Private Enterprise in China


    Private enterprise in China has comprised an increasing share of the country’s national economy since the launch of the Reform and Opening-up Era in 1978, with the ascension of Deng Xiaoping (邓小平) as China’s paramount leader.

    Following the founding of the People’s Republic of China (PRC) and the launch of socialist reforms, China’s industrial and commercial economy was completely nationalised and its non-public economy was reduced to almost zero.

    Private enterprise in China was revived soon following the ascent to power of Deng Xiaoping in 1978.

    On 27 June 1981, the Sixth Plenary Session of the 11th Central Committee of the Chinese Communist Party (CCP) approved the “Resolution Concerning Several Historical Issues of the Party Following the Nation’s Founding” (关于建国以来党的若干历史问题的决议).

    The Resolution stated that China’s “socialist system is still at an incipient phase,” and that “the reform and improvement of socialist relations of production must adapt to the state of productive capability and be of benefit to the growth of production.

    “The state-owned economy and collective economy are China’s fundamental economy reform, and the individual economy (个体经济) of workers within a definite scope are a necessary adjunct to the public economy. A detailed administrative system and allocation system must be implemented to suit each economic component.”

    The Resolution is considered to be major breakthrough for the development of China’s private economy.

    In 1982 the 12th National Congress of the CCP called for the encouraging and supporting the “appropriate development” of the individual economy of the workers as a “necessary and beneficial adjunct to the publicly owned economy.”

    In 1987 the 13th National Congress of the CCP stated that the private economy (私营经济)  and individual economy were the same, and bother a supplement to the socialist public economy.

    The “Revision to the Constitution of the People’s Republic of China” (中华人民共和国宪法修正案) of 1988 served to confirm the legal status of private enterprise in China.

    The Revision stipulated that “the state allows the private economy to exist and growth within the scope stipulated by law,” and that “the state protects the lawful rights and interests of private enterprise.”

    In June of the same year the State Council issued the “People’s Republic of China Private Enterprise Provisional Regulations” (中华人民共和国私营企业暂行条例) – only the second specialist law concerning private enterprise after the “Private Enterprise Investment Provisional Regulations” (私营企业投资暂行条例) approved in December 1950 in Government Administration Council of the Central People’s Government .

    The Provisional Regulations cemented the legal status of private enterprise in China, with company registrations commencing in 1989.

    In 1992 Deng Xiaoping declared in a speech that “the development of China’s private economy has entered the fast track, and has truly been integrated into the schedule for the modernisation and establishment of socialism.”

    In the same year the 14th CCP National Congress announced that the goal of economic reforms were to establish a “socialist market economy,” while also calling for “the individual economy, private economy and foreign invested economy” to serve as a supplement to the state-owned and collective economy.

    The National Bureau of Statistics subsequently nine economic designations – the state-owned economy, the collective economy, the private economy, the individual economy, the joint economy, the joint-stock economy, the foreign invested economy, the Hong Kong, Macau and Taiwanese invested-economy and other.

    In September 2018 Yan Pengcheng (严鹏程), spokesperson for the National Development and Reform Commission (NDRC) announced that as of the end of 2017 China was host to more than 27 million private enterprises and more than 65 million individual industrial and commercial registrants, wth registered capital exceeding 165 trillion yuan.

    Peng said that China’s private economy accounted for a more than 60% of  national GDP. Private enterprise also accounted for 65% of Chinese patents, over 75% of technical innovations and over 80% of new product development.

    Figures from the All-China Federation of Industry and Commerce indicated that private enterprise accounted for over 80% of urban employment as of the end of 2017, and made a contribution of over 90% to new jobs.