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China: Connections Speak Louder Than Hard Work, Talent - 2002-11-06

Senior leaders are soon expected to invite private entrepreneurs to join China's Communist Party. The Communist Party is trying to catch up with China's increasingly capitalist society.

Business is booming at one of Beijing's hot new bars, the owner of which wishes to remain anonymous. Here, well-coiffed and affluent young Chinese happily pay more than $4.00 for a beer.

The 26-year-old owner of the bar is pleased with the success of his five-month-old business. But he doesn't take any of it for granted and works more than 12 hours a day.

The bar owner said that to become rich in China these days, it is not enough to work hard and have talent. He said, "You need good connections in the government." Still, he said he probably would not join the Communist Party. "It would be too uncomfortable, like wearing a mask all the time," he said.

Yet this bar owner and his customers are precisely the kind of people the Communist Party wants. The turgid ideology of the party, with its sloganeering about Marxist-Leninism and the dictatorship of the working class, clashes with the vibrant changes and materialism of 21st century China.

More than 50 years after the Communist Party took control of China, it urgently needs a makeover. Otherwise, it risks becoming irrelevant, or even losing its hold on power.

At the 16th Communist Party Congress starting Friday, leaders are expected to revise the constitution, and invite entrepreneurs to become party members for the first time. China observers also think the Congress is likely to appoint some prominent business people to the party's powerful, 200 member Central Committee.

Jean-Pierre Cabestan is head of the French Center for Research on Contemporary China. He said China's President Jiang Zemin proposed the idea so entrepreneurs would not become too influential and threaten the party.

"The first one … is to promote some entrepreneurs or to make the integration of entrepreneurs within the party something which is not only legal but welcome and should be encouraged in order to prevent entrepreneurs to be tempted to set up independent political forces outside of the party," he said.

Many party members have already become wealthy business people, so in one sense, the move merely acknowledges reality. But formally embracing entrepreneurs would mark a significant change for a party that used to call business owners "capitalist running dogs."

Reaching out to entrepreneurs is part of a theory Mr. Jiang promotes called the Three Represents. The theory states that the party represents "advanced productive forces, advanced culture and the interests of the majority of the people."

"Jiang Zemin would like to be associated with the adaptation of the Communist Party to the new environment, which is made of a globalized economy, a more open society - though still very tightly controlled from a political point of view," he said.

In short, communist China is becoming more capitalist. Private businesses are the most dynamic part of the economy, accounting for at least a third of the country's gross domestic product today, up from virtually nothing two decades ago.

Yet the state continues to control more than half of the economy, and private businesses face difficulty obtaining credit from banks.

Analysts said the change is likely to result in more support for the private sector. Some, for example, expect banks in several cities to be given more freedom to lend money to private companies.

While inefficient state-owned enterprises shed millions of workers, private companies create jobs. China's leaders recognize that entrepreneurs are crucial to the country's continuing economic growth and social stability.

The U.S. magazine Forbes annually compiles a list of China's 100 richest people. Those on this year's list all have a net worth of at least $84 million, and the magazine estimates that a quarter of them belong to the Communist Party.

Nigel Holloway, a Forbes editor, said being a party member seems to be good for business. "It admits you to certain social circles and because the Communist Party still holds all the power in China, political power, therefore it would give you an entrée into circles which decide on infrastructure contracts, who gets access to the capital markets … to list their shares on stock exchanges and so on," he said.

Now that the party is opening its arms to the wealthy, more entrepreneurs may assume senior government posts, becoming part of what is nominally communist rule.

Yet being a high-profile tycoon has its perils. Yang Bin and Yang Rong, the second and third richest men on last year's list of China's wealthiest people, dropped off the list this year. Chinese authorities have charged both with unspecified economic crimes.

Mr. Holloway, the Forbes editor, said China's economy is in such a high state of flux that just nine names from the Forbes 100 richest list of 1999 remain on the list this year. "I think it's a reflection of how companies and industries can both rise and fall very rapidly… but in addition there is obviously the extra element of their standing with the government. And if they fall foul of the government, they can expect to end up in prison or in exile, in which case they would fall off the list," he said.

It is no wonder, then, that many entrepreneurs are not interested in joining the party. At a bar in Beijing, the young owner admits he often has to pay higher rent than party members do. But he sighs and says, it is part of doing business in China. He is satisfied with the money his business generates and says he would rather not attract too much attention anyway.