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China economy

Marx or market? Chinese scholar raises the question all private business owners want to ask

  • Economist Jia Kang highlights the ideological contradiction of Beijing supporting private enterprise while promoting Marxism
  • Questions raised as leaders scramble to show support for private sector
PUBLISHED : Thursday, 15 November, 2018, 7:45am
UPDATED : Thursday, 15 November, 2018, 9:34am

A Chinese economist has highlighted an ideological contradiction in the Communist Party’s practice of supporting private business while promoting Marxism.

Jia Kang, the former head of a research institute under China’s finance ministry, said on Tuesday that it was the question to be answered about the ruling party’s attitude to private ownership.

Speaking at a conference in Beijing organised by Chinese financial magazine Caijing, Jia said China needed to find a new theory to explain how it would support private enterprise when the Communist Manifesto – written in 1848 by Karl Marx and Frederick Engels – called for it to be eliminated.

After taking power, China’s Communist rulers seized control of private businesses in the 1950s and purged capitalists during the Cultural Revolution.

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China’s private economy did not re-emerge until the late 1970s when late paramount leader Deng Xiaoping initiated a programme of reform. Asked at the time if China was embracing capitalism, Deng said that, “no matter if it is a white cat or a black cat – it is a good cat as long as it can catch mice”.

That attitude was the catalyst for China’s economic rise over the past four decades, and ideological controversy largely faded from China’s business world. However, it has started to make a comeback.

Zhou Xincheng, a professor of Marxism at the Renmin University of China, wrote in an article published in January in the Flag – a journal backed by the party’s propaganda unit – that “the theory of the Communists may be summed up in the single sentence: abolition of private property”.

The direct quote from the Manifesto sent chills through the private business community.

In April, China’s Politburo, headed by President Xi Jinping, conducted a group study of the Manifesto.

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Xinhua reported later that Xi said in a speech after the study that Chinese Communists were “loyal followers” of the spirit of the document.

In September, investment banker Wu Xiaoping achieved instant notoriety when he posted a short essay on Chinese social media arguing that the nation’s private sector had played its historical role in assisting the leap forward of the public sector and should now be phased out.

This ideological confusion has dampened private sector confidence, which had already been hit by falling stock markets and slower economic activity as a result of the trade war with the United States.

Beijing however has voiced its “unswerving support” for the private sector in recent weeks. On November 1, Xi told 54 invited guests from the private sector that Beijing valued and supported them.

Meanwhile, government ministries have scrambled to roll out support measures for private businesses. For example, the banking regulator has ordered lenders to increase lending to the private sector to 50 per cent of the total in the next three years.

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Jia, who is chief economist at the China Academy of New Supply-Side Economics, a private think tank, said at the conference that a fundamental question remained unanswered.

While the Communist Party had supported private businesses in the preliminary stages of socialism, was there still the possibility it could eliminate them further down the road, he said.

If the Communist Party believed in a future without private ownership, as Karl Marx envisioned 170 years ago, then “it’s always safe to talk about eliminating private ownership”, he said.