January 3, 2020

During the Politburo’s 40th Collective Study Session in April 2017, President Xi delivered a speech on strengthening the Party’s leadership over financial affairs, particularly over the financial mechanisms used to stimulate economic growth. In response to President Xi’s call to action, local party committees across China have launched a variety of party membership-based loan programs. These programs give qualified party members and private businesses easy access to designated pools of often collateral-free capital at exceptionally low-interest rates, thus making party membership an important indicator of creditworthiness. 

The proliferation of various party membership-based loan programs reveals that local party committees are utilizing financial instruments not only to stimulate economic growth, but also to solidify party control over financial affairs. This allows the CCP to enhance its relevance and appeal to Chinese people in a most practical way—access to low-cost capital. Programs such as these provide additional evidence that the Party plays a central role in selecting which individuals and companies can be granted access to low-cost capital.

Most of these party membership-based loan programs are launched as a partnership between local party committees and rural commercial banks (农商银行) or rural credit cooperatives (农村信用社). My Internet-based survey found that since 2017, such programs have been launched in more than 40 Chinese cities and counties across at least 13 provinces or provincial-level administrative regions, including but not limited to Fujian, Gansu, Hubei, Jiangsu, Liaoning, Guizhou, Guangdong, Guangxi, Qinghai, Shandong, Shanxi, Yunnan, and Zhejiang.[1] Local party committees hope that these programs will support the entrepreneurship of party members, provide seed capital for their business plans, or finance rural party members’ agricultural production. Existing programs can be divided into two major categories: “Rural Party Member Entrepreneurship Loans” and the “Party Building Plus” model. The primary difference between these two categories is that the second category is conditioned upon advancement within the Party and party building efforts. 

10/1/2019 | Zongyuan (Zoe) Liu

https://www.ccpwatch.org/single-post/2019/10/01/Communist-Party-Membership-and-Access-to-Cheap-Loans-Varieties-of-Party-Membership-based-Loan-Programs-in-China

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Zongyuan Liu holds a Ph.D from the Johns Hopkins School of Advanced International Studies (SAIS) specializing in International Political Economy with regional expertise in Asia. Her research focuses are Asian energy security, political risk in Asia, China-Middle East relations, and China’s overseas infrastructure investment.  Her dissertation examines the politics and economic fundamentals of foreign exchange reserves management in China and Japan and its global implications. Zoe holds an MA in International Affairs from George Washington University’s Elliott School of International Affairs. In addition, she took the CFA Level III exam in June 2018 and is a part-time consecutive/simultaneous translator for visiting Chinese government and business delegations to Washington DC.