Response to a Journalist’s Query Regarding the Sun Dawu Verdict

Yaxue Cao, July 28, 2021

There is no sun, moon and stars but dazzling lights that blind me day and night,
With two armed soldiers guarding me, six shifts a day, through long and tormentous hours.
Fate is fickle, I am but a living corpse, eyes wide open, forbidden to speak.
In unbearable suffering I hold on to faith, as I silently miss Dawu City.

Sun Dawu (Briefing on the Third Day of Dawu Trial)

I was asked to comment on the significance of the Sun Dawu verdict, what impact it might have on private businesses, and why the Chinese authorities may have decided to go after Sun Dawu and his company so harshly. My reply is as follows:

If one looks at the history of Sun Dawu and the Dawu Group, it’s a poster child for China’s “reform and opening up” era, and it shows what a private citizen and a private company can do for the country, for a place, and for the people with a little freedom and policy support from the government. But I’m afraid, politically, that’s exactly where the CCP now sees danger.

Could it be a miscarriage of justice on the part of the local government? I don’t think so. Local governments everywhere in China need private enterprises like Dawu — they are the engines that drive economic development. But Xi Jinping, incessantly scanning for potential threats, is thinking something different. If you look at the party’s various moves against private businesses in the last couple of years, it’s clear that Xi perceives these large and wealthy private enterprises and entrepreneurs as imminent threats to the regime. Unlike dissidents and political activists who oppose the Party’s rule outright, private entrepreneurs have money, have prestige, have the ability and experience to mobilize people, and have a much wider recognition and far deeper reach into the Chinese society.

There won’t be a 1950s-style of nationalization of private businesses (公私合营), but China is going after the large and powerful private companies methodically, one by one. I dare to predict that, in the next couple of years, it will become more widespread no matter what the Party’s rhetoric on “protecting private businesses” is.

On a fundamental level, China has no private enterprises because there is no rule of law to protect private property, and there are always some parts of the private enterprises that are not private — by design, like the land Dawu uses and the hot spring resort it developed with the blessing of the local government. The CCP has never seen private enterprises as sovereign entities and it can take them over anytime under the guise of implementing the law. That’s precisely what we have seen in the Dawu case.

In the series of speeches Sun Dawu delivered at several universities in 2003, he called for more freedom for China’s farmers, and less suffocating government control. He said China’s countryside does not lack talent, labor, capital, or market; it lacks freedom. But more freedom is precisely the Party would not and will not grant.

The early 2000s was a very different era than today. Back then, the Party needed private enterprises such as Dawu to drive development, now that these enterprises are rich and mature, the Party is coming to “harvest” them while eliminating potential threats. Therefore, the Dawu verdict is really a verdict on the so-called “reform and opening up.”

I want to add that China will find ways to do the same to foreign companies, maybe not taking them over, but stealing their technologies and driving them out of the Chinese market. In fact, it’s already happening.

Dawu is a rare company in China that has thrived on a unique and excellent management philosophy, or what Sun Dawu calls a “constitutional system of private enterprise” (私企立宪), which I devoted a section to in my profile of Sun Dawu, and years of implementing disciplined, best practices. The charges leveled against Sun Dawu and others, as well as the Dawu Group, are all derived from very trivial “disputes” that can be seen everywhere and every day in China. With the exception of “illegally absorbing public deposits,” there is nothing in the prosecutors’ case that points to mismanagement, product problems, or any other abuses, because there are none. As for “illegally absorbing public deposits,” it’s a long story and Sun Dawu was sentenced with a reprieve in 2003 for the exact same “crime,” which I explained in my profile.

So why did the court sentence Sun Dawu, and his sons and brothers, so harshly? A better question might be: How else would the Party achieve its goals of taking over Dawu and eliminating its perceived threats? By taking a page from the timeless Chinese civilization: 满门抄斩 (kill the whole family and close relatives; leave none alive so that they will never be able to come back to exact revenge).

The defense lawyers are disciplined in what they have reported and commented, but in several of the Briefings, they hinted in one way or the other: “the court is very determined and has powerful backing.” (See, for example Briefing on the 8th Day)

I wrote the Sun Dawu profile in March because I saw what’s coming.

Yaxue Cao edits the China Change website.

Briefing on the Ninth Day of Dawu Trial, Dawu Legal Team, July 23, 2021.

Briefing on the Eighth Day of Dawu Trial, Dawu Legal Team, July 22, 2021.

Briefing on the Seventh Day of Dawu Trial, Dawu Legal Team, July 21, 2021.

Briefing on the Sixth Day of Dawu Trial, Dawu Legal Team, July 20, 2021.

Briefing on the Fifth Day of Dawu Trial, Dawu Legal Team, July 19, 2021.

Briefing on the Fourth Day of Dawu Trial — ‘I Want to Dig a Window’, Dawu Legal Team, July 18, 2021.

Briefing on the Third Day of Dawu Trial, Dawu Legal Team, July 17, 2021.

Briefing on the Second Day of Dawu Trial, Dawu Legal Team, July 15, 2021.

Briefing on the First Day of Dawu Trial, Dawu Legal Team, July 15, 2021.

Latest Development of the Dawu Case: Charges Brought to Court, Dawu Legal Team, May 12, 2021