ABSTRACT
This chapter examines the interactions between institutional change and entrepreneurship in the private sector. It traces the change of rules for entrepreneurs, particularly those in the private sector, in the history of the People's Republic of China. Political resolutions published at national conventions of the Chinese Communist Party (CCP) are the most important because they set the tone for resolving controversial issues. In 1987, economic pragmatism gained an upper hand over Communist ideology. Following the Austrian approach, Israel Kirzner sees an entrepreneurial opportunity 'as a result of the initially flawed plans', that is, flawed plans made by other economic actors. There are three types of private enterprises officially recognized in China: sole ownership, partnership, and limited liability companies. Finally, there has been a controversy over whether private enterprises should be allowed to issue shares in the stock market.
