McGregor's The Party is a history of the Communist Party of China (CPC). It is also a playbook for the establishment of a government that has contradicting properties: Decentralised decision making and a centralised policy body; Communist ideologues running the government and private property. The single unifying goal of this government system is to deliver economic growth. Financial freedom was China's only hope after 100 years of subjugation under Western powers and Japan beginning with the Opium Wars in 1839 and ending with the end of the Second World War in 1945.
Numbers that describe the growth of the Chinese economy are eye-popping. (The Party was written in 2009.) Profits from Chinese State-run enterprises went from 0 in 1997 to $140 billion in 2007. The aggregate growth numbers for China are also impressive and have pulled half a billion people out of poverty. It is the most significant eradication of extreme poverty that we have seen since the Second World War. Behind this growth are the stewards of the Chinese economy, men who aim to return China to its designation as the "factory of the world." These men belong to a mysterious, unregistered organisation, that exists by virtue of a single line in the Chinese constitution's preamble: The Party.
The socialist system is the fundamental system of the People's Republic of China. Leadership by the Communist Party of China is the defining feature of socialism with Chinese characteristics. It is prohibited for any organisation or individual to damage the socialist system. – Constitution of the People's Republic of China (Article 1)
First off, McGregor clarifies the system of government in China (as much as he can). There are courts, cabinets, and governments at each level: city, province, federal. But these are subordinate to the party committees at the corresponding level. So, the real chain of power would look something like this:
In this diagram, the solid lines are real reporting lines. (i.e. The mayor is officially answerable to the governor.) And the dotted lines are part of the Party system. The Mayor unofficially reports to the Secretary of the City Party Committee. Ultimately, its existence is not something which can be proved through documents or journalistic reporting. McGregor's claim that this line exists is based on his experiences in China. Throughout the book, he gives many examples that reinforce his point that the dotted line exists and takes precedence over the solid line. (One of my complaints with the book is the way in which McGregor assumes the existence of this line in some parts of the book, instead of trying to prove otherwise and having to resort to its existence despite his best efforts.)
McGregor makes it amply clear throughout the book that the ambiguity in this governing system, where an outsider doesn't really know who is in control, is the point. This ambiguity gives rise to a lot of freedom for the Party to make decisions which can be presented as decisions made by the People's Government. The Party Committee Secretary of a city or province has wide ranging powers over the permit process. So, he can serve as the mythical "single-window," that businesses chase with reckless abandon, in every new economy that they enter into. By virtue of the socialist system, all the land in China is owned by the State. (No pesky government land acquisition cases that have to be litigated before a lucrative new mine can be set up.) Thus, the Secretary can lease this land. Party committees at the regional banks can be instructed to issue loans, using the Party bureaucracy. As many strategic businesses are owned by the Party, all these activities cannot be classified as "self-dealing." Indeed, they follow the capitalist mantra of "creating shareholder value." The Party is the major shareholder in the ventures that will benefit due to this swift decision making and the free hand that party secretaries around China are given.
Should we term the CPC as a shadow government? Yes. The CPC maintains an intentionally low profile. The highest body in the CPC is the Politburo, which has 9 members. Everyone knows the CPC General Secretary Xi Jinping. However, the other 8 members are obscure, and as McGregor insists: "often unknown even in the provinces they used to govern." At each level of government, and inside state- and non-state-run enterprises, the Party is more powerful than the publicly visible chain of power. But admitting this superiority openly will break the illusion.
McGregor takes the reader on a tour of the different departments inside this shadow government. The book begins with a brief history of the Party and a summary of the governing system. The subsequent chapters cover a variety of subjects such as decentralisation, corruption, and propaganda. Each chapter contains anecdotes from the author's travels in China and from public reporting.
Reading any book about China is disorienting. It is impossible to understand modern China's rise from outside China. The closest one can get is to understand the institutions which spurred the unprecedented growth and prosperity, alongside a controlling state. Accepting that communism and prosperity can coexist is difficult. Cuba, Russia, and East Germany have corrupted the imagination of the capitalist world. The drab brown clothing is seen as a stand-in for governing systems that are unimaginative and do not possess the tools to thrive in a world with open borders for goods and people. To fall into this trap and term the Chinese government as authoritarian or the privacy sacrifices made by the Chinese people as futile would be a grave mistake. The open-borders, liberal model of development was used by some countries to reach their higher-income status. This model is being exported by institutions such as the WTO, the IMF, and the World Bank. However, it does not exclude the existence of another, more effective model which is appropriate for Asia. The Chinese model of growth is the most recent example of an economy growing from scratch to a dominant position. Dismissing it out-of-hand is short-sighted.
The State-approved consensus inside China is that Mao is "70% good and 30% bad." This seems like an overly positive evaluation for a leader who unleashed 10 years of madness and death during the Cultural Revolution, after his previous plan (The Great Leap Forward) failed to produce the socialist utopia that he was aiming for. Why does this evaluation still hold sway?
Mao is the man behind the People's Republic of China. He was Chairman of the CPC for the longest period of time. He is the amalgamation of three key figures in communism.
Mao's ideology and revolution are the 70% good that he gets credit for. 30% is docked for the path he chose when his initial plan failed. Mao Zedong thought is the foundation stone of the Chinese system of government. He can never be extricated from China's image of itself or from the story that China tells about its triumphs and tribulations.
McGregor gives a detailed recounting of the CPC's decision in 1981, 5 years after Chairman Mao's death, to accept that Mao had made mistakes. But to accept that Mao was "100% bad" would be a self-inflicted wound. Deng Xiaoping, Chinese premier in 1981, had the insight that stripping Mao of his party membership for these mistakes would be a blunder. If the CPC were to evict Mao for his mistakes, the radical thinkers would eventually negate the system that was built on Mao Zedong thought. The radical thinkers may not have come in the next decade or five. But to Deng, the negation was inevitable.
Control over the narrative of China's past and present falls to the Propaganda Department. To control narratives of the present, weekly guidelines are issued to all newspaper editors. These guidelines list topics that are out-of-bounds. True to form, these guidelines are ambiguous. The ambiguity in them is supposed to be interpreted as conservatively as possible by editors who know where the line is. The stories that cross this line never get written. The Propaganda Department is the most shadowy and hidden part of a government system where few people openly talk about anything, except what is already settled CPC policy.
The People's Liberation Army (PLA) is China's military. As General Secretary of the CPC, Xi Jinping is also the head of the Central Military Commission (CMC), which controls and courts the PLA. In McGregor's reading, "the PLA is the only real threat to the CPC." I am not convinced that other threats don't exist or that those that exist could go out of the CPC's control in the future. But that the PLA is a threat to the CPC is beyond doubt. With control over the media and over assembly of its citizens, the only group of citizens who are allowed to carry weapons and assemble are soldiers in the PLA. Measures have been taken to keep them placated.
The PLA has received double digit budget increases; their modernization was prioritised by the Party; the Party continues to regularly run jingoistic pieces in State media that highlight the "grave" threats to the Chinese system of government and especially to the mutinies that are brewing inside the PLA. (No such mutiny has ever been found.) These threats serve a purpose: They tether the PLA to the CPC against an imaginary enemy.
The PLA was the military wing of the CPC. The CPC itself was founded by Mao as a revolutionary party; so, when the revolution ended, the PLA stopped serving any purpose. There is no one to rebel against in China anymore, except the Party itself. The PLA's international role is a modern afterthought, which has become eminent in recent times as China's clout increases in global conflicts.
Three things are notable about the tether between the two most powerful institutions in China.
First, the CPC convinced the PLA that territorial expansion and military competition would lead to conflict which would be detrimental to China's growth as an economic superpower. It would hamstring the policymakers' ability to steward the economy. This worked. While the US and USSR were involved in a Cold War, China saw steady growth that empowered a new middle class. During the 15 year period starting around the end of the disastrous Cultural Revolution in 1977 and ending just after the collapse of the Soviet Union in 1992, Chinese GDP grew at an average annual rate of 9.45%.[10]
Second, the CPC realised the potential of a revolution when some PLA commanders refused to carry out orders during the 1989 Tiananmen revolution. The lead-up to Tiananmen was characterised by a decade of liberalisation where university professors and students were allowed to voice their opinions about wanting a more representative government. The CPC "woke-up" to the existential threat that the PLA could pose. McGregor describes the 6 months after Tiananmen as "tense" as people at think-tanks, universities, and at the PLA who had supported or expressed sympathy for the protests were imprisoned.
Third, the Taiwan question. Under Chinese premier Jiang Zemin, this question was desperate for an answer. Jiang was a nationalist and did not care about the economic impact of military conflict. His period as the chairman of the CMC after the end of his tenure as the General Secretary of the CPC was dangerous for the new premier Hu Jintao, who wanted to refocus on the economy. The PLA preferred a military conflict with Taiwan because it had been recently modernised (bolstered by the budget increases, that came without fail each year.) and because it saw an opportunity to get out of the Party's control during the chaos that would undoubtedly follow a war with Taiwan. Hu extricated himself from this precarious situation because the Chinese people agreed that the Taiwan question could be left unsettled for some more time. (Their tacit approval is inferred from the lack of widespread protests demanding a military conflict with Taiwan for reunification. Such widespread protests were predicted by some conservative scholars inside China and by Jiang's supporters.) After Hu's term began in 2002, the Taiwan question was put on the back-burner; and the PLA's ambitions to break free of the Party had been squished.
A significant threat to the CPC is corruption and cronyism within its ranks. The Chinese government system's "decentralisation for quick decision making" works only when its ranks are full of talented and competent people, who are acting at least indirectly in the Party's interests. Indeed, Party membership should be contingent on these skills. But corruption can taint even the most talented of people. Avoiding corruption and cronyism among officials, especially those that are further away from Beijing has been a challenge for the Party.
The CPC anti-graft department heads corruption investigations. The anti-graft commission has a lot of power. They can hold people for up to 6 months. When the investigation is complete, the Party decides whether the official is guilty. But there is one caveat to this ostensibly good anti-corruption infrastructure.
Investigations that probe senior party officials must be approved by the Party apparatus one level above the official. This serves two purposes: as senior Party officials want to appear to be tough on corruption, they will want to approve any corruption investigation request that comes their way. However, corruption in their ranks would reflect badly on their own competence, and so, they will try to suppress investigations as much as possible. The second, implicit purpose of this approval process is that Politburo members and their families are essentially protected from any corruption investigation, as there is no one above them to approve a corruption investigation into them.
After the Party investigation, the judicial process takes over. This process is simply for the sentencing of the official. Even if the official was found to be not guilty of the charge (which happens in very few cases), the detention of an official by the Party anti-graft committee alone will spell disaster for their career.
McGregor goes into a long digression about Shanghai and the role of corruption in the growth of Shanghai's economy and its relative power in Beijing under Chinese premier Jiang Zemin. Shanghai was famously rich and corrupt during this period. And Jiang put people from Shanghai inside the Politburo, which created the only faction that had ever existed inside the Politburo. When Hu Jintao came to power, he cracked down on Shanghai using the anti-graft commission and a scandal that was brewing in the real-estate market there. McGregor does not cite any other usages of the anti-graft commission for personal gain.
This part of the book was the most revelatory for me. It is clear to me that officials in China have more power than bureaucrats in other Western-style democracies. Corruption is widespread in democracies where the official is vested with power over the permit process and even over ordinary citizens. While McGregor himself does not go into reasons about why officials are not more corrupt, a genuine belief among officials that the growth of their regional economy will also lead to personal benefit seems to be the main reason. In McGregor's telling, the anti-graft commission plays a somewhat secondary role in controlling corruption, with its main role being to show outsiders that the Party is tough on corruption.
A large part of China's economic growth has come from the right amount of decentralisation. What is that right amount? There is no answer to this question. There does seem to be a "tolerable" level of decentralisation though, because the government in Beijing is stuck in a policy cycle with alternating periods of centralization and decentralisation. This diagram illustrates the cycle.
McGregor says that local and regional governments will tow the Party line when it comes to political campaigns (such as those relating to propaganda or ideology). As for economic policy, local governments will pick what they believe will work for their region and implement only those. This disobedience is corrosive even for Beijing because it lives on as a reflection of the Party's incomplete control over China's economy. However, it is also beneficial for Beijing because freedom to steward each region's economy in a different direction is the only way to deliver growth in a country as large and diverse as China. Each economic region has different characteristics and Central Planning was proven to be a failure.
Local governments compete fiercely against each other. This competition is inflamed by the local Party Secretary's ability to decide matters related to land and finances on the spot, with no requirement to take proposals back to a legislative body. Officials have an interest in a flourishing economy wherever they are as this will reflect well on their competence and help them move up the Party ladder of power. It is good for the Party because it can test new policies in some regions before expanding it to the whole country. The Party itself has been using this competition by putting promising young leaders in embattled regions and promoting the people who can turn around these regions.
The Sanlu dairy poisoning incident from 2008 was a disastrous coalescence that led to deaths, a cover-up and eroded confidence in dairy products produced in China. McGregor provides a gripping account of the scandal, which follows the executives at the dairy company Sanlu and the Party officials during the first few days after the discovery of the poisoning. The scandal was uncovered a week before the Beijing Olympics in 2008. The options that are available to them are all painful and they have to choose between varying degrees of disaster. The Propaganda Department had issued guidelines that prohibited any reporting related to food safety issues. The chairman of the dairy company decided that she would cover-up the scandal at least until after the Olympics, which would be overshadowed by a scandal of this magnitude, especially one with the sensitive image of dead infants associated with it. The chapter recounts a nationalist decision by a company executive, who knew that no matter what she chose to do, her personal life (and possibly her career) was going to be tainted by this failure. Yet, she decides to cover the matter up and tow the Party line. When the scandal was discovered, justice was swift and top managers were punished. No mention was made of the Party's guidelines that resulted in the delayed public discovery of the scandal.
What is the problem with being the only political party that is allowed to exist? You are responsible for everything. Every bump in the road can become an existential threat. As dictators in the Middle East found out during the 2011 Arab Spring protests, when the public starts protesting due to some unrelated economic issue (such as inflation), they won't stop when that issue gets resolved. Things spiral from there. And there is little a government can do when its own people rise up against it. Democracy gives people the opportunity to "rise up" and vent their frustration every 4 or 5 years. Other forms of government don't give the people any chance at all. The CPC is no different and knows about the perils of single-party rule intimately.
Protests at Tiananmen square in 1989 were a turning point for the CPC because it was the first time the Party had been challenged from within and had come dangerously close to touching off country-wide protests. The Party stopped the protests early using military power, leading to a high death toll and horrible /static/images/acx/images104_139. Discussion about the protests was contained using the Propaganda Department's control on the media. But the Party also had a profound realisation: The people wanted economic growth. If they could not deliver economic growth, then they would ask for local elections and a free press. And so, the Party redoubled its efforts on two fronts: First, delivering economic growth to the Chinese people and second, tilting the party-government dual hierarchy governing system more towards the Party and reducing the Chinese state to a shell.
The tool that they used to achieve both ends was the Communist state enterprise: Public sector companies that would be just as efficient as private sector companies, compete with each other, and go abroad to get foreign investment.
This policy worked. There are no two ways about it: It worked. State enterprises shed 48 million employees between 1993 and 2003.[11] These were people who had been inefficiently employed by state enterprises and promised pensions. Once they were let go, they could be employed in other industries where labour was actually required. The surplus labour undoubtedly powered the growth of China as a manufacturing hub since 2000.
Apart from Economic growth, the Party also uses its control on personnel to keep dissent in check within the professional elite. As there is no concept of private property that is independent of the Party in China for these executives, a single misstep can lead to their massive fortunes being appropriated by the State. (Jack Ma's disappearance and subsequent reappearance was a prominent example which happened after this book was published.)
Control over the history that gets told to Chinese children is the final tenet of the Party's guarantee of its control. The Propaganda department approves textbooks. The 100 year period of subjugation is reinforced. Present-day happenings are told through the lens of a paranoid state media which portrays nearly everything that the West or any non-ally does as "anti-China." And this nationalist fervour machine seems to be working.
The Party's approach has very much been: "Deliver economic growth to all parts of society. Don't allow too much public introspection or debate. Don't be wrong."
The CPC has had an uncanny ability to foresee the booms of the future. When presented as a list, they are impressive.
In each case, the policies are beneficial to both the Party and the Chinese people. As McGregor indicates lightly, it will become increasingly difficult to differentiate between the interests of the Chinese people, the Chinese state and the CPC. These three will fuse into a single entity that is stewarded by the CPC.
