Capitalism with Chinese Characteristics: Entrepreneurship and the State

by Yasheng Huang

By the measure of private-sector fixed-asset investments, the most liberal policy epoch, by far, was in the 1980s; in the 1990s, the policy was reversed, and many of the productive rural financial experiments were discontinued. Rural administrative management was substantially centralized in the 1990s. Credit constraints on rural entrepreneurship, including private TVEs, rose substantially in the 1990s. Growth of rural household income in the 1990s was less than half of its growth in the 1980s, and the declining growth in the rural business income was especially pronounced. The size of government – measured in terms of headcounts of officials and the value of fixed assets it controls – expanded enormously in the 1990s. The directionally liberal political reforms of the 1980s were discontinued and reversed.