ABSTRACT
Economic reforms are usually initiated whenever it is expected by decisive social groups that a change in economic systems will result in a higher level of welfare. China’s government initiated its reform programme in the countryside, where most of the population is engaged in agriculture. Social stability might be hampered by drastic structural changes in the near future. The enormous amount of surplus labour in the countryside was, until recently, camouflaged by the commune system. According to some estimates, surplus labour might total 30 per cent of the rural labour force. The erosion of social stability could be prevented by establishing a social network for those who are unable or no longer able to produce for the market. The linking of economic rewards to individual effort was also taken as the basis for the transformation of China’s small-scale state and collective enterprises in industry, services and transportation.
