One of the many fascinating tidbits scattered through Stephen Kotkin’s Stalin: Paradoxes of Power 1878-1928, the excellent first volume of his Stalin biography, is an explanation of where the unique “party-state” Communist political structure comes from.
In China today, as in the Soviet Union in the past, the Communist Party and the government exist as parallel, intertwined institutions, with Party clearly politically superior even as government bodies do most of the practical work. In the Soviet case, this resulted from the fact that the Bolsheviks had seized power as a minority party but were nonetheless attempting to exercise absolute control over the entire country:
Party thinking equated Bolshevism with the movement of history and thereby made all critics into counterrevolutionaries, even if they were fellow socialists. Meanwhile, in trying to manage industry, transport, fuel, food, housing, education, culture, all at the same time, during a time of war and ruin, the revolutionaries came face to face with their own lack of expertise, and yet the solution to their woes struck them with ideological horror: They had to engage the class enemy—“bourgeois specialists”—inherited from tsarist times, who often detested socialism but were willing to help rebuild the devastated country. …
But the cooperative tsarist experts were not trusted even if they were loyal, because they were “bourgeois.” Dependency on people perceived as class enemies shaped, indeed warped, Soviet politics and institutions. The technically skilled, who were distrusted politically, were paired with the politically loyal, who lacked technical competence, first in the army and then in every institution, from railroads to schools. The unintentional upshot—a Communist watchdog shadowing every “bourgeois expert”—would persist even after the Reds were trained and became experts, creating a permanent dualist “party-state.” …
“The institution of commissars” in the Red Army, Trotsky had explained of the political watchdogs, was “to serve as a scaffolding. . . . Little by little we shall be able to remove this scaffolding.” That dismantling never happened, however, no matter how often commissars themselves called for their own removal.
China went through a similar dynamic as the Communist Party took over government and nationalized companies after 1949: Party figures were installed to oversee managers and technical experts. As in the USSR, this dual party-state structure persisted long after its immediate justification had passed, even when the majority of government officials and company leaders had become Party members. In other words, the Communist Party has continued to treat its own country as a hostile environment that could not be trusted.
The fact that the dual Party-state structure is, essentially, institutionalized mistrust, is one reason why this system is hard to defend on principle. Chinese scholars have been discussing the need for the Communist Party to adapt from being a “revolutionary” party to a “governing” party for decades. In the liberalizing 1980s, there was the beginning of a movement to formally separate the Party and government, but this was reversed in the post-1989 return to conservative politics. Xi Jinping also seems to want to clarify the relationship between the role of the Party and government. But he has taken the opposite approach: formalizing the Party’s leadership over the government (see my previous post on this topic).
The Tangled Woof 
“In other words, the Communist Party has continued to treat its own country as a hostile environment that could not be trusted.” This is quite correct, and partly explains the reluctance of CCP members to explain the ruling role in every government or non-profit organization. And, as Andrew has pointed out in his prior post, Xi is a believer in the system, and takes its logic seriously. CCP sees itself as an elite (which it is, in many ways) but it is also best understood as an occupying force, akin to every other dynasty since the Han. This occupying organization can have a light touch, extracting only what is needed to maintain power and lifestyle, a la Mancur Olson’s stationary bandit model. But it is an occupier. I think this explains the relationship to government (and reluctance to discuss) in an easier way than in Frank Pieke’s book (which I also liked).
“The fact that the dual Party-state structure is, essentially, institutionalized mistrust” is also not new to CCP. In a relationship society, without rule of law or well-defined or singular roles for elites, there has never been trust at a distance. Only within the extended family and the network can there be a semblance of trust. Mr. Xi is no interloper, but he is breaking norms. While many people approve of the anti-corruption campaign, it is destroying the internal bonds that have facilitated work over the recent decades. I have friends in the Land Bureau in Wuhan who are caught in a bind now – they must approve projects that they know to be out of conformance with plans, if not illegal. But they serve at least two masters, as is common. So to approve the plans is to be subject to discipline; to not approve the plans is to be subject to discipline. I have a friend who is a judge in Tianjin. She is depressed at having to issue judgments that she might have had some leeway to alter in years past. It is a tough world.
Is the push to install/strengthen Party cells in private companies (even foreign invested ones) a sign of growing mistrust? Could it be a kind preliminary step before an (in)formal decision-making take-over should the need arise?
I don’t see this move as a new level of mistrust; more like a new level of scrutiny or coercion. Mr. Xi wants the party to take a leading role in every industry, public or private. From his speech to the 19th Party Congress in November, 2017 – “The Party exercises overall leadership over all areas of endeavor in every part of the country.”
This is the first point of the fourteen outlining his plan to achieve greatness again.
Xi’s Chinese Dream is not even the “moderately prosperous society” or a dream of upward mobility for individual Chinese, but a dream of national power – “The greatest Chinese dream is the great rejuvenation of the Chinese nation.”
I think Graham Allison does a good job of summarizing the plans Xi has for his term as paramount leader in his 2017 Atlantic article. Allison interviewed Lee Kwan Yew for a book published in 2013. Lee described the Chinese dream, replicating the good old days – “recall a world in which China was dominant and other states related to them as supplicants to a superior, as vassals that came to Beijing bearing tribute.”
When Xi addressed assembled foreign business leaders as part of the G-20 meetings in Hangzhou in 2016, he entered the room to drum rolls and trumpets, as I would guess a Roman emperor would have done.
Elizabeth Economy described the pyramid – “Xi Jinping sits on top of the Communist party, the Communist party sits on top of China, and China sits on top of the world.” (https://www.theguardian.com/world/2017/oct/18/xi-jinping-speech-new-era-chinese-power-party-congress)
All Xi and CCP are doing is dotting the i’s and crossing the t’s on the master plan. Nothing will be out of control of CCP. I don’t see a future in which CCP takes over foreign businesses, even though the government is now making life more difficult for them. That would be a step too far. China does want foreign investment, which would cease in that situation.
Dear Bill,
Why do you think we have this “new level of scrutiny or coercion”? It seems to run contrary to other publicly stated policies, for instance to let the private sector doing what it does, and attract FDI…
German companies (among others) complaining publicly about it (https://www.scmp.com/news/china/diplomacy-defence/article/2120423/german-firms-warn-chinese-communist-partys-drive-gain) would at least give pause to prospective investors…
The fundamental security, the constant goal, is protection for CCP. China has grown wonderfully using western tech, however acquired, and China still needs western companies for tech and as customers. But less so than anytime in the last forty years. China – certainly as seen through Mr. Xi – is feeling far more confident than anytime in the recent past. “Peaceful rise” is over. I have written rather a lot about this at chinareflections.com There is little to no felt need at the senior policy level to have a single unified voice in addressing foreign businesses. China wants western business, but more than ever, on its own terms. This is a terrible conundrum for CCP – western tech and business, yes, but western values, no. See Document No. 9, translated at ChinaFile, which laid out Mr. Xi’s fears of western values of civil society, free speech, and a free press. Party cells in western businesses will likely do little. But they will be a reminder of who the ultimate customer is, and cells can always report on what is happening within the company. More surveillance, more data, more control. What is stated publicly or in documents has little value until you see how it is implemented, and that can vary by province.