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China’s Communist Government Has a Strong Hold on Chinese Corporations

AP Images

JD.com is the largest e-commerce company in China. In Communist China, it’s not enough for large companies like JD.com to be profitable — they must serve the goals of the Communist Party and benefit the country as a whole. For The New Yorker, details the clever ways that the company uses rural villages’ existing social networks to recruit new customers and employees, which has allowed it to improve Chinese life and possibly help slow the exodus to cities by giving villagers an incentive to remain in the countryside.

For the country’s leading tycoons, keeping in the government’s good graces is a well-established habit. During our conversation, Liu repeatedly spoke of company strategy in terms of deeper ambitions for the country as a whole, framing economic advancement as a civic virtue. A thirty-year economic miracle was not enough in itself, he said; one also had to “lead society in the right direction and bring in positive energy.” “Positive energy” is a phrase much used by President Xi Jinping, and my conversation with Liu took place less than two weeks after the Chinese Communist Party’s Nineteenth National Congress, which had signaled a tightening of Xi’s grip on the country. It has become evident that, compared with his predecessors Hu Jintao and Jiang Zemin, Xi demands more direct and explicit fealty from corporate titans. Recently, he stipulated that all publicly listed companies must establish a Party branch in the workplace.

Ryan Manuel, a political scientist at the University of Hong Kong, told me that, until recently, there was a cautious symbiosis between the government and Chinese tech giants, an outgrowth of forms of Internet supervision dating back to the early nineties, when the Web first came to China. But Xi, Manuel said, is now “putting the onus of censorship on the companies themselves, and dealing with them the way he managed his anti-corruption campaign.” The message is clear: as long as executives follow the Party line and police their own organizations, companies will be given permission to thrive, and championed as evidence of China’s soft power. But if there are transgressions the Party will target company leaders, even people as famous as Liu or Alibaba’s founder, Jack Ma—or Wu Xiaohui, the billionaire C.E.O. of Anbang, one of the largest insurers in the country, who, in May, was sentenced to eighteen years in prison after being convicted of fraud and embezzlement. Manuel said that, in such cases, the charges are frequently opaque—“corruption,” “ideological failings”—but the fates of the company and of its top executives are sealed.

As a result, the recent public utterances of business leaders have displayed a new caution, coupled with an extravagant eagerness to demonstrate loyalty to the Party. A couple of weeks after I met Liu, he was named the head of a poor village south of Beijing, and he quickly unveiled a five-year plan to increase its wealth tenfold. Last year, he made a remarkable announcement on TV. “Our country can realize the dream of Communism in our generation,” he said. “All companies will belong to the state.”

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