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Document specifications

“New Opinions on Promoting the Entrepreneurship and Giving Better Play to Their Roles”, issued on September 25, 2017.

Issuing institutions: General Office of the Central Committee of the CCP, General Office of the State Council

Takeaway message: Party documents and local practice show that party organizations aim to have more say in decisions of foreign companies in the future in order to influence their entrepreneurial strategies. The party wants both local businesses and foreign companies to act in accordance with its economic policies. At the 19th Party Congress in October 2017, the CCP announced that 70% of foreign companies in China had established corporate party organizations. The party aims at “consolidating the ruling basis of the CCP in foreign companies”. Foreign companies are getting uneasy with the uncertain prospects of party interference, especially with the question whether and to what extent party organizations in their companies might influence their decisions in the future.

Background

One important provision of the company law of the PRC (Article 19) refers to the mandatory establishment of CCP organizations in all companies that do business in China. This rule remained dormant for almost a decade, although it was written into statutory law in 2005. Under earlier administrations, there were practically no Party documents referring to party organizations in foreign companies. In May 2012, however, the CCP’s Organization Department of the Central Committee (ODCC) issued the Provisional Opinions on Reinforcing and Improving the Work of Party Construction in Non-State-Owned Enterprises (<关于加强和改进非公有制企业党的建设工作的意见>). At the same time, the ODCC announced that up to one million private companies had established CCP organizations, of which some 50,000 were purely foreign companies.

In June 2017, the Central Committee of the CCP, together with the State Council, issued Reform Plans on the Construction of the Team of Industrial Workers in the New Period (<中共中央、国务院印发《新时期产业工人队伍建设改革方案》>). Xi Jinping’s subsequently called for an “overall coverage” of companies with party organizations. With a series of measures, the CCP is now implementing his uncompromising policy. Local committees of the CCP are taking substantial steps to gain new party members and set up party branches in foreign companies. These developments are most visible in urban areas, especially in coastal regions.

Major content: Establishing systematic political control of foreign companies

The document mentions the necessity of educational sessions for entrepreneurs aimed at inculcating them with “common ideals of socialism with Chinese characteristics” and reinforcing their “loyalty” to the party. It also stresses the party’s leadership over entrepreneurs of private and non-state-owned companies and emphasizes the “political core functions” of party organizations in different companies. Analysis of collected materials relating to party organizations in foreign companies in several coastal cities and provinces shows that the party has already established considerable degrees of control over foreign companies in several areas (see table below).

Party organizations of local municipal governments seek to dispatch their party members to foreign companies (as full-time or part-time employees) to supervise the work of party organization. This happens most frequently in fields where government departments are in charge of the administration of development plans and reforms, investment, tax, etc. Party members will try to convince key employees of foreign companies of the need to become party members themselves.

Such organizational tasks are assigned to party units in local governments as part of their administrative responsibilities. Party units can be small, some comprise only 3-5 members. One of their tasks is to establish systematic databanks on foreign enterprises. They organize education sessions for employees and propaganda activities promoting the party’s importance. Apart from that, they notify foreign investors of relevant laws and regulations (including those of the CCP), provide CCP-related materials for study, and spread stories about “good party members” in foreign companies.

A substantial part of the party units’ work lies in obtaining financial resources to support party work in foreign companies. Usually, party fees serve as the staple income, but foreign investors, together with the workers’ unions, are supposed to provide subsidies to party units as well. In some cities, it was suggested that foreign companies bear the costs for the heads of party units and incorporate those into their budgets.

Most importantly, party units are expected to convince foreign investors of the “advantages” of promoting party members to the management board. Party opinions on major issues are supposed to be fed into foreign companies’ managements in “meetings on the exchange of business situations”, “meetings for offering advice and suggestions in cordial dialogues”, and “meetings of study and discussion about the construction of staffs”. In some localities, high-ranking managers or even chairpersons of the directors’ board have been enlisted as party secretaries of the corporate party branches.

The document mentions giving full play to the “political core functions” of party organizations as the main target of party activities in non-state-owned companies. Party organizations are expected to cooperate with local trade unions and examine the “political and ideological performance”: Entrepreneurs or investors who “deviate from correct political standpoints” may be criticized and possibly even prosecuted, should they violate laws or regulations.

Sometimes party units also help with settling labor disputes between employees and foreign investors. In so-called internal organizational talks, employees are dissuaded from launching a legal proceeding against investors. To foreign companies, this kind of party work may even be useful, but it remains a double-edged instrument because party members could just as well stir up hostility towards foreign employers via trade union activities.

This systematic party work is closely supervised by senior CCP organizations. They pay regular visits and give financial support to party units in foreign companies. Besides, the party tightens ideological control of party members and units in foreign companies through regular political inspection, supervision, reports, assessment, awards and punishments.

Sources:

EN: Opinions on Creating Healthy Growth Environment for Entrepreneurs, Promoting Eminent Spirit of Entrepreneurship, and Giving Better Play to the Roles of Entrepreneurs (September 2017)

CN: 中共中央 国务院关于营造企业家健康成长环境弘扬优秀企业家精神更好发挥企业家作用的意见