Power and political participation of entrepreneurs: evidence from Liuzhou, Guangxi, China

Abstract

Using survey data of enterprises and entrepreneurs from Liuzhou, Guangxi, China, the determinants of political participation of private enterprises are studied. We find (1) entrepreneurs who are older or from larger older enterprises have a higher probability of becoming members of the People's Congress and the Chinese People's Political Consultative Conference, while gender, education and household registration status do not significantly affect their political participation. (2) Entrepreneurs with membership in the Communist Party of China or other parties have a higher probability of entering politics. Compared with Communist Party members, those of other parties have a much higher probability of political participation. (3) Parental leadership identity increases entrepreneur probability of entering politics. Its effect is between that of Communist Party membership and other party membership. This paper provides evidence that Chinese entrepreneurs in private enterprises are translating their economic power, political identity, and household background into formal political power.

Keywords:

• entrepreneurs
• political participation
• political identity

JEL Classification:

• G1
• H00
• O10
• P2
• P3

Acknowledgements

Financial supports from Ministry of Education (grant # 06JJD790007 & Program for NCET), Shanghai Leading Academic Discipline Project (B101), Shanghai Educational Development Foundation and ‘985 Project’ of Fudan University are greatly appreciated. We also thank Dr Hui Pan for her help in data collection and two anonymous referees for their helpful comments. However, all the errors are solely the authors'.

Notes

∗∗∗ and

∗∗means respectively that the difference between two groups of samples is significant at 1% and 5% level

⁽¹⁾The reference is when capital, enterprises' history and age are at their average value, and other dummies are taken 0. When capital is at average, ln(capital) = 5.749, the average of enterprises' history is 8.003, and the average of age is 42.502

⁽²⁾Here, ln(capital) = 6.442

1. Cited from the issue of December 29, 2003.

2. China has eight democratic parties, which also collaborate with CPC in policy-making.

3. In April, 1988, the first session of the Seventh National People's Congress adopted ‘Amendment to the Constitution of P.R.C.’ and the first article reads that 'Article 11 of the Constitution shall include a new paragraph which reads: The state permits the private sector of the economy to exist and develop within the limits prescribed by law. The private sector of the economy is complement to the socialist public economy. The state protects the lawful rights and interests of the private sector of the economy, and exercises guidance, supervision and control over the private sector of the economy.

4. Xinhua News agency, Beijing, January 22, 2003.

5. For more detailed background introduction of NPC and CPPCC, please see Li et al. (2006).

6. As the governing party, CPC has its requirements on the member structure of the committee of both PC and CPPCC. For example, in 1987, the standing committee of the National People's Congress issued a report, which pointed out the decrease of non-party members in the committee of PC and CPPCC at the county level and affirmed formally that non-party members in the committee of PC at the county level should be no less than 35% while the members of CP in the committee of CPPCC at the county level should not exceed 40% (Cheng 1990, p. 432).

7. Our samples also included foreign entrepreneurs or entrepreneurs of Hong Kong, Macao and Taiwan, but this part of the samples has not been included into the econometric model.

8. In Li et al. (2006), enterprises' history and entrepreneurs' experience can both significantly affect their political participation. In this paper we controlled enterprises' working longevity, working longevity in their industry, working longevity in current enterprise and position, but did not find a significant influence of such experience on their political participation. This is why we did not include entrepreneurs' experience in the following econometric analysis.

9. If we change parents' leadership identity to father's leadership identity, this variable will not be significant, although the coefficient is still positive. Apparently, a father's leadership identity does not markedly affect political participation of their offspring.