architect behind the early market reforms, summarized the
views of most party cadres with a “bird in a cage” analogy
for the economy: China’s economy was the bird; the party’s
control, the cage, had to be enlarged to make the bird
healthier and more dynamic, but it could not be unlocked or
removed, lest the bird fly away. Jiang Zemin, shortly after
becoming general secretary of the Communist Party in
1989, the most powerful position in China, went even
further and summarized the party’s suspicion of
entrepreneurs by characterizing them as “self-employed
traders and peddlers [who] cheat, embezzle, bribe and
evade taxation.” Throughout the 1990s, even as foreign
investment was pouring into China and state-owned
enterprises were encouraged to expand, private
entrepreneurship was greeted with suspicion, and many
entrepreneurs were expropriated or even jailed. Jiang
Zemin’s view of entrepreneurs, though in relative decline, is
still widespread in China. In the words of a Chinese
economist, “Big state companies can get involved in huge
projects. But when private companies do so, especially in
competition with the state, then trouble comes from every
corners [ sic ].”
While scores of private companies are now profitably
operating in China, many elements of the economy are still
under the party’s command and protection. Journalist
Richard McGregor reports that on the desk of the head of
each of the biggest state companies in China stands a red
phone. When it rings, it is the party calling with orders on
what the company should do, where it should invest, and
what its targets will be. These giant companies are still
under the command of the party, a fact we are reminded of
when the party decides to shuffle their chief executives, fire
them, or promote them, with little explanation.
These stories of course do not deny that China has
made great strides toward inclusive economic institutions,
strides that underpin its spectacular growth rates over the
past thirty years. Most entrepreneurs have some security,
not least because they cultivate the support of local cadres
and Communist Party elites in Beijing. Most state-owned
enterprises seek profits and compete in international
markets. This is a radical change from the China of Mao.
As we saw in the previous chapter, China was first able to