ABSTRACT
After 1949 the new Communist Government transformed China into a socialist planned economy (Selden and Lippit 1982). By the end of the 1950s private ownership had been largely eliminated in favour of state-owned enterprises (SOEs) and collective firms and farms (Li 1960).2 Since the death of Mao Zedong in 1976 and under the leadership of Deng Xiaoping, however, China has introduced important market reforms. Whereas between 1949 and 1978 economic performance was lacklustre, since the reforms began the country has sustained close to double-digit economic growth (Lardy 1994, ch. 1). Industrial output is expanding by well over 20% per annum and the share of manufactured goods in total exports has increased from about 49% in 1980 to 82% in 1993. Amongst developing economies China is now the world’s largest recipient of foreign investment.3
