ABSTRACT
This chapter examines the sources of growth and the emerging problems within China's nonstate sector. In terms of the environment, property-rights relations among different forms of firms and local state authorities are primarily investigated. The fact that property rights of foreign ventures are preferentially protected by central authorities may have been an important motivation for private entrepreneurs who launched small joint ventures with foreigners, mostly overseas Chinese. To explain the behavior of nonstate enterprises, property-rights relations are focused on to argue that private enterprises in Chinese socialism behave quite differently from their counterparts in capitalist market economies. In the urban nonstate sector of China, there are four types of enterprises: urban collective enterprises, cooperative businesses, private capitalistic businesses, and private individual businesses. Emerging collective and private enterprises are now among the most dynamic and increasingly important elements in the Chinese economy. Rural enterprises have come to be regarded as the most dynamic economic entities in China.
