Post-Mao economic transition: The role of non-state enterprises

Pursuing a gradual reform process, China has avoided experiencing declining incomes and massive unemployment. This study surveys the speed of China's reforms and the main sources of the country's economic growth. A major find ing is that China's economic growth is mainly derived from the massive vise of non-state enterprises and an increase in competition between state and non-state enterprises. Among the various types of non-state enterprises, th e emergence of the fast-expanding rural collectives has been most striking. Their success is largely attributed to the fact that these non-state enter prises face hard budgetary constraints, enjoy artificial cost advantages, a nd benefit from a faster rate of institutional innovation in the rural area s. However; these enterprises have had major difficulties obtaining funding for long-term investment from outsiders and from banks. Thus, their appare nt success is largely attributed to their artificial cost advantages.