Creating property under market socialism: Development of private industry in rural China

This study is about change in the ownership structure of China's market socialist system: the rise of private industry in the rural areas. The first part examines private enterprises' growth potential: their ability to make use of available resources for initial take-off and their potential to pursue continued growth by way of capital intensification and technological advancement. The second part looks into the impact of private sector growth on two major aspects of policy formation: the allocation of relevant policy goods and state intervention for the purpose of promoting cooperative ownership as a substitute for private property.; The survey of major trends in the development of private enterprises highlights the impact of structural transformation on the development of property structure in the system. It suggests that as reforms move the system a considerable distance toward a market economy, they are likely to initiate and sustain a process of ownership diversification. In China, the fast growth of private sector industry is a direct result of reform programs that have reduced the scope of central planning and expanded the role of markets in resource allocation. Continued expansion of the market not only creates conditions for free enterprise, but also reshapes the framework in which the politics of ownership reform unfolds.; This view on the dynamics of reform represents a reinterpretation of the relations between two major reform steps: the shift toward market regulation and the creation of private property. It departs from the way current debate on the subject is framed--either in the neo-classic economics tradition or by the conventional conception of market socialism. The Chinese experience in private property creation directly challenges the basic assumptions underlying radical privatization theory, particularly those concerning how to evaluate the logic of reform packages and whether massive transfer of state assets into private hands is the only way to initiate transition toward a market economy.