Thrilled to share my cover story in @thewirechina , a profile of Rong Yiren (1916-2005)—the millionaire co-opted by Mao who was China's vice president from 1993-1998—and the political lessons that his life offers for entrepreneurs like Jack Ma today (1/) https://www.thewirechina.com/2021/01/10/the-red-capitalist/

Rong's life shows:

1. The Party's long history of co-opting capitalists & managing the politics of capitalism

2. How Xi Jinping is reasserting—not establishing—control over business in China

Xi says Rong is a "model" of the "patriotic entrepreneurs" he wants to cultivate (2/)

Rong's very existence fascinated me—how did one of China's richest men survive a bloody communist revolution?

It's because the Party chose to co-opt rather than eliminate elite capitalists after 1949, because they needed their skills and resources to keep the economy going (3/)

Rong became a key part of "United Front" work w/capitalists. While not a member, the Party gave Rong positions on important consultative bodies, made him a “representative” figure of the capitalist class, and tasked him with cajoling other businessmen to follow Party policy. (4/)

Yet, while the "national bourgeoisie" were amazingly part of "the people," they were still considered an ambiguous "two-faced" class. The "Five Anti" campaign of 1952-53 targeted capitalist "abuses" & capitalists inc Rong endured "struggle sessions." Many died or were ruined (5/)

But Rong's profile protected him. Despite tightening Party control and coercive resource extraction, private firms existed in the PRC until 1956 (capitalists had expected a 25-year window). That's when Rong helped Mao coordinate the "socialist transformation" of all business (6/)

Even then, Party ideology celebrated the contribution of patriotic capitalists, and even compensated them for their expropriated assets with (low!) "fixed-interest dividends." Rong then took figurehead political roles like Shanghai vice mayor and vice minister of textiles (7/)

Capitalists now depended fully on the Party-State for their livelihoods, but Rong maintained a bourgeoisie lifestyle even under socialism. He made himself indispensable as the contented star of “carefully staged and rehearsed” propaganda events the Party held for foreigners (8/)

Yet Rong's political life was always tense and tenuous under Mao, and his luck ran out when Mao launched the Cultural Revolution in 1966, and "capitalist roaders" came under attack. He and his wife were beaten by Red Guards but were spared worse by Zhou Enlai & colleagues (9/)

Rong was in the political wilderness but came in from the cold in January 1979 when Deng Xiaoping invited him and 4 other former capitalists to a celebrated hot pot lunch. Deng said the Party needed their business knowledge & overseas networks to kickstart Reform & Opening (10/)

Rong won the special role of founding head of state conglomerate CITIC, arguably the most important firm in the 1980s & 1990s, which Deng dubbed China's "window to the world" for foreign investment, technology & management. Rong again became the face of Chinese capitalism (11/)

This goes to an intriguing difference in Chinese vs Soviet experiences of economic reform in the 1980s. Because Beijing co-opted rather than eliminated capitalists, it had latent business talents/networks and experience managing capitalists & firms within a communist polity (12/)

I also feel that the Party's experience with co-opting capitalists like Rong may have been overlooked or discounted by many observers in the 1980s-2000s who thought that entrepreneurs and market forces would spell the end of the Party's control of Chinese politics (13/)

Pre-1949 capitalists like Rong also helped the Party mobilize crucial early investment and useful political support from overseas Chinese. In 1986 Deng received 200+ members of Rong's extended family in Beijing & Rong was deeply involved in United Front work re HK & Taiwan (14/)

Things got difficult for Rong in 1989. He supported economic reformers like Hu Yaobang and Zhao Ziyang and initially voiced support for the Tiananmen protest movement. But after June 4 he had to fall into line with the Party's "extraordinarily wise" decision to crack down (15/)

Perhaps the most unknown part of Rong Yiren's story is the key role he played in reviving Sino-foreign relations following June 4, 1989. The first high-level international event in Beijing after the violence was a symposium to mark CITIC's 10th anniversary in October 1989 (16/)

Around 100 foreign business leaders accepted Rong’s invitation to attend, inc. executives from top US & Japanese firms, who were selected for their “influence in politics.” Some even joined Deng on the Tiananmen rostrum to mark the 40th PRC anniversary on October 1, 1989 (17/)

Inc. ex-US SecState Alexander Haig, then a consultant. Rong's guests also met with leaders like Jiang Zemin and Li Peng. The message was clear: those who stuck with China would be rewarded. It was Rong's invitation as a "businessman" that made the event possible/palatable (18/)

Rong was apparently not thrilled to play this role though. He took an extended break from public life in Canada and CITIC even issued a press release denying that he had defected. Rong returned and then threw himself into supporting Deng's revival of economic reform in 1992 (19/)

Another interesting part of Rong's life (he was everywhere in Party-biz relations from 1940s-90s) was his 1988-93 presidency of the All-China Federation of Industry Commerce, the United Front body for private biz, when it began to become the Party-biz "bridge" it is today (20/)

Rong retired from CITIC in 1993 when Deng made him vice president, as a reward for his service and as a signal of continued opening. He served until 1998. In 1999 Forbes named him China's richest person and first billionaire (thanks to his son's shares in CITIC Pacific) (21/)

Rong Yiren died in 2005 but his political legacy as a capitalist who always put the Party first is embraced by Xi Jinping, who is reasserting control over business after an unusual 10-20 years when entrepreneurs like Jack Ma ran ahead of the Party's capacity to control them (22/)

There is still so much more to this story, both in the article and in material that had to be left on the cutting room floor. Please give the piece a read and get in touch if you'd like to talk more or swap notes! (23/)

The piece draws on work by Christopher Leighton, @puckengman & @zuoluogu and benefitted from the insights of @jamesLmcgregor, Meg Rithmire, Bruce Dickson, @FrankChing1 @twerpsichore @doumenzi @jeromeacohen @HongKongKellee @JosephTorigian & Christian Murck https://www.thewirechina.com/2021/01/10/the-red-capitalist/

And, ultimately, I was incredibly fortunate to work with the brilliant people @thewirechina — my enormous thanks to @DavidBarboza2 and @ckamarckfox for their advice, editing, and support. They improved the piece immensely. (25/25) https://www.thewirechina.com/2021/01/10/the-red-capitalist/