They were periodically bankrupted and persecuted
after the Communists took power in 1949, but China's capitalists
are rising in status thanks to economic reforms.
Drawing on their growing economic and political clout, private
entrepreneurs have been lobbying for better legal protections, and
they appear to be succeeding.
The National People's Congress is expected to approve an
amendment to the constitution enshrining the rights of private
business when it convenes its annual two-week session on March 5.
By turns praised for showing initiative and excoriated for
becoming wealthy, entrepreneurs have until recently operated on the
fringes of the economy, surviving on loans from family and friends
and scrounging for niches not already taken by state industries.
Perhaps no one better exemplifies the precarious place of
capitalists in Communist China than Mou Qizhong, the 57-year-old
chairman of the trading company Land Economic Group.
Mou has careened between celebrity and calamity throughout his
career. He learned early in life the hazards of doing business: His
father, a former banker, was persecuted after the Communists' 1949
victory and starved to death during the great famine of the early
During the tumultuous 1966-76 Cultural Revolution, when
"capitalist roader" was one of the worst epithets possible, Mou
was jailed for criticizing ultraleftists then in power who had
destroyed what little was left of private business.
He was sentenced to death, but regained his freedom when
political winds shifted in the late 1970s. He returned to his
hometown, Wanxian, in the reform-minded southwestern province of
Sichuan and opened a small shop that eventually grew into Land
China began allowing small private businesses in 1980, but those
who dared to test the waters of entrepreneurship did so at their
own peril. Police and local officials often seized their property
and business licenses or charged them exorbitant and arbitrary
Mou was jailed again in 1983, charged with "speculating," but
was released a year later.
Moving on to bigger projects, he won praise from the
state-controlled news media for his creative moneymaking, such as a
1989 swap of 500 freight car loads of factory surplus socks, shoes
and other items for four Tu-154 Russian aircraft that netted Land
Economic Group $25 million.
Like Mou, millions of entrepreneurs have found ways to make
money on the margins of the state-dominated economy during two
decades of economic restructuring. Most have tiny, family-run shops
and street stalls. But others have built up substantial corporate
empires, such as the Hope Group, a Sichuan-based animal feed
conglomerate that is now China's biggest private company.
China's private sector now accounts for one-quarter of the
country's total output of goods and services, according to
government estimates. There are about 1 million registered private
businesses employing 40 million workers. In addition, 28 million
people are registered as self-employed.
Private businesses now are lauded for providing jobs for many of
the millions of workers being laid off by defunct state factories
and for nurturing high-tech industries and services.
The Communist Party acknowledged the increasing importance of
private business during a September 1997 congress, when President
Jiang Zemin gave a speech approving private takeovers of some state
Still, state-owned banks have starved startups of financing, and
bureaucrats banned them from direct foreign trade until this year.
"We need equal competition. State firms had more than 40 years.
Now, attitudes need a period of transition," said Wu Yijian,
president of Ginwa, a diversified private company in the central
city of Xi'an.
Heading the campaign for better legal protection is Jing
Shuping, chairman of the All-China Federation of Industry and
Commerce, the main representative of private business in China.
In a speech last spring, the 80-year-old pre-revolutionary
capitalist proposed amending the constitution to ensure "equal and
nondiscriminatory treatment for all enterprises."
A petition signed by 30 members of the National People's
Congress echoed his call for equal competition.
This March, the legislature is expected to approve a
constitutional amendment acknowledging private business is "an
important component of the socialist market economy."
The state-run Xinhua News Agency said another amendment before
the congress reads: "The country should protect the legitimate
rights and interests of the self-employed and private enterprises
and the country should also exercise guidance, supervision and
management over them according to law."
Reflecting the increasingly business-friendly environment,
Beijing's city government recently announced it would give
preferential treatment to private businesses and encourage them to
take stakes in state-owned firms through acquisitions, mergers,
leases and equity holdings.
Since the beginning of the year, 61 private companies, among
them Hope Group, have been given the right to conduct their own
exports and imports ../022099_2Fchina-sml/__151.css; the first time private Chinese firms have
been allowed to engage in foreign trade on their own.
While once-closed doors have been creaking open for other
entrepreneurs, Mou's fortunes have taken another downturn.
In 1996, he was stopped by immigration officials at Beijing
airport and prevented from leaving the country pending resolution
of various legal disputes. His company's internal newspaper, Land
Economic Digest, likened that year to "standing by a burning
Undaunted, Mou proclaimed in 1997 that Land intended to become
one of the world's 10 biggest companies.
But the era of Mou-style barter arrangements appears to be
ending. A deal to lease channels on Russian satellite transmitters
apparently failed. Mou's proposals for dynamiting a pass through
the Himalayas to help draw humidity into arid northern China and
for building a Sino-Russian version of Hong Kong in remote Siberia
have come to naught.
According to state-run media reports, Mou is in police custody
again. Police and other officials declined to comment on Mou's
whereabouts or about his legal situation, but company executives
say Land owes about $48 million in unpaid debts.
Employees at Land confirmed Mou had disappeared. They said staff
were showing up at company headquarters in Beijing mainly in hopes
of collecting overdue salaries.