Weapons Of The Rich. Strategic Action Of Private Entrepreneurs In Contemporary China. Thomas Heberer

and exercises guidance, supervision, and control over the private sector of the economy.’

      ¹¹It was then replaced by the ‘Ordinance of Urban and Rural Industrial and Commercial Self-Employment’ (Lin, 2017: 32).

      ¹²The extent to which the 1989 protest movement was supported by private entrepreneurs is estimated as low by most scholars. There was financial and material support by a number of them, but in general private entrepreneurs abstained from becoming entangled in the protests and displayed much ambivalence in taking a stance on them (Wank, 1995).

      ¹³‘Dual-track’ means the pursuance of market reforms under the auspices of a command economy protected by the state.

      ¹⁴One of the most comprehensive and telling studies on the rise of the private sector in post-Mao China is Nee and Opper’s Capitalism from Below (2012), which meticulously traces the interplay of state institutions and informal agency on the part of entrepreneurial actors which resulted in institutional adaptation and change by shifts in market competition, entrepreneurial action bringing about institutional innovation, mutual monitoring and enforcement in cross-cutting networks and mimicking, i.e. copying effects caused by successful private entrepreneurs which led to increasing collective action for further changes in the overall institutional setup of the Chinese economy.

      ¹⁵However, Deng’s ideological ‘victory’ remained contested in the party throughout the 1990s and it was only thanks to his personal authority that the ‘reform and opening up’ was not attacked with more serious consequences as market reforms went into rough water periodically during that decade.

      ¹⁶During roughly the same time frame, there was a complete restructuring of the public sector economy (see below).

      ¹⁷Jiang Zemin, ‘Qi yi jianghua da tupo’ (Big breakthrough by Jiang Zemin’s July 1st talk). http://talk.163.com/06/0323/16/2CTNGB5600301IJI.html (accessed 22 June 2018).

      ¹⁸The ‘Three Represents’ were officially mentioned for the first time by General Secretary Jiang Zemin in 2001 in a keynote speech at the occasion of the 80th anniversary of the founding of the Communist Party. According to this formula, the Party represents China’s ‘advanced social productive forces’ (i.e. economic development), the ‘progressive course of China’s advanced culture’ (i.e. cultural development), and ‘the fundamental interests of the majority of the Chinese people’.

      ¹⁹This was no less than a revolutionary change in the party constitution: Private entrepreneurship, the epitome of mankind’s exploitation, was now defined as a major pillar of socialist development instead of, as in the early years of the People’s Republic, being considered only a transitory means in the struggle to bring about socialist transformation.

      ²⁰Zhongguo Gongshang Bao (accessed 20 March 1998).

      ²¹Chinese firm development confirms the theory of Hayami and Kawagoe (1993), among others, according to which a productive upswing in agriculture entails entrepreneurship specializing in industrially processing agricultural produce. In this way, the agricultural sector is connected with modern industry and urban markets. Traditional village and clan communities facilitate this process as they help to keep costs at a minimum. Rural industrialization generates increases in income for both urban and rural areas. Consequently, rural–urban migration is calibrated and limited at a tenable level.

      ²²For an interesting example of structural, institutional, and social change induced by ethnic entrepreneurs in an ethnic minority area in China as well as their competition with Han entrepreneurs — an issue which, however, cannot be addressed in this volume — see Heberer (2007).

      ²³As a Chinese entrepreneur noted, the private sector was developed by giving it freedom (fang) and not by means of a bureaucratic steering (guan) (Sun, 2018: 55).

      ²⁴The history of China’s TVEs, which developed out of the old communes and production brigades after the household contract responsibility system had been installed in rural China, is well accounted for by Oi (1999), Naughton (2007), and Huang (2008).

      ²⁵Huang Yasheng (2012) has argued that China’s capitalist takeoff was predominantly due to the success of its TVEs. On the development of TVEs and other rural ownership forms, see Fan et al. (2015: 65–160). In 1985, according to data published by the Chinese Ministry of Agriculture, there were 12 million TVEs of which 10.5 million were registered as private and only 1.57 million as collective (!). In the same year, the official data started to divide TVEs into three categories, namely (1) collective, (2) privately run, and (3) household businesses. The growth of TVEs in the following years until 1993 occurred entirely in the second category. This means that the government was not only well aware of the private character of most TVEs, which had meanwhile registered as collective enterprises, but also accounted for them as such statistically. Huang also points at another interesting aspect of private sector development in China’s countryside during the 1980s: the liberalization of informal finance (via rural credit cooperatives and so-called rural cooperative foundations) as a substitute for formal finance to help private enterprises solidify their operations. However, starting in the early 1990s, the central government reverted its former policies and attempted to wipe out informal finance schemes in order to regain full control over the credit sector and the private sector economy. Since then, private companies have suffered from a structural ‘credit crunch’.

      ²⁶Dickson cites a survey conducted by the All-China Federation of Industry and Commerce (gongshanglian) and the Chinese Academy of Social Sciences in 2002 which also showed that 25 percent of all officially registered private enterprises at the time had originally been part of the state sector.

      ²⁷Wo guo shi you geti gongshanghu he siying qiye zhan quanbu shichang zhuti 94 percent (Individual and private enterprises constitute 94 percent of all market players), Xinhua News Net, 22 January. http://www.xinhuanet.com/fortune/2018-01/22/c_1122297394.htm (accessed 9 August 2018).

      ²⁸Some reports, however, argue that these data do refer to small and medium enterprises only. See, e.g. ‘Wei xiaowei qiye shutuan, xu shichang ‘zhichi’ genshang’ (A bailout for small enterprises requires ‘support’ for their survival in the market), Xin Jing Bao (New Capital Newspaper), 31 August 2018; Zhongda lihao (Major advantages), Zheng, shang xuejie jiti xingdong, minqi xinde de chuntian yao laile (Collective action of politics, business and scientists, the new spring for private enterprises is arriving). https://465557.kuaizhan.com/11/45/p5516239418a8bf (accessed 1 September 2018).

      ²⁹Well-known ‘national champions’, which have ranked among the top 10 on the Forbes’ Global 500 list of 2017, are State Grid (2), Sinopec (3), and China National Petroleum (4).

      ³⁰‘National champions’ are companies which a government has identified as major driving forces of its overall economic development strategy. They have easier access to credit, are given preferential treatment in government contract bidding, and sometimes gain monopoly or oligopoly status in certain sectors of a country’s economy. China’s biggest companies, most of them state-owned, are called ‘national champions’, among which are the world’s three largest companies: Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), and Agricultural Bank of China (ABC). Huawei, the world’s largest producer of smartphones, is probably the most prominent example for a private ‘national champion’, though a vast majority of them are SOEs. The establishment of the State-Owned Assets Supervision and Administration Commission (SASAC) in 2003 marks the starting point of China’s ‘national champion’ policy, as SASAC was assigned the task of enacting industrial policies to transform China’s top 40 companies into such giants (Graceffo, 2017). Today, in accordance with the state’s call to promote so-called ‘Strategic Emerging Industries’, which was written into the 12th Five-Year Plan (2011–2015) and further