transformations ever to have occurred, with changes that have spilled over into the social and political realms. Among the most important social and political results of the economic reforms is the emergence of new economic strata, including the group that is the subject of this book: China's new business elite. Reflecting the central government's perception that it depends increasingly on members of the new business elite to promote industrialization, it has granted members of this elite greater economic authority and control over economic resources. Moreover, the government has revitalized business "associations" (xiehui ) to act as intermediaries with enterprises.

It would seem that China's new business elite is poised to use its economic position to play an important role in China's political life. That such a role is possible is suggested by the example of parallel groups in other developing countries. In these countries, members of the "national bourgeoisie" have helped to drive the conversion to markets and integration into the world economy. Members of the business elite, including those who have ties to international firms, have influenced government policy in a direction favorable to international economic cooperation. Members of the business elite also have a potential role to play in the political realm. Indeed, although the premise is questioned in this book, it is often assumed—particularly by U.S. policy-makers—that the Chinese business elite will be the carrier of democracy or "civil

society" in China, much as its counterparts were in the development of the Western industrial nations.^[1]

The growing command of resources and autonomy on the part of China's new business elite, plus a consciousness of the role its counterparts have played elsewhere, raise the core problem addressed in this book: whether economic reform alone can, or inevitably does, lead to significant political change, even if the regime in power is unwilling to initiate such change. The very appearance of a new business elite suggests the possibility that its members and their associations may not be mere "transmission belts" of the Leninist state but, rather, harbingers of a new and unintended pattern of state-society relations.^[2] But have the members of the post-Mao business elite in fact translated their greater economic autonomy into pressure for political change, carving a new pattern of interaction with the state at either the central or local levels?^[3] Is the new pattern that has appeared, if any, "democratizing,"^[4] or does it

reflect an alternative type of transition? What forces have shaped the emerging relationship between new business groups and the state?

In short, this book represents an attempt to understand how the creation of a new elite as an outgrowth of economic reform has shaped state-society relations in the most advanced sectors of the Chinese economy, and to understand whether the popular assumption that economic reform leads inevitably or easily to democracy holds in the case of China. An examination of two segments of China's new business elite provides the empirical basis for addressing these issues. The group that receives primary emphasis is the topmost stratum of "foreign-sector managers"—Chinese nationals who manage the foreign-backed businesses that have been allowed to operate in China since the late 1970s. The other segment of the new elite this book examines is private entrepreneurs. Together, members of these two groups have been granted a considerable degree of autonomy from the state, and through their jobs command considerable economic resources. They seem positioned, more than other economic groups in post-Mao China, to convert their autonomy and resources into a new pattern of state-society relations. If we find that these two relatively autonomous groups have not made such a conversion, or if any conversion they have made is not democratizing, it is unlikely that other, less well positioned groups will be able or willing to do so.

Chapter 1 establishes a framework for exploring the link between economic reform and the emergence of new state-society relations by examining three models of state-society relations that might be expected to emerge from China's economic reforms. The chapter begins by considering arguments that economic reform will lead to civil society or democratization. It uncovers significant flaws in the logic underlying such a scenario and suggests that, contrary to conventional assumptions, market reform by itself is highly unlikely to lead directly to democratization. Rather, there is ample reason to expect that the relationship between China's new economic elite and the state will be complex and shaped by a multitude of factors, and that extensive democratization by this path is unlikely. Chapter 1 then examines two alternative models of state-society relations that, prospectively, seem to offer more plausible alternatives: clientelism and a version of state corporatism.

Although it is part of a broader worldwide "national bourgeoisic," China's new business elite has appeared in its own historical context. It is easy to recall images of a Chinese nation hostile to merchants, as in the derogation in Confucian thought of merchant and trade activity and the elimination of the national capitalist class by Mao in the 1950s. Yet

these signs of hostility must not be allowed to overshadow an equally important legacy of merchant dynamism, significant independence from the state, and a de facto influence in political life. These two legacies blend to create a dominant historical pattern that can best be described as a dualism. In this dualism, merchants and their associations possess a degree of autonomy and yet, at the same time, are closely tied to and often dominated by the state. This pattern, which remains important for the present era, is the subject of chapter 2.

The three chapters which then follow examine the specific cases of foreign-sector managers and private entrepreneurs in the post-Mao era. Each chapter tells a part of the story of the pattern of state-society relations that has emerged as a result of reforms. Chapter 3 demonstrates why China's new business elite has the potential to carve out a new pattern of state-society relations by describing how, as a result of the economic reforms, foreign-sector managers and, to a lesser degree, private-sector entrepreneurs have obtained a striking degree of structural autonomy from the state compared to other economic groups. It also shows how the views of members of the business elite toward economic reform and politics are firmly pro-market and, to a large extent, anti-regime and anti-communist.

Chapter 4 goes on to address directly the question of whether this new elite has converted its privileged economic position, structural independence, and ideological predilections into a force for democratization. A seeming paradox arises, for, in spite of the advantages they possess, members of China's business elite have shown few signs of becoming an independent, activist political force. They desire to escape from politics, not to engage in it or to create a "civil society." Individual foreign-sector managers, and private entrepreneurs even more so, use means familiar in Chinese political life to shape their situation: personalistic, clientelist efforts designed to influence officials. Having gained structural independence, they try to rebuild informal ties to the state. Members of the business elite are characterized by neither strong horizontal ties to each other, nor strong links to other societal actors, both of which we expect in an emergent civil society.

Although the structural autonomy and ideological antipathy of foreign-sector managers and private entrepreneurs have not been channeled into strong pressures against the state, a new pattern of state-society relations has appeared around these groups. The continued use of clientelist ties is one element of that new pattern. The analysis in chapter 5 brings to light an additional element. Business associations have been established to represent the new elite. In these new associations

can be seen the strongest attempts to date by representatives of the business elite to influence the state in an organized way and, more generally, to turn these state-initiated institutions into more independent societal organizations. But unlike in "civil society," where the associational realm is a central forum for establishing and maintaining political autonomy, post-Mao business associations are established by the state and are dominated at the top by retired officials from relevant ministries. The state has attempted—albeit with only limited success—to use these organizations to co-opt potentially autonomous social forces. This strategy, which may be termed "socialist corporatism," echoes what has occurred in other developing countries where the state remains strong.^[5]

Chapter 6, in closing this study, concludes that new patterns of state-society relations have indeed emerged in the leading sectors of the post-Mao economy as a result of economic reforms. But this pattern is not what many expect; while inklings of civil society have appeared, structural, historical, and international factors have thwarted a link between economic reform and democratization and, instead, have created a hybrid pattern of state-society relations. This hybrid pattern contains both "socialist corporatism" and clientelism. These characteristics have roots in China's socialism and, at the same time, are strongly reminiscent of pre-revolutionary China. The hybrid pattern is likely to endure, not least because it serves the interests of members of both the business elite and the central and local governments. Chapter 6 also observes that China's hybrid pattern bears some similarities to the "statism" found in the East Asian countries of Taiwan and South Korea. But China's socialist legacy has meant that the corporatist institutions, which ideally would help coordinate business-government relations and foster effective policy-making, are significantly weaker than elsewhere in East Asia, making China's situation different enough to preclude its firm inclusion in the "East Asian statist" mold.

Defining China's "New Business Elite"

China's new business elite is part of a broader international stratum: a modern, often influential business class, a portion of

which is supported by foreign capital. This elite has been termed, depending on its precise makeup, the national bourgeoisie, the comprador elite, the managerial bourgeoisie, or, in this study, the "new business elite."^[6] As used here, the term "business elite" denotes a group defined primarily according to its position in the hierarchy of the economy and its members' income, education (primarily formal), and prestige.^[7] In terms of their position in the economy, members of China's new business elite work in the most advanced sectors of the reform economy.^[8] Consistent with the orthodox Leninist definitions of the "national bourgeoisie," they are sometimes property owners (as in the case of private entrepreneurs). But, departing from the rather simplistic Leninist definition, members of the new business elite are also professional and technocratic managers of modern companies. Many members of China's new business elite have gained their position by managing assets belonging to others, including foreign companies. These managers possess "property rights"—in the sense of having substantial latitude to acquire, use, and dispose of assets—and hence possess authority on a par with or near to that of owners.^[9]

The business elite is also defined by its members' relatively high income. Its members are compensated at a level many times the average wage in the PRC. Usually this difference reflects legitimate salaries, although some members become wealthy through illegitimate means such as kickbacks or smuggling. Regardless of the source of their funds, members' higher income translates directly into a better standard of living, as measured by owning modern conveniences, purchasing luxury consumer items, dining out, and sometimes living in more spacious surroundings or even owning an apartment.^[10]

The general educational level of members of the business elite is similarly high, consistent with the profile of the national bourgeoisie in other developing countries. As education and expertise are once again officially valued in China, they have become stepping-stones to business opportunities, especially for the generation in their twenties and thirties.^[11] Although, as a whole, members of the business elite tend to be extremely well educated, there are Horatio Alger-style exceptions of those who have succeeded by virtue of their business acumen. A quirk unique to the PRC is that the disruption of education during the Cultural Revolution has meant that the portion of the population who would have entered a university between 1967 and 1969 could not do so. Many in this cohort, who in the mid-1990s were in their mid-forties and have been labeled laosanjie ("three old ranks"), did not return to school after they were sent to work in villages and factories, and yet they have risen to the top on the basis of their intelligence and determination.

Their position, education, and income level have translated into considerable prestige for the new business elite in urban society. In recent years, as consumerism has gripped China, business is seen as increasingly legitimate and desirable work, and those who are successful in business are respected and/or envied. One measure of this evaluation was the increasing attention paid to professionals and white-collar workers in the mid-1990s on television, in the print media, and in fiction. Yet, the high regard in which many Chinese hold members of the business elite is not universal. Disapproval from older people and those who are

politically conservative reflects in part the historically low status of merchants in Chinese culture, a view accentuated by Marxist-Leninist and Maoist disdain for market-related activities and consumerism. Moreover, the fact that many of the post-Mao era's first entrepreneurs were from groups not generally respected (notably the unemployed and ex-convicts) and operated on the fringes of "socialist legality' also hurt the image of business.^[12] More recently, corruption scandals involving members of the business elite, particularly those who are former government officials, also have taken a toll. To counter this image, the government initiated a campaign in the official press in the early 1990s emphasizing the contributions and good behavior of entrepreneurs. Perhaps in part because of such campaigns, but most directly as a result of its financial success, the business elite has continued to gain considerable status and prestige in post-Mao society, especially among young people.^[13]

Research Focus

Building on the broad definition of China's new business elite just presented, it is necessary to describe in greater detail the segments of the business elite examined in this book, and the research methodology used to study them. As noted previously, managers in the foreign sector are the primary focus of this book. Foreign-sector managers were chosen as the basis for study because they appeared, prospectively, to be the group granted the greatest autonomy by the state, and therefore better positioned than any other economic group to engage in organized efforts to influence the state from outside the state. In order to expand our confidence in the generalizability of findings based on managers in the foreign sector, this book examines whether the experiences of foreign-sector managers are replicated elsewhere within China's new business elite. Specifically, it examines the literature on members of the elite in the other sector that is most formally autonomous from the state, that is, the private sector.

Insofar as foreign-sector managers and private entrepreneurs are the groups most involved in market reforms, these groups serve as "critical cases" in the study of post-Mao state-society relations. By the critical case logic, if we find that members of these most autonomous segments

of the business elite have not in fact converted their economic position to political influence, or have done so under very limited conditions, then it is unlikely that other members of the business elite who are more bound to the status quo of the state, or other non-elite economic groups, will be able or willing to do so either.^[14] A study of China's private and foreign business elite therefore delimits the boundaries of what we can expect to find in other sectors.

Before looking more closely at these two groups, it is important to point out that other segments of the business elite are not studied here. These other segments include entrepreneurial managers of state-owned enterprises and of collective township and village enterprises (TVEs). Many TVE managers have successfully navigated their enterprises into competitive export markets, while some state enterprise managers have striven to list their enterprises on the Chinese or foreign stock exchanges.^[15] Managers in quasi-governmental investment organs such as the China International Trade and Investment Corporation (CITIC) and its provincial equivalents also qualify as members of the business elite. Most important among these other segments of the new business elite, perhaps, are former government officials (who are said to have resigned their posts to "jump into the sea," or xiahai ) and children of high-level government or Party cadres (so-called "princelings," or taizidang ). Both are able to use contacts gained through official channels to their advantage in making business deals.^[16] The personal connections of former officials and taizidang are impressive and give them entree, in many cases, to leadership circles.^[17] But, consistent with the

"critical case" logic, because such people are formally tied to the state, they are prima facie less useful as initial tests for understanding the question of whether economic marketization generates new groups that readily convert their economic position to pressures for democratization. In other words, because these groups are already closely tied to the state, we would expect them to be a source less of change than of conservatism.

China's Foreign Sector and its Managers

China's foreign business sector appeared first during the late 1970s and became established as an important force in the economy in the mid-1980s. Whereas the Maoist government had long rejected the idea that foreign businesses should be allowed to operate and profit on Chinese soil, the post-Mao reformers actively encouraged such activities, hoping that foreign businesses would bring in not only capital but also technology and managerial skills. Since the late 1970s, foreign-backed companies have been established across a wide range of industries in China, including manufacture of computers, chemicals, pharmaceuticals, automobiles, consumer goods (notably toys, bicycles, televisions, and textiles), together with trading companies and, in the early 1990s, financial services and real estate. Although the growth of foreign investment in China was small in the early 1980s, and erratic in the mid- and late 1980s, dramatic growth began in the first half of the 1990s. (See appendix I.) Total pledged foreign investment was reported to be nearly $400 billion (in more than 258,000 enterprises) by the end of 1995.^[18]

Foreign-sector businesses take several forms, the three most common of which house the elite of foreign-sector managers examined in this study.^[19] First, Sino-foreign joint ventures (JVs), of both the equity and contractual varieties, represented approximately 85% of the total num-

ber of foreign direct investments (and 75% of the total pledged value) by the early 1990s.^[20] Second, wholly foreign-owned enterprises (WFOEs) involve no Chinese investment and are often preferred by foreign investors because they can maintain a greater degree of control over their operations and technology. The number of WFOEs has grown dramatically since the mid-1980s, yet they represent just under 15% of all foreign direct investment. In all, there were approximately 70,000 JVs and WFOEs registered in China by the end of 1992.^[21] The third type of foreign-sector businesses included in this study are representative offices (ROs). These are not technically direct investments but, rather, operate as agents for large foreign companies, and tend to be located in Beijing and Shanghai. There were an estimated 13,000 ROs in China as of mid-1993.^[22]

Members of China's business elite who are employed in the foreign sector are PRC nationals who work alongside expatriates. Many foreign-owned enterprises have hired Western and Asian managers, often from Hong Kong. By doing so, these enterprises have attempted both to inject Western managerial methods into their operations and to maintain some level of foreign control. The lack of access to a supply of trained Chinese managers—due to the upheaval of the education system during the Cultural Revolution, to poor labor mobility, and to political disincentives for Chinese managers' taking responsibility for foreign-backed enterprises—has discouraged extensive use of Chinese managers in many foreign-funded enterprises. Yet both Chinese and foreign participants in these businesses have preferred to promote high-quality PRC nationals to middle- and senior-management levels. The presence of expatriates, who tend to hold high positions and who make much higher salaries than their Chinese counterparts, causes tensions within companies.^[23] Many Chinese officials and managers are also sensitive to the circumstance that extensive foreign control recalls experiences of foreign imperialism of the nineteenth and early-twentieth centuries.

Management by local personnel is also desirable for effective communications within the firm. The recent rapid growth in numbers of foreign-backed enterprises has intensified the demand for talented indigenous managers. Thus, early on, efforts were made in JVs to set up management structures that paired Chinese and foreign managers at equal levels in so-called "shadow" management structures. Explicit efforts at management training, both inside and outside of China, have also been made.^[24]

The foreign sector has three types of managers, only one of which can be considered part of the business "elite." The first type of manager was dominant in foreign-sector companies in the first part of the 1980s. These are "old-line" managers who work in medium and large joint ventures, most of which have been formed with Western or Japanese partners. Such managers most often have been transferred to JVs from the Chinese state-owned parent company. They often have many years of on-the-job experience (and hence seniority) and tend to be in their late forties or fifties. They generally have not received either university degrees or schooling in Western managerial methods except, perhaps, for traveling to the foreign parent company for short-term technical training.^[25] Rather, they have obtained their position in the foreign-sector enterprise because of their status in the parent Chinese company, through personal tics with others involved in the venture, or by virtue of their political "reliability" or their ability to offer good connections on behalf of the enterprise. Their political "reliability" and lack of formal managerial training too often has meant that they are unwilling to take bold initiatives or accept responsibilities that might contravene standard practice in state-owned enterprises.^[26] Because of these problems, foreign participants often have been dissatisfied with their performance. Increasingly, these "old-line" managers have been eased aside or have transformed themselves into more effective managers.

The second type of manager in the foreign sector is clustered in the majority of Hong Kong- and Taiwan-funded investments. Most of these investments are small factories involved in value-added manufacturing

or processing, or in producing goods using fairly low-level technologies. Their managers tend to be recruited through family or clan networks rather than through merit-based processes.^[27] Anecdotal evidence suggests that their salaries are lower than in Western- and Japanese-funded enterprises, and that their status is not as high. This characterization does not diminish the importance of Hong Kong and Taiwanese investments in China's economic development; both Hong Kong and Taiwan firms have contributed enormously to China's export capacity and to rural industrialization, and much of the success of these factories can be attributed to the entrepreneurial behavior of their Chinese managers. Yet despite their success, these factories are not the major source of the foreign sector's new business elite.

A third type of manager forms the core of the foreign-sector business elite. Consistent with the meaning of "elite," the number of foreign-sector managers in this category is quite small—not more than 50,000 as of the mid-1990s.^[28] In contrast to the overall profile of the origin of foreign capital, in which more than half the reported foreign investment in the PRC has come from Hong Kong investors, members of the foreign-sector business elite are disproportionately concentrated in Western and Japanese firms.^[29] These firms offer managers the highest salaries and status, and tend to hire at their middle and upper tiers managers with the highest educational credentials.^[30] Because investments by Western and Japanese firms are more likely to incorporate advanced

technology and appropriate management skills, these firms tend to be most interested in hiring managers with advanced training. Such training occurs in a variety of venues. The most advanced management training is in Western-style M.B.A. programs located in China or abroad. Despite strong interest in M.B.A. degrees in China, government quotas on the number of M.B.A. degrees have kept the number awarded by foreign-run programs at 60 per year, and the number awarded by Chinese programs at 150^[31]

The number of Chinese students enrolled in M.B.A. programs located overseas is increasing. Yet, although some of these students return to China to work in foreign companies because of the emerging work opportunities as well as for family reasons, the number overall remains small. Management training for most members of the elite foreign-sector managers is therefore provided in Chinese-government-run universities, particularly those sponsored by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), or in special training centers (such as those established in Shekou and Wuxi) that are financed by foreign governments or universities or by the World Bank.^[32] Alternatively, many large foreign companies choose to recruit directly from China's premier universities (though there are some government restrictions on this practice), and then provide in-house management training either in or outside of China.^[33] In part as a result of their training, members of the business elite tend to be less cautious in their management style compared to their "old-line' counterparts.^[34]

Employees of Western and Japanese businesses are the highest tier of foreign-sector managers in terms of status as well. This is in large part a result of the international prestige of many of their firms. It is also a result of the higher salaries they are paid, particularly for managers who work in the U.S. financial and other professional services offices that began operating in the early 1990s.^[35] According to one survey, managers in joint ventures and wholly foreign-owned enterprises earned about 850 yuan ($160) per month (including pay, bonuses, and subsidies) in 1992. Chinese managers in representative offices earned even more, generally making between 1,000 and 3,500 yuan ($190 to $670) per month, plus benefits, in the early 1990s.^[36] These salaries compare favorably with other typical salaries, including those of managers in state-owned companies. In some cases, the salaries of RO managers are astronomical by Chinese standards; the manager of a U.S. financial house located in Shanghai reportedly earned $60,000 to $80,000 per year. In Shanghai, Chinese JV managers were ranked fourth among categories of the "richest people," after private entrepreneurs, entertainers (actors and singers), and government bond traders.^[37]

The foreign sector's elite managers are a self-selecting group. They have striven to reach beyond the rigidly prescribed stations of socialist society to apply for highly competitive schools, perhaps abroad or in some distant location within China. They are attracted to jobs in the foreign sector because these positions allow them to use their skills and to have more responsibility at a younger age. Indeed, being young can present a problem in a society that respects age and seniority. Talented young people often have difficulty finding positions in state enterprises commensurate with their skills and ambition, where promotion to management positions is more often based on seniority and personal ties than skill. Young managers without firmly established contacts in state enterprises or government see foreign companies as offering them more

chance for upward mobility.^[38] Many are attracted, moreover, by the opportunity to gain international experience and travel abroad. Working for a foreign company may enhance their chances for emigration, although this does not appear to be a primary motive for taking a job in the foreign sector. As we shall see, young people's risk-taking nature has tended to accompany a more independent attitude about the state and a willingness to break the bonds that tie them to it. At the same time, many find in the foreign sector the opportunity to escape the "politics" that pervades jobs in government and state enterprises.

Private Entrepreneurs

Examination of the literature on private entrepreneurs, the second segment of the business elite considered in this book, allows us to test whether what has been learned about members of the elite in the foreign sector is generalizable to other leading-edge sectors of the economy. If China's most successful private entrepreneurs are found to behave similarly to members of the foreign-sector elite, then we can be more confident of the conclusions based on the foreign sector.^[39]

The government in 1979 sanctioned China's first private businesses since the 1950s in the form of individual (geti ) or small family enterprises. By mid-1993, the official number of such businesses was 15 million.^[40] Small enterprises have been seen as a means to solve two chronic problems: unemployment and the lack of a service sector. Regulations limit geti businesses to a maximum of seven employees and to ownership only by farmers, retirees, or unemployed persons. Geti businesses have operated mostly in commerce, handicrafts, restaurants, repair, and service businesses, and are restricted from operating in finance and military sectors. Other owners, particularly those who entered the private sector early, are of lower-status backgrounds (ex-convicts, the unem-

ployed, or semi-skilled workers), although by the mid-1980s school graduates had come to make up a larger portion of the roster of geti entrepreneurs.^[41]

In early 1988, the government sanctioned a second type of non-state business: private (siying ) enterprises. Even in the early 1980s, government reformers recognized that many individual enterprises had expanded to outgrow the geti restrictions on numbers of employees, and allowed dying enterprises to employ eight or more people. For the most part, private enterprises have remained relatively small, despite the absence of a mandated cap on their size. As of the late 1980s, most such businesses employed an average of sixteen people. Although the largest enterprises, such as the Stone (Sitong) Group, have received the most attention, fewer than one percent employed more than one hundred workers. In contrast to the geti sector, private enterprises are less oriented to consumer services; their customers tend to be state enterprises and local government agencies. Most private enterprises have been established in manufacturing, mining, transportation, and construction industries, and many have leased land and equipment from small and medium state-owned firms. More recently, however, private enterprises have been established in the nascent professional services sector in the major coastal cities; indeed, the most risky and speculative areas of private business—especially finance (interbank lending and securities trading) and real estate—have grown rapidly in the 1990s.^[42] In 1994, the government news agency reported that there were a total of 420,000 private enterprises, although the number is undoubtedly much higher.^[43] The majority (60% in the mid-1990s) are located in the south and eastern coastal regions of China.^[44]

Although the backgrounds of the earliest siying enterprise owners resemble the early entrants to the geti sector (i.e., older or of lower status), there has been an influx of new types of people to the siying enterprise ranks. These newer entrants have been less often studied, but it is they who constitute the elite of the private sector. They number 5,000 or less.^[45] Although they face financial risks, many private enterprise owners have found their work to be quite lucrative. According to one survey, the annual income of private entrepreneurs (including salaries and bonuses) averaged $10,600 (92,000 yuan, or $883 per month), a figure twenty times greater than the average individual's salary.^[46]

The private-sector elite is more diverse in background than are elite members of the foreign sector. Nonetheless, they increasingly share the foreign-sector elite's characteristics of good formal education and high salaries. Members of the private-sector elite have essentially succeeded on their own. As with the foreign sector, some, particularly members of the "laosanjie " in their forties, who were frozen out of higher education during and after the Cultural Revolution, have no university education, and have developed their businesses "out of their kitchens." In general, however, private entrepreneurs have a higher level of formal education than the average worker; more than 70% in a 1994 survey had earned a high school degree, and 17% had gone on to higher education.^[47] Indeed, a significant number of established academics and other educated technical experts have gravitated toward siying enterprises. An increasing number of them are in their twenties and thirties, and have university educations. Despite this level of education, these younger private entrepreneurs are usually not well connected to the existing state-owned or bureaucratic sector, and they often eschew the traditional assignments upon graduation from university.^[48]

To some degree, members of the siying elite fit well the Western image of what it means to be an entrepreneur. As one interviewee put it, "They aren't related to Party members; they are nobodies, and have only their guts." Echoing the tendency of foreign-sector managers, moreover, elite entrepreneurs tend to enter the private sector in order to make better use of their talents and have more control over their careers. Over the course of the 1980s, as academics and state-sector managers saw the benefits of their stable salaries being eaten away by inflation, the private sector appeared to talented young people as an even more attractive alternative.^[49]

The business elite in post-Mao China is a far cry from the compradors of the late Qing, and nearly as distant from the state enterprise managers of the Maoist era. A theoretical basis for understanding the potential political role of this new business elite is presented in the next chapter.