China's Future

At Large : China's 'yuppie corps'

Rina Jimenez-David
Inquirer News Service

BEIJING -- An important part of the economic restructuring taking place in the "Reform Era" in China is the transformation of State ministries into government-owned or -controlled corporations. The re-tooling of bureaucratic institutions into corporations (run with private-sector efficiency and competitiveness) has enabled China to compete with the rest of the world, not just in providing goods and services to its own huge population, but also in going head-to-head with multinationals in the global arena.

Crucial to China's strategy to leap into the age of globalization is the appointment of young, well-educated and aggressive leaders to head the country's flagship firms. Together with the most successful private-sector entrepreneurs, they constitute what has been dubbed as "China's yuppie corps."

A study published in the "China Leadership Monitor" describes this new economic elite as "party-legitimated entrepreneurs," most of whom have been trained in engineering or economics and business administration; some of them hold post-graduate degrees from Western universities. Most are male, city-born and -bred; the majority is below 45 years old. One might also call them the elite of the post-Cultural Revolution generation, Chinese who have no experience or just vague memories of their country's political upheavals.

The rise of the "yuppie corps" promises more than economic changes. "The rapid rise of young business executives may also broaden the way in which political leaders are chosen," the study says. While the political and Party leadership has traditionally been held by individuals who gained experience and power by rising through the political ranks, the economic elite suggest a way to leapfrog the local-to-national politics route. Already, a number of CEOs have been appointed to sit in the People's Assembly and even in the Party Congress, bringing a different sensibility to Chinese governance.

"The transformation of social and economic life in China during the Reform Era is eventually a tale of redistribution of power, wealth and prestige," says the study. "Chinese entrepreneurs' growing influence in Chinese society, their relations with other elite and social groups, their own diversified characteristics, and the implications of the rise of this group for the outside world should attract much more attention among China-watchers in the future."

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OUR group of journalists met one such member of China's "yuppie corps" Sunday evening. Ren Hongbin is the chair of the China Machinery and Equipment Corp. (Group) or CNMEG, a state-owned enterprise that arose five years ago from the Ministry of Machinery Industry.

An engineer, Ren was just 38 when he was appointed to head CNMEG, which consolidates 62 companies engaged in science, industry, construction, manufacturing, engineering, trade and finance; and leads the way in research and development. It has 33,000 employees, with an annual turnover of $4.67 billion.

Over a Peking Duck dinner in a historic restaurant, Ren spoke proudly of the scope of CNMEG's operations, which includes construction of a number of structures for the Beijing Olympics in 2008, the manufacture of crucial components for spacecraft, and the construction of the "Three Gorges" dam and hydro-electric power plant, the world's most ambitious civil works project that entailed the dislocation of several villages.

Its annual report proclaims that CNMEG's vision is that of "a large transnational group that is market-orientated, motivated by technology innovation with scientific management and diversified capital structure with engineering contracting and hi-tech products export as its main business."

Ren is married to an engineering professor and they have a 15-year-old daughter who, he confided, had begged to be taken to the dinner "so she could practice her English."

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"WE have over $4 billion in projects around the world," remarked Ren, "but the project in the Philippines is the most difficult," this said with a wry smile.

The "project" Ren was referring to is the controversial $421-million Northern Luzon Railway Project, or Northrail, the subject of a Senate investigation hearing tomorrow. (CNMEG has done projects in the country in the past and is engaged in two other ongoing projects, including the General Santos City fish port.) Though most everybody, especially residents and traders along the Manila-Bulacan-Pampanga-La Union corridor, concedes the need for and importance of a revived railway service in this part of the country, the project has run afoul of the old Filipino bugaboo of politics.

In fact, Northrail and its supposedly anomalous contract were among the items in the "amended" impeachment complaint against President Macapagal-Arroyo. Upon the urging of Sen. Juan Ponce Enrile, with the active backing of Senate President Franklin Drilon, the Senate last week voted to hold hearings on Northrail, forcing Northrail president Jun Cortes to cut short his Beijing trip. (We teased him about bringing home some bananas in case he ran afoul of the senators.)

Among the questions being raised against the Northrail project is the choice of CNMEG as the contractor, with some quarters alleging that "second-hand" equipment would be used, and calling to doubt the company's capability to undertake the work.

The speculation about "second-hand" equipment puzzled Chairman Ren no end. "Where did they get such information?" he wondered. And there were some rumblings of hurt feelings among more junior company officials, who speculated that if the contractor had been an American or Japanese company, nobody would have questioned its capability.

But CNMEG, given its size and track record, does not have to prove anything. And neither, it turns out, does the Northrail project.