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«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»

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production also favored small businesses and subcontracting over larger corporations and thus contributed to domestic development.1471 As a consequence of the distrust of more formal institutions (as for example courts, see below), the informal collaboration of private entrepreneurs with government officials over Guanxi is long-established, going back to pre-communist times and reaching new heights during reforms.1472 As local officials are often embedded into local networks, many feel compelled to protect the newly established private sector and vice versa individuals seek this protection to facilitate access to resources and bank loans. Most entrepreneurs aim at meeting their own needs to be successful in business in interacting with government officials without contesting the political system as such.1473 Quite the contrary, political change seems not to be wanted, as long business is going well.1474 Moreover, they discovered other, non-democratic ways to pursue their interest.1475 This again is in line with Foucault‘s argument that state power is not necessarily situated in its institutions but rather is ―widely dispersed throughout capillary networks‖ and not ―localized in the state apparatus‖.1476 Of course, Chinese entrepreneurs have more or less the same economic objectives in common but this proves not to be enough to bond to influence politics. Mostly, private entrepreneurs do not strive to become interconnected over horizontal ties, be it informal or more formal ones. Not least, because collective action within an authoritarian state is still a sensitive issue and the political circumstances rather support individualism in the sense that each entrepreneur relies on his Guanxi to selected government cadres.1477 They need not rely on this as there are other possibilities to represent their interests. Their ties to local cadres have different – and more economic – reasons and therefore do not exercise pressure for political reform.1478 They used their Dirlik, 1997.

Zhu, 2007, p. 1510f. Decentred policy network theory argues that networks cannot be understood apart from traditions and are enacted by individuals whose beliefs and actions construct the nature of the network.

See Bevir and Richards, 2009, p. 8. For the relationship of Guanxi and corruption, please refer to chapter 6.2.

Heberer, 2002b, p. 6.

Wank, 1995a, p. 63f. and Tsai, 2005, p. 1150, Chen, 2002, p. 412, Dickson, 2007, p. 830. ―In contrast to historic kingship-based societies, modern democratic regimes are centered around an ―empty place of power‖ and characterized by extreme social heterogeneity. The disappearance of an image of the unified body politic parallels the psychoanalytic account of the ―ordeal of the division of the subject‖. Totalitarianism promises to heal that division, filling the empty center with the image of the leader and the party, radically simplifying social space, and restoring the unity of the community-body‖. Steinmetz, 1999, p. 26.

Tsai, 2005, p. 1145.

Foucault, as quoted in Steinmetz, 1999, p. 9.

Cf. Heberer, 2002b, p. 13.

Chen, 2007, p. 152f., Tsai, 2005, p. 1132 and Pearson, 1997, p. 115.

power and tried to achieve their goals outside official institutions but rather with more informal measures like Guanxi.1479 As already discussed in chapter 7, although Chinese entrepreneurs as such do not form a class, they are nevertheless a dynamic element of political and social change. Due to their economic success and wealth they command over negotiating power to achieve their own aims. From a Western point of view, it could be assumed that those include the desire for democratization1480 or at least a legal framework for free competition. They also could seek leading positions in politics or society to influence social values, but Chinese entrepreneurs seem not to have this in common with their European counterparts.1481 They are lacking a shared identity, probably because they stem from different backgrounds (former peasants or so-called ‗self-made men‘ alongside former state officials and other long-established elites).1482 It is also important to note that even if entrepreneurs all belong to a class of people that in the literature is called the ‗new rich‘1483 and thus to an economic elite, they do not form a middle class or bourgeoisie in the Western sense. If they have the potential to form a strategic group is not yet clear and is viewed differently within the literature.1484 Heberer argues that China‘s entrepreneurs are still in ‚status nascendi‗ to form a strategic group, whereas Kellee Tsai states that in the past the development of Capitalism has been associated with a parallel tendency towards democracy as only in a democratic state market forces can thrive. This has been justified by the argument that with the rise of a civil society the increase in individual liberties and related changes in economy and society a so-called ‗middle class‘1485 would develop that with increasing wealth also sought political influence. Middle classes also serve as buffer between upper and lower classes which leads to political stability. They tend on average to be conservative and less radical and they are also oriented toward consumption. Indeed this has been the case for example with the Heberer, 2002b, p. 10.

The term ‗democracy‘ has been highly ideologically indoctrinated by the CCP. For many people democracy is defined as ―minority that complies the majority‖ and ―officials bear responsibility for the people‖ and is also often simply associated with chaos. The democratization movement of the 1980s occurred in a time when the capitalistic economy was not yet fully developed. Since the 1990s, intellectual, economic and political elites more and more merged, led by the thought that market economy and totalitarism actually are an advantageous combination and all that matters is economic development. Thus, a ‗marketization‘ of power occurred. He and Reisner, 2006, p. 465f.

Heberer, 2002a, p. 121f.

Huang Ping, 1997, p. 235f.

Goodman, 2008a. See also chapter 7.1. Often these new rich are regarded as part of a new Chinese conservative middle class, see for example Unger, 2006. In contrast to the population of most developed countries, Chinese people still adhere themselves to the working class. Chen, 2002, p. 410.

Cf. Heberer, 2002b, p. 12, Tsai, 2005 and Tsai, 2007. See also Dickson, 2003, Dickson, 2007, Chen, 2002, Chen, 2007, Holbig, 2002.

For a terminological clarification and demarcation between ‗middle class‘, ‗citizen‘ and ‗bourgeois‘, please refer to chapter 4, fn 469.

German bourgeoisie and can be summarized with the slogan ―No bourgeoisie, no democracy,‖ coined by Barrington Moore in his book Social Origins of Dictatorship and Democracy: Lord and peasant in the making of the modern world of 1966. It has also been argued that paying taxes will result in the incentive to gain greater access to the political system (in a Western sense), as in the American notion of ‗no taxation without representation‘. It has been expected that the late developing countries would follow this ‗concept‘, in line with modernization theory that associates economic growth with political liberalization which led to the breakdown of many authoritarian regimes. However, as already outlined in chapter 4, the concept of middle class is a problematic one as it is not clear if it is defined by a certain ‗median‘ income level or if it is related to a certain lifestyle. Especially in the Chinese case it has been shown that the ‗new rich‘ are indeed no social group that shares an identity and also does not express the wish for political reforms. As private entrepreneurs do not belong to one class, they are not inclined to collectively engage for system change, although they are very actively involved with local governments. This again reveals the degree of fragmentation between central and local political entities.1486 Also Dickson claims that ―[s]o far, China‘s private entrepreneurs have not asserted themselves as an organized or coherent interest group‖.1487 However, maintaining Guanxi connections to the local government is conceived as essential to overcome administrative obstacles and even more so, gain the support of local cadres for business. Having these bonds meant access to resources, information and other advantages but also avoiding excessive extra fees and taxes. It also enhanced doing business with collective and state enterprises. ―This kind of support was of course not openly available. It required particularistic links with officials for favorable decisions and access.

In fact, the more successful entrepreneurs seemed to spend as much if not more time developing these ties than credit relations with suppliers and customers of commodities‖.1488 In general, entrepreneurs have several methods for influencing the local government. They either make ―financial or other contributions (in the form of gifts or privileges granted), offering real or fictional employment in their companies in high-salaried positions as consultants or managers‖.1489 Entrepreneurs are not against the idea of the rule of law as it is considered as protection from arbitrary government treatment, but they are skeptical toTsai, 2005, Tsai, 2007, He and Reisner, 2006, p. 449f. and chapter 7.2. as detailed example of that.

Dickson, Bruce J.: ―Economics as the central task: do entrepreneurs matter‖, Paper prepared for the ‗China‘s leadership transition: prospects and implications‘, December 2001, p.4, quoted in Holbig, 2002, p. 47.

Wank, 2008, p. 105.

Wank, 1995b, p. 166ff.

wards democratic ideas such as free election and majority rule.1490 Although in an authoritarian regime, local officials still have enough liberties to support economic transactions, even if they are illegal, without lobbying pressure or democratization tendencies, as long those activities generate profits.1491 To prevent the diffusion of informal links between private entrepreneurs and local governments and to gain control of the political participation of entrepreneurs, entrepreneurs were allowed to become official members of the CCP since 2001 and were strongly encouraged to join. In his speech in early 2000, Jiang Zemin - in a manipulation of party ideology – justified that because of the ―requirements of the three representations‖. These are the need to represent ―the development trend of China‘s advanced productive forces‖, ―the orientation of China‘s advanced culture‖ and ―the fundamental interests of the overwhelmingly majority of the people of China‖. This emphasis on the ―productive forces‖ is a shift away from Marxist-Leninist terminology. The term ―relations of production‖ usually is associated with the contradictions between classes that determine if an economic system is regarded as capitalist and thus exploitative. However, interpreting it differently, made this notion irrelevant.1492 The expression ―majority of people‖ additionally hints to the inclusion of all social classes (or rather strata). However, a hierarchy of ‗worthy‘ entrepreneurs has been created. At the top are ―entrepreneurs and technical personnel employed by scientific and technical enterprises of the non-public sector‖, next are ―managerial and technical staff employed by foreign-funded enterprises‖ and at the end of the hierarchy there are the self-made type of individual entrepreneurs. This emphasis on science and technology is reminiscent of the ‗mystifying power‘ associated with the import of Western science and technology 100 years earlier that was supposed to lead to modernization (see also chapter 5.1.5.).1493 The invitation of private entrepreneurs into the party is widely received as the ―ex-post legitimization of a long-standing fact‖. Unofficially, private entrepreneurs were for quite a long time already allowed to join the CCP.1494 It is thus a decision that can be interpreted as being merely symbolic in nature as private entrepreneurs are still confronted with the same difficulties concerning access to loans, supplies and information. Regulations and Chen, 2002, p. 421f.

Tsai, 2005, p. 1153.

The contradiction to welcome labor and capital and thus workers and entrepreneurs has been justified by the introduction of further new terminology: workers and peasants became ‗basic workers‘ and entrepreneurs (the new economic elite) became ‗management workers‘. Holbig, 2002, p. 44.

Dickson, 2007, p. 833, 837f., Holbig, 2002, p. 30, 41f. Both articles are in-depth analyses of the decision of the CCP to officially allow the admission of private entrepreneurs.

Holbig, 2002, p. 41ff..

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