Are China’s private-sector businesspeople unhappy about living under a Communist government? That is the increasingly explicit contention of some commentators on China’s current economic troubles. The idea is that Xi Jinping has reversed the Communist Party’s recent historical accommodation with the private sector, leaving entrepreneurs fundamentally uncertain about their future prospects. If business owners do not believe they can earn a profit without risk of intervention or confiscation by the government, then they will not invest, and the economy will not grow. As Adam Tooze put it in a typically thoughtful overview of this school of thought, the key contention is that “the problems of China’s economy are political and though they center on Xi they go beyond him and concern the entire system.”

Bill Bishop’s Sinocism newsletter of July 19 has a useful summary of some of the Party’s recent ideological pronouncements that “may have caused some skepticism in the private sector.” Among the most explicit was a 2020 document (English translation here) that detailed measures to “continuously strengthen the Party’s leadership over the private economy” and “educate and guide private economy practitioners to…unswervingly listen to and follow the Party.” While the document also discusses the Party’s duty to support private businesses and respond to their concerns, it is fair to say that it does not envisage a hands-off relationship in which the private sector is allowed to go about its own affairs.

Xi’s politicization of the private sector’s role in Chinese society is often contrasted, implicitly or explicitly, with the high-level accommodation of the interests of the private sector that existed under previous leaders. In 2001, Jiang Zemin famously welcomed private entrepreneurs into the ranks of the Communist Party and pledged that the Party would respect and support their interests, under his slogan of the “Three Represents.”

This dramatic ideological shift has sometimes been interpreted by critics on the left, inside and outside China, as a “neoliberal turn” in which the state served as the handmaiden of private capitalists. In reality, Jiang’s concerns were not so different from Xi’s: his goal was also to ensure that the private business sector would not evolve into a political opposition (in general, Jiang’s role in setting the fundamental parameters of China’s post-1992 political economy is often underrated).

The historian Frank Dikötter, in his recent book China After Mao: The Rise of a Superpower, points out that while the Three Represents did open Party membership to entrepreneurs, it also began a push to extend Party cells into private businesses:

Although few people knew exactly what the formulation meant, the general idea was that the party should not dilute its own political power and must ensure it remained in the vanguard of every area of life. This included the country’s ‘advanced culture’ as well as the ‘fundamental interest of the majority of the people’. A third principle posited that the party should ‘represent the foremost production forces’.

Foreign experts gasped with admiration, as the Three Represents included a decision to end a ban on party membership for private business people. But in typical Orwellian doublespeak, the campaign was designed to extend the hand of the state, not retract it, most of all in the private sector. Since tens of thousands of state enterprises were becoming shareholding companies, shedding millions of jobs along the way, the party insisted on maintaining control. The Three Represents meant that party cells must be established even within private businesses, subjecting them to closer party supervision.

Some of Jiang Zemin’s comments from the time on the issue of the Party and the private sector are reproduced in Volume III of his Selected Works. In May 2000, he visited Nanjing, Suzhou and Shanghai–some of the historical centers of China’s private businesses–and held discussions about “Party building,” meaning the establishment of Party cells in private businesses. Here are a few of the key passages, which also highlight the need to ensure private companies support the Party line:

There are nearly 1.5 million private enterprises and more than 31 million individual industrial and commercial businesses (getihu) nationwide, employing more than 82 million people. In terms of either economic strength or the number of people, the weight is not light. … This has raised a new topic for us, which is how to strengthen the party’s leadership in these fields, and effectively unite and organize the masses in these fields around the party. …

It is necessary to promptly carry out the work of party building in non-public economic organizations. Carrying out party building work in non-public enterprises is a new field. In recent years, some places have actively explored and achieved some results. But in general, the development is very uneven, obviously lagging behind the requirements of the development of the situation. According to incomplete statistics, currently 83.3 percent of private enterprises in the country have no party members, and only 1.4 percent of the total number of enterprises have established party organizations. …

Today’s private business owners have developed under our Party’s reform policy and the call to get rich first, and many of them are laborers. The Party organization should actively do a good job of uniting, educating, and guiding them in accordance with policy, unite them around the Party organization, and make them support the establishment of Party organizations in enterprises, support the Party’s various policies, operate enterprises according to the law, care for and protect employees’ rights and interests, and contribute to the country and society.

Surveys by the All-China Federation of Industry and Commerce document that the share of private companies with a Party cell rose sharply after the initial launch of the Three Represents slogan in 2000. Xi has also emphasized Party-building in the private sector, and has presided over a lot of political messaging and actions designed to enforce the idea that private businesses have a duty to be loyal to the Party and support the Party’s policies. But this is not a new idea, and private businesses have had a couple of decades, if not more, to get used to it.

To me, the historical evidence suggests Xi’s ideology probably does not differ a lot from his predecessors in terms of the private sector’s political position in Chinese society. And therefore I’m not sure that such ideological messaging is the real problem affecting private business in China today. What I do think is different under Xi, and where he has created instability and uncertainty, is his articulation of the goals that China’s political system is trying to achieve.

As Xi has repeatedly said, sometimes with evident frustration for those who still have not gotten the message, what he is trying to do is reorient China’s political system away from the pursuit of economic growth at all costs. From his perspective, that pursuit created a lot of political problems that need to be corrected: corruption, waste, loss of Party discipline.

But one of the political benefits of the orientation toward economic growth is that it offers a fundamental assurance that the interests of the Party and the interests of private businesses are aligned. If growth is the goal, then ultimately the Party wants companies’ revenues and profits to go up, and that is the same thing the companies want. If growth is not the goal, then the Party’s interests and the interests of private businesses can diverge. And that prospect could reasonably trouble businesses who understand their political position.