Battle for China's Past : Mao and the Cultural Revolution

THE BATTLE OF CHINA’ S HISTORY
communist victory in 1949, or their descendants, have returned. Businesspeople
from Hong Kong or Taiwan, who know how to bribe
bureaucrats and how to exploit cheap labour because of their cultural
and language advantages, skilfully play this comprador role. The
general picture is that a Western company has the soft technology, such
as design and marketing, and the comprador manages the production
and supplies the products to the company. Companies like Nike, for
instance, demonstrate considerable concern about design and selling,
but little concern when it comes to how their products are made. The
compradors take orders from Nike and are slave drivers in China who
supply cheap shoes to Nike.
Apart from the return of pre-1949 compradors there has been a rise of
new Chinese compradors who are engaged with trade or who work for
foreign firms. Those people either directly control the trade or smooth
the greasy operations for foreign firms and reap rewards in the process.
The end result is that a few Chinese get rich but the state gets virtually
nothing in return. In spite of special treatment of tax concessions such as
no tax for the first five years of operation and lower tax rates than
required for Chinese firms, foreign enterprises still uses Chinese administrative
and legal loopholes to avoid tax. According to a recent study by
the Chinese Bureau of Statistics, up to 2005 two-thirds of all the foreign
firms claimed losses (Zhonghua gongshang shibao, 28 March 2007; see also
Fuxi 2007). One of the ways of doing this is ‘transfer pricing’, that is,
inflating the prices of imported goods and deflating the prices of the
assembled commodities that are mostly exported. The Chinese
compradors are rewarded in the process when they help the transnational
companies exploit the tax loopholes. According to Chinese official
sources, ‘tax evasion by multinationals costs the country 30 billion yuan
(US$3.88 billion) in tax revenue each year’ (Chung 2007).
The Chinese compradors also use a two-tier system to create their
own ‘foreign companies’ by first transferring funds overseas as investments
in ‘suitcase’ or ‘paper’ companies, and then repatriating them as
foreign investment in China. According to Mei Xinyu, a senior
researcher at the Chinese Academy of International Trade and
Economic Cooperation under the Ministry of Commerce, ‘of China’s
utilized FDI of $72.4 billion in 2005, a third was Chinese investment
overseas that came back disguised as foreign capital take advantage of
the tax breaks’ (Chung 2007). 3
Many of the sons and daughters of the CCP office holders, the
‘princelings’, have joined the comprador class in its rise. According to
Gilley (1998), Jiang Mianheng, son of the former General Secretary of
the CCP, who gained a doctorate from Drexel University in Philadelphia,
become a key player in Shanghai business, starting with the
city-owned investment firm Shanghai Alliance Investment, serving on
[ 183 ]