113. The Management of China Executives

The selection and the promotion of an organization's leadership will ultimately decide the characteristics as well as the success of a business.  The presences of operational excellence, favorable competitive positions or the availability of natural resources are always essential. However a flaw in appointing competent executives into leadership positions  will overcome all other strategic or tactical advantages.  In this blog we will examine the process by which the rapidly developing China has organized its management of executive selection.


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The Department of the Communist Party of China Organization Department is the central authority for the development and promotion of executive. It directly reports to the Central Committee and holds a full minister-level rank. 

It is one of the most important organs of the CPC. It is a secretive and highly trusted agency and forms the institutional heart of the party system. It controls the more than 70 million party personnel assignments throughout the national system, and compiles detailed and confidential reports on future potential leaders of the Party. Because the People's Republic of China is a one-party state, the Organization Department has an enormous amount of control over personnel within the PRC. The Organization Department is indispensable to the CPC's power, and the key to its hold over personnel throughout every level of government and industry. It is one of the key agencies of the Central Committee, along with the Central Propaganda Department and International Liaison Department.

The CPC uses the nomenklatura method ("list of names" in Soviet terminology) to determine appointments. The nomenklatura system is how the ruling party staffs the apparat, exercising organizational hegemony over appointments and dominating the political life of the country.

The central nomenklatura list comprises the top 5,000 positions, all of which are controlled by the Organization Department. This includes all ministerial and vice-ministerial positions, provincial governorships and First Party secretary appointments, as well as appointments of university chancellors, presidents of the Academy of Science and Academy of Social Sciences, etc.

Related to the nomenklatura list is the bianzhi list, which is a list of the authorized number of personnel, as well as their duties and functions in government administrative organs, state enterprises, and service organizations. The bianzhi covers those employed in these organizations, whereas the nomenklatura applies to leadership positions. However, because the Party and its organizational departments are constantly intervening in the personnel and administrative functioning of state institutions, the parallel existence of the bianzhi and nomenklatura systems has become an obstacle to fundamental administrative reform in China.

An equivalent of the Organization Department in the United States, according to the Times, would "oversee the appointments of US state governors and their deputies; the mayors of big cities; heads of federal regulatory agencies; the chief executives of General Electric, ExxonMobil, Walmart and 50-odd of the remaining largest companies; justices on the Supreme Court; the editors of The New York Times, The Wall Street Journal and The Washington Post, the bosses of the television networks and cable stations, the presidents of Yale and Harvard and other big universities and the heads of think-tanks such as the Brookings Institution and the Heritage Foundation."

Bruce Gilley and Andrew Nathan write that in the promotion of individual candidates for high positions, a good rating from the Organization Department is essential. The Department judges on such qualities as "ideological probity, loyalty to the Party, attitude toward work, and ability to mobilize others." Its research on individuals slated for top positions are "probing" and assessments often acute.

In recent years, the party's Organization Department introduced an evaluation procedure for leading officials (the cadre responsibility system) that aimed to assess regularly the officials' performance and success at implementing policies. Shambaugh also notes the promulgation of Regulations on the Selection and Appointment of Party and Government Leading Cadres in July 2002, writing that the Organization Department has stepped up its evaluation of cadres, including annual appraisal reviews according to various criteria. However, research conducted by Thomas Heberer in China in 2007 revealed that an effective evaluation procedure is not yet in place. Crucial policy areas, such as environmental issues, are not being evaluated, and evaluation is predominantly based on self-assessment.

The nomenklatura system is also facing grave challenges due to the development of the market economy and private entrepreneurship in China. Because Chinese citizens can now achieve upward mobility and the acquisition of resources outside the Party's control, the CPC is no longer the sole stakeholder. This development entails a challenge to the power monopoly of the CPC.

Senior Party leaders often carry influence in the determination of key positions. The children of Li Peng, for example, came to hold powerful jobs in the power sector where he had ruled; while Zhu Rongji oversaw the finance sector, his son became the highly paid head of China International Capital Corporation, the country's largest investment bank; and Jiang Zemin putting loyalists into top jobs, and his son into a key position.

The buying and selling of official positions also takes place, particularly in small localities, where head of the local Organization Department is among the most sought-after positions. The job carries great discretionary power, allowing the wielder the ability to grant jobs to other individuals in return for cash. The practice is characterized by bribery, corruption, treachery, and "sheer desperate self-interest," according to documents produced by the Organization Department in Jilin Province.

Internal Party documents give frank assessments of the Organization Department's strategy to enhance its control. Before the 16th Party Congress, a set of Temporary Regulations were amended to encourage the appointment of cadres.  The Organization Department is now headed by Chen Xi in 2017.

Conclusion:

The State Organization Department has not received sufficient attention when evaluating the currents growth prospects for China.  It is our position that the development of "human capital" at the leadership levels is always the key ingredient when evaluating the growth potential of any nation. In the case of China was find that so far we have witnessed one of the most sophisticated and comprehensive institutions for managing the development of executive cadres. 

The current practice has roots that can be traced in the past for eight centuries of the selection of the China civil service. It is this history that confirms out view that China may be on the threshold of a major transformation of its progress towards a new civilization.