Wed, Nov 27, 2002 page12

• Communists accept business leaders

  RAGS TO RICHES When Mao died in 1976, China was almost devoid of private business. It now has 2 million private businesses that employ over 27 million people

  • AP
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  Smoothing the way for capitalists, China's leaders have invited an electronics magnate and a steel maker to join the Communist Party's influential circle of leadership. The business of communist China is now, officially, business.

  The party's growing acceptance of the political clout of business leaders like Zhang Ruimin, chief executive officer of electronics giant Haier Group, and Xie Qihua, president of steelmaking giant Baosteel Co. is good news for entrepreneurs

  

  A worker takes a break at a construction site in Beijing, yesterday. China has been engaged in an expensive campaign to invest in large infrastructure projects since 1998 in an effort to lift overall economic growth. With its market economy opening and its entrepreneurs growing more powerful, China's leaders during the 16th Communist Party Congress two weeks ago approved President Jiang Zemin's ``Three Represents'' theory, adding capitalist-style ideology to their party constitution.

  PHOTO: AFP

  "Today's leaders understand things a bit better. We can work faster now," said Li Zhucheng, managing director of Fashion Electronics City, a huge store in the southern city of Dongguan.

  "It's good to have more business managers in the party. I might consider joining myself," Li said.

  Though the party's congress earlier this month stuck to a ritual-laden script, the 2,114 delegates approved a new generation of leaders and endorsed changes allowing a more active political role for the increasingly influential business sector, including the private sector.

  Included among 158 alternate members of the party's Central Committee, which has a regular membership of 198, Zhang and Xie could be tapped later for higher positions. That's a turnaround for "red capitalists" raised in an age when profit-makers were branded "imperialist running dogs."

  Private enterprises now account for roughly half of China's economic output. Along with foreign-invested companies, they are the main source of jobs for tens of millions of workers laid off by state firms.

  "The only thing that keeps the ruling party ruling is growth and economic development," says Jim McGregor, a Beijing-based business consultant. "The jobs are all coming from the private sector. If it doesn't bring entrepreneurs on board, the party is in danger of becoming irrelevant."

  Like Zhang and Xie, most of the business figures attending the congress represented state-owned companies. Others attending were the chairman of Beijing's biggest manufacturer, Capital Steel Group, and the president of Air China, China's government-run flagship airline.

  Haier, based in the eastern port city of Qingdao, was a failing state appliance factory until Zhang, a bureaucrat, was deployed to turn it around in 1984. Today it is one of China's best known brand names. As head of Shanghai-based Baosteel, China's biggest steel manufacturer, Xie is one of the country's most prominent businesswomen.

  The party never disclosed the full list of delegates at the congress, but various estimates put the number of private business leaders attending at between five and 10. About one in five entrepreneurs have joined the party, according to government statistics, but until now their formal political role has been an advisory one.

  Now, tycoons -- some of them the sons and daughters of past party leaders -- occupy an increasingly important spot in the unique Chinese economic-political hybrid known here as the "socialist market economy." The party refers to them by the more oblique "advanced productive forces."

  Until the early 1980s, China pursued a policy of defense-oriented heavy industry and collectivist agriculture shaped by the utopian vision of revolutionary leader Mao Zedong.

  When Mao died in 1976, China was almost devoid of private business and its economy was in shambles. His successor, Deng Xiaoping, declared that ``to get rich is no sin'' and began shifting from central planning to a market economy. He opened the country to foreign investment.

  China now has 2 million private businesses. They employ more than 27.1 million people and own registered capital estimated at US$217 billion, according to one recent government estimate.
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