chapter  6
The development of entrepreneurship in China: A geographical and institutional perspective
ByCANFEI HE, QI GUO, SHENGJUN ZHU
Pages 17

In the first half of the twentieth century, central and local administration’s underestimation, if not neglect, of entrepreneurial ventures and widespread warfare and upheaval for decades all curbed the development of entrepreneurship in China (Landes, 1999). After the Communist Party took over, China was brought by Mao into a socialist system that collectivized agriculture and nationalized industry, leaving little room for private sector activity. Following the Soviet central planning model, resources and factor inputs were disproportionately allocated by the state toward the development of heavy industry (Naughton, 1996). Despite this, entrepreneurship was not completely eliminated and remained at a small scale, particularly in the form of the black market and underground economy. Even though such activity was largely unproductive at this time, actors in these markets were able to profit by taking advantage of economic shortages in the 1960s and 1970s.