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Corporate China closed to Xi Jinping's party congress

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Private sector attendance at the Chinese Communist Party congress has dropped nearly 50 percent since Xi Jinping came to power, reflecting what analysts say is the declining status of magnates.

The party has pledged to curb “uneven expansion of capital” to reduce wealth inequality and achieve “common prosperity”.

“It’s clear that Xi sees the political reach that entrepreneurs had in previous years as a potential threat to the Communist Party,” said Neil Thomas of the Eurasia Group, a consulting firm.

China’s private sector is the country’s largest employer and a driver of economic growth. But according to party records reviewed by the Financial Times, only 18 of the 2,296 delegates at the 20th party congress held executive positions in special groups.

That compares with 34 executives at the convention in 2012, when Xi took office, and 27 at the most recent congress in 2017.

The declining turnout under Xi’s administration contrasts with a 10 percent increase in the number of party committees reported at private sector companies — to 1.6 million — in the first decade in power. Many of the committees, made up of employees who are party members, have become more active in corporate decision-making in recent years.

Jiang Zemin, former chairman and party secretary general, first invited entrepreneurs to the party in 2002. Delegates to subsequent party congresses, which meet every five years to appoint the new leadership, include Wang Jianlin, founder of the Wanda Group, and once the richest man in China.

By contrast, most of the 27 executives attending the last party congress in 2017 ran small or medium-sized businesses. In the same year, Zhou Haijiang, just one delegate from Hongdou Group, was ranked among China’s 500 richest people in 2012, compared to six such delegates.

“I couldn’t find a familiar name [this year’s] delegate list,” said an executive from a private business association whose members include companies founded by leading entrepreneurs.

The manager, who asked not to be named due to the sensitivity of the subject, added, “Our best CEOs are not at a conference that will shape their future.”

Only three executives from China’s 500 largest private sector groups by income are attending this week’s congress as delegates, where Xi is expected to be appointed as supreme leader and military commander-in-chief for the third time.

Only one executive from the country’s once thriving and private-sector-dominated internet industry is in Congress – the board secretary of Three Squirrels, an online snack shop. Industry leaders like Tencent and are underrepresented despite employing tens of thousands of party members.

Private sector executives say they still aspire to get into Congress. They want to win the favor of the party as they try to manage the unprecedented regulatory overhauls of the tech, property and other industry sectors launched last year.

However, they realize that it is increasingly unlikely to send a delegate to the party congress in Xi’s China. “This is something money cannot buy,” said an executive at a Beijing-based internet company.

In September, a representative from the party’s powerful personnel department told the official Xinhua News Agency that party loyalty is crucial to potential delegates. The organizational department that selected the congress delegates, adhering to Xi’s ideological teachings at the top, listed six criteria for people hoping to attend. Strong business performance ranked sixth.

“Candidates without political qualifications will not have a chance to attend the congress,” the ministry said.

One of this year’s delegates is Cao Shiru, who runs a supermarket chain in the southwestern city of Chengdu. His business, Red Flag, reported falling profits in 2020 and 2021, and had little success expanding to other cities as planned.

A Chengdu-based entrepreneur close to Cao said he had spoken out about his family’s ties to the party and would proudly talk about his “son’s previous job in the state security ministry.”

He also made it clear that his business would support the government when needed, the person added.

However, the Chengdu entrepreneur was skeptical about the value of representation at the party congress: “Participation in the party congress does not make your store more attractive. It will just be lower prices.”