Abstract
Since the late 1970s, China's growth has been about 10% per annum, the highest in the world. Rural enterprises have been the backbone of China's record with real gross output value expanding at a rate of over 20% since 1978.1 In 1996 China had over 23 million rural enterprises and these employed 135 million workers. Rural industrial enterprises contributed 26% of GDP, 44% of gross industrial output value, and 35% of total earnings from exports. The value-added of rural enterprises accounted for 60% of the entire value-added in rural areas; in the coastal provinces their contribution was more than two-thirds. The importance of such enterprises is also reflected in their share of total output in a range of industries. For example, they produce 17% of electronics and communications equipment, 26% of machinery, 40% of coal, 43% of food and drinks, 80% of garments, and 95% of smalland medium-sized farm tools. However, in recent times rural enterprises have been growing at a slower rate. In the first six months of 1997 real gross output from rural enterprises grew at 12.5%, which was 5% lower than the comparable figure for 1996. Up to August 1997, year-on-year growth fell to 8.4%. One reason for this is that credit is tight, which implies that the root cause might be cyclical rather than structural. Nevertheless, given that rural enterprises have been driving growth, this has raised some concerns that China's growth rate will also slow. The profit rate in such enterprises has also declined. In 1980 the profit rate in
Published Version
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