13 - Property rights reform of rural enterprises (1994)

Summary

More and more people are coming to terms with the importance of rural enterprises to the Chinese economy, an importance that has been borne out by reality. The reform of large and medium-sized state enterprises and the development of rural enterprises are part and parcel of the effort to reshape the microeconomic foundation of the socialist market economy being developed in this nation. Academic discussions are elaborate and thorough concerning the property rights reform of large and medium-sized state enterprises, but somewhat lacking on the significance of similar reform of rural enterprises and the approaches to it. Indeed, discussions about the latter have merely touched upon the development of the “joint-stock cooperative system.” In truth, the property rights reform of rural enterprises is no less important and difficult than that of state enterprises. Moreover, the term “joint-stock cooperative system” is yet to be clarified. All this necessitates some in-depth study.

To begin with, we should not take the burgeoning development of rural enterprises over recent years for granted. Rather, we should contemplate the role of the market in the survival and development of these enterprises, and look at the question of what is to be done to adapt them further to the market.

Rural enterprises have no lack of competitors. On the home market, they compete with each other, but their competition comes mainly from state enterprises, large urban collectives, private businesses, equity joint ventures with Chinese and foreign investment, and imported commodities.