The Sudden Rise of the Private Sector
The Sudden Rise of the Private Sector
After the enterprise reforms did not achieve positive results, China embarked on an incremental reform strategy that placed priority on the reform and gradual expansion of the nonstate sector. An amendment to the Constitution in 1988 defined the private sector as a supplement to the socialist public economy, thereby recognizing the legality of the private sector in China’s ownership structure. The unexpected rise of township and village enterprises, the relaxation of the restrictions on individual businesses, permission to hire workers to allow for the growth of private enterprises, and the opening to foreign investment all led to gradual increases in new nonstate elements in the national economy. These incremental economic changes are the main reasons for China’s sustained high growth rates in the 1980s.
Keywords: Chapter state-owned enterprise reform, nonstate economy, household contracting system, private sector, township and village enterprises, incremental reform strategy
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