Kim Kyung-Hoon / Reuters China's Communist Party.

China's Un-Separation of Powers

The Blurred Lines of Party and Government

In late January this year, 18 U.S. business associations penned a joint letter to the Chinese authorities complaining about a new rule requiring that they replace their banking technologies with "secure and controllable" ones produced in China. Adopted ostensibly for national security purposes after Edward Snowden revealed the presence of spying equipment in the existing banking technologies, the guidelines actually cater to Chinese industrial policy by potentially requiring foreign companies to reveal source code and other commercial secrets.

Although it is not uncommon for U.S. industry to lobby the Chinese government, particularly when the stakes are high, in this case, the businesses chose to bypass the government and address the letter directly to the Chinese Communist Party (CCP) Central Leading Group for Cyberspace Affairs rather than the government’s Cyberspace Administration of China. The standard practice is to engage government officials up and down the hierarchy, from the lowliest section chief up to the minister and beyond. Business lobbyists even interact with critical decision-makers who hold key party positions on a government rather than a party level. (The exception is local investment deals, where the local party secretary has the ultimate say and can influence the bureaucracy’s decision.)

In any case, soon after registering their complaint, representatives from U.S. businesses received face-to-face meetings with Chinese officials, and in late March, China announced it would suspend implementation of the banking-technology regulations. Fearing that China would attempt to quietly implement the policy anyway, the group sent a second letter in early April to the same party agency, asking that it issue a written edict to ensure the suspension would truly hold. A few days later, the party complied once more.

This unexpected victory not only reveals how U.S. industry has figured out how to pull the levers of power in China but also points to a substantial change in how China is governed. In the past, there was at least some separation between party and government roles, but it

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