Richard N.Cooper  |  http://english.caixin.com/2014-10-30/100744910.html

10.30.2014

China's Growing Private Sector

Despite view that move away from central planning slowed in recent years, evidence in new book by Nicolas lardy suggests the opposite is true

By Richard N. Cooper

There is a widespread impression both inside China and out that after the vigorous economic reforms of the 1980s and 1990s, moving away from central planning and state control to greater emphasis on markets, the reform process stopped, or even reversed, during the 2002-2012 period. This view was perhaps reinforced by the emphasis in the third plenum of the Communist Party's 18th Central Committee in November 2013 on the need to move further toward less guidance from the state and greater reliance on market prices to allocate resources.
A new book by Nicholas Lardy, a prominent American student of the Chinese economy, called Markets over Mao and published by the Peterson Institute in Washington, takes a look at what has actually happened in the Chinese economy over the period of reform, and especially during the past decade, based in large part on a close study of official Chinese data. He carefully examines the changes in Chinese output and employment, paying particular attention to the role of state-owned enterprises (SOEs) and enterprises that are effectively privately owned. Despite the apparent slowdown in Chinese reforms, Lardy finds that the country has evolved toward ever greater private economic activity, with a sharp diminution in the overall role of SOEs.