Chapter 1.6: China s Prospering Private Sector

Wang Chaoping, Senior Researcher, Director General, Policy Research Department of Central Committee of the Communist Party

Overview

At the end of the 1970s, a major change took place in China, which was the implementation of economic reforms and opening to the outside world. These policy initiatives represented an effort to build a socialist country with Chinese characteristics. The initial efforts at reform thereafter gradually led China to realize that it is still in the initial stage of socialism, which is going to be a long historical process. In this period, China must adhere to the basic economic system in which public ownership will remain dominant but in which other forms of ownership are allowed to develop. As a result, the pace of restructuring ownership was accelerated, which has greatly liberated and developed society's productivity, adding impetus to the rapid development of China' s economy.

If one looks back at the statistical data from 1980, one notices that there was no separate entry for the non- state or private sector, meaning, in other words, that the private sector was so negligibly small at that time that it did not make sense to include it in the statistics. However, by the end of 2001, the total number of what is called ge ti gong shang hu (namely, individual industrial and commercial proprietors) had surged to 24.33 million, while si ying qi ye (privately-run enterprises ) have developed to a total of 2.03 million. They employed 74.74 million workers and their total registered capital amounted to 2.2 trillion renminbi. The total value of output created by the private sector in 2001 reached 1.96 trillion renminbi, one fifth of China's GDP. The total retail sales of consumer products contributed by the private sector in the same year was 1.77 trillion renminbi, about half of the country's total. The private sector also provided one quarter of China's employment opportunities. The non-state or private sector has thus become an important part of the economy, playing a positive role in China's economic operation and development.

China's non-state or private sector has been able to maintain a good trend of development, evidenced by the following statistics.

^[*] This chapter was originally written in Chinese and was translated by Li Yong.