Huawei and the Communist Party | China Huawei Ban



is Huawei connected to the Communist Party a short answer to this question is yes the Communist Party is connected to hallway and in fact for all major companies in China the Communist Party has influence over them whether this poses a security threat is not so conclusive but this relationship between Huawei and the Communist Party is not exactly what you might think to understand this connection we first have to look at the political system of the country that system being communism specifically though Leninism the basic structure of this system is where there is a single party in charge of leading the country it has the regular government bodies and institutions such as Congress and it's committees executive branch with its departments and the judiciary but the party mimics these bodies and has an equivalent party organization that runs parallel and oversees these bodies of government this second layer to its political system uses Soviet style institutions to manage it and are done in complete secrecy the most important of these institutions is the central organization Department basically the way to think about it is as a giant human resources department except that in this case it's in charge of literally everything paraphrasing Richard McGregor's book the party the department equivalent in the US would oversee the appointment of all presidential cabinet members state governors mayors heads of all federal departments CEOs of the 50 largest companies the Supreme Court justices the editors and bosses of all the major media news networks presidents of Yale and Harvard and the heads of think tanks such as the Brooklyn Institute and Heritage Foundation all of the vetting process for these positions are done in private unlike a democracy where the people are elected by the public to become government members the central organization department promotes officials to these positions by several criteria which are codified in more than 70 articles an official is promoted based on things such as their education level length of service economic growth investment quality of air and water and public order that's the theory of course so what's the reality according to research by the Australian National University which studied party officials at all levels of government found that economic performance had a larger impact on promotion among lower-level officials just as in a large firm in government a building quality or highly valued when officials are first recruited the higher the post the less abilities taken into consideration while other factors including personal ties become much more valuable these findings are also in accordance with what McGregor finds in his research were up to a certain point merit isn't the main factor this practice of selection of government officials isn't a recent development it actually dates back to the Western Han Dynasty and the CCP has tweaked it and has taken away the outdated parts such as reciting poetry as a means of judging candidates this department is the heart of the Chinese system and there is literally no equivalent like it in the world its most important feature is that it maintains files on top-level officials in the public sector to keep tabs on their political reliability and past job performance making it indispensable to the party's control of the country this oversight not only includes job performance but also criminal record or sexual misconduct the party is so extensive in its control that Professor John Burns of Hong Kong University who managed to secretly obtain the party list estimated the department directly controls about 5,000 government posts and this number was on the conservative side this department is essentially the nomenclature ax system the Soviets used the only difference is that the Chinese of taking it to the extreme compared to the Nazis are Soviets the CCP is in a league of its own when it comes to vast and extensive political bodies of power surprisingly a lot of members don't come from wealthy backgrounds usually in this system most officials apply to the party during university are at the beginning of their professional careers and slowly work their way up the party managing local level matters to being in charge of Provinces so how is this party connected to the economy and its companies as noted earlier in most major companies the party has the power to assign upper management roles and has staff to oversee this process as stated by McGregor in his book and all the major companies the party meetings are held regularly before the board meetings operating costs capital commitments and the like are discussed at the board meetings while personnel remains in the hands of the party this control serves two important fundamental functions which is one to steer the overall economy in a particular direction which allows the party to start major projects easily or a little need for long public debate an example would be China's high-speed rail system second and most importantly is that it keeps the party's monopoly over the economic and political power in the country this stops any rival business entrepreneur class from rising and taking charge this has largely helped keep the power dynamic stable there is no debate in the party on whether to disclose this connection but there is debate among various party factions on how much of a role the party should have with the traditionalists on one side and the ambitious entrepreneur chief executives on the other even though the party has given executives on company boards much more freedom on how to run their companies over time the party has remained an integral part when it comes to managing personnel notable examples of this issue of transparency can be seen with the aluminium company China Co in 2007 when PHP bulletin one of the largest mining companies in the world made a takeover bid for Rio Tinto this move was seen as a direct threat to Beijing since it would create a monopoly of the iron ore trade which is used to make steel and since China had a growing demand for steel the party decided to launch an opposing bid of 14 billion for 9 percent share of Rio Tinto although the company's chairman tried to convince the foreign press and leaders that the company's management and commercial decisions or independently he ultimately failed due to various reasons one was the money for the bid came from the China Development Bank in which it was approved by the State Council and not the company's board of directors second was that this was during the financial downturn of 2008 and even when bhp back down due to the economic downfall China Co still pressed forward with its bid even though at the time it was losing money it could do this since it at the backing of the party and government which was a tell finally it was later leaked at the company chairman after the deal was made when moving to a party approved position with another party approved official replacing him there are similar examples of this issue and the most recent one of course is with Huawei a final example of the party and its role in the economy can be seen with the Asian financial crisis of 1997 for example in 1998 57 percent of loans made by the Industrial and Commercial Bank were unrecoverable this was due to the decentralization of state banks and corrupt lending practices so what did the CCP do to control this they set up two high-level committees and placed the power to hire and dismiss senior bank executives to these committee centers in Beijing if the banks did not comply the central powers of the party threatened to simply close the banks and take away their jobs what is important to note here is that none of these moves were ever written into an official law our never decided upon by an official government body as noted in the book the Politburo did not bother to give these all-powerful party bodies any legal status by putting bills through the legislature the fact that these two committees had no lawful basis did not matter the backing of the Politburo and the director at the jobs of provincial bank executives were more than enough to galvanize local officials to sign up the Beijing's plan to secure the party's economic base this example illustrates perfectly that the most important and largest company in the country is none other than the party itself a singer of examples Chinese companies are not only commercial in nature but political due to the way they are set up and managed this relation is not a result of corruption some may perceive but rather how they operate within the Communist political system corruption though definitely occurs within the system but it is controlled one of the way the party deals of this is by rotating senior officials in different parts of the country with different administrative responsibilities weeding out unreliable ones another way is by launching anti-corruption campaigns in which a significant amount of officials are arrested for a scandal or misconduct the problem is that since this action originates from the Politburo itself which is the highest authority in the country they aren't ever going to arrest themselves and will only expose the corruption up until a certain point the party believes if there is free speech and due process this could spark massive protests like the Cultural Revolution and result in total chaos since Maori started China's whole political system if the legitimacy of the party is broken the country has no other long-standing institutions to fall back on this is why the party sees issues such as Tibet or Taiwan as direct threats since it could upset their legitimacy ironically the thing the party fears the most more than anything is not the US or Russia but its own people besides the economics the Chinese political system is surprisingly meritocratic and efficient although it is far from ideal it should not be underestimated or overlooked simply because it is not a democracy




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