ABSTRACT
One of the most successful elements of the Chinese reform and transformation process has certainly been the development of rural industry. The origins of China’s rural industry date back to workshops that had been set up in the people’s communes during the 1960s and 1970s in order to maintain and repair farm machines, e.g. tractors, water pumps, etc. (Putterman 1997; Chang et al. 2003). It was, however, only since the reform era initiated in the late 1970s that these non-agricultural production units became independent business units (Chang et al. 2003). Known since the early 1980s as township village enterprises (TVE),1 these enterprises have developed into a highly important economic factor for economic development and social stability in China’s rural areas. Over the past two and a half decades in China, rural enterprises have made a significant contribution to the strengthening of social structures in that they have created jobs and a second (industrial) pillar in the rural areas of the Chinese economy. At the beginning of the twenty-first century they were responsible for the contribution of nearly one half of China’s industrial value added, about a quarter of the GDP and provided one quarter of the jobs available in China’s rural areas (Xiangzhen qiye tongji nianjian, various).
