ABSTRACT
The co-existence of various organizational forms and property rights in a prolonged period during the reform era in fact serves as a kind of lubricant to reduce the friction caused by replacing one economic system for another. The development of China’s Township and Village Enterprises sector (TVE) has provided a vivid example that besides the ‘ideal’ reform and development strategy, there can exist alternative path that will lead to the same outcome in economic reform. Chinese leaders initiated economic reform after the ten years of ‘Cultural Revolution’, which had resulted in sharp production decline and utter social chaos. Privatization or other fundamental property rights reform has never been the core reform objective of the Chinese leaders. According to the endogenous reform model, China’s reform is a gradual process, one in which partial reform measures initiate a learning process that expands the horizon of all participants.
