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CAMBRIDGE, England — Now that the dust is settling after the Chinese Communist Party’s 16th National Congress, we can begin to see the implications of the various decisions announced there.

There was a lot of rhetoric in the media, both before and after the congress, about the way in which the Communist Party has embraced the private sector. The CCP seemed to be struggling to give birth to an elephant over the last year or so as President Jiang Zemin called for it to welcome capitalists as members. There was even talk of private entrepreneurs being elected to the party’s central committee and maybe even to the Politburo and its standing committee. The congress, however, gave birth not to an elephant but to a mouse.

No private-sector entrepreneurs were elected to the party’s central committee, although the chief executive officer of Haier Corporation, Zhang Ruimin, was elected as an alternate, nonvoting, member. Haier Corporation is, however, not really a private enterprise: state bodies of one sort or another hold the majority of its shares.

Although the pressure to have Jiang’s theory, the “Three Represents,” written into the party constitution was successful — although without his name attached — a lot more was expected.

The party chiefs know that they no longer lead a communist party. They have been saying for some time now that the Marxist-Leninist foundations of the party’s ideology are antiquated and not relevant to contemporary China.

The Central Party School, which is in charges of doctrinal issues and is presided over by China’s new leader, Hu Jintao, has been studying the Third Way policies of Britain’s Labour Party for some time now. Third Way guru Peter Mandelson has made more than one trip to the CPS to spread the word. Teachers at the CPS have been to Britain to learn.

It seems clear that while the old-guard Communists who still have the faith won one or two battles — keeping Jiang’s name out of the party constitution and private entrepreneurs off the central committee for now — they lost ground. Party committees around China have legitimized the membership of thousands of private entrepreneurs who had joined earlier, despite it being against the rules.

The All China Federation of Industry and Commerce, which the party has been using to try to maintain some control over the private sector, recently claimed that 9,065 private businessmen are now members of city and district (above county level) People’s Congresses. It also announced that 32,025 entrepreneurs have become members of regional Chinese People’s Political Consultative Conferences.

Don’t, however, be fooled. While the Chinese Communist Party can no longer claim to be a communist party, its leaders are not about to share power with private-sector entrepreneurs.

China’s leaders are well aware that their continuing in power is dependent on the private sector, which is now larger that the state sector. It provides the growth in income and jobs that keeps the people from questioning the legitimacy of the rule of the Communist Party. They are also deeply worried that an uncontrolled private sector could develop an ideological threat to the continuation in office of leaders who claim to be Communists. The party is terrified of a second force — a force that could be organized as an opposition, developing around the growth of the private sector.

It was fear of such a force that led Jiang to initiate the bloody suppression of Falun Gong. It was his surprise at how fast, and how quietly, Falun Gong came to be a second force in China, well organized and with more members than the Communist Party itself, that led him to decide not to make the same mistake twice.

Jiang is determined to bring the private sector under the party’s control. Unlike Falun Gong, which he could destroy with impunity, he knew he could not do this with the private sector. Hence the Three Represents, which is all about bringing the private sector under the disciplinary processes of the party.

Hundreds of thousands of party cells have already been sent up in the more than two million registered private enterprises with the rest being required to come into line and set one up. Individual high-profile entrepreneurs are being pressured, often against their will, to join the party.

The party cells allow the party to keep a watch on the political aspirations of emerging entrepreneurs; they have the security files on them and their tax records. If they get out of line they can be denounced and their companies taken over. There has been a spate of high-level and well-publicized arrests of private-sector leaders recently.

Other private-sector leaders may be learning how to trim. Tao Xinkang, the man who created and developed the Xin Gao Chao Group, Shanghai’s biggest private firm and one of China’s biggest, did not complain, at least in public, when the Communist Party recently took the credit for his success. The deputy head of the party cell in the company, the first in Shanghai, recently claimed, “Our enterprise was once just a seedling. The sunlight and rain of the Communist Party allowed us to grow strong and healthy.” Tao now, probably wisely, splits his time between China and Canada.

The domestic private sector in China, in a reversal of the truth, is being told that its continued success depends on its acceptance of the authority and discipline of the Communist Party. The more successful entrepreneurs are likely to pay lip service to the leadership of the party while building up their overseas assets and obtaining foreign citizenship for themselves or their families.

The less successful or less scrupulous entrepreneurs are likely to form an unholy alliance with party officials. Together they will exploit the people. And then there will have to be another socialist revolution. You read it here first.

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