The Changing Face of China’s Local Elite: Elite Advantage and Path Dependence in Business Communities

Chinese Political Science Review, Oct 2017

There has been considerable discussion about whether and how China’s political economy will change with economic growth and development. The debate has focused for the most part on the possibilities for either market transition or continued path dependence, and in particular, research has centred on the emergence of business activities and the changing role of local business elites. The results of interviews with 469 members of the new economic elites in five cities suggest that while local politics may indeed have adjusted to the new environment, in elite formation, the market plays a role alongside and sometimes secondary to status and political power. There is a significant pattern of elite privilege that reaches back into the era of state socialism, with further origins for some to be found in the pre-1949 local elites. Even where there are reasons to be sceptical about long-term status claims, there can be no gainsaying the strength of such narratives as motivational forces in business and elite behaviour.

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The Changing Face of China’s Local Elite: Elite Advantage and Path Dependence in Business Communities

The Changing Face of China's Local Elite: Elite Advantage and Path Dependence in Business Communities David S. G. Goodman 0 1 0 Department of China Studies, Xi'an Jiaotong-Liverpool University , Suzhou , China 1 & David S. G. Goodman There has been considerable discussion about whether and how China's political economy will change with economic growth and development. The debate has focused for the most part on the possibilities for either market transition or continued path dependence, and in particular, research has centred on the emergence of business activities and the changing role of local business elites. The results of interviews with 469 members of the new economic elites in five cities suggest that while local politics may indeed have adjusted to the new environment, in elite formation, the market plays a role alongside and sometimes secondary to status and political power. There is a significant pattern of elite privilege that reaches back into the era of state socialism, with further origins for some to be found in the pre-1949 local elites. Even where there are reasons to be sceptical about long-term status claims, there can be no gainsaying the strength of such narratives as motivational forces in business and elite behaviour. China; Local; Business elites 1 Introduction Four decades of reform in China have clearly wrought considerable change on China’s political economy as it has moved away from the earlier system of state socialism. For almost all that time scholars, both inside and outside of the People’s Republic of China (PRC) have debated the political impact of economic change. For many, there has been an expectation that the marketization of the economy will lead to a fundamental change in the political system (for example, most recently Minxin Pei 2016) . For others, the remarkable aspect of the era of economic reform has been the maintenance and adaptation of the party state, leading even to discussion of ‘The Beijing Consensus’ and ‘The China Model’ as alternative paths of modernization to the once dominant ‘Washington Consensus’ (for example, Cooper Ramo 2004; Shambaugh 2009) . The debate on the respective merits of market transition and path dependence as the interpretation of change has not unnaturally focussed on its impact at the local level, particularly in the development of businesses and business cultures. Leading the way has been the work of Victor Nee. Since the late 1980s, he has argued that the impact of the introduction of market forces into China’s state-socialist economic system has had a profound impact on the local elites, influencing not only class formation, but also the exercise of power. By 2012, Nee was arguing that there had been a market transition in which: ‘The market has replaced redistributed power; political capital does not lead to economic success’ (Nee and Opper 2012, p. 55) . Others have argued that the impact of market forces has been more muted, with the influence of the party state, and its participants, either continuing to determine or at least remaining dominant in local economic development. Some have even described the emerging political economy as one more characterised by crony capitalism than determined by the operation of the market. In a recent example, Bruce Dickson argued that there was now: ‘a system of interaction between economic and political elites that is based on patrimonial ties and in which success in business is due more to personal contacts in the official bureaucracy than to entrepreneurial skill or merit’ (Dickson 2008) . This article is not so much concerned with the question of market transition (though that is a useful starting point for analysis of change) as with the question of elite advantage and its source(s). The evidence from research in Lanzhou, Nanjing, Qingdao, Taiyuan, and Zhongshan suggests that the contemporary economic elite has either emerged from the party state or been incorporated into it and that the relationship between the two sources of wealth and influence remains so close as to be almost inseparable. There are some ways in which the market has influenced elite formation, but these are somewhat limited, and on the whole, there has been a high degree of path dependence. Perhaps, even greater interest is the indication that path dependence is not confined to the relationship between the era of state socialism and the more recent period of economic reform. There is apparently a degree of family continuity between the former pre-1949 local elites and the new economic elites of the early 21st century. 2 Transition and Dependence Nee’s arguments about market transition and the debates that have ensued around them are a useful starting point for understanding the dynamics of change, not least because they indicate key areas for the analysis of change (or otherwise) amongst the new economic elites. These include considerations of class, of political participation, of education and social mobility. To these have been added considerations of family history, not simply in terms of factors generating elite advantage, but also the importance of narrative motivating elite or would be elite behaviour. Nee’s starting point for the development of his ideas referred to Ivan Szelenyi’s earlier research into still then Communist Party-Run Hungary and Poland, and the observation that in a state-socialist economy, wealth and political power is a function of redistribution not of the market (Szele´nyi 1978) . State officials make decisions about distribution that determine wealth and power. Nee’s initial argument was that with the introduction of market forces, there would be a ‘transfer of power favouring direct producers over redistributors’ (Nee 1989, p. 666) . He then set about undertaking a number of studies that demonstrated (inter alia) that rural stratification had moved to market determination (Nee 1996) ; that cadres have incentives to move into the private sector because of market transition (Nee and Lian 1994) ; and that cadres had indeed moved out of State Owned Enterprise management and into private enterprises (Nee and Su 1998) . Almost inevitably, Nee began to argue that ‘The spread of markets erodes commitment to the party and paves the way for regime change’ (Nee and Lian 1994, p. 285). In the early 1990s, Nee’s views initially met resistance from those who argued quite convincingly that politically based privilege was actually a structural matter: it was embedded in the economy (Bian and Logan 1996, p. 741) . Nee’s response to these criticisms was to acquiesce to some extent, accepting that especially in the urban economy, there would necessarily be a high degree of path dependence. Things were not able to change that quickly. Indeed, he went on to develop his ideas further, arguing that each situation would be highly localised, determined by different kinds of markets and dependent to a high degree on which sector was dominant in any given locality. There was a clear difference between areas on the coast, which were more exposed to the market reforms and the rest of the world’s economic involvement, on the one hand, and those inland, on the other. Nee readily accepted that even on the East Coast, there could be and was a clear difference between the individual sector dominated economy of Zhejiang and the more collective sector dominated Jiangsu developmental model (Nee 1991, 1992; Nee and Cao 1999) . Those who did not accept Nee’s explanation of market transition continued with their skepticism. They argued that there had been little evidence of declining political influence in either wealth creation or elite formation, and their replacement by the power of the market. In their views, class background, CCP membership, and political position remained crucial to the local level distribution of wealth and power (Xie and Hannum 1996; Walder 2002, 2003; Bian and Zhang 2004; Gustafsson and Ding 2010) . At the same time, there has been a greater awareness of market forces alongside and intermingled with political factors in the determination of local elites (Walder, Li and Treiman 2000; Zang 2001, 2004) . Although Szelenyi’s identification of the political redistribution of wealth had been the starting point for the development of Nee’s ideas, the former did not agree with the latter’s analysis or arguments. Drawing on research into reforming East European state socialism (before and after 1989), Szelenyi and Kostello came to a different conclusion about the prospects for political transition. There, they argued that it had been ‘the technocratic fraction of the former nomenklatura’ and the children of former cadres who ‘would become the new system’s political and economic elite, not the current private entrepreneurs’ (Szele´nyi and Kostello 1998) . Later still, Szelenyi went on to describe contemporary China’s political economy in terms of state socialism, largely because of the continuing domination of the party state (Szele´nyi 2008). This was a view more than somewhat echoed by those who described China in terms of Crony Capitalism, as was the case with the alreadycited case of Bruce Dickson. These comments and criticism have persisted. Nonetheless, Nee has continued to argue not only that market transition will come, if slowly, but that it is already here in some respects. In 2002, he argued that ‘Market transition theory is not a theory of radical change; instead, it turns on the cumulative causation of decentralized market processes in promoting discontinuous change at the margins of the pre-existing stratification order’ (Nee and Cao 2002, p. 36) . According to Nee, the gradual accretion of pressure for change has to lead to a tipping point, which most recently in Capitalism from Below, his major study of enterprise development in East China, he argues that has been passed (Nee and Opper 2012). 3 New Economic Elites Members of the new local economic elites were interviewed across China during 2009–2013, amongst other things to investigate their demographic background, level of education, and career, as well as their family history back to before the establishment of the PRC. To provide markers of change, attention focussed on family history in 1949 and 1979, not simply because these events were evenly and conveniently spaced at the time of the first interviews, but also because of their obvious historic significances: the establishment of the PRC and the start of its Reform Era, respectively. From these interviews, it is clearly the case that elite formation and wealth creation are no longer exclusively dependent on the exercise of political capital as was the case in the PRC before 1978. At the same time and by the same token, it is equally clear that neither elite formation nor wealth creation is only explained as resulting from market forces. In discussing the relative merits of the cases for market transition and path dependence, redistribution according to class, membership of the Communist Party of China (CCP), and political position are said to be the key characteristics indicative of the dominant exercise of political capital. On the other hand, distribution of economic benefits according to skills, education, and enterprise is held to be indicators of the market transition. Consideration of all these indicators suggests not simply that the market transition is easily exaggerated, but also that politics and economics are almost inextricably intertwined, and rarely understandable as independent variables. As much other research has long established (for example: Solinger 1992; Goodman 1999) , path dependence is clearly an important part of the explanation for the formation of contemporary local economic elites. Many of those who are now firmly established as new local economic elites had previously worked in the party state, especially before the major restructuring of the state sector of the economy that occurred at the end of the 20th century, and were able to translate their political advantage to their economic benefit. At the same time, there is also an apparent relatively high degree of family continuity between the local elites of pre-1949 China and the contemporary local economic elites. Over half of all those interviewed 60 years on claimed, at least one member of their family had been local elite before the establishment of the PRC. While the social revolution wrought by the party state during the 1950s would seem to make this a remarkable finding, there are two obvious explanations. The first is that many of the pre-1949 local elite had in fact been mobilized to the CCP cause before 1949 and that many of those who had not found employment in the management of the state sector of the economy with the establishment of the PRC (Walder et al. 2000; Walder and Hu 2009) . The second is that as was the case in formerly Communist Eastern Europe after 1989, the social capital of families that had previously been involved with business and entrepreneurial development before the establishment of communist party rule in those countries came to the fore again with the political changes of that year (Szele´nyi 1988). In the longer historical dure´e, it becomes likely that social status is then also an explanatory factor in the determination of the wealth and power of contemporary local elites. 469 entrepreneurs were identified with the assistance (usually) of tax officials in Lanzhou (100 interviewees), Nanjing (78 interviewees), Qingdao (103 interviewees), Taiyuan (98 interviewees), and Zhongshan (90 interviewees). The qualification for interview was that an individual had to have an annual income at least as much as 12 times the local average GDP per capita. Interviews were conducted (for the most part) with the help of postgraduate students from local departments of Sociology. 84.4% of those interviewed were men and 15.6% female. There is no suggestion that those interviewed for this survey were chosen randomly, and indeed, the nature of the selection process may leave the study open to the criticism that those who answered the call to be interviewed were by definition from established ‘within system’ families. 4 Class ‘Class’ was operationally difficult to use in interviews in the PRC during 2009–2013. The first problem is that the Marxist term for class (jieji) is associated very much with the CCP’s ideology during the now politically disgraced Maodominated years. Asking about class with that term ran the risk of provoking negative reactions from many of those being interviewed who may well have suffered either directly or indirectly from the vagaries of 1957–1976. The second problem, clearly related to the first, and notwithstanding the adverse impact of the Cultural Revolution, is that there is a residual valorization to being ‘working class’. Class identification necessarily depends on how the questions are put. Consistently, surveys of the Chinese population since the end of the 20th century have indicated that when faced by choices explicitly mentioning ‘middle class’ and ‘working class’, the majority identify with the latter, but that when asked to self-identify with no specific class labels offered for choice, the majority describe themselves as ‘middle class’ (Bian and Lu 1996; Wang and Davis 2010; Boehler 2013) . To avoid these issues, interviewees were asked instead to determine their own class in terms of the term for stratum (jieceng). Since about 2002, this term has been used more popularly in the PRC to refer to class outside of the Mao-era usage of the term and to avoid those earlier identifications. In justifying this change Lu Xueyi, then, the Director of the Chinese Academy of Social Sciences, Institute of Sociology, observed in 2005: ‘the theoretical meaning of the term ‘‘stratum’’ is close to that of the term ‘‘class’’ in English’ (Lu 2005: 419) . The employment of a discourse of class as stratum as opposed to class as used in the Mao-era should not be taken as automatically indicating the introduction of a market transition. Certainly, the change suggests that the categories of class that had been introduced in the early 1950s to ensure the revolutionization of society and the establishment of the communist party state were no longer in operation in quite the same way or at least no longer as important as had previously been the case. At the same time, it would seem from the way members of the new economic elite selfidentified that earlier categories of class had often played a positive role in their career development and life opportunities and that for some those earlier class labels were still important to the development of their status and wealth. In addition, reactions from members of the new economic elite also indicate the influence of other categorizations of class on their opportunities for wealth creation and status formation. The notion of an established upper or ruling class, with its roots in pre1949 China seems particularly strong among some if not all of the new economic elites interviewed. In the interviews, a substantial number of the members of the new economic elite replied to the request to identify their own class (jieceng) in the political language of pre-1978 China, describing themselves as workers or peasants (or sometimes both). On the other hand, the majority adopted the new perspectives. Of those who provided answers to this question (436), 9.1% described themselves as elite or upper middle class, 51.6% as middle class, and 39.3 as working class or peasants. The question also led to a range of less standard answers: Which Class (jieceng) Do you Belong To? • Better than peasants. • Middle class: the mainstream of society. • Economically middle class but have great reputation in the community. • I do not know what class I am. I just know that I am needed by others. • I am proud that I belong to a social stratum that could do something for the country. Personal wealth does not matter so much. • I am from a noble family. • Middle class in America; not sure here. • Happy family class. • Humans are all equal and should not be classified by wealth or education. 5 Political Participation Considerable research elsewhere has shown that both membership of the Chinese Communist Party (CCP) and the holding of current positions in the party state remain bankable factors of operation for entrepreneurs. Bank loans become easier, as is access to labour and land (Chen and Dickson 2010, pp. 80–81; Zhou 2009) . Redistribution may not operate as before, but nonetheless, CCP membership is seen not least by the entrepreneurs themselves as a good move to support their entrepreneurial activity. 54% of those interviewed and who responded on this count (376 people) stated that they were members of the CCP. Similarly, 71% of those who responded to the question about involvement (410 individuals) indicated that they did hold a position in the party state. Almost all those who responded positively in this way were delegates to a People’s Political Consultative Conference (Zhengxie) at local, city, provincial, or national level (Chen 2015) . The observation that only 43% of the total 2009–2013 contemporary local economic elites interviewed were members of the CCP might seem like a rather low participation rate. However, in terms of providing an indicator of political influence and economic significance, this statistic is more than somewhat misleading. Age is a crucial consideration. 29.2% of those being interviewed and who provided information about their age had been born before the start of the Cultural Revolution; 38.2% during 1966–1978; and 32.6% since 1978. Amongst those interviewed, party membership was disproportionately higher for the first two categories. Very few of those born after 1978 reported membership of the CCP. Business people were not permitted to join the CCP until the end of the 20th century, so this statistic actually represents more the extent to which those who later became entrepreneurs and business people had earlier been employed in the various branches of the party state—notably the state administration, the military, and management of the economy and state economic activities—where they had become members of the CCP. When the opportunity came to move into business and the corporate sector, they retained their party status. Equally as significantly, the parents and grandparents of those who were interviewed during 2009–2013 had higher participation rates as members of the CCP. As already noted, interviewees were asked questions about their family history. In particular, they were asked question about themselves or their immediate family members (usually parents) in 1979 and their immediate family members (usually parents or grandparents) in 1949. Of those who responded about their immediate family in 1979 (392 people), 79.3% (66% of all those interviewed) indicated that at least one individual had then been a CCP member. There is then more than a suggestion of inherited political influence regardless of formal affiliation. As one of those younger members of the local economic elites who were interviewed tellingly remarked, when asked why he had not joined the CCP: ‘Why should I have joined the CCP, my father ran the town’. Of those who responded about the circumstances of their family in 1949 (334 respondents), 80.1% (59% of all those interviewed) indicated that at least one immediate family member had been a member of the CCP at that time. This final observation is doubly important to an understanding of social change and the later role of class (both as state-derived and as self-identified categories) in wealth creation and elite formation. During the early 1950s, when the new PRC state assigned class labels to its citizens, all those who had participated in the CCP and the communist side during the earlier civil war were assigned a ‘red’ and positive class label, often regardless of any earlier socio-economic background that might suggest a less than proletarian identity. These identities then became crucial in the PRC’s subsequent allocation of access to public goods until well into the 21st century (Goodman 2014, p. 13) . 6 Education and Mobility Class, CCP membership, and political position all then continue to play some role in elite formation. In contrast, the information about both their education and mobility suggests that local elites may owe some of their position to skills, education, and enterprise, though here again, the evidence is not conclusive. Education, for example, is rarely determined by merit alone. Opportunity and opportunity cost play decisive roles in determining who gets what kind of education. There is, for example, a huge difference between educational provisions in rural as opposed to urban China. It is often not seen as important for women to continue their education beyond the notional compulsory period, and in some parts of the country (particularly, the Northwest where local religious observance conflicts with the mixed classes of secular education), girls are even left out completely. In higher education, there has been a massive expansion in provision since 1998, with student numbers increasing from about 2 million to over 35 million; the number of colleges increasing from just over 1000 to just under 3000; and the number of teachers increasing from half a million to over one and a half million (Goodman 2015) . Yet, even in that environment, parental social privilege remains the key factor in entrance to higher education. In the words of one recent study, ‘College is still a rich, Han, urban and male club’ (Wang et al. 2013, p. 469) . More than half of those interviewed who responded to the request for information about their highest level of educational attainment (448 people) reported that they had attended either a three or a 4-year higher education program. 56% indicated that they had been to college or university, while 24.1% had received a middle or high school education. 2.9% reported that they had gone overseas for higher education. More interestingly, perhaps, in terms of a recognition of the greater influence of skills and expertise in the determination of wealth and power, 15.2% of those responding to this question indicated that while they had not undertaken a college or university first degree, they had taken a professional postgraduate degree. These latter degrees are those mostly in Business Administration, Management, and Legal Affairs, offered by Party Schools, leading Chinese universities, and some international institutions. They are targeted precisely at business people and entrepreneurs who though having been successful in the growing economy had missed out on an earlier education. Rather than suggesting that skills and education are sufficient for elite formation the existence of these educational programs suggests status issues beyond the creation of wealth or even the exercise of political power. An attempt was made to discover whether the interviewed entrepreneurs had moved for economic reasons, and if so the scale of the market in which their mobility had occurred. Those interviewed were asked, where they had grown up, and spent the majority of their childhood years before the age of fifteen. All but two (467) responded to this question. Almost half (46.9%) had grown up in the locality, where they were being interviewed, and most were proud to be local. As one reported: ‘I have been to Shanghai and I felt like an outsider. I have been to Beijing, and felt small. I like to work and stay here, where things are familiar’. For those who were not local, the degree of economic mobility was not particularly high. 28.5% had moved into the locality, where they now were from elsewhere within the same province, and 23.5% from elsewhere in China. Five of those interviewed had moved to China from overseas—they were all Chinese—for business. Most of those who had travelled for economic reasons came from places within closer rather than further travelling distances: West Hebei to Taiyuan, Wuwei to Lanzhou, and Southern Jiangsu to Nanjing, for example. There were remarkably few instances of people or families moving across the country. There are social structures, such as language, that provide an explanation for this check on migration. Where internal migration across the country was reported as part of the discussion of family history, this was always as a result of participation in the CCP and its forces before 1949, or of service in the party state after the establishment of the PRC. 7 Family Histories As already noted, those interviewed were asked about their family’s circumstances not just in 1979 but back to 1949 and earlier. Their responses should, for fairly obvious reasons, be treated with some skepticism, particularly when related to the period before the twentieth century. The language is often magniloquent, many stories do not (necessarily) reflect lived experience, and some of the comments sound somewhat fanciful. Nonetheless, the stories that people tell themselves provide motivation and explanation for behaviour even when they may only also provide half-truths or no truth at all. Narrative after all plays an important role in the construction of social status (Rocca 2017, p. 9) and the long sense of family and of appropriate social status seems to be constant themes in the interviews. Interviewees were asked questions designed to provide indications of their sense of long-term family presence. Some had very little, but those who did were often willing to talk at length. 94 of the entire set of those interviewed (20.0%) claimed some history from before 1911, and there were several dramatic statements made. Three examples are fairly typical: ‘We have a family book that goes back to the Warring States Period more than 2000 years ago’ ‘I am a descendent of the 4th son of the Zhouwen Emperor of the Zhou Dynasty’ ‘Grandfather’s grandfather had been Governor-General of Guangdong and Guangxi’ Statements about family books going back a large number of generations, to famous ancestors, and to evidence of officials holding elite positions were frequent. Only one of those interviewed mentioned a Manchu noble background, though several mentioned that they were descendants of earlier nobility. More usual though were references to the 20th century. Many of those interviewed claimed to be a direct descendent of a member of the pre-1949 local elite. Of the 307 individuals who provided information about their family’s 1949 social status, 81.3% (53.2% of all those interviewed) indicated that they had at least one member of their family who had been part of the local elite at that time. Whether accurate or not, it would seem that stories of the past wealth and economic success have indeed been motivators for contemporary activity. One entrepreneur told the interviewer: ‘Mother’s grandfather was Director of the Shanghai Bank of Communications before 1949. The whole of Zhenjiang Road used to belong to her family’. Another reported that ‘Uncle had been Head of the Finance Department in the Provincial Government, Principal of the Finance and Economics University, and Head of the Provincial Branch of the Construction Bank’. There is also, inevitably, pride in the roles played by earlier generations in the development of the PRC. As already noted, the percentage of later entrepreneurs with at least one immediate family member before 1949 who had been then a member of the CCP was 59% of the total of those interviewed (and more than fourfifths of those who provided information on this score). The parents and grandparents of those interviewed inevitably included many soldiers, particularly from the 1947–1949 Civil War era. Unsurprisingly, this percentage is not much lower than the similar statistic given for 1979 when 66% of all those interviewed indicated at least one immediate family member had been a CCP member (79% of those providing information about party membership) at that time. The generation who came to power nationally in 1949 was generally young, and built the PRC after that date not only politically but also in terms of the systems of economic management, especially after 1955 with the socialisation of the means of production. The family histories recorded by the members of the new economic elites also bear remarkable witness to the apparent continuation of local elite family ties and a family’s long-standing CCP membership both from before 1949. These key features of those interviewed reinforce the importance of social status, as well as of social capital in elite formation. 223 of those interviewed provided information about their family’s 1949 social status and CCP membership. Of those, 62.6% (29.8% of all those interviewed) indicated that at least one member of their immediate family at that time was part of the local elite and that at least one member of their immediate family at that time was a member of the CCP. Necessarily, these were not always the same person. One reason was the significant gender difference. Amongst those 223 providing information about both elite status and CCP membership in 1949, 24.2% (54) reported that in their family, a female member of the local elite had married a soldier or member of the CCP shortly after the establishment of the PRC. Altogether, those interviewed provided 108 cases (23%) of an individual in their immediate family who in 1949 had been both from the local elite and had joined the CCP by that date. Overshadowing even those continuities in elite formation are those with social categories that might have been thought antithetical to the CCP before 1949, notably landlords, Nationalist Party members, and supporters of the Wartime Japanese regime in China. Many of the new economic elites interviewed reported that in 1949, one part of their family had been CCP, who had then married another part associated before that time with (or even members of) the Nationalist Party. One even reported that before 1945, his mother’s grandfather had been a commander for the Japanese Army in China, before defecting and becoming a PRC cadre after 1949. Several of those interviewed spoke of grandparents who had been local landlords before 1949, or who had grown up in elite families of that kind, who had given their land away to poor peasants, joined the CCP, and later become a cadre. This is of course not an unknown story (Chen 2012) . 8 Economic Growth, New Politics, Old Society It is often argued that economic growth and industrialisation leads to greater social mobility. Recent research related to a number of countries, including China, suggests that a high degree of social mobility is more an aspiration than an established consequence. There remains a high degree of intergenerational transfer of privilege—of political power, economic wealth, and social status—despite economic growth. In most industrialised countries, privilege outperforms upward social mobility into the elite by a factor of almost 6:1. Furthermore, it is estimated that six generations are needed for elite privilege to be dissipated and that assumes a total lack of reinforcement (Clark 2014) . Earlier studies of pre-industrial and Republican China suggest that elite positions were on the whole skilfully maintained by families over time: one of the main tasks of a local elite family was to ensure its continued position of privilege (Ho 1962; Chow 1966) . In the contemporary era, it would seem that little has changed. A 2004 survey undertaken by Peking University and the National Bureau of Statistics found that a child’s socio-economic position when they go into the workforce is determined by parents’ income, level of education, occupation, and CCP membership. There was a near certainty that a daughter would follow her father’s occupation and a 74% probability that a son would do the same (Gong et al. 2010, p. 16). Economic growth has certainly led to some political change at local level, and indeed to adjustments in the configuration of the local elite, but it has hardly revolutionized the system. Local governments often act like corporate entities (Oi 1992) , and businessmen and company interests play a role alongside and in many cases with local governments. At the same time the current elite are the children of the state-socialist-era elite or they were part of that elite themselves, albeit in some cases serving in different positions with the restructurings of the Reform Era. Moreover, even that earlier state-socialist-era elite itself had emerged from within and had ties to the earlier pre-1949 local elite. Certainly, many of those new economic elites interviewed during 2009–2013 had a sense of their social status that was both superior and permanent. Social status and political participation legitimizes economic success, not vice versa. One highly successful entrepreneur reported: ‘One grandfather was a New 4th Army Hero. The Family Tree goes back to the Spring–Autumn Era. We share ancestors with Mao Zedong. We still keep contact with that family and visit them.’ Another was even more straightforward about her inheritance: ‘I am an egg laid under the Red Flag. Both my husband and I are from the privileged class. Before China’s reforms, we were masters. Now it is hard to define ourselves. But we are still part of the upper class – we have never left.’ David S. G. 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David S. G. Goodman. The Changing Face of China’s Local Elite: Elite Advantage and Path Dependence in Business Communities, Chinese Political Science Review, 2017, 1-14, DOI: 10.1007/s41111-017-0083-x