ABSTRACT
This chapter focuses on entrepreneurship because it serves well as a working mechanism connecting institutional change and economic development in China. It states that the Chinese State and its officials are also playing double gambles. In China, the legitimacy of entrepreneurship is hard earned. At the end of the 1970s and during the 1980s, China was haunted by a strong sense of frustration, confusion, and suspicion toward Mao Zedong Thought, Communism, and the Chinese Communist Party (CCP) handling of internal affairs. The Great Cultural Revolution of the Proletariat added further detrimental effects to these problems and prolonged their rectifications. Cognitive legitimacy is of low importance for private entrepreneurs in China, because nearly everything is political. The market mechanisms were new to the State, and by the end of the 1970s the Party had lost many of its economic and financial professionals. At the ideological level, the Maoist model proved to be a disaster for China, both politically and economically.
