It all began in 1927. After the communists’ fledging armed forces suffered serious losses against the Kuomintang government, Mao Zedong and his associates decided to create a hierarchy within the military that would mirror the structure of the party. The idea was to instill a fighting spirit throughout the ranks by ensuring the party’s top commands would be relayed all the way down. Party branches (黨委) were set up at the company level, party cells (黨小組) at the platoon and squad levels, and together they recruited foot soldiers who were solid party material. In just a few years, an unruly peasant army was whipped into a formidable fighting force. The rest is history.

Fast-forward to 2002 and the C.C.P.’s 16th national congress, convened under Jiang Zemin. In the interval, China underwent two revolutions. The first, in 1949, established a communist state; the second, in 1978, jettisoned a stagnant socialist planned economy in favor of pro-market reforms. By 2002, China was competing with France to be the world’s fifth-largest economy, and the Chinese people’s entrepreneurial spirit had been reawakened. Much of the political elite, including relatives of party and government officials, had become the owners and managers of private businesses.

To legitimize the growing importance of these so-called new social strata (新興社會階層), the party congress inducted many of their influential members into the C.C.P. The move would have been heresy under canonical Marxism, but it was made acceptable by the convenient adoption of a new ideology: socialism with Chinese characteristics. It was also an astute bargain. In return for becoming politically acceptable, capitalists and top business managers at private firms would come under the party’s chain of command.

The year before the party started controlling the managerial classes, it had already begun to manipulate how private companies ran their businesses. Starting in 2001, every private-sector firm with at least three C.C.P. members among its employees was required to have a party unit. Much like the party cells in the Red Army decades earlier, party units in companies were expected to “firmly implement the Party’s line, principles and policies,” as the Constitution of the C.C.P. stipulates.

This control mechanism had been a fixture of state-owned enterprises since the first days of the communist republic. It was brought into the private sector in earnest in 2001 — just on the heels of China’s accession to the W.T.O. — and extended after the 2002 party congress. Around 2006, it was introduced to private firms set up with foreign capital, like Walmart.