Chinese Government Tightening Control over Its Rich Persons to Concrete Its Hegemony

China is showing an ambivalent attitude toward businessmen. On the one hand, it is trying to induce them into its market system by allowing registration of them as political party`s members. On the other hand, it is tightening up its control over them.

This contradicting attitude of China is part of the efforts of the Chinese government to resolve the conflicts of its system, which pursues communist political system and market economy. Thus, many attentions are being given to the future of the efforts being made by China.

The Economist, a weekly in its Oct. 12th issue, pointed out, “It is honor to become a rich man in China. In fact, however, Chinese politicians do not like people to become rich.” It translates into a mentality that politicians, while accepting the market economy system, are afraid of losing the hegemony that their socialist government is enjoying now.

The magazine also reported, “Out of the 1,216 companies made public in China, other than 82 of them, the rest are owned by the government.” It also criticized, “Private companies in China produces more than half of its GDP. But they have got all the discriminations.”

Recently China has rounded up, on charges of, for example, tax evasion, rich entrepreneurs like Yang Bin, who was appointed by North Korea as the first minister of its Shinuijoo Special Economic Zone. In the Oct. 13th Internet edition, The New York Times, mentioning the series of arrests, referred to the arrest as a businessmen-taming tactic for showing off the firm control of the communist regime over the country.

The NY Times also pointed out, “What the Chinese businesspersons such as Yang Bin and Yang Rong and Rhou Shaoping, now arrested or at large, have in common, among other things, is that they are enormously rich. Second, they were publicly boasting of their independence from the Chinese government.”

Yang Rong is being wanted by Chinese authorities because he has allegedly embezzled his company’s money and resisted the government policy under which the state would nominally own his company. On the other hand, Rhou, who had publicly promised that she would become the first woman millionaire in China, was recently arrested on tax evasion charge.

The New York Times explains, “In order to soothe the opposition of the hard liners in the Chinese communist party, China has recently introduced the individual income tax, which is unprecedented throughout the history of China. Rhou has become of one of the victims under the new system.” Noh Seung-jun of CJK Forum, which specializes in economic affairs in the North Eastern Asia, analyzed the phenomenon and said, “China has tried to take in the market system with the economy and the politics separated apart. But it’s just beginning to show up its limitations.” He added, “The problem is whether China could successfully find ways to overcome those limitations and defects lying in its unique system.”

Seung-Jin Kim sarafina@donga.com