Private Enterprise under Xiconomics: How Party Cells and Golden Shares Work – and What Europe Should Do
Private Enterprise under Xiconomics: How Party Cells and Golden Shares Work – and What Europe Should Do
Private Enterprise under Xiconomics: How Party Cells and Golden Shares Work – and What Europe Should Do – chinaobservers
[Op-ed by Kai von Carnap, Research Associate at the University of Trier in Germany.]
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Under the blueprint of “Xiconomics,” China’s economy was recast as state capitalism, characterized by deep intervention into private-sector structures and tighter limits on entrepreneurial autonomy. The Communist Party’s co-optation of private firms is nothing new, but under Xi Jinping –and his vision of “modern private enterprises with Chinese characteristics” – it has intensified dramatically.
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Since 1993, China’s Company Law had governed the Communist Party representative units within private firms. A 2005 amendment made the establishment of such units – commonly known as “party cells” – mandatory. However, it was not until a series of policy initiatives in 2018 and 2020 under Xi Jinping that the expansion of these units significantly deepened.
Today, party cells are creative and multifaceted structures: at least seven different types of cells can be formed, often numbering several or even hundreds within a single company. Depending on the firm’s size and the number of party members on its payroll, these structures range from shopfloor “grass-roots” groups to board-level units.
The rollout of party cells is a core element of what Beijing calls “party construction work,” overseen by the party’s United Front apparatus and turbo-charged by Huawei’s “Smart Party Building” programs – IT-driven platforms for digitally managing and training cadres. The cells’ remit is broad: ensuring regulatory compliance, providing ideological instruction for the workforce, and policing loyalty to the party. In some cases, they create access to state capital or serve as levers to steer executive decisions.
By 2023, official figures reported 1.6 million party cells embedded in Chinese private companies. Penetration rates across sectors average above 90 percent; however, experts estimate that in the technology industry, the figure is close to 100 percent.
[See the table in the linked article.]
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“Golden shares” [...] – sometimes referred to as “special management shares” – allow the state to wield outsized powers while holding only a minority equity stake. Rights can include appointing a board director, vetoing specific corporate decisions, censoring content, or securing access to essential media and publishing licenses. The details are often murky. Golden shares are rarely issued directly to a ministry; instead, they are channeled through layered corporate structures such as the China Internet Investment Fund (CIIF).
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No definitive count exists, but analysts believe the number remains limited and aimed chiefly at tightening control over the data and content pipelines of China’s most influential internet firms. Alongside rumors involving Tencent, 36Kr, Didi, and Ximalaya, as well as unspecific reporting around SenseTime.
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