Tales from the Development Frontier
allowing private firms to apply for loans, and simplifying business licensing signaled a gradual legitimation of private entrepreneurship. Setbacks periodically slowed this gradual expansion of the operating space for private entrepreneurs. In 1983, the government described its policy toward enterprises with more than five workers as “not to encourage, not to publicize, and not to diminish”: hardly enthusiastic support (Han and Pannell 1999, 277–79). The retrenchment that followed the violent suppression of urban protests in May–June 1989 led to a short-lived rollback of private sector expansion. But then came Deng Xiaoping’s 1992 tour of southern China, with its ringing endorsement of reform and growth, followed by the Communist Party’s announcement of the long-term goal of building a “socialist market economy with Chinese characteristics.” These steps firmly established the private sector on the path of growing influence that continues to this day (figures 1.3 and 1.4). Because of data shortcomings, neither the scale nor the timing of the sudden rise in the number and output of private firms can be
Figure 1.3 Light Manufacturing Enterprises by Ownership Structure, China, 1999–2010 120,000 100,000 number of enterprises
80,000 60,000 40,000 20,000
09 20 10
20
06
05
07 20 08
20
20
20
04 20
03 20
02 20
20
01
0
19 99 20 00
48
year state owned foreign invested
collectively owned other (mainly private)
Source: China Light Industry Federation 2010. Note: “Other” includes privately owned firms with and without foreign investment.