ABSTRACT
The non-state sector in China's rural areas basically means the Township Village Enterprise (TVE). This chapter argues that TVEs are best viewed as vaguely defined cooperatives with weak or poorly developed property rights. It provides a brief survey of standard property rights theory. In describing the standard model of transition, the chapter focuses on principles or fundamental strategies rather than the actuality of implementation. The chapter summarizes some relevant growth rates for the period 1979 to 1991. To rationalize the success of the TVEs, many Western economists have regarded them as actually being private firms under the protective label of a collective enterprise. If TVEs must be forced into a traditional classification, then they are more like producer cooperatives than anything else. But Chinese prefer to use the term vaguely defined cooperatives to label the collectively owned TVEs, because TVEs seems to be especially ill-defined even by the standards of traditional producer cooperatives.
