ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Politics

More companies are writing China's Communist Party into their charters

Amendments are seen as a sign of President Xi Jinping's tightening control

A growing number of companies have granted the Chinese Communist Party an official role in management.   © Xinhua-Kyodo

GUANGZHOU Hundreds of Chinese companies have revised their corporate charters to allow a deeper management role for the Communist Party, a sign the ruling party is tightening its control over the private sector.

At least 288 of the 3,314 companies listed on the Shanghai and Shenzhen stock exchanges at the end of July had changed their articles of association to ensure management policy that reflects the party's will, disclosure forms show. The trend has accelerated sharply in recent months, with 197 companies reporting such amendments between April and July.

Changes include acknowledging a central role for the party and establishing internal party committees to be consulted on important decisions. Some stipulate that corporate chiefs also serve as the heads of in-house party organs. Despite the Communist Party's dominance over the Chinese state, it is unusual for publicly listed businesses to explicitly give the party a role in decision-making, much less write it into their charters.

Those following the trend include the nation's big four banks as well as Baoshan Iron & Steel, China United Network Communications and Guangzhou Automobile Group. The carmaker, which operates joint ventures with Japan's Toyota Motor and Honda Motor, changed its charter to state that it will set up a fully staffed party committee and guarantee its funding.

This rush to codify Communist Party influence in the private sector comes as Chinese President Xi Jinping looks to strengthen the party's authority ahead of the twice-a-decade party congress and leadership shake-up this fall.

Listed companies are no exception, particularly in cases where cozy ties with political heavyweights limit the party's influence. Xi has sought for some time to bring these businesses under his sway to eliminate potential challenges to his rule.

The sudden upswing in amendments to corporate charters can be seen as companies scrambling to express loyalty to a president working to solidify his position as the party's sole authority.

The trend could spread further if Xi succeeds in consolidating power. This could cause problems for foreign companies if, for instance, the party's influence keeps a local joint-venture partner from making prompt decisions about top-level appointments or new projects. Businesses will need to be more cautious than ever about investing in China.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media