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Les sociétés entrepreneuriales et les mondes anglophones

Jacques-Henri Coste

Troisième partie. Entrepreneuriat et changement social

Creative Destruction: The Rise of Entrepreneurial Society in China

Siu-Lun Wong


L’entrepreneuriat est aujourd’hui en plein essor en Chine, alors qu’il existait à peine sur le continent chinois il y a quarante ans. Comment cette nouvelle force entrepreneuriale a-t-elle pu émerger de l’économie socialiste planifiée de la République populaire de Chine (RPC) ? Le chapitre montre que cette dynamique trouve son origine dans deux événements importants : la Grande Révolution culturelle prolétarienne et la rétrocession de Hong Kong à la Chine. La Révolution culturelle a stimulé l’entrepreneuriat de trois façons différentes : en affaiblissant le contrôle de l’état sur la paysannerie entreprenante, en modifiant les structures d’opportunité au sein de la société par un processus de décentralisation, enfin, en créant une migration interne massive qui a donné naissance à de nouveaux entrepreneurs. D’autre part, les négociations sur le futur de Hong Kong qui ont commencé au début des années 1980 ont lancé un défiaux dirigeants chinois. Les communistes chinois ont dû rapidement se familiariser avec les rouages du système capitaliste pratiqué dans la colonie britannique. L’attrait nationaliste pour le rétablissement de la souveraineté chinoise à Hong Kong a légitimé l’adhésion des cadres de l’administration de la RPC à une coexistence paisible d’éléments capitalistes au sein du système socialiste. L’auteur conclut par quelques remarques sur les tensions et les problèmes liés à cette explosion d’énergie entrepreneuriale dans la Chine contemporaine.

Texte intégral

1Entrepreneurship is blooming in China today. Yet four decades ago, back in the 1970s, entrepreneurship was hardly visible on the Chinese mainland. The private forms of entrepreneurship were virtually non-existent then. As “sprouts of capitalism”, they would have been quickly crushed. As the “tails of embourgeoisement”, they would have suffered a thousand cuts in the hands of the ideologues. Innovations, where they existed, were strictly confined and embedded in the hierarchical orders of the state enterprises. In other words, only the public forms of entrepreneurship were permitted to operate. Their function was to fulfil the plans laid down by the central authorities. Their remit was to enhance production with maximum speed and at minimum cost (Wong, 1996: 130-131).

2Forty years on, this private-public imbalance is rapidly being reversed. Private initiatives multiply and spread beyond most people’s expectations. The public sector with its state-owned enterprises is in retreat. By 2009, according to the findings of the Global Entrepreneurship Monitor, China had moved up the league table and ranked 7th in the world (among 54 participating countries) in terms of the TEA index. This index refers to the level of early-stage entrepreneurial activity, that is, “the proportion of people aged 18-64 who are involved in entrepreneurial activity as a nascent entrepreneur or as an owner-manager of a new business” (Bosma & Levie, 2009: 21). China attained a score of 18.8 which was well above the average of 11.2 for the “efficiency-driven economies”. In comparison, among the “innovation-driven economies”, France had a TEA score of 4.3 while Hong Kong’s score was 3.6. However, it should be borne in mind that the TEA score includes both necessity-driven and improvement-driven business activities. Once this distinction is made, it becomes clear that a large proportion of the TEA activities in China were driven by necessity and the need for economic survival while those in France and Hong Kong were mainly propelled by the search for innovation and improvement. But this qualitative difference should not detract us from the evidently very robust rate of entrepreneurial growth found in present day China.

3How did China turn itself from a centrally planned economy into an entrepreneurial one? Where did the entrepreneurial force come from? How did it gather momentum and spread like wild fire? It is of course tempting to give credit to Deng Xiaoping (1904-1997), or at least to his reformist faction within the Chinese Communist Party (CCP), as the architect of this great transformation. It is commonly assumed that he and his supporters had the foresight and courage to initiate the well-known “Open Door” policies in the late 1970s that changed the course of China’s economic development. But the importance of Deng’s vision and reformist measures should not be over-exaggerated. It is well to remember that Deng himself had admitted that he was not in full command of what was happening on the ground in the early stage of reform. He had told us that he was reacting to, rather than directing, the flow of events particularly in the countryside where township enterprises were mushrooming without official blessing:

Generally speaking, our rural reforms have proceeded very fast, and farmers have been enthusiastic. What took us by surprise completely was the development of township and village industries… This is not the achievement of our central government. Every year, township and village industries achieved 20 percent growth… This was not something I had thought about. Nor had the other comrades. This surprised us. (White, 1998: vi)

4In the above statement, Deng was quite frank in admitting to the limits of his leadership role. There was apparently a powerful upsurge of entrepreneurial force bursting from below in China’s rural society. Deng and other reformist leaders did not have the magical touch to create such a force. They just tried their best to direct and to tame it. The entrepreneurial force shaped reform policies. Not the other way round. Such a pattern recurred again and again in subsequent developments.

5For example, we know that soon after the Tiananmen Incident of 1989, the CCP tried to tighten up ideological control. Young intellectuals were being sent to the countryside to be re-educated by the peasants. But as the sociologist Yang Keming told us through his own experience, that policy actually triggered quite an unexpected flurry of entrepreneurial activities:

Two years after the political confrontation at Tiananmen Square in 1989, I started my first job as a lecturer at Nankai University in the City of Tianjin. Very much to my dismay, I was told that I would have to spend the first year of my career in a remote village at the city’s outskirts. The arrangement was part of the ‘Socialist Education Programme’ organized by the Ministry of Education… At its completion, many of us were busy helping local officials and nascent entrepreneurs look for opportunities, network with clients and supplies, or search for a technological patent of promising business value. Money and business, not politics and democracy, dominated our conversations. Some kept their connections with the business world even after returning to their university life; others were even planning to set up their own business. Just three years after the democratic protests, entrepreneurial ventures had beaten democracy in popularity among young academics in China. (Yang Keming, 2007: ix)

6As Yang Keming returned to university life in 1992, Deng Xiaoping went on his famous “southern tour”. Deng’s aim was to re-start the stalled engines of reform. Ideological control imposed by the political centre was gradually relaxed. But the party-state still kept a tight rein on one crucial resource of the economy—the supply of credit. The banking system remained strictly state-owned. Non-state entities were prohibited from taking deposits from the public. Bank loans were extended only to state and collective sectors. Private businesses were not given access to such credit.

7During her field work in the 1990s, the political scientist Kellee Tsai (2002) asked a businesswoman whether she had ever borrowed from the banks. Tsai was laughed in her face with this pithy remark: “Even if Chairman Mao had risen from his grave, he could not have ordered the banks to give me a loan.” When Tsai talked to more private entrepreneurs in various parts of China, she discovered that they had created various forms of unofficial credit such as rotating credit associations and pawnshops. Their business grew because they were able to call forth a whole array of “back alley” or underground banking. In other words, they prospered in spite of the state’s control on finance, not because the state’s banking policy was in their favour.

8Their effort in subverting official banking policy was a highly risky one. They could be gambling with their lives, as Wu Ying, a 29-year-old businesswoman, discovered to her horror recently. It was reported that an intermediate court in Zhejiang Province had sentenced her to death in December 2009 for taking 770 million yuan from “depositors” in a loan-sharking scheme. “She had been offering investors a guaranteed 80 per cent annual return then lent the money out to borrowers at even loftier rates. The harsh judgment came even though Wu’s investors did not lose any money.” (South China Morning Post, 19 July 2010, B1)

9So it is clear that the robust entrepreneurial imperative was not a creation of official policy from the top. It was very much a pent-up force that burst up from below. The formation of this pent-up force, I shall argue, had its origins in the Great Proletarian Cultural Revolution (1966-1976). No Cultural Revolution, no economic reform. According to the two leading experts on the Cultural Revolution, Roderick MacFarquhar and Michael Schoenhals, this is the common verdict of China scholars who are astounded by the great changes that have occurred in the PRC in the past few decades. The connection between these two major events, as they indicate, is a dialectical one. “The Cultural Revolution was so great a disaster that it provoked an even more profound cultural revolution, precisely the one that Mao intended to forestall.” (MacFarquhar & Schoenhals, 2006: 3)

10In their view, the CCP had established a typical communist state since its victory in 1949 with a command economy and a powerful political centre. Then in 1966, Mao Zedong initiated the Cultural Revolution, an event unique in the communist world, so as to dismantle the state apparatus. Terror and chaos ensued, and China fell into a Hobbesian state. When Mao died and the Cultural Revolution formally ended in 1976, the Chinese economy was in tatters and lagged far behind those of Japan and the “Four Little Dragons” of South Korea, Taiwan, Singapore and Hong Kong. Deng Xiaoping and the other rehabilitated leaders who took over the helm after Mao’s death had no other choice but to try to catch up at all cost. They had to abandon Mao’s utopianism and embrace instead the pragmatic path of reform. “Otherwise the CCP itself might not last”, said MacFarquhar & Schoenhals (2006: 2).

11This might well be a reasonable description of the prime motivation impelling Deng and his supporters to initiate economic reform. Utopian Maoism had reached its leftist limit, so the ideological pendulum must swing back in the rightist direction. But this dialectical explanation has an elitist bias and begs the critical question: why was Deng’s reform policy so effective? As the earlier quotation from Deng Xiaoping has shown, he was not in full control of the rural situation at the beginning of reform. A strong entrepreneurial force was gathering momentum and pushing him forward. I would submit that the Cultural Revolution itself had engendered such a force, not by design but by default.

12For a start, the Cultural Revolution had paralyzed state control over the countryside. The extractive power of the state was badly weakened. “In Shehong county, Sichuan, peasants were told ‘Cultural Revolution means no more grain delivery to the state!’ In a dozen or so counties in Henan, government finance bureaus were so badly affected by factional fighting that regular personnel simply were unable to attend to their tax collection duties.” (MacFarquhar & Schoenhals, 2006: 271) Peasants were being left alone, and they had an unprecedented autonomy to give rein to their rich traditional repertoire of economic striving.

13Prior to this, the rural collectives created by the Chinese communists had immobilized the peasants. They could not move freely to the cities as petty traders of the past. They could not cultivate individual plots and engage in side-line production on a large scale. Kinship organizations such as lineages were abolished in name as feudal remnants. Yet kin groups tended to remain intact and took on a new guise as production teams and rural brigades. The traditional dynamism of the Chinese peasants was thus frozen after rural collectivization. When the Cultural Revolution happened, the Chinese peasants were partially liberated from the new institutional shackles that had restrained them. Repressed rural entrepreneurship began to stir long before Deng was to resume power at the top:

In some parts of China, the years 1967-1969 saw a resurgence of household-based farming, which the peasants preferred. In Yibin prefecture, Sichuan, some 8,355 of 49,349 production teams were by 1969 redistributing fields to individual households (fentian daohu), contracting production out to individual households (baochan daohu), and/or what contemporary sources described generally as allowing the “seizure of the collective economy” by private interests. (MacFarquhar & Schoenhals, 2006: 272)

14The impact of the Cultural Revolution was of course much wider than the disruption of rural control. Its expressed aim was to transform the world view of the whole population. I remember a conversation I had in Hong Kong with a demographer from the Renmin University in Beijing several years ago. We talked about our childhood experiences, and he recalled how he grew up as a young boy during the Cultural Revolution. The dominant theme that remained stuck in his mind, he said, was “anti-authority”. I would call this a “decentering” process (Wong, 2009). The sacred centre of society, where core values resided, was challenged and broken. The familiar world had lost its mooring, and things were turned upside down. The golden path of upward mobility—to join the ranks of the communist officialdom—had suddenly lost its lustre. What was once being honoured, the status of being a leading cadre, had become suspect. Book knowledge and academic pursuits were regarded as reactionary, and all universities were closed down. The entire opportunity structure in society was in disarray. For most of the youth in China at that time, the only path worth pursuing was to become a “red guard” and to champion the revolutionary call of Chairman Mao. But when Lin Biao, the heir-apparent designated by Mao, allegedly defected and died in a plane crash in 1971, the new charismatic centre erected by Mao since 1966 also crumbled to the ground. A once devoted party member later wrote about how she and her husband felt when they heard the news about the fall of Lin Biao:

The revelations were shattering for me… So many of us had dedicated our lives to the future of our country, but what use were our efforts when the society was being directed by people like Lin Liguo [son of Lin Biao]? Both Lao Tang and I were disillusioned, aware that something was fundamentally wrong with the system in which we had believed so devotedly. I guessed that we were not the only ones whose faith in the Party wavered, but no one could communicate his misgivings. (MacFarquhar & Schoenhals 2006: 338)

15Yet we now know that many did communicate their misgivings in private. Among them was Liu Yonghao who climbed over the mountains in Sichuan the day after Lin Biao’s death to break the news that he had just heard over the Voice of America to his father who was in exile herding cows in the wilderness. His father reportedly told him: “That’s good. The era of speaking falsehood and doing false things is over. China should now take up the solid task of developing the economy.” (Guan Shan & Xiao Dong, 2006: 203) Liu Yonghao had evidently taken his father’s remarks to heart. Eleven years later, in 1982, he and his three brothers resigned from their posts in state-run units and started their own farming enterprise in the village where they were assigned to stay during the Cultural Revolution. Their rural business prospered and grew to become the New Hope Group, one of the largest producers of animal feed in China.

16The case of the Liu brothers demonstrates how seeds of entrepreneurship were sown during the high tide of the Cultural Revolution. As political passions waned, at least some of the intellectual youths began to turn to the pursuit of economic interests as their new goal in life. The stigma of the “Five Black Labels” (namely landlord, rich peasant, anti-revolutionary, bad elements, and rightists) was lifted when the former “Five Red Labels” were being trampled to the ground. “Red” and “black”, “left” and “right”—these political categories had lost their meaning as the Chinese populace gradually recovered from the nightmare of the Cultural Revolution.

17For most of the Chinese intellectual youth of the 1960s, their worst nightmare was being sent “up the mountains and down to the countryside”. With all universities closed soon after the outbreak of the Cultural Revolution, Mao issued a directive in 1968 asking intellectual youths to leave the cities and go to the countryside to be re-educated by the peasants. This led to one of the most massive wave of urban to rural migration in recent Chinese history. It was later estimated that about one tenth of the urban population was forced to move to the countryside at that time (Ming Pao Monthly, 2010: 31).

18This forced migration was preceded by a frenzy of free political travel for the Red Guards. “By the end of 1966, 1.6 million Red Guards from all over China had passed through the Southern metropolis of Canton, ostensibly to visit the KMT Peasant Movement Training Institute, where Mao had lectured forty years earlier.” (MacFarquhar & Schoenhals 2006: 111) The more adventurous among them had roamed all over the place, as a retired PLA officer recalled years later:

An old comrade-in-arms of mine, in Beijing, had a son in middle school who when the great exchange of revolutionary experiences began took his little twelve-year-old sister along and set off from Beijing via Shijiazhuang, Taiyuan, Xi’an, Urümqi, Wuhan, Guangzhou, and Changsha (where he lost his little sister; he searched everywhere but was unable to find her), to Shanghai; then on to Qingdao, Dalian, and Tianjin, before returning to Beijing. (MacFarquhar & Schoenhals, 2006: 112-113)

19Such roaming had paved the way for a new breed of petty traders and salesmen to emerge after the Cultural Revolution who would have the daring to venture into uncharted territories to search for business opportunities. But for the majority of the sent-down youth at that time, freedom to move around the country was a luxury beyond their reach. They were bound to the production teams and brigades to which they had been assigned, and they needed permission in order to make outside visits. Nevertheless, this massive wave of forced migration had the unintended consequence of connecting up the two separate worlds of urban and rural China that had been sharply demarcated since 1949 through a strict household registration system. In sociological terms, we may say that a wide web of linkages had been built across the “structural holes” that used to divide the circuits of social networks of urbanites and the peasantry. As a result, some of the sent-down youths had subsequently turned themselves into “hinge leaders” and engaged in “double entrepreneurship” by combining their urban skills with rural resources (White, 1998: 17-21; Yang, 2007: 60-64).

20Let me recapitulate my argument up to this point. My assertion is that the Cultural Revolution had stimulated entrepreneurship in China quite unwittingly for three reasons: it had weakened state control over the dynamic peasantry; it had altered the opportunity structure in society through a ‘decentering’ process; and it had created massive internal migration that gave birth to nascent entrepreneurs. In conjunction, these three unintended consequences of the Cultural Revolution had stirred up a strong ground swell of entrepreneurial energy from below. How did the Chinese leadership respond to this ground swell of energy? Why was it so receptive to this entrepreneurial force? In my view, the key reason is that the Post-Cultural Revolution leadership had to grapple with a legitimacy crisis posed quite unexpectedly by the Hong Kong problem.

21The reversion of Hong Kong from British to Chinese rule in 1997 was generally seen as a problem of confidence from the perspective of the Hong Kong people. Doubts abounded for quite a long time on whether the prosperity and stability of Hong Kong as a capitalist society could be maintained after the 1997 handover. But we seldom took the view from the Chinese side. Had we done so, we would have recognized how great a challenge the Hong Kong issue had posed to the Chinese leadership that had just barely recovered from the devastations of the Cultural Revolution.

22The British Government began to broach the issue of Hong Kong’s future with the Chinese leadership as early as in 1979, just one year after Deng Xiaoping had consolidated his power at the top and initiated the “Open Door and Reform” policy. It took the form of a visit to Beijing by the then Governor of Hong Kong, Murray MacLehose, ostensibly to discuss the possibility of extending land leases in the New Territories beyond 1997 (Lu, 2009: 7-8). Deng and the other Chinese leaders were not eager to take up the issue. Hong Kong’s future was not on their agenda then. They had assumed that it would be tackled “when the time is ripe”. But once the issue was broached by the British side, they knew it could not be dodged. They had to face it squarely and to bite the bullet. At that time, Deng had already stepped back from handling the day to day affairs of the state. But as he told us later, he had decided to focus his mind on only two issues in 1984. One was the resumption of sovereignty over Hong Kong, and the other was the further opening up of fourteen coastal cities (Deng, 1993: 24). He took charge personally over the problem of Hong Kong because he knew just how great a legitimacy crisis he was facing.

23In his 1982 meeting with Margaret Thatcher, then Prime Minister of the United Kingdom, Deng was forthright in depicting the crisis confronting him. He told Thatcher that the cession of Hong Kong to Britain in 1842 was a national humiliation for China. The Chinese people had yearned to be rid of that humiliation for more than a century. The CCP had already exercised restraint in not taking back Hong Kong in 1949. But with the approach of 1997, he and his colleagues had no other option than to resume sovereignty over the territory. The resumption of sovereignty was not negotiable, otherwise he would be regarded as another Li Hongzhang (1823-1901) who had betrayed the national interest. His Party would lose its legitimacy to rule, as the people would have run out of patience because they had waited to regain their pride for so long (Deng, 1993: 1-5).

24In standing firm on the resumption of sovereignty over Hong Kong, Deng Xiaoping was taking on huge risks. How could he take back Hong Kong peacefully? The odds were stacked against him. For a start, the economic gap between Hong Kong and the Chinese mainland was staggering. In 1984, when the Sino-British Agreement was signed, the GDP per capita of Hong Kong had already reached $ 6,179 and ranked 35 in the world, while that of the PRC was just $ 247 with a world ranking of just 136. The PRC had to catch up in record speed so as to reduce the gap substantially before 1997.

25Moreover, there was only limited expertise available within the Chinese administration to take on the intricate task of negotiations with the British side. Deng had to tap on the small pool of cosmopolitan talents available to him, many of whom had barely survived the traumas of the Cultural Revolution. The leaders of the Chinese negotiating team were chosen from those with extensive international experience. Zhou Nan, who had served as Chief Negotiator since 1984, had worked in the Chinese mission to the United Nations for ten years (Zhou, 2007: 176-222). Lu Ping, who headed the newly formed Hong Kong and Macau Affairs Office of the State Council, was a graduate of St. John’s University in Shanghai and had worked as deputy editor-in-chief of the official foreign-language magazine China Reconstructs for many years (Lu Ping, 2009: 158-169). Xu Jiatun, who served as Director of the New China News Agency in Hong Kong from 1983 to 1989, had been in leadership positions in Jiangsu Province for 27 years and was Party Secretary and Governor of the Province before being despatched to Hong Kong (Xu, 1993: 5). They all belonged to what might be called “the blues” (from the colour of the ocean) within the Chinese political spectrum. They represented the modernizing elite of the China coast, in contrast to the “browns” (from the colour of the Yellow River), consisting of the more inward-looking leaders of the interior (Yahuda, 1996: 18). The Hong Kong problem had elevated this “blue” elite to centre stage in China in the 1980s when the Sino-British negotiation reached its climax.

26Then lastly, there was the ideological task of reconciling the potential conflict between the capitalist system as embodied in Hong Kong with the socialist system as practised on the Chinese mainland. There was no ready-made theoretical justification available in the Marxist classics to support the concept of “One Country, Two Systems”. In order to make this innovative idea work in reality, the Chinese communists had to undertake a crash course on the inner workings of the capitalist system. An intensive campaign to understand capitalism anew ensued. Deng Xiaoping himself took the lead to learn from the top entrepreneurs in Hong Kong. The daughter of Y. K. Pao told us in her recent memoir that her father, who was the leading shipping tycoon in Hong Kong at that time, would be invited to have a private family dinner with Deng whenever Pao visited Beijing in the 1980s and 1990s (Bao, 2009: 223-230).

27On the other hand, the former Director of the New China News Agency in Hong Kong, Xu Jiatun, attempted to sum up his experience in the capitalist haven by publishing a theoretical article in the official CCP journal, Qiu Shi, in 1988 with the resounding title of “To Renew Our Knowledge about Capitalism, and To Build Socialism with Self-Initiative”. In order to ensure that the new understanding about capitalism would permeate through the entire political hierarchy, Xu had instructed the New China News Agency to organize a host of training courses in Shenzhen in the 1980s with lectures given by Hong Kong executives and academics for the Chinese provincial cadres at the level of deputy governors, deputy mayors and deputy party secretaries who were in charge of economic affairs (Xu 1993: 281). In the name of the patriotic duty to recover Hong Kong, this nationwide campaign to understand and accept capitalism had led to a fundamental transformation in the ideological outlook of the Chinese communists: it is not only glorious to get rich; it is even honourable to rub shoulder with the capitalists. From then on, they would have no misgivings in responding positively to the demands of the new indigenous entrepreneurs who were emerging in droves after the Cultural Revolution.

28To sum up, it seems clear to me that the rise of an entrepreneurial society in China today has very much to do with the two unique events of the Cultural Revolution and the resumption of sovereignty over Hong Kong. Both were earth-shaking happenings that had brought about a process of creative destruction at a grand scale in Chinese society. Yet we should keep in mind that the powerful entrepreneurial force unleashed through this process is quite a rampant one. It is by its nature a decentering force that would exert its pull away from the commanding heights of society. It is a force that needs to be tamed. It needs to be properly channelled lest it would undermine social solidarity. The blending of capitalism with socialism, and the private with the public modes of entrepreneurship, is still very much an on-going experiment in contemporary China.



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Professeur émérite à l’Institute for the Humanities and Social Sciences de l’université de Hong Kong. Après avoir obtenu un B. Soc. Sc. à l’Université de Hong Kong, un M. Phil. à l’université Chinoise de Hong Kong, puis un B. Lit. et un Ph. D. à l’université d’Oxford, il enseigne tout d’abord au département de sociologie de l’université de Hong Kong dont il devient le responsable en tant que professeur. Il est ensuite nommé directeur du Centre of Asian Studies en 1996, puis directeur général de l’Institute for the Humanities and Social Sciences de 2009 à 2010. Ses travaux de recherche s’intéressent à l’entrepreneuriat, aux réseaux d’entreprises, aux questions de migration, aux indicateurs sociaux ainsi qu’au développement de la sociologie en Chine.

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