Beyond the Middle Kingdom: Comparative Perspectives on China's Capitalist Transformation

SCOTT KENNEDY

Pick a sector in China, and you will find companies lobbying. In 2000, Hangzhou’s Geely Motors successfully lobbied to be allowed to be the country’s first full-fledged domestic private automaker, breaking the dominance of state-owned and foreign producers. In 2006, TCL Chairman Li Dongsheng used his post as a deputy to the National People’s Congress (NPC) to issue a proposal demanding the government provide more support for the electronics industry so it could compete against foreign competition. In 2004, fifty-four multinationals jointly issued a research report to senior Chinese government agencies explaining how the unification of domestic and foreign corporate income tax rates, effectively raising their rates from 15 to 33 percent, would reduce China’s attractiveness to foreign companies, and hence, harm its economic progress. In 2006, the Carlyle Group was thwarted from purchasing a majority stake in construction firm Xugong due to a media campaign by other domestic firms upset that they were not given the chance to acquire Xugong themselves. And, in 2005, the Shanxi government issued a policy banning small mines, but the Wenzhou entrepreneurs who owned many of these mines persuaded the Zhejiang government to issue a counterpolicy in early 2006 encouraging financing mechanisms to help the Wenzhou investors consolidate their mines to put them above the closure threshold.

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