Foreign firms come to the party in China

Communist Party branches are operating within about 70 per cent of international companies in China.

Discussions during China’s 19th Communist Party Congress have revealed that party branches are operating within about 70 per cent of international companies in the country.

Qi Yu, the deputy-head of the party’s Organisation Department, revealed that branches had already been established within 106,000 foreign-funded companies in China, more than double the number since the last Congress five years ago.

This is slightly above the proportion of all private companies in China that now have party branches — 68 per cent of the 2.73 million firms. And 93 per cent of the 147,000 state-owned enterprises contained party branches, Mr Qi said, without explaining whether the remaining 7 per cent might suffer sanctions.

Mr Qi said such branches within overseas-owned businesses should be viewed not as a political intrusion but as offering commercial advantage.

He said senior managers of foreign firms had told him their companies’ party branches helped them to understand government policies better, to receive correct guidance in obeying laws and guidelines, and to respond more swiftly to changes in national priorities.

“The majority of them welcome and support party organisations carrying out activities in their companies,” he said.

The internet giant Tencent has boasted during the Congress that more than 7000 Communist Party Members, who are also staff, have been involved in leading the development of its now-dominant social media and payment platform WeChat.

The state is also requesting to be issued shares in all the major internet corporations, including Baidu, Alibaba and Tencent.

The immense reach of the Central Commission for Discipline Inspection — earlier viewed merely as an anti-corruption agency, but now clearly China’s most powerful single official agency — into business life, as well as into monitoring university research and teaching, was made clear in Congress discussion.

The Commission’s deputy secretary, Yang Xiaodu, discussed the role its inspection teams have been playing in ensuring that structural reform goals for companies, both state and privately owned, are met. He said the Party’s CCDI is, for instance, overseeing the closure of industrial plants that are deemed to comprise “excess capacity”, and the control of production to fit national targets for output that is economically and environmentally sustainable.

In the macroeconomic area, Beijing-based research firm China Policy said yesterday “the next step in fiscal reform is to realign central-local revenues with spending responsibilities, according to Xi”. China Policy said a desire to move budgeting in this direction “has been evident for some time, with little to show for it”.

“Xi endorses greater direct ­financing, indicating an intention to wean the economy off its over-reliance on the banking system — the major source of indirect ­finance — and flagging an implicit mandate to ensure healthy securities markets,” it said.

Mention of “a steady push for full capital account convertibility”, noted in the last report, is discarded, China Policy noted. This, it said, highlights concern about capital outflows and their destabilising effects on the renminbi.

Guo Shuqing, the top banking regulator, was at the weekend being tipped to succeed the widely respected Zhou Xiaochuan as governor of the People’s Bank of China.