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Politics and Business Group Formation in China: The Party in Control?*

  • Kjeld Erik Brødsgaard (a1)

As a result of economic reform and administrative restructuring in China, a number of powerful state-owned business groups (“national champions”) have emerged within sectors of strategic importance. They are headed by a new corporate elite which enjoys unprecedentedly high levels of remuneration and managerial independence from government agencies and which derives legitimacy from symbolizing China's economic rise. However, through the nomenklatura system, the Party controls the appointment of the CEOs and presidents of the most important of these enterprises and manages a cadre transfer system which makes it possible to transfer/rotate business leaders to take up positions in state and Party agencies. In order to conceptualize the coexistence of the contradicting forces for further enterprise autonomy and continued central control that characterizes the evolving relationship between business groups and the Party-state, this paper proposes the notion of integrated fragmentation.

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The author wishes to thank Robert F. Ash, Koen Rutten, Carl Walter and Yang Jiang as well as two anonymous reviewers for their constructive comments and suggestions on an earlier draft of this article.

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