Policy, Practice and the Private Sector in China

Abstract

When private businesses were first revived after the 1 1th Central Committee's 3rd Plenum, there was much disagreement over the propriety of even small private businesses under socialism. An extensive public relations campaign was initiated to present private businesses as economically beneficial and well under the control of the socialist state. Two Central Committees later, China's constitution has been altered to allow not only small private businesses, but large ones as well, in recognition of the enormous growth of the private sector since 1978. However, official recognition must be followed by more concrete policies and regulations, and it is here that the issue of the role of the private sector under socialism becomes more complicated. For while the private sector has grown rapidly, the theoretical response of the leadership to this development has been slower, constrained as it is by political considerations and the weight of socialist tradition. The result has been a time lag between practice on the one hand, and ideology and policy on the other, creating a backlog of administrative problems. In this paper I will examine the growth of the private sector in China in the decade since 1978, including the original goals of its promotion and development since then, and the impact of this growth on Chinese assessments of the role of private business in the Chinese economy. I shall then consider the effects that the economic pressures of growth and the analytical debate surrounding the private sector have had