The limited liability company is the main form of private businesses while sole proprietorship has grown very slowly

For the obvious reason that investors assume limited liabilities under the structure of a limited liability company while their liabilities are unlimited in the case of sole proprietorship, the owners of private businesses choose the limited liability company as the main form of business structure. As a result, the number of limited liability companies has increased for several years . By the end of 2001, there were 1.38 million limited liability companies in China, an increase of 26.9 per cent over the previous year. These private limited liability companies had a total registered capital of 1.61 trillion renminbi in 2001, a rise of 43 per cent against 2000. The number of investors involved in those companies in the same year was 3.654 million, 26.9 per cent more than in 2000. There was also an increase of 29.9 per cent in total employment to a total of 14.42 million people. Private joint-stock companies numbered 289, a drop of 8.3 per cent; however, their total registered capital surged by 68.2 per cent to a total of 12.77 billion renminbi.

Partnership enterprises experienced a drop of 24.9 per cent in 2001 to a total of 131,000. Their registered capital was 48.74 billion renminbi, down by 24.9 per cent. The number of investors in partnership enterprises shrank by 23.9 per cent to a total of 426,000. In addition, the number of jobs provided by partnership enterprises declined by 27.5 per cent to 1.94 million. Solely owned proprietorships grew by 3.5 per cent in 2001 to a total of 517,000. Their registered capital reached 148.39 billion renminbi, an increase of 12.6 per cent, but the workforce employed by solely owned proprietorships dropped by 2.7 per cent to 6.153 million.

China's private sector has developed quite rapidly within a short span of 20 years or so from the late 1970s. The private sector has now reached a considerable scale and has injected vibrancy into the economy as whole, while maintaining a strong momentum. This has proved that the principles and policies regarding the private sector were correct. The achievements made in China's economy are only a start and there will be great potential for future development. Many private businesses have entered the high-tech sector and have launched export-oriented processing operations. In 2001, there were 164,000 exporting and foreign exchange earning private businesses, which generated 91.35 billion renminbi ( roughly US$11 billion) worth of foreign exchange, an increase of 23.3 per cent over the previous year. The organizational structure of private businesses is also moving in the direction of standardized modern corporate governance. There are more and more private companies that have become joint- stock companies, publicly listed companies and joint ventures with foreign investors. Some of the large private enterprises have also extended their business presence in overseas markets. It is firmly believed by the Chinese people and the government that, as long as the principle of 'maintaining public ownership as the mainstay while allowing the development of diversified ownership' is adhered to in the long- term , China's economy will be full of vigour and energy. It will progress faster, in new and better ways, creating further economic achievements while at the same time contributing to world prosperity and development.