HSBC International Business Guide | China
But Xi was all the time making sure that the party grew in tandem with the economy, in both the state and private sectors. X i spent much of his first term in power reining in the big state firms. Under his predecessor, Hu Jintao, many of the large state enterprises, big enough to be in the top 20 of the global Fortune , had grown into powerful empires and breeding grounds for serious corruption.
In , Xi chaired a national meeting that cleared the way for a more expansive role for the party in enterprise. In , the measures were further extended, with the body overseeing big state companies directing them to write the party into their articles of association. In , the securities regulator followed up by issuing a new corporate governance code requiring listed firms, at home and abroad, to include in their internal guidelines an expansive role for the party. Similarly, company boards had long been legally and theoretically independent of the party, but not in practice.
But the direction of policy under Xi has been clear: the power that the party had over business decisions and personnel in state firms, once wielded behind the scenes, would not only be strengthened.
In March , a few months before taking over as general secretary, Xi delivered a speech in which he stressed the need to increase the number of party bodies inside private business. There was a need, the survey said, to retain the revolutionary spirit inside the companies as their ownership was handed on to the next generation. Although the party is becoming more involved in private firms than ever, it wants to be part of business successes, not failures. It wants to sit alongside local and foreign entrepreneurs and share their wealth, not run their companies into the ground. Increasingly, it also wants to do more than supervise companies.
It wants to be at the table when commercial decisions are made, not just manage staff. But the message was clear: the fat of the land should be shared with the state. The party wants economic growth, but not at the expense of tolerating any organised alternative centres of power.
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During the s, Chinese leaders watched in horror as the Soviet Union disintegrated and its assets were privatised. Having seen business threaten to take over the state in Russia, Beijing has been determined to make sure that the same disaster does not befall China. For a reliable benchmark about the power of the party in China, you only need to listen to wealthy entrepreneurs hold forth on politics. These otherwise all-powerful CEOs go to abject lengths to praise the party.
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Liang Wengen of Sany Heavy Industry, which builds earthmovers, went even further, saying his life belonged to the party. Jack Ma of Alibaba, the global face of Chinese entrepreneurship, has always managed to strike a quirkier and more independent stance than his fellow billionaires. That, he added, was a dangerous position to be in. In September , Ma unexpectedly announced that he would step down from a day-to-day role in the company the following year. Ma said he wanted to focus on education and philanthropy. Whether or not some entrepreneurs were intent on taking him on, Xi pre-emptively took the fight to them.
In , his administration began a campaign to rein in swashbuckling business leaders, starting with some of the corporate chieftains who had become the standard-bearers for aggressive Chinese dealmaking overseas.
Some business leaders were forced out of overheated commercial sectors such as real estate. Others were told to pull back from offshore forays, either because their high profile was an embarrassment for Beijing or because the government was trying to stop capital flight. In May , the authorities announced Wu had been sentenced to 18 years in jail for fraud and embezzlement.
The rapid growth of the BAT companies and their dominance of the internet in China has given them an outsized economic status. With the mountain of data they generate, the BAT trinity are in effect turning into a real-time, efficient and privately run intelligence platform. In that respect, they are seen as ideal private companies. They both drive economic growth and also buttress the political system.
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F oreign CEOs, too, have come under pressure to give the party a larger role in their firms. Again, this is a trend that began before Xi. Under Xi, however, emboldened officials have pushed foreign firms harder to accommodate the party and give its representatives a role in business decisions. In , Reuters published an article that quoted executives from one European company saying that party representatives had demanded to be brought into the executive committee and have the business pay their expenses. These industry opportunities will add momentum to what is already a very broad and strong economic, strategic and cultural relationship between our two nations.
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The scale of numbers cannot be compared to any of its neighbours, with million people currently considered middle class and a projected 70 per cent of its population expected to reach middle class by Amongst this huge middle class, Australia is finding growing markets for its agricultural produce, processed food, tourism, education, and more specialised professional services and advanced manufacturing. Australia will increasingly need to build on these non-resource export opportunities in future as an economic cushion against the end of the mining boom.
ChAFTA is set to greatly assist in this aim, providing much easier access to the Chinese market for Australian service providers, and removing tariffs on most of our export goods as soon as it comes into force. As this is happening, the surge in the urban Chinese middle-class population — they are expected to number about million by — should also drive further growth in consumption expenditure for years to come, and in doing so fuel potential new demand for non-mineral Australian exports.
The prospects for agricultural and processed food exports are particularly bright.