How the Chinese Communist Party affects corporate governance in China

Shaomin Li and Matthew Farrell

Chapter 3 in Research Handbook on Corporate Governance in China, 2025, pp 44-67 from Edward Elgar Publishing

Abstract: The Chinese Communist Party (CCP) plays the most crucial role in governing China. To enhance our understanding of the CCP's involvement in corporate governance, it is necessary to acquire knowledge about the party. However, despite being the world's largest and most powerful political organization, the CCP has received limited attention and understanding from management scholars. In this chapter, we review China's developmental trajectory, spanning from Mao's revolutionary era to the reform era and the current era under Xi Jinping. By examining the CCP's ideology and goals, we assert that China can no longer be considered a transition economy. After decades of experimentation, the CCP appears to have adopted a governance model that treats China as a colossal corporation. Firms are viewed as departments, subsidiaries, or franchisees of ‘China, Inc.,’ with the party functioning as the top management team. Furthermore, we explore the implications of ‘China, Inc.’ on corporate governance within China and its internationalization.

Keywords: Chinese Communist Party; Corporate governance; China Inc; Theory of the firm; Xi Jinping; Transition economy; Post-communism (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035312603
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