Civil Society and Limited Government

CIVIL SOCIETY AND LIMITED GOVERNMENT -- TAKE THE CHINESE CHAMBERS OF COMMERCE FOR EXAMPLE

Dr. Liu Junning

I. Chamber of Commerce and Civil Society II. Interaction between Chamber of Commerce and Government 1. Effect of Government on Chamber of Commerce 2. Effect of Chamber of Commerce on Government III. Chamber of Commerce and Governance 1. Complaint and Articulation of Interests 2. Making Interest Demands 3. Communication and Dialogue 4. Participation in Legislation and Policy-Making 5. Self-Development 6. Increasing Transparency 7. Rule of Law and Peaceful Settlement of Conflicts 8. Charity and Public Welfare IV. Preliminary Conclusion

In modern society, governance in any sense is under the market economy. First of all, it is interaction between the government and the market society. The rise of modern civil society is closely related to the market economy. There is no civil society in a strict sense in a self-sufficient natural economy and under the economic structure in which all economic activities are controlled according to government orders. So civil society and government governance are inseparable from commercial activities and the corresponding free and voluntary association under the market economy. All constitutions in modern society recognize people’s freedom of association. There will not be civil society without freedom of association. Therefore, investigation of the status of the chambers of commerce in all localities in Chinese society and their influence on government governance at the current stage should constitute an indispensable link in study of the relationship between China’s civil society and governance. For this reason, I choose the “chambers of commerce” in present-day China as the object of case study. The purpose of research is to observe, through the case study of the federation of industry and commerce, how the civil social organizations which emerge in the process of the reform designed to establish the market economy in China play a unique role in the establishment of limited government in China which is compatible with the market economy and democratic politics. The research is designed to discuss the revival of the chambers of commerce in present-day China and the motive force for their development, study their status in China’s civil society, discover the basic factors for promoting or impeding the revival of the chambers of commerce as a major civil social organization in China and the impact of the growing chambers of commerce on government governance and assess the impact. The so-called governance refers to the methods, behaviors and process of the government’s management of public affairs. In the research, governance refers to the method of exercising public rights in the process of management of economic and social resources of a state for the purpose of achieving economic growth.

I. Chamber of Commerce and Civil Society

The official name of China’s chamber of commerce is the All-China Federation of Industry and Commerce. According to official determination of its status, it is a mass organization for the industrial and commercial circles throughout the country, the civil chamber of commerce for internal and external ties, a national organization for local federations of industry and commerce at all levels, a component of the united front and a member unit of the Chinese People’s Political Consultative Conference. The All-China Federation of Industry and Commerce was established in 1953. But the task entrusted to it at that time was not to promote the development of industry and commerce and private economic sector, but to eliminate private economic sector in coordination with the Communist Party of China (CPC) and governments at all levels under the leadership of the CPC, complete the socialist transformation of capitalist industry and commerce and conduct socialist education and ideological remolding among private industrialists and businessmen. After the planned economy, public ownership, proletarian dictatorship and regime were established and private enterprises and economic sector disappeared, the All-China Federation of Industry and Commerce and its local organizations at all levels which represented the interests of private enterprises and economic sector lost the value and the social, political and economic basis for its existence. For 20 years from 1959 to 1979, the All-China Federation of Industry and Commerce and its local organizations at all levels which served as the Chinese chambers of commerce ceased almost all the activities and existed in name only. The Sixth National Conference of the All-China Federation of Industry and Commerce held in November 1988 decided that the organization is the civil chamber of commerce for internal and external ties and stipulated that it is a united front organization. The object of the case study is the All-China Federation of Industry and Commerce (also called the National General Chamber of Commerce in the article) and its local organizations: local federations of industry and commerce (also called local general chambers of commerce). The principal members of the Chinese chambers of commerce are private enterprises and entrepreneurs in all localities. Unlike cultural organizations, organizations for social movements and the promotion of civil rights and other civil social organizations, the Chinese chambers of commerce are professional service organizations. As China’s politics and economy undergo a transition, the status of the chambers of commerce is at a stage of the transition. The following is the determination of the status of a provincial chamber of commerce. This determination of the status reflects the nature of the chamber of commerce which is undergoing a change. “The (Hainan) General Chamber of Commerce should be fully aware that it has greater advantages than other organizations of industry and commerce. As the federation of industry and commerce, it was an important component of the Party’s united front. It is gradually civilian-run and moves towards civil self-governance, but it is still and will be a component of the united front. This requires that on the one hand, it should consolidate its status in the people’s political consultative conference and use the forum of the people’s political consultative conference to participate in the deliberation and administration of state affairs on behalf of the industrial and commercial enterprises and that one the other hand, it should utilize the group advantages to adapt to the new situation and ensure that the chamber of commerce is a part of the united front, represents the economic sector and is civil, so as to promote the reform. At the same time, it should keep to leadership by the Party throughout the process of reform and construction. Only by keeping to leadership by the Party and concentrating firmly on the central task of economic development will the chamber of commerce certainly make progress in its improvement and various reforms.” 1 From this we can see that on the one hand, the chamber of commerce should free itself from the original status as the tool of the united front and be civilian-run and independent and that on the other hand, it must continue to accept leadership by the Party and meet the needs of the united front. Because regional development in China is uneven, there are great differences in the development and activity of the chambers of commerce in different areas. Chambers of commerce in economically developed southeastern coastal areas are usually better than those in backward areas in terms of their development, independence, sound organization and impact on social and economic activities. Chambers of commerce in economically developed areas have stronger wishes for self-development than those in backward areas. For example, Hainan Provincial General Chamber of Commerce has put forward a new way of thinking for its self-development, that is, if the general chamber of commerce “develops, it must improve the central link of the provincial general chamber of commerce, be based on grass-roots chambers of commerce, trade councils and professional associations and become a civil, self-disciplined system of social intermediate service organizations. We should further establish the authority of the provincial general chamber of commerce. The chambers of commerce should make a shift from being loosely organized to being well-organized, from independent operations to combined operations and from decentralized activities within their system to the network coordinated activities under unified command, so as to pool efforts and enhance the cohesiveness within their system.”2 This way of thinking shows that Hainan Provincial General Chamber of Commerce ardently hopes for self-development. It is hard to find the way of thinking for development from the chambers of commerce in backward areas. Another index for proving this point is that chambers of commerce in backward areas seldom set up their web sites in Internet. But chambers of commerce in economically developed areas set up their web sites in Internet. As a reviving civil social organization and especially an organization for private enterprises in a socialist country, the chamber of commerce in China is of special significance. The revival of the chamber of commerce gives new impetus to the development of the market economy. As a result, the relationship between enterprises and the government begins to undergo a change, and private enterprises begin to expand considerably. On the one hand, the emergence of private enterprises and the chambers of commerce requires that existing political system tolerates them. On the other hand, they pose a direct challenge to the method of governance under the old planned economy. From this we can see that the local chambers of commerce which serve as the federations of private enterprises are the backbone of the civil society and that they are the most representative external factor which can result in a change in governance. With regard to the nature, objectives and functions of the Chinese chambers of commerce, we can find some clues from the rules of the chambers of commerce at all levels. For example, the Rules of Hainan Provincial General Chamber of Commerce make the following stipulations.3 With regard to its nature, the chamber of commerce is “a mass organization under the leadership of Hainan provincial Party committee and provincial government, a federation of civil chambers of commerce which are voluntarily organized by industrial and commercial enterprises, groups and individuals in Hainan Province and an affiliated organization of the All-China Federation of Industry and Commerce”. (See Article 3 of the Rules). With regard to its objectives, “all the activities of the chamber of commerce conform to the Constitution of the People’s Republic of China which serves as cardinal principles and the various laws, statutes and regulations promulgated by the state and Hainan Province and are designed to unite with industrial and commercial circles, safeguard the legitimate rights and interests of its members and serve social stability, reform, opening to the outside world and economic prosperity in Hainan Province, socialism with Chinese characteristics and the reunification of the motherland.” (Article 4 of the Rules). With regard to its functions, the chamber of commerce has the duty to “carry out the Party’s basic line, help its members conscientiously study and observe the state policies and laws, help and educate them to love the motherland, devote themselves to their work, abide by the law and perform their due social responsibilities. It safeguards the legitimate rights and interests of its members, checks their complaints and reports their opinions, requests and suggestions to the competent government functional departments.” (See Article 5, Sections 1 and 2 of the Rules). We can also review the provisions of the Rules of the All-China Federation of Industry and Commerce adopted in November 1997.4 According to the Rules, its nature is that “the All-China Federation of Industry and Commerce is a mass organization and civil chamber of commerce which is organized by the Chinese industrial and commercial circles under the leadership of the Communist Party of China, a link and bond between the Party and the government on the one hand and figures from non-public sectors of the economy and an assistant for helping the government manage non-public sectors of the economy.” (Article 1 of the Rules) Its objectives are “to hold high the great banner of Deng Xiaoping Theory, to adhere to the Party’s basic line and program for the primary stage of socialism, the basic economic system which takes the public sector as the dominant part and makes the economy with diverse forms of ownership coexist and the basic principle of one country, two systems, to persist in uniting with, educating, guiding and serving its members, to promote the sound development of non-public sectors of the economy and to make contributions to the promotion of socialist material progress and ideological and cultural progress, reform and opening to the outside world, the reunification of the motherland and the rejuvenation of the Chinese nation.” (Article 3 of the Rules) Its major tasks and functions are “to participate in political consultation about the fundamental state policies and major issues concerning politics, economy and social activities, play the role of democratic supervision and participate in the deliberation and administration of state affairs; to help its members take an active part in national economic development, promote the gradual improvement of a socialist market economy and bring about all-round social progress; to recommend representative figures from industrial and commercial circles for political appointments; to carry forward the fine tradition of self-education, publicize and carry out the principles and policies of the Party and the state and strengthen and improve ideological and political work; to advocate love for the motherland, devotion to work, the need to abide by the law, raise the quality of its members and train the contingent of activists.” (See Article 4, Sections 1 to 4 of the Rules) Although the Rules stipulate for various political tasks for the chamber of commerce, they also provide that “the All-China Federation of Industry and Commerce is a Chinese civil chamber of commerce. The federations of industry and commerce in provinces, autonomous regions, municipalities directly under the Central Government, autonomous prefectures, cities, counties, banners and prefectures (leagues), and districts are civil chambers of commerce which can be called chambers of commerce or general chambers of commerce. (See Article 6 of the Rules) There is an interesting thing which merits attention. The Rules of the chambers of commerce at all levels do not impose open political restrictive conditions on their members and especially their individual members. In a sense, this is a sign of the spontaneous civil nature of the chambers of commerce. The Chinese chambers of commerce are the most representative civil social organizations under the market economy. In the first half of this century, the Chinese chambers of commerce (federations of industrialists and merchants) exerted a great influence in political life. Later, they almost disappeared under the planned economy. As the reform to establish the market economy was deepened and civil society emerged in the late 1980s and the 1990s, the chambers of commerce began to revive. As China’s society was increasingly pluralistic, powers were delegated and transferred, the political and economic systems underwent a transition and the ownership structure was changed, the Chinese chambers of commerce developed at a high speed in the 1990s after they emerged in the 1980s. The rise and fall of the chambers of commerce are closely related to the rise and fall of the market economy and private enterprises in China. The relationship between them is “they are bound together for good or ill”. From 1992, the federations of industry and commerce at all levels throughout the country began to use another name – “(general) chambers of commerce”. The change in the name also implies that the Chinese commercial organizations begin to advance towards and even finally become compatible with the model of the chamber of commerce under the free enterprise system. This means that the chambers of commerce begin to remold themselves once again according to the model of civil social organizations. At the same time, they also begin to perform some functions of mouthpiece against the background of the primary stage of the market economy in China. The matters which merit our attention are that the Chinese chambers of commerce are still official-run social organizations, that their authorized sizes are determined by the government and that their personnel have the status of public servants. Like other government departments, they have Party organizations, their leading cadres are appointed by Party organizations at all levels, their funds are mainly appropriated by the government and their authorized sizes are determined by the government. The ranks, wages and material benefits of their personnel are determined according to public servants, and their personnel can be transferred between the chambers of commerce and Party and government governments. There is an event which can explain the relationship between the government and the chambers of commerce, that is, the Chinese government is formulating a law on the chamber of commerce. “The guiding principles for the Law on the Chambers of Commerce (draft for discussion) have been basically affirmed by the Premier’s Administrative Meeting. But some of these principles are being discussed. Particularly the principles for enterprises’ admission to the chambers of commerce and for the system of the chambers of commerce are the basic issues in the state legislation in the chambers of commerce and in the legislation in the chambers of commerce in special economic zones which draw the people’s attention. Most of the people think that we should draw on the usual practice for the chambers of commerce in such civil law countries as France, Germany and Italy which have legal traditions similar to those of our country, that is, to apply the principle of compulsory admission to chambers of commerce and not the principle of voluntary admission, with a view to better reflecting the representativeness of the chambers of commerce and giving play to their role of coordination. With regard to the system of the chambers of commerce, the leading comrades of the State Economic and Trade Commission hold that the chambers of commerce are regional and comprehensive organizations, that professional associations and trade councils are professional organizations and that most of the professional associations have been “half-dead” because of the incomplete political restructuring for many years. They hope that the original issues concerning professional associations can be solved after the Law on the Chambers of Commerce is promulgated. Through discussion, people think that drawing on the usual practice in civil law countries and properly handling the relationship between chambers of commerce and professional associations in light of China’s actual conditions are beneficial to the orderly operation of intermediate organizations under the socialist market economy and that we can give play to their role.”5 Moreover, local governments at all levels will formulate the regulations on the chambers of commerce. The motive force for doing this is to put the management of the chambers of commerce on a legal footing. The membership of the Chinese chambers of commerce at all levels generally consists of enterprise, group and individual members. According to the Rules, like the Communist Party of China, the Chinese chambers of commerce establish the “principle of democratic centralism” as their organizing principle (Article 13 of the Rules). According to the Rules, the decision-making power of the chambers of commerce at all levels are vested in presidents, vice-presidents and secretaries-general. The chambers of commerce at all levels generally establish some departments and special committees (Article 22 of the Rules). The Rules do not prescribe the powers of Party organizations within the chambers of commerce. Because the Constitution of the People’s Republic of China stipulates that the Communist Party of China exercises the leadership of all fields, in light of the political practice in China, Party organizations within the chambers of commerce exercise leadership over the chambers of commerce. According to the provisions of the Rules of the Chinese chambers of commerce at all levels, their leading cadres are elected at their conferences or membership conferences, and presidents and executive vice-presidents are elected according to equal-number election system. In practice, the leading cadres of the various departments of the chambers of commerce are appointed by their Party organizations. Because the chambers of commerce serve as “assistants”, with regard to their responsibility system, first of all they are responsible to the Party and the government at corresponding levels, and then they are responsible to their members. The status and the responsibility system under which the chambers of commerce are responsible to higher authorities are an important reason why people criticize the chambers of commerce for becoming the “yamen” and laying “undue emphasis on official rank”. Because the Chinese chambers of commerce at all levels are organized by the Party and government departments at all levels and they are not the organizations which are purely civil and voluntarily organized, they are stamped with the brand of government departments. The overdue emphasis on the “yamen” and “official rank” are a serious problem existing in the Chinese chambers of commerce at all levels. Their internal organizational structure is obviously hierarchy and not based on equality. Because the chambers of commerce are not voluntary and independently organized organizations, their internal democracy, participation and responsibility system and the transparency in their routine operation are affected by the above factors. From this we can see that the Chinese chambers of commerce are both the associations which private industrial and commercial circles voluntarily join and the link between the state and the civil society. They are both the independent, non-governmental civil organizations and a part of the state apparatus. As civil social organizations, the chambers of commerce are not fully independent, but we should admit two facts. First, the chambers of commerce accept the leadership of the Party and the government, but there is a great difference between Party organizations and government departments on the one hand and chambers of commerce on the other. It is obvious that the Chinese chambers of commerce are not the organizations under the ruling party and not the typical government departments. They do not exercise the special rights enjoyed by government departments. This can be proved by the fact that the chambers of commerce perform the functions of professional management and services. For example, the National General Chamber of Commerce performs the following functions of professional management and services: It represents and safeguards the legitimate rights and interests of its members and reports their opinions, requests and suggestions. It helps its members maintain the traditional virtues of the Chinese nation, makes those who become well-off first provide assistance to others and work for common prosperity and ensures that its members are devoted to the work for the public good; It provides information and scientific, technical, managerial, legal, accounting, auditing, financing and consulting services to its members. It conducts special industrial and commercial training, helps its members improve business and financial management, pay taxes according to regulations and raise production technology and the quality of products; It organizes its members to hold and attend the various foreign sales exhibitions and fairs and to go abroad for business investigations and visits and helps its members open domestic and international markets; It increases ties and friendship with the industrial and commercial organizations and the figures from industrial, commercial and economic circles in the Hong Kong Special Administrative Region, Taiwan, Macao and other countries in the world, promotes the development of the economy, technology and trade cooperation, assists in the attraction of funds, technology and talented people, provides the relevant certificates, coordinates relations and mediates in economic disputes for its members; It does a good job in managing its enterprises and institutions; It handles other matters entrusted by the government and other departments.6 Second, the Chinese chambers of commerce are different from those of the Western countries. This is because the Chinese General Chamber of Commerce accepts the leadership of the ruling party and the Central Government. Local chambers of commerce at all levels accept the leadership of the chamber of commerce at the next higher level and local Party and government departments, and they mainly accept the leadership of local Party and government departments. Because other civil social organizations in China are basically the same as the chambers of commerce in terms of nature, status and relationship with the government, conflicts between the chambers of commerce and other civil social organizations are almost impossible. If there are any conflicts, Party organizations and government departments at all levels will settle them through coordination. The Chinese chambers of commerce are mainly professional associations for private enterprises, and their social and political status is basically the same as that of private enterprises. The growth of the chambers of commerce is basically the same as that of the whole civil society in China. Because China is a country in which communism is a dominant ideology. According to this ideology, private enterprises, private ownership and private economic sector must be eliminated after socialism enters the high stage. So private enterprises and private economic sector play a secondary, supplementary role in the whole national economy and social and economic activities. Although the legal status of private economic sector has been slightly raised after the Constitution was revised in March 1999, the above-mentioned state of affairs has not been fundamentally changed. Because public ownership and state-owned enterprises play a dominant role in China’s economy and almost all the large and medium-sized enterprises which support the key sectors of the economy are not the members of the chambers of commerce at all levels, the representativeness of the chambers of commerce in the entire economy must be restricted to a large extent. This shows that the chambers of commerce play a secondary role in the whole economic and political activities and the civil society in China and are typical weak organizations. This point shows that there is a great difference between the Chinese chambers of commerce and those of the developed countries under the market economy. The chambers of commerce in the Western developed countries where private enterprises and private economic sector play an overwhelmingly dominant role are strong civil social organizations. Governments operate between the chambers of commerce and professional associations at the next lower level. General chambers of commerce at all levels do not have too much autonomy. So there is no issue of maintaining the balance between the chambers of commerce and other civil social organizations before they obtain substantial decision-making power. Associations of self-employed laborers and private enterprises are often managed by the government departments for industry and commerce, and cadres in charge of industry and commerce serve as heads of these associations. Some private entrepreneurs also organize their own social organizations (entrepreneurs’ associations) which are not controlled by the departments for industry and commerce. Their heads are private entrepreneurs. As mass organizations, they maintain ties with the federations of industry and commerce and become the affiliated organizations of the latter. For example, Shenzhen Chamber of Commerce has various group members. It has over 30 group members, including such comprehensive industrial and commercial organizations as Shenzhen Branch of China Council for the Promotion of International Trade, the association of private enterprises, the association of entrepreneurs from Taiwan, the scientific innovation centre, municipal major professional associations and trade councils.

II. Interaction between Chamber of Commerce and Government

1. Effect of Government on Chamber of Commerce

Because the Chinese chambers of commerce are Party-run and officially-run, it is not necessary for the Party and the government to suppress the chambers of commerce. Cooperation, tolerance and encouragement are out of the question. Because there are no relationship of administrative subordination and equal partnership between the government and the chambers of commerce, there is no relationship of “cooperation” between the two. There are no issues of “tolerance” and “encouragement” between the two. Because the chambers of commerce are the civil organizations which are directly controlled by the Party and the government and which establish Party organizations, they do not need tolerance by the government. The government does not need to voluntarily give up controlling the chambers of commerce with a view to encouraging them to develop independently and cannot encourage them put pressure on the social governance and decision-making process of the government. The above conclusion is drawn according to the two points. First, the ruling party establishes Party organizations in the chambers of commerce at all levels and directly exercises the leadership of all of their affairs. They have the duty to be in agreement with the ruling party and the government. Second, the relationship between the chambers of commerce and the government is “assistant”. This means that the chambers of commerce cannot stick to their own opinions and are subordinated to the Party and the government as assistants. The Rules of the All-China Federation of Industry and Commerce stipulate that its nature is that “the All-China Federation of Industry and Commerce is a mass organization and civil chamber of commerce organized by the Chinese industrial and commercial circles under the leadership of the Communist Party of China, a link and bond between the Party and the government on the one hand and figures from non-public sectors of the economy and an assistant for helping the government management non-public sectors of the economy.”7 2. Effect of Chamber of Commerce on Government

The Chinese chambers of commerce have dual representativeness. On the one hand, they represent the Party and the government and “unite with, educate, guide, serve and promote the sound development of non-public sectors of the economy”. On the other hand, they represent private economic sector and “participate in political consultation about the fundamental state policies and major issues concerning politics, economy and social activities, play the role of democratic supervision and participate in the deliberation and administration of state affairs”. The first representativeness is more important than the second one. In China, the chambers of commerce regard the ruling party and the government as their higher authorities and leading bodies and are responsible for accomplishing all tasks entrusted by the ruling party and the government. For example, according to the Rules of the Chinese General Chamber of Commerce, the chambers of commerce are not entities independent of the ruling party or the government, but serve as assistants to accomplish the tasks and the “bonds” and “links” between the Party and the private economic sector. Because of the first representativeness, the Chinese chambers of commerce assume the important political mission entrusted by the Party. If people read the following words in the news reports of the Chinese chambers of commerce at all levels, they do not need to be surprised. On the 22nd: The Federation held a meeting attended by the leading cadres at and above the level of division and all Party members. Comrade Liang Jinquan, Secretary of the leading Party group presided over the meeting and communicated the spirit of the remarks about the issue of exposing and opposing the Falun Gong made by Head of the United Front Work Department of the Party Central Committee, set demands on the Party members and cadres in the Federation and its affiliated enterprises and institutions and required them to take the lead in maintaining social healthy trends, advocate scientific thinking, do away with feudal superstitions, raise their awareness of the serious issue of the Falun Gong, gain a clear understanding of its harm and maintain social stability voluntarily. The Federation organized the personnel to communicate the Z.B. No. 19 Document, the Z.F. No. 13 Document and several documents on the issue of the Falun Gong issued by the Central Committee of the Communist Party of China and arrangements for conducting ideological education among Party members and cadres made by the Party committee of the Federation on the request of the leading Party group. On the 23rd: The Federation issued a circular to federations of industry and commerce in all provinces, autonomous regions and municipalities directly under the Central Committee and the Executive Committee of the Federation and supported the decision on determining the nature of the Falun Gong and dealing with it made by the Central Committee of the Communist Party of China. The circular called on the organizations of the All-China Federation of Industry and Commerce at all levels and members of the Executive Committee of the All-China Federation of Industry and Commerce to take action and unify their thinking according to the instructions of the Party Central Committee. It set the four concrete requirements. The Federation held a symposium attended by representative figures from non-public sectors of the economy. They studied and discussed the Circular on Not Allowing Party Members to Practise the “Falun Gong” Issued by the Central Committee of the Communist Party of China and other documents. Representative figures from non-public sectors of the economy spoke and expressed firm support for the decision made by the Party Central Committee, thoroughly exposed and opposed the Falun Gong, denounced the wrong and evil ideas of the Falun Gong, agreed to ban the illegal organization resolutely and did away with feudal superstitions. On the 29th: The (Dalian) Symposium on the Publicity and Education of the All-China Federation of Industry and Commerce was held. Participants at the symposium discussed ways of adapting to the new situation to effectively handle the ideological and political work among representative figures from non-public sectors of the economy, promoting the sound development of non-public sectors of the economy and conducting systematic investigations and research. The content of investigation and research is the review of experience gained in ideological and political work among figures from non-public sectors of the economy for many years; the thinking of figures from non-public sectors of the economy and their education and training; how to adapt to the new situation and take the initiative to do ideological and political work among figures from non-public sectors of the economy; how to gradually train a contingent of the activists who firmly support the leadership by the Party and cooperate with the Party.8 Because the National General Chamber of Commerce assumes an indispensable political obligation, that is, to participate in political movements and be in agreement with the Party Central Committee. The following is the review of the work and tasks made by Shanghai Municipal Chamber of Commerce: to conscientiously “do ideological and political work among figures from non-public sectors of the economy and to focus on one thing, namely, to maintain the fine tradition of letting the old generation ‘heed what chairman Mao said, do as the Communist Party instructed and take the socialist road’ in the new period and to enable the new generation ‘heed what Deng Xiaoping said, do as the Party Central Committee with Jiang Zemin at its core said and take the path to socialism with Chinese characteristics’”. 9

III. Chamber of Commerce and Governance

As the purely civil, non-governmental voluntary association under the typical market economy, the representativeness of the chamber of commerce is one-way. The chamber of commerce has no right to represent the government and even the ruling party. As mentioned above, however, the representativeness of the chamber of commerce in China is dual. It represents both the Party and the government to “unite with, educate, guide, serve and promote the sound development of non-public sectors of the economy”. It represents private economic sector to “participate in political consultation about the fundamental state policies and major issues concerning politics, economy and social activities, play the role of democratic supervision and participate in the deliberation and administration of state affairs”. The first representativeness is more important than the second one. Nevertheless, a designated function of the chambers of commerce at all levels is to fully represent the interests of private industrial and commercial circles. The Rules of all the chambers of commerce stipulate that the participation in the deliberation and administration of state affairs is one of their important functions. For example, Article 5, Section 7 of the Rules of Hainan Provincial General Chamber of Commerce stipulates that one of the duties of the chamber of commerce is “to cooperate with the government departments for legal affairs, conduct investigations and research in legislation designed to develop the market economy and participate in legislation”. Article 4, Section 1 of the All-China Federation of Industry and Commerce stipulates that its major function and task is “to participate in political consultation about the fundamental state policies and major issues concerning politics, economy and social activities, play the role of democratic supervision and participate in the deliberation and administration of state affairs”. Because the chambers of commerce perform the function of participation in the deliberation and administration of state affairs, their activities must be related to government governance. Research shows that the Chinese chambers of commerce at all levels have impact on governance in the following eight aspects to varying degrees.

1. Complaint and Articulation of Interests

In compliance with the status of the “assistant” of the ruling party and the government, the chamber of commerce begins to take the initiative to play a role in the collection and articulation of the interests of private industrial and commercial circles and exerts influence on the process of government governance. So the basic function of the chamber of commerce is to collect the interests of the members which it represents and articulate these interests to the government and society. The following is a typical example of the collection and articulation of the interests through organizing the symposium. The non-publicly-owned enterprises in Nanjing City express seven hopes for the implementation of the amendment to the Constitution. After some representatives from non-publicly-owned enterprises in Nanjing studied the amendment to the Constitution adopted at the Second Session of the Ninth National People’s Congress a few days ago, they conducted heated discussions about the fact that the Constitution clearly stipulates that non-public sectors of the economy are an important component of a socialist market economy. They think that there is an urgent need to coordinate efforts to promote the sound, rapid development of non-public sectors of the economy for the purpose of the implementation of the amendment to the Constitution. This boils down to seven hopes. First, they hope that leading bodies at all levels take the lead in studying the amendment to the Constitution, earnestly understand the spirit of the amendment, extensively publicize it among figures from non-public sectors of the economy, make it known to the public and enhance people’s faith in the implementation of the amendment to the Constitution. Second, they hope that governments at all levels observe the provisions on the status and role of non-public sectors of the economy in the amendment to the Constitution, proceed from the Constitution to check on all outmoded legal provisions which run counter to the spirit of the Constitution, formulate practical and effective policies and measures, promulgate and implement them as quickly as possible and create a favorable environment which is beneficial to the development of non-public sectors of the economy. Third, they hope that the federations of industry and commerce (chambers of commerce) can play a greater role in the socialist market economy. They hope that the Party and the government can ensure that the federations of industry and commerce truly play a role of links and bonds, becomes assistants for the government’s management of non-public sectors of the economy and make contributions to the establishment of a good order in the market economy. Fourth, they hope that government departments in charge of law enforcement can thoroughly change their concepts, overcome their discrimination against the ownership of non-public sectors of the economy and eliminate protectionism for publicly-owned enterprises. For example, in handling a lawsuit, publicly-owned enterprises and non-publicly-owned enterprises should be treated equally without discrimination, and government departments should take action to protect the legitimate rights and interests of non-public sectors of the economy. Fifth, they hope that financial departments step up their efforts to help overcome difficulties in obtaining loans which impede the development of non-publicly-owned enterprises. They hope that there is the need to accelerate the establishment and implementation of guarantee funds for small and medium-sized enterprises so that many small and medium-sized non-publicly-owned enterprises can enjoy the same treatment as small and medium-sized state-owned enterprises in obtaining loans. Sixth, they hope that when private enterprises participate in the reform of state-owned enterprises, in implementing the measures of contracting, leasing and selling small and medium- sized enterprises, the competent departments should give information fairly and accurately and prevent private enterprises from “falling into a trap”. The federations of industry and commerce (chambers of commerce) should help private enterprises conduct thorough verification, work out ideas, think about methods, avoid unnecessary defects and help private enterprises smoothly participate in the reform of state-owned enterprises. Seventh, they hope that the competent government departments and the federations of industry and commerce at all levels should strengthen the training of figures from non-public sectors of the economy and especially the legal representatives of non-publicly-owned enterprises, provide special training jointly by chambers of commerce and all sectors of society or by chambers of commerce and ensure that non-publicly-owned enterprises try to make correct policy decisions, improve their management, rely on talented people, conduct business operations according to law and adapt to increasingly sharp market competition.10 A report on the survey jointly conducted by the All-China Federation of Industry and Commerce and the State Economic and Trade Commission summarizes the various difficulties which private enterprises encounter in China: 1. The concepts are not thoroughly changed. In the localities with a favorable environment for the development of individual and private sectors of the economy, some people still have some mistaken concepts. They only “dare to relax control and do not dare to exercise management”. They have no firm confidence and do not dare to give publicity”. Some non- governmental entrepreneurs are not free from anxiety and have to wear the “red cap” of the collective sector of the economy or the “foreign cap” of the joint ventures or the foreign-funded enterprises, so that the ownership of some enterprises is uncertain. 2. There are restrictions on some trades. Although individual and private sectors of the economy continue to expand their areas, there are still restrictions imposed on them in a few trades. For example, individual and private enterprises cannot engage in real estate. Although many enterprises try to engage in real estate by wearing the “red cap” or the “foreign cap”, the method of making adaptations despite clear disallowance causes many problems. 3. Individual and private enterprises find it hard to obtain loans, and existing financial institutions cannot meet their needs. Individual and private enterprises have difficulties in obtaining loans. Only mortgage loans are extended to them, loans are only short-term circulating funds and they cannot get loans on favorable terms. Credit rating based on the scale of assets, high unit costs and tedious formalities for loan examination, insufficient assets used for mortgage, low credit and other factors make it harder for individual and private enterprises and especially small and medium-sized enterprises to obtain loans. Difficulties in writing off the bad debts of these enterprises are outstanding. 4. More fees are paid, and the collection of fees is not standardized. According to tax laws, enterprises with diverse forms of ownership shall be equal. In fact, individual and private enterprises find that there are still some unreasonable provisions and practice. For example, income tax is collected in advance. The business tax base for self-employed persons is stable for six months and is increased year by year without consideration of their business conditions. Some officials falsify output value and increase tax base. There are the collection of fees under all sorts of pretexts and the arbitrary imposition of dues and quotas, for example, noise fee, haircut pollutant discharge fee and other fees and the subscription to newspapers. 5. Policies are not fully implemented. At the symposium, many individual and private entrepreneurs said that the state attaches macro importance to non-public sectors of the economy, gives meso support and lacks micro measures. In the process of concrete implementation, the state has no end of worries, is overcautious, thinks hard and conducts repeated research, so that enterprises have to make use of all sorts of back doors. For example, because formalities for going abroad are too complex and it is hard to handle these formalities through normal channels, individual and private entrepreneurs have to buy and sell foreign passports secretly to facilitate entry and exit. Because of tedious formalities for export, they engage in secret transactions with state-owned trade companies. Although the state has formulated policies for these matters, difficulties in implementation or lack of concrete measures cause many troubles and losses to enterprises.11 It is obvious that governments at all levels cause these difficulties. To overcome these difficulties, the government must change the policies, laws and methods of governance which discriminate against private enterprises. An important activity of the Chinese chambers of commerce at all levels is to report difficulties and especially discrimination which private industrialists and merchants have encountered.

2. Making Interest Demands In modern pluralistic society, civil social organizations play an important role in making reasonable interest demands to the government, cultivating and increasing the government’s speed and ability to respond to reasonable civil demands and ensure that governance can better respond to civil requests. If clear and concrete interest demands cannot be made to the government, the government policy decisions and administration will not reflect and meet these interest demands. In China, the chambers of commerce at all levels gradually get used to making their interest demands on all occasions. The following are the suggestions on the promotion of the sound development of non-public sectors of the economy in the report on the survey jointly conducted by the All-China Federation of Industry and Commerce and the State Economic and Trade Commission: 1. The proper political status should be given to non-public sectors of the economy. There is the need to formulate concrete policies to implement the provisions of the Constitution on the confirmation of the status of individual industrialists and merchants and private entrepreneurs, so that they will truly enjoy the same treatment with regard to economic matters, will be treated equally without discrimination with regard to political matters and will be reported with regard to publicity. 2. It is necessary to check on existing laws, statutes and regulations according to the new Constitution. Accelerating the establishment of the legal system for non-public sectors of the economy and ensuring their legitimate rights and interests are an important and urgent task. The Interim Regulations on Private Enterprises promulgated in 1988 puts the development and management of private economic sector on a legal footing, but it is hard to implement the provisions on the rights and obligations of private enterprises and on the protection of their legitimate property and other legitimate rights and interests. Some provisions are obviously outmoded and do not conform to the spirit of the Fifteenth National Party Congress and the provisions of the new Constitution. To promote the sound development of non-public sectors of the economy, we must accelerate legislation and step up our efforts to publicize the legal system. While continuing to standardize the operation and management of individual and private sectors of the economy, we must safeguard their legitimate rights and interests according to law and deal with the acts in violation of laws which infringe upon their legitimate rights and interests. At present, according to the new Constitution we should first check on the laws and regulations promulgated by the departments in charge of industry and commerce, taxation, land, foreign affairs and foreign trade and economic cooperation. If they do not conform to the provisions of the new Constitution, some will be annulled or revised. We should formulate new measures to encourage fair competition and the sound development of non-public sectors of the economy. 3. We should further lift restrictions on trades and ensure that non-public sectors of the economy can play a greater role. Under the effective supervision by the government, we should allow private enterprises which have economic strength, conduct standardized business operation and show good quality to operate in the industries which need to develop and in which the government and state-owned enterprises find it hard to increase investment for various reasons. This can increase the supply of products from these industries and promote their development. After competition is introduced to these industries, this will be beneficial to the improvement and raising of the quality of their services. The reform and development of state-owned enterprises require the participation of all sectors of society in terms of capital investment, technology transfer, change of mode of business operation and market exploration. We should encourage individual and private sectors of the economy to participate in the transfer of property rights, reorganization of assets and structural readjustments in small and medium-sized state-owned enterprises and arouse the initiative of all sectors of society. To this end, we should take the initiative to support association and cooperation between private enterprises and state-owned enterprises. When private enterprises merge and purchase small and medium-sized enterprises and buy the latter’s stocks and self-employed persons contract and lease small state-owned enterprises, we should create a policy-related environment by treating all enterprises equally without discrimination and encouraging fair competition in terms of formalities for examination and approval, assets evaluation, handling of debts, regulations on rights and obligations, placement of workers and staff and provision of wages and benefits to retired workers and staff. 4. We should standardize the behaviors of government departments and raise their work efficiency. First of all, there should be a competent government department responsible for promoting the sound development of non-public sectors of the economy and fair competition on the basis of the separation of government functions from enterprise management and solve the current problem of “multiple leadership”. The competent government department must alter its functions and focus on services. We should establish a two-way supervisory mechanism between administrators and individual and private entrepreneurs. The main content of the government’s supervision over individual and private sectors of the economy is to help them conduct legal business operation and engage in the business activities which conform to the state policy for industrial development and to ensure that the profit-making activities of non-public sectors of the economy meet social needs. Government departments must investigate and deal with the tax evasion, bribery and fraud, smuggling and trafficking in smuggled goods, production and sale of counterfeit and shoddy goods in non-publicly-owned enterprises according to law and strengthen routine supervision. At the same time, entrepreneurs exercise supervision over government functionaries. Such illegal acts of law enforcement as accepting bribery, eating and taking gifts gratis, extortion and purchase of goods at low prices which are reported by entrepreneurs and the masses shall be punished severely. We should help social organizations fully serve as a link and strengthen ties between the government and individual and private enterprises by making use of the federations of industry and commerce, individual laborers’ associations, private entrepreneurs’ associations and other organizations and professional associations. We should publicize all the principles and policies of the Party and report the problems existing in the process of the development of individual and private sectors of the economy through many channels. 5. We should strengthen positive publicity about non-public sectors of the economy. We should encourage them and give positive publicity about them without exaggerating their negative influence. We should strive to create a soft environment for the great development of individual and private sectors of the economy and promote their rapid and sound development. 6. We should eliminate discrimination with regard to ownership and increase the awareness of service. Individual and private sectors of the economy should be incorporated into local governments’ five-year plans for economic and social development and yearly plans and into the plans for promoting material progress and ideological and ethical progress for the purpose of assessment and commendation. We should persist in more guidance, less intervention, more services, fewer obstacles, more assistance, fewer troubles, more support, less criticism, more practical work and less empty talk, so as to truly increase the awareness of service in all functional departments and strengthen guidance. The main work is as follows: (1) We should strengthen supervision and management, promote what is beneficial and eliminate what is harmful and help individual and private sectors of the economy start new undertakings for the second time. At present, in view of the defects in the management methods and decision-making mechanisms of private and individual sectors of the economy and their short- term behaviors in the tactics and modes of business operation, on the one hand, we should strengthen supervision and management, give more publicity about the legal system and standardize their business and management behaviors. On the other hand, we should take the initiative to give guidance and help them conduct legal and standardized business operation. (2) With regard to financing, settlement, exchange, transfer of account and capital operation, state financial institutions should provide highly efficient, excellent financial services to private and individual sectors of the economy. (3) The competent government departments, research institutions, institutions of higher learning and social intermediate organizations should provide technical information services to private and individual sectors of the economy through various channels and many methods. (4) Government departments should provide consultancy about industrial policy and market information, guide investment, avoid duplicated construction and raise investment returns. According to the relevant regulations, they should earnestly solve the problem of the land used for the production and operation of non-publicly-owned enterprises and give the same treatment to non-publicly-owned enterprises and to state-owned and collectively-owned enterprises with regard to the various land fees. Departments in charge of industry and commerce should simplify formalities for handling licenses and other documents and reduce procedures for examination and approval. Departments in charge of water, power and gas supply should ensure timely and sufficient supply to meet the construction and production needs of non-publicly-owned enterprises and give the same treatment to non-publicly-owned enterprises and to state-owned and collectively-owned enterprises with regard to standards for the collection of fees.12

3. Communication and Dialogue

As mentioned above, the chambers of commerce in China are not only the assistants of the government but also the “bonds” and “links” between the government and private industrialists and merchants. This means that the chambers of commerce at all levels have the duty to facilitate communication between the government and private industrial and commercial circles and organize dialogue. For example, the All-China Federation of Industry and Commerce often conducts communication and dialogue with the State Economic and Trade Commission – the competent department in charge of industry and commerce within the Central Government. The following is the record of a meeting: The leading comrades of the National General Chamber of Commerce and the State Economic and Trade Commission met in the auditorium of the chamber of commerce. After Chairman of the National General Chamber of Commerce gave introduction to it, he said that as an assistant for helping the government to manage non-public sectors of the economy, it hoped to cooperate with the State Economic and Trade Commission to give macro guidance over non- publicly-owned enterprises and establish necessary ties between both parties to promote the sound development of non-public sectors of the economy. Minister of the State Economic and Trade Commission gave detailed introduction to its work responsibilities, organizational structure and work priorities. He said that one of the three important tasks of the State Economic and Trade Commission for handling the work concerning enterprises is to encourage fair competition for non-publicly-owned enterprises, promote their sound development, create reasonable external conditions and provide policy-related basis. He hoped that the National General Chamber of Commerce provided support and cooperation in the process of lightening burden on enterprises, exercising quality control and technical supervision, standardizing the market, protecting the rights and interests of consumers and formulating regulations on industrial management.13 Except for direct dialogue with the competent government departments, the chamber of commerce also organizes private entrepreneurs to conduct face-to-face communication with government departments. The following is an example: On February 26: The National General Chamber of Commerce held a symposium attended by officials from the Comprehensive Department of the State Economic and Trade Commission and figures from non-public sectors of the economy to listen to the suggestions on the development of non-pubic sectors of the economy put forward by entrepreneurs. Some private entrepreneurs aired their opinions about investment environment, market entry, financing conditions and fair competition. Officials from the State Economic and Trade Commission showed great interest in the pioneering spirit of non-governmental entrepreneurs and their mode of business operation and said that they would cooperate with the National General Chamber of Commerce to create better conditions for the development of non-public sectors of the economy.14

4. Participation in Legislation and Policy-Making

The participation of civil social organizations in the process of national legislation and policy-making is an important yardstick of the level of governance in a country. In China, the chambers of commerce are more and more involved in the process of legislation and policy- making. This is true both at the central level and at the local levels. For example, at the meeting on political consultation and the situation held by the Central Committee of the Communist Party of China every year, the principal leading cadres of the National General Chamber of Commerce put forward suggestions to the Party and state leaders. The National General Chamber of Commerce participates in economic legislation in the National People’s Congress. It has put forward suggestions on the revision of 24 drafts transmitted by the Commission of Legislative Affairs of the National People’s Congress for four years. The National General Chamber of Commerce and the Financial and Economic Committee of the National People’s Congress jointly held a symposium on the Law on Sole-Investor Enterprises (Draft) and the Partnership Law (Draft) attended by non-governmental entrepreneurs and listened to their opinions. In addition, the National General Chamber of Commerce put forward clear suggestions on the drafting of the Law on Chambers of Commerce and Professional Associations organized by the State Economic and Trade Commission. The following is a report about the participation of Anhui Provincial Chamber of Commerce in legislation. “The Suggestions on Accelerating the Development of Individual and Private Sectors of the Economy Throughout the Province put forward by the provincial chamber of commerce drew the great attention of the provincial Party committee and the provincial government and were incorporated into the Decision on Further Accelerating the Development of Individual and Private Sectors of the Economy made by the provincial Party committee and the provincial government. After a vice-governor of the province read the suggestions on the participation of the provincial federation of industry and commerce in economic legislation put forward by the provincial federation of industry and commerce, he immediately transmitted the document to the provincial bureau of justice and agreed that the federation of industry and commerce participated in economic legislation.”15 From this we can see that the influence on the process of legislation is not the right of the chambers of commerce in China and that this must be approved by authoritative persons and is confined to economic legislation. This shows that the level of standardization for the participation of civil social organizations such as chambers of commerce in legislation is low. Like the chambers of commerce in other countries, the Chinese chambers of commerce promote legislation related to them, take the initiative to express their attitude towards the laws which have been promulgated and lose no time in making use of the laws which are favorable to them to raise their discriminatory social status and safeguard their legitimate rights and interests. Sometimes they even raise questions about some articles of laws. For example, in view of the Law on Sole-Investor Enterprises which was promulgated not long ago, the chambers of commerce mobilized private entrepreneurs to give support to the law. “Private entrepreneurs said that the formulation of the law gives the de jure recognition of sole-investor enterprises and authorizes the scope of their independent operation and that this conforms to China’s actual conditions, extends the scope of non-public sectors of the economy and reflects the state protection of private property and the interests of investors. This will play a positive role in solving the problem of employment, placing laid-off workers and promoting the development of the national economy. Entrepreneurs hope that the policies and regulations related to the two laws are formulated as soon as possible, so as to standardize the behaviors of the government and enterprises, ensure fair competition on the market and truly protect non-public sectors of the economy. The Law on Sole-Investor Enterprises will become an important page in the history of China’s legislation. It is the first law on non- public sectors of the economy since the founding of the People’s Republic of China and fully reflects the state protection of non-public sectors of the economy. The questions on the law raised by members are also the controversial issues arising in the process of the formulation of the law, so these issues are not solved in the law and solutions to them will be supplemented in other policies and regulations.”16 In addition to putting forward suggestions on legislation, the chambers of commerce at all levels also take the initiative to participate in the formulation of the relevant policies. As the links and bonds between the government and enterprises, on the one hand, the chambers of commerce accurately transmit the policies, laws and regulations promulgated by the state and local authorities and other information to enterprises. On the other hand, they report the suggestions, requests and demands of non-publicly-owned enterprises and the problems existing in enterprises to the government in a timely manner and provide the basis for decision-making. Safeguarding the legitimate rights and interests of industrial and commercial circles and especially non-public sectors of the economy by relying on policies and through legal means is the objective of the chambers of commerce and one of the main purposes for enterprises’ joining the chambers of commerce. However, at the current stage, the chambers of commerce are more involved in putting forward suggestions on laws which have been promulgated than participating in the formulation of the draft laws during legislation. In comparison with the United States, a country with a developed civil society, there are great restrictions on the level and channels of the participation of the Chinese chambers of commerce in the formulation of the policies on legislation. It is impossible for the chambers of commerce to conduct open and large-scale lobbying activities and exert direct influence on legislative voting. The chambers of commerce should work hard to achieve these goals in future.

5. Self-Development

With the rapid development of private economic sector in China, the chambers of commerce at all levels also work for self-development and self-expansion. For example, the National General Chamber of Commerce specially studies and formulates the long-term plan for increasing its members. In 1996, it planned to focus on the increase of enterprise and group members. By the end of the third quarter of 1997, the total membership of the All-China Federation of Industry and Commerce had increased from 670,000 during its Seventh National Conference to 1.1668 million, an increase of 74.15%, among whom there were 234,800 old members and over 922,000 new members. Its members from non-public sectors of the economy had increased from 205,900 during its Seventh National Conference to 684,800, accounting for 58.68% of the total members. Its members from joint stock enterprises had increased from 503 during its Seventh National Conference to 5,751. It readjusted the structure of its members and the contingent of figures from non-public sectors of the economy continued to expand. Federations of industry and commerce at the county level and grass-roots organizations increased rapidly. By the third quarter of this year, 2,913 federations of industry and commerce at and above the county level had been restored or established, accounting for 90.4% of the total administrative regions throughout the country. The federations of industry and commerce at the county level had been restored in nine provinces and municipalities directly under the Central Government, such as Beijing, Tianjin, Shanghai, Jilin, Henan, Hunan, Guizhou, Hainan and Jiangxi. 13,976 grass-roots organizations including township and town branches of the federations of industry and commerce and trade councils were also established throughout the country. These grass-roots organizations take the initiative to conduct activities and promote the grass-roots work according to the objectives of relying on members to run associations, making associations provide services and invigorating associations on the basis of strength.17 Unlike the planned economy, the market economy and the free enterprise system are established on the basis of the separation of public and private interests and the separation of politics and economy. The model of limited government whereby scale, resources, power and functions are rigorously restricted is a prerequisite for governance under the modern market economy. Therefore, any acts which are beneficial to the achievement of limited government will help raise the level of government governance in China. The Chinese chambers of commerce at all levels expand their scale, augment the strength of private economic sector and increase the space of civil society. As a result, all these are beneficial to the achievement of the shift from “totalist government” to “limited government”, the reduction of the scale of the state sector of the economy, the promotion of the separation of politics and economy, the specification of the scope of the rights and responsibilities of the government, the formation of limited and efficient government and the raising of the level of governance. 6. Increasing Transparency

Transparency is an important index for determining the level of governance in a country. If government governance lacks enough transparency, fraud, unfair treatment and corruption will occur. Under the market economy, the government needs to raise the quality of the information it provides and increase transparency in its decision-making and action. This can ensure that enterprises can get sufficient information to make reasonable decisions about business operation. Transparency is the key to economic efficiency and an effective way to make the government assume more responsibilities, put a stop to corruption and encourage fair competition on the market. Sufficient information and transparency can make enterprises reasonably anticipate government behaviors. The key to transparency is that the government provides accurate information in a timely manner. If information is insufficient, reliability will be lacking and there will be uncertainty and more risks in production and business operation. Therefore, all the enterprises are more concerned about the transparency of the government and the accurate, timely and sufficient information it provides. As professional organizations for industrial and commercial circles, the Chinese chambers of commerce at all levels begin to be aware of the vital importance of the issue. Now almost all chambers of commerce establish survey information networks, quickly know the hot and difficult issues which are the concerns to industrial and commercial circles, raise efficiency in their participation in the deliberation and administration of state affairs and provide better services to their members. From investigations we can see that the chambers of commerce at all levels make great efforts to collect economic information and produce good results, but still find it hard to increase the transparency of the government. For example, what the chambers of commerce can only do is to be in a passive position to publicize and explain the laws, regulations and policies of government departments among industrial and commercial circles and help industrial and commercial circles conduct business operation according to law and handle matters according to policies. But they encounter many obstacles to forcing the government to make a great deal of important economic and decision-making information known to the public. From another angle, such civil social organizations as the chambers of commerce still can make great efforts to increase the transparency of government governance. 7. Rule of Law and Peaceful Settlement of Conflicts

As mentioned above, with regard to their nature, the Chinese chambers of commerce do not represent the interests of industrial and commercial circles, but are the “assistants”, “bonds” and “links” between the Party and the government on the one hand and private industrial and commercial circles on the other. Moreover, the right of personnel in the chambers of commerce is vested in the Party and the government, and there are sound Party organizations within the chambers of commerce. So there is no need to talk about the peaceful settlement of conflicts between the chambers of commerce and the government through legal means. In China, there is no precedent whereby the chambers of commerce which serve as the “assistants” put the government in the dock. So it is obvious that there are almost no conflicts between the chambers of commerce and the government. If the chambers of commerce and the ruling party or the government hold different views, the views of the latter will prevail. As intermediate organizations, the chambers of commerce begin to serve as mediators between member enterprises and between member enterprises and the government and can help settle disputes without antagonism. The settlement of disputes with the help of the chambers of commerce – intermediate civil social organizations can keep government authority from directly intervening in civil society. This is also an important sign of the self-governance capability of civil social organizations. As intermediate channels, the chambers of commerce can help the state and civil social organizations harmonize, establish mutual trust and resolve potential or existing antagonism. At the same time, they provide an institutionalized channel for enabling private enterprises to participate in and affect the formulation of policies.

8. Charity and Public Welfare

It is worth mentioning the contributions to charity and public welfare made by the Chinese chambers of commerce at all levels. The activities of charity and public welfare conducted by the chambers of commerce at all levels fall under the two categories: first, to help those in distress and aid those in peril, that is, to provide assistance to the areas hit by natural disasters and some relief to those in dire poverty; second, to make anti-poverty investment, that is, to attract investment in poor areas and help people in poor areas gradually shake off poverty by promoting the economic development of poor areas. The National General Chamber of Commerce reviewed the activities of charity and public welfare which it conducted in recent years. “Under the guidance of the United Front Work Department of the Party Central Committee, the leading comrades of the All- China Federation of Industry and Commerce and some provincial and municipal federations of industry and commerce led and organized entrepreneurs from non-publicly-owned enterprises to go to Guizhou, Inner Mongolia, Xinjiang, Tibet to implement some projects. At present, 2,296 entrepreneurs from non-publicly-owned enterprises throughout the country invest in the Glorious Undertaking, begin launching 2,731 projects of the Glorious Undertaking, contribute funds totaling 5.1 billion yuan, fulfill the volume of domestic and foreign trade worth 1.4 billion yuan, donate 380 million yuan, train 250,000 persons for poor areas, place 180,000 persons in poor areas and help 540,000 people in poor areas have adequate food and clothing.”18 The significance of the Glorious Undertaking which the chambers of commerce help privately-run enterprises engage in is not confined to charity and public welfare. It is also closely related to government governance. First of all, the activities of public welfare and charity conducted by the chambers of commerce show that as civil social organizations, the chambers of commerce have the ability and willingness to provide welfare, change the situation in which the government has been the sole and exclusive provider of welfare since 1949 and explore the myth of “totalist government” to a certain extent. If the government is totalist, there is no need to allow the chambers of commerce to conduct the activities of charity and public welfare and help the “totalist” overcome its difficulties and anxieties. The efforts and positive results of the chambers of commerce to attract investment for poor areas show that welfare does not mean donation. Aid to poor areas with the use of market mechanisms does not conflict with welfare to poor population. In comparison with pure charity activities of donation, it produces better results and needs low costs. The chambers of commerce and other civil social organizations perform some functions of the provision of charity and public welfare. This will help reduce the social functions of the government, which should be performed by civil society. This will help reduce the size of the government and promote a shift from “totalist government” to “limited government”.

IV. Preliminary Conclusion Present-day China is a post-totalist authoritative country. Unlike the typical totalist country in which civil society is completely eliminated, civil society has preliminarily emerged in China as the market economy develops and the state control is gradually lifted. Even the civil social organizations organized by the government also begin to show the civil nature gradually. The method of government governance also undergoes a transition. On the one hand, the totalist government which has operated since 1949 continues to be transformed in the process of the market-oriented reform which has been gradually introduced since 1978, so that officials and civilians begin abandoning the governance model of totalist government. But the governance model of limited government under the rule of law has not been established. In a typical authoritative country, civil social organizations are spontaneously established by civilians, but they are subject to many restrictions imposed by the government. In China, the laws and the government stipulate that any civil organization must be attached to a government department and directly accept the leadership by the ruling party and the government. For example, the Rules of the All-China Federation of Industry and Commerce stipulate that “when a new local federation of industry and commerce is established, this should be reported to the Party committee or the government at the corresponding level and to the federation of industry and commerce at the next higher level and the All-China Federation of Industry and Commerce for record.”19 From this we can see that the establishment of a chamber of commerce is not based on automatic registration according to law, but this can be valid after examination and approval by the ruling party. Even the National General Chamber of Commerce has no right to approve the establishment of local chambers of commerce at all levels. Even if the right of examination and approval is vested in the National General Chamber of Commerce, the hierarchical structure formed from above still conflicts with the typical civil social organizations which are voluntarily associated. The subordination of the chambers of commerce at all levels to the ruling party and the government finds expression in the organizational structure and personnel arrangements within the chambers of commerce at all levels. For example, with regard to the organizational structure and personnel arrangements of Shenzhen Municipal General Chamber of Commerce, “Executive Vice- Mayor of the municipal government serves as its president, the present president of the general chamber of commerce becomes executive president, the following persons serve as several vice- presidents without election: a deputy head of the united front work department of the municipal Party committee (who is responsible for the united front work) and presidents of some organizations of industrial and commercial circles (for example, the council for the promotion of international trade) (who are not responsible for concrete affairs in the general chamber of commerce).20 This method of personnel arrangements is very typical in the local chambers of commerce at all levels. From personnel arrangements, we can see that the leadership over the chambers of commerce at all levels is controlled by the organizations of the ruling party and government departments at all levels and that figures from industrial and commercial circles who serve as vice-presidents are not responsible for concrete affairs in the chambers of commerce. Because China has a special political system, there is also a special relationship between the government and the chambers of commerce. At the current stage, the formation of the Chinese General Chamber of Commerce conforms to the provisions that private economic sector must accept the leadership and guidance of the ruling party, the government and the state sector of the economy as prescribed in the Constitution of the People’s Republic of China and the relevant laws to a large extent. It represents the ruling party and the government to further intensify the efforts to unite with, educate, guide and help figures from non-public sectors of the economy and exercises leadership over and gives guidance to the entire private economic sector. The first task of the chamber of commerce which serves as the assistant to the government is to help the government overcome difficulties and anxieties. Its second task is to strive for and safeguard the legitimate interests of private enterprises and represent them in participation of the deliberation and administration of state affairs on the request of the government on condition that the government’s permission is secured. The Glorious Undertaking designed to help those in distress and aid those in peril is a typical example of the chamber of commerce’s helping the government overcome difficulties and anxieties. But if the government can handle matters independently, there is no need to require the chamber of commerce to play a role. By comparison, under the typical market economy and limited government, the government performs the functions which the civil society cannot fulfill on its own. The government handles the matters which the civil society cannot deal with. Under the typical market economy, the government does something which the civil society cannot accomplish. Under the socialist market economy with Chinese characteristics, as civil social organizations, the chambers of commerce do something which the Party and the government cannot fulfill. The two situations form a great contrast. But if the chambers of commerce which serve as civil social organizations begin to seize the opportunity to do something which the government cannot fulfill, this represents a great progress in comparison with what they did under the planned economy. This shows that the political philosophy of omnipotent “totalist state” under the planned economy cannot continue to be executed. The suggestions on ways of serving as an “assistant” put forward by a local chamber of commerce reflect the process of the transition of the relationship between the Chinese chambers of commerce and the state. It puts forward the following suggestions: “We should take the initiative to strengthen ties. The comrades of the local federations of industry and commerce should keep the overall situation in mind without having knots in their thinking, take the initiative to strengthen ties. This is determined by the status of the ‘assistant’, and this is also important. We should do what Comrade Li Ruihuan, Chairman of the National Committee of the Chinese People’s Political Consultative Conference has emphasized many times: ‘fulfill duties without exceeding authority, help without adding trouble and be practical without being on the surface’”. “We should pay attention to reminding our comrades, _ Subjectively, we should stress the need to study, be political-minded and be honest and upright, persist in taking Deng Xiaoping Theory as the guide and further emancipate our minds. On the one hand, we should rely on the ‘assistant’ to remind our comrades objectively.” “We should take the initiative to coordinate efforts to work. Small government and big society especially require social intermediate organizations and self-disciplined professional organizations to play a role. As the operating mechanisms for the market economy are constantly improved in various localities, this role is more and more obvious and important, and it is indispensable. As Tian Jiyun, Vice-Chairman of the Standing Committee of the National People’s Congress pointed out in his Speech of Congratulations to the Eighth National Conference of the All-China Federation of Industry and Commerce, “under the market economy, many affairs which government departments should not handle, which they fail to handle properly and which they are not capable of handling should be assigned to civil chambers of commerce and other mass organizations.”21 The views on guiding the work of the chambers of commerce put forward by a leader of a Chinese legislative body as mentioned in the above suggestions prove the difference in their models concerning the relationship between the Chinese chambers of commerce and the government and between the government and the chambers of commerce under the developed market economy. The nature of the relationship between the chambers of commerce and the state is similar to the model of corporatism which is dependent on the state, and it is not the model of self-governing, independent and self-organized civil society. Because China is at the stage of the transition, the initial trend of interaction between the chambers of commerce and the state is a shift from state domination to interaction between the state and the chambers of commerce, from vertical command to regulation and control of interests and from organized subordination to organized interaction. The more developed the market economy is, the more developed the chambers of commerce are. In this sense, the Chinese chambers of commerce just begin to undergo a shift from the subsidiary organs of the government to pure civil social organizations. If the chambers of commerce want to become pure civil social organizations in the future transition, their organizational structure must be changed correspondingly, that is, the model of organizational structure from below should replace the model of organizational structure from above, so that organized chambers of commerce become self-organized ones and the chambers of commerce which represent the ruling party and the government become those which represent the whole private enterprises and private economic sector. Market economy, limited government and democratic politics are beneficial to the increase of the participation of the chambers of commerce in political affairs, their influence on public policies and the improvement of governance. The key to making the Chinese chambers of commerce play a proper role in society and government governance as civil social organizations is the prospects for China’s political restructuring and democratization. The task of China’s political restructuring has not been accomplished so far. This is a common understanding of the government and the public in China. In present-day China, whether it is possible for the chambers of commerce to make a shift from the assistants of the government to independent, pure civil social organizations is closely related to the destiny of the market economy in China. Market economy and democratic politics are never developed in China. Therefore, people lack a clear understanding of the nature, status and role of the chambers of commerce as civil social organizations. From this we can see that the current problem of serious stunted growth of the chambers of commerce is inseparable from the fact that the entire Chinese society is at the stage of the political and economic transition. If the political and economic transition in China cannot make a breakthrough, the Chinese chambers of commerce and civil society cannot be divorced from China’s political and economic actual conditions and cannot become mature on their own. But if the process of China’s market-oriented reform is not reversed, the Chinese chambers of commerce at all levels will gradually become the purely civil, non-governmental, independent, typical civil social organizations which are voluntarily organized from below. 1Notes

1 For “A Bridge and Bond between the Government and Enterprises: Reform and Development of Hunan Provincial General Chamber of Commerce”, see the Internet web site of Hunan Provincial General Chamber of Commerce: http://www.hgcc.org.cn. 2 Ditto. 3 For the Rules of Hainan Provincial General Chamber of Commerce, see the Internet web site of Hainan Provincial General Chamber of Commerce: http://www.hgcc.org.cn. 4 For the Rules of the All-China Federation of Industry and Commerce, see the Internet web site of the All- China Federation of Industry and Commerce: http://ww.acfic.com.cn. 5 For Shenzhen Municipal General Chamber of Commerce: “Summary of Survey in Beijing and Work Report Prepared by the Research Group on the Subject of the Plan for the Reform of Shenzhen Municipal General Chamber of Commerce”, see the Internet web page of Shenzhen Municipal General Chamber of Commerce: http://szii.gov.cn/library/party/zsh. 6 For Article 4, Sections 6 to 13 of the Rules of the All-China Federation of Industry and Commerce, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 7 For Article 1 of the Rules of the All-China Federation of Industry and Commerce, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 8 For the Newsletter of the All-China Federation of Industry and Commerce compiled by the General Office of the All-China Federation of Industry and Commerce in July 1999, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 9 For “Hold High the Great Banner of Deng Xiaoping Theory and Continue to Create a New Situation for the Work of the Federation of Industry and Commerce during the New Period” which was written by Zhang Yapei, Secretary of the Leading Party Group of Shanghai Municipal Federation of Industry and Commerce, which was published in the Newsletter of the All-China Federation of Industry and Commerce and which was complied by the All-China Federation of Industry and Commerce in January 1999, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 10 For the article contributed by Nanjing Municipal Federation of Industry and Commerce in April 1999 to the Newsletter of the All-China Federation of Industry and Commerce compiled by the All-China Federation of Industry and Commerce, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 11 For “the Survey Report on the Development of Individual and Private Sectors of the Economy in Some Areas of Fujian and Zhejiang”, a report on the survey jointly conducted by the All-China Federation of Industry and Commerce and the State Economic and Trade Commission, which was published in the Bulletin of the All-China Federation of Industry and Commerce compiled by the General Office of the All-China Federation of Industry and Commerce in March 1999, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 12 Ditto. 13 For the Bulletin of the All-China Federation of Industry and Commerce compiled by the General Office of the All-China Federation of Industry and Commerce in February 1999, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 14 Ditto. 15 For “Anhui Provincial Federation of Industry and Commerce Stresses Practical Results in Its Work” written by Yuan Quan, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 16 For the Bulletin of the All-China Federation of Industry and Commerce compiled by the General Office of the All-China Federation of Industry and Commerce on September 8, 1999, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 17 For “Hold High the Great Banner of Deng Xiaoping Theory and Assume the Cross-Century Historical Mission of the All-China Federation of Industry and Commerce”, a work report delivered at the Eighth National Conference of the All-China Federation of Industry and Commerce by Jing Shuping on November 3, 1997, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 18 Ditto. 19 For Article 26 of the Supplementary Articles to the Rules of the All-China Federation of Industry and Commerce, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn. 20 See the Internet web page of Shenzhen Municipal General Chamber of Commerce: http:// szii.gov.cn//library//party//zsh. 21 For “Several Suggestions on Enabling the Federation of Industry and Commerce to Better Serve as ‘the Assistant for the Government Management of Non-Public Sectors of the Economy’” in the Newsletter of the All- China Federation of Industry and Commerce compiled by the General Office of the All-China Federation of Industry and Commerce on April 22, 1999, see the Internet web site of the All-China Federation of Industry and Commerce: http://www.acfic.com.cn.