Since 1925, the Chinese Communist Party (CCP) constitution has mandated that entities with three or more party members form a party cell. In the private sector, the practice became more formal in 1993 when China compelled all companies to provide the "necessary conditions" for cells to "carry out their activities" within. Chicago-based Motorola, for example, then the biggest U.S. investor in the country, saw its Tianjin office hosting one in four years' time; Arkansas-based Walmart's Shenzhen office saw the same a decade later. The Chinese government's infiltration of industry gained even more steam in the early aughts as then-Chinese President Jiang Zemin lifted the CCP's Marxist restriction against businesspeople joining. Another decade and the Central Commitee's General Office instructed party organizations to "cover[]" all industry regardless of size or ownership. The in-house units have only grown in number and strength since.

Formerly dismissed as social clubs, party organizations nowadays are often written into corporate bylaws. Researchers describe the CCP's 2015 party-building directive, openly endorsed by Chinese President Xi Jinping the next year, as something "never seen" in the West: "a dominant political party inserting itself into corporate charters to influence corporate management." In 2017, a European executive whose multinational operated in China said, "Once it is part of the governance, they have direct rights." Senior execs worldwide warned the cells exerted evermore political pressure over operations, investment and, notably, technology access -- sometimes rebuffed, sometimes not. A German industry chamber threatened its firms might leave if influence attempts continued. Xi doubled down. A 2018 amendment to the Corporate Governance Code for Public Companies shifted policy toward party-building beyond merely state-owned enterprises, according to Prof. Lauren Yu-Hsin Lin of the City University of Hong Kong, leading to a surge of privately owned firms adopting the provisions. Xi made it very explicit in 2020, telling officials to unify the private sector around the CCP, i.e., around him.

What do the 100 million members of all of China's party cells do today, besides compulsory studies of "Xi Jinping Thought," say, his abolishing of his own term limits in 2018? As of just a year and half ago, according to Prof. Curtis J. Milhaupt of Stanford Law School and Prof. Lin, 37% of publicly listed, privately owned enterprises in China, foreign and domestic, had party committees written into their charters -- not infrequently putting powers over personnel or decision-making into the hands of party cells.

Beijing's manipulation of economic levers and national security laws -- the oft-cited intelligence one dictates that "All organizations and citizens shall support, assist, and cooperate with national intelligence efforts" -- equip the Chinese government with additional mechanisms to pressure businesses. Then there's the more visceral tool of harder coercion.

Created by Douglas Lucas in May 2024 as a footnote for his Aug. 27, 2024 article at Foreign Policy, "Banning TikTok Won't Keep Your Data Safe: Pompous billionaires, authoritarian regimes, and opaque oligarchs are hoarding our data. Only an alternative online ecosystem will stop them." (Gift link; alternate hyperlink.)