ABSTRACT

Since 1978 market oriented reforms have created remarkable changes in the Chinese economy. In many ways, China is moving away from a centrally-planned economy to a more market-oriented economy. This process is best demonstrated by the relative decline of the state sector and the emergence and rapid rise of the non-state sector in the Chinese economy. The share of stateowned enterprises (SOEs) in industrial production has declined from two-thirds in 1985 to only one-third in 1995. Correspondingly, the non-state sector, including the township and village enterprises (TVEs), private and individual enterprises (PIEs), and foreign invested enterprises (FIEs) has been growing rapidly, comprising an increasingly greater share of the economy. Similarly, the share of SOEs in total exports declined from almost 90 percent in 1986 to less than 30 percent in 1994.1 Thus, it is clear that the state sector is no longer the dominant player in the Chinese economy, though it is still a key player.