THE PARTY
The Secret World of China’s Communist Rulers
by Richard McGregor
Allen Lane, 300pp.
Reviewed: 10 July, 2010
Australian natural resources shareholders, keen to take Chinese cash, will point to corporate structures that seem to give the Chinese suitor a corporate governance and accountability consistent with Australian law.
Regulators and politicians may know, but seldom say publicly, that no Chinese corporation of strategic scope or scale, regardless of its formal structure, can operate outside the pervasive control of the Chinese Communist Party. Governance and accountability are crippled by the fact that corporate, judicial, and legislative responsibilities are all subject to direct control by a Communist Party that is above the law in China, accountable only to itself.
“Separation of Powers” is anathema to the Communist Party, and so it is largely a charade wherever it is pretended to exist in the Chinese system.
Richard McGregor has spent nearly twenty years in and around China, firstly for The Australian and then for the Financial Times (of London), covering China’s period of rapid economic development and acquisition of global soft power. Now out of China, he has written a brilliant and thorough description of how the Communist Party has defeated every internal and external challenge to its monopoly of power.
I don’t like the over-dramatic subtitles publishers often attach to their books, but in this case “The Secret World of China’s Communist Rulers” is no more than a straight description what McGregor sets out, fairly and impeccably sourced, about the way that China is governed.
The name “Communist Party” may confuse westerners: it is neither a political party of the parliamentary kind, nor “communist” in a sense that Karl Marx would understand. In Hong Kong, where political parties must be registered by law, the Communist Party simply declines to register. Lenin would recognize its organization style, secrecy and discipline, but not the pragmatism of its policies. Many features of the way the Party rules China owe as much to the tyrannical bureaucracy of China’s Imperial dynasties as they do to Russian Leninism. “Ruling from behind a screen” has an ancient history in China.
When contemporary Chinese leaders refer to democracy in China, they mean what was spelled out in an internal White Paper for the Party, in 2005: “Democratic Government is the Chinese Communist Party governing on behalf of the people”.
The essential feature is that every element of the state structure, and as far as possible every social or “private sector” organization, is host to a Party Committee that shadows whatever powers that body may have. Since the Party organization itself is strictly hierarchical, this means that both policy and patronage can be both supervised and directed by the Party, at any scale of organization.
A highly secretive Party Organisation Department controls appointments and promotions at every senior level, including the vast state-owned commercial sector and board appointments to “private” corporations. Someone who is managing director of a petroleum corporation one day can be the governor of a province the next, and vice versa. Heads of three huge telecommunication companies, set up supposedly to compete with each other, were simply “rotated” by Party direction so that competition would not “harm state interests” by reducing overall profits to the state.
This tight control of China Inc has enabled China to make spectacular resource allocations for political purposes and to control internal markets, but it has its downsides. Corruption is endemic because patronage is power and Party patronage is universal and unchallengeable. Party members, however corrupt, may not be prosecuted by state law authorities unless the Party’s internal discipline office recommends it. McGregor says that less than ten percent of Party members found to be corrupt have been sent to court – the rest are let off with internal discipline and demotions.
McGregor had finalized his text before the case of Stern Hu and Rio Tinto arose, but his exposure of the system supports the view that arbitrary and unexplained elements of that case relate more to the involvement and interests of senior Party members than to any of the overt legalities discussed in court. The Party can direct the courts and the Party appoints the judges, but need never explain.
Of course, the Party also controls the press and the police. The “Peoples Liberation Army” is formally required to defend the Party even above defending the nation. The Party controls the legislature at every level, and can change the Constitution whenever it sees fit – though since the current Chinese constitution gives the Communist Party primacy over every organ of government, revision of the Party’s inviolate status is unlikely any time soon.
McGregor doubts that any external factors can shake the control of the Communist Party. Its propaganda thrives on external threats. With western capitalism on the defensive, and China’s Party-controlled economy apparently booming, the Chinese system is looking increasingly attractive to tyrants and opportunists everywhere. It is so much easier to do deals with monarchs and dictators, once you know what they want.
If liberalisation of any kind is to come, it will come from within the Party itself. China’s own large intellectual and entrepreneurial middle classes are either benefiting from the system as it is, or kept mostly within bounds by the threat of exemplary punishment.
China’s Communist Party has every reason to be confident that it can buy or bully whatever support it needs at home and abroad. Neither toadying nor megaphone diplomacy from foreign liberals will deflect its primary aim of retaining absolute, unaccountable power at any cost.
Anyone with interest in China’s place in our world should read this excellent book.
Richard Thwaites was Australian Broadcasting Corporation correspondent in China, 1978-1983.