by Wendy Liu
For Those Whose Concept of China Has Frozen in the 1970s and for Anyone
Who Would Like to Know About Today's China.
9. Private Economy Cast in Concrete
To boost the private sector further for the overall growth of China's economy, China's National People's Congress (NPC) went even farther. In
the spring of 1999, the NPC approved yet another amendment, the third since
1982, to China's Constitution. This time, the private sector was offered
elevated status, as shown in Article 16.11:
(Original) "Within the limits regulated by law, individual economy of urban and rural workers is a supplement to the socialist public economy."
(Revised) "Within the limits regulated by law, individual, private and other non-public economy is an important component of the socialist market
economy."
At first glance, the switch of words from supplement to component may look like a mere change of degree. It in fact represented a genuine change
of nature. In 1988, the Chinese government recognized, as shown in the
earlier amended version of the Constitution, the momentum of the growing
private sector. But it was not ready or was reluctant to accept the private
sector as a part of China's otherwise socialist economy. Eleven more
years of its continued growth, in output as well as in employment, made it
solid evidence to the Chinese government as well as the Chinese people that
the private economy was not only going to grow and stay, but also to become
an ever more important and larger component of China's economy. The
new amendment not only gave the private sector new respect and new
status, it cast the private sector in concrete.
China Is Not Red Anymore
China's private sector, the non-red sector of the Chinese economy, has been more than living up to the expectations. In each year from 1991 to
1997, the number of private businesses increased by an average of 46% and
the value of their output by 71% . It continued its sustained growth
well into the new century. The first half of the year 2000 saw an 11.3%
increase in registered capital and 5.17% more firms . All this growth
has forever reshaped and recolored China's economy. According to Business
Week, government-owned companies in China that had all but
monopolized business two decades earlier made up only 47% of the economy
by 1999, while the private sector - not counting farms and the
operations of foreign investors - accounted for as much as 40% . The
Economist pointed out in 1999 that in addition to agriculture, 51% of
China's industrial GDP and 37% of services were also in private
hands. All together, the journal
estimated, the private share of China's whole economy was at 53%, more than
half of its economy . Meanwhile in Forbes magazine figures, China's
private sector (semi-private township and village enterprises and private
companies and farmers) was estimated to account for 60% of China's GDP in
1999 , up from zero in 1979. If one looked at China's gross value
industrial output (GVIO), the picture became even more dramatic. The
state-owned enterprises (SOEs) accounted for only about 25% of China's
total GVIO in 2000, down from some 80% in 1978!
The most authoritative study of China's private sector, however, is one conducted by the International Finance Corporation, a division of the World
Bank, published in October 2000. According to that study, entitled
"China's Emerging Private Enterprises, Prospects for the New Century,"
domestic private enterprises directly accounted for 33 percent of China's
gross domestic product. When private-owned agribusiness was included, the
figure rose to 51 percent. The addition of collectives, which were in
various stages of privatization, brought the non-state contribution to 62
percent! That's 62% blue!
As for the employment in the private sector, this World Bank study showed that it had risen an average of 41 percent per year since 1980. The
Forbes magazine further indicated that in 1999, 177 million of China's
working population (ages 18 to 60) worked at a private, or partly private,
company, versus 122 million in state-owned industries, plus 400 million or
so private peasant farmers . That means almost five out of every six
working Chinese citizens were in the private sector that year! That's more
than 80% blue!
This unprecedented growth of the private sector has also changed the employment picture of every Chinese family, where some members are in
the state sector while more in the private, making it "one
family, two systems", like the "one country, two systems" policy adopted for Hong Kong.
My brother - the Red Guard mentioned earlier in this
article - is now working (where else) in the private sector!
(To be
continued...)
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