Research On Development Of Non-state Owned Economy Since Reform And Opening Up

Non-state owned economy is the most beautiful landscape in the process of China economic reform and development. Over 20 years in the Reform and Opening Up, non-state owned economy has made tremendous contributions on sustaining, stable and health development of the Chinese economy, which has become a vital new force for the national economic development. With New Institutional Economics, this thesis focuses on the history, dynamic, pattern of development of non-state owned economy as well as the existing institutional restraint since the Reform and Opening Up, and tries to do new institutional arrangement and design.The first chapter makes theoretic study on development of non-state owned economy. (1) At present, the theoretic circle has different viewpoints on the concept of non-state owned economy, therefore, it is necessary to define and classify it. Non-state owned economy is a kind of economic form with operational mode of non-state-run. It is defined by using operational mode without concerning property rights. Non-state owned economy has a meaning both in a wide sense and in a narrow sense. In a narrow sense, non-state owned economy includes individual business and private business, while in a wide sense it includes all the non-state-run business. The non-state owned economy has some advantages that the other economic forms do not have in the competitive fields, typically flexibility of operation mechanism and efficiency of resources positioning. So non-state owned economy has its objective certainty of being, and it adapts to market economy in nature and is an active force to drive the social productivity. (2) Institutions are a series of rules acknowledged by the society to restrain the behaviors and regulate the interest relations among the people. The function of institutions is essentially to provide motivation and restraint to affect economic efficiency. The institutional changes can be classified into mandatory institutional change and causative institutional change, which provide dynamic, remove obstacles, and create loose & comfortable environment for non-state owned economy. So the whole history of non-stste owned economy is a history of institutional changes.The second chapter makes a systematic study on the history of development ofnon-state owned economy since the Reform & Opening Up. It classifies the history of development of non-state owned economy into four stages such as recovery, fast growth, readjustment and full development. (1) From 1978 to 1984, it is recovery stage. The recovery of non-state owned economy begins from the rise of individual business. The development of individual business in the cities and the towns brings a recovery of private business. (2) From 1985 to 1988, it is the fast growth stage. Since the 3rd Session of the 12th Conference of the Party, with initiating urban economic systematic reform, the Party and the government have conducted 'neither encourage nor prohibition' on the development of the private business, thus non-state owned economy grows very fast. In this stage, the township enterprises appear all a sudden. (3) From 1989 to 1991, it is the readjustment stage. Due to orderless development and too hot in the economy, the State started improvement and rectification. Also because of the political disturbance in 1989, there came a fall after rise in the development of individual and private business. (4) From 1992 to now, it is a stage of full development. Since a speech made by Deng Xiaoping after a tour to the South, non-state owned economy has the second development climax. The 15th Conference of the Party has regarded non-state owned business as important part of the socialist market economy, which has given great impetus to development of non-state owned economy. As a result, non-state owned economy has the third development climax. The 16th Conference of the Party has come out two 'unswervingly' and decided to perfect legal system to protect the private property, which removed the worries behind and thus the enthusiasm of start-up a business rose high. Non-state owned economy entered a new period of development.The third chapter makes deep analysis upon the dynamic of development of non-state owned economy. (1) Analysis on the general dynamic of economic development. Pursuit of material interests is the basic dynamic of social development. According to Maxism Viewpoints, interest relationships are origin of all social relationships. Pursuit of material interests is original dynamic of material production and spiritual production for human beings. And on the basis of the assumption of "rational economic person", human nature is selfish, and persuit of self interest is the fundamental motive driving a person's economic behaviors. Economic development results from the common push by capital, human resources, technical progress andinstitutions, etc. in which the institution plays an important role. Those dynamics originate from persuit of material interests of human beings. (2) Analysis on the dynamic of development of non-state owned economy. The institution is a main dynamic of development for non-state owned economy which struggles for survival, while the factors that help development of non-state owned economy such as the land, the capital, the human resources, technical progress make sense in the regime of the institution. The institution of land releases the restrained potential productivity. The financial institution affords financial support for development of civilian-run economy. As to the human resources institution, the publishing of a series of personnel system, system of labor power employment, reform of salary system as well as the establishment of a series of employment regulations within non-state owned economy have bettered the situation that non-state owned economy lacks human resources, which lays a good foundation for development of non-state owned economy. A series of guiding principles, policies and laws of motivating scientific and technical innovation published by the Party and the State facilitate development of non-state owned economy. The property rights institution is a base for development of modern economy. A clear property institution brings high efficiency to non-state owned economy, therefore, and to clear property relations can facilitate development of non-state owned economy. (3) Study on the two ways of institution change of non-state owned economy. The mandatory institutional change initiated by government. Each change of the important policy has made great impetus on development of non-state owned economy. The causative institutional change initiated by the civilians. A typical example is that the local people in Wenzhou created all kinds of necessary systems, which made non-state owned economy in Wenzhou develop very fast. These two types of institutional change jointly push development of non-state owned economy.The fourth chapter makes institutional comparisons on development patterns of non-state owned economy. (1) Patterns are the results of the institutional changes. The pattern of the south of Jiangsu supported by the township business is resulted from the mandatory institutional change initiated by the local town governments. The pattern of the south of Jiangsu was the most typical in the whole 1980's, while in 1990's, the township business made property rights reform with the change of internal andexternal conditions. As a result, some business changed into private business, while most changed into corporation. The change into shareholding corporation in some sense marks new pattern of Jiangsu. Wenzhou pattern is an efficient combination of developed non-state owned economy and market, resulting from the causative system change initiated by the civilians. From the family industry at the beginning of Reform and Opening Up to the stock cooperative in the mid of 1980's, then to the change of modern enterprise system in 1990's, it marks a change from the traditional Wenzhou pattern to a new Wenzhou pattern. The Pearl River pattern with collective business as its main part has much of extropism, resulting from common function by the mandatory system change and the causative institutional change. In 1990's, the Pearl River pattern achieved a clear property and upgrade of industry structure, however it still remained a feature of its extropism. (2) From a point of view of institution base, property rights institution, financial support institution, chamber of commerce institution, role of the local government played in the institutional change, the patterns of south of Jiangsu, the Wenzhou pattern and Pearl River have its own feature respectively. Due to difference in the institution base, mostly the difference in the ways of institutional change, different development patterns occurred, but they are subject to the principle of economic efficiency, which appear to be unique development pattern in line with local conditions. A pattern is resulted from some special conditions, it can not be imitated mechanically. A pattern is also developing, and the change of institutions is its drive of development. The future pattern of non-state owned economy should be orientated a combination of development ways of intro-source and extro-source, embodying the local features with assistance of industrial clusters. In this way, the sustainability of pattern development can be assured.The fifth chapter makes analysis on institutional restraint of development of non-state owned economy and raises some countermeasures to facilitate non-state owned economy. (1) In the period of economic transition, the first factor of preventing development of non-state owned economy is institutional restraints, including restraints of property rights institution, financial supporting institution, chamber of commerce institution, cutural notions, market permit institution and property protection institution, etc. Firstly, the property rights relationships are unclear withinthe family enterprises and 'be labeled red' enterprises. Secondly, financial restraint becomes bottle neck of development of non-state owned economy. Currently, the expansion of production of non-state owned economy is restrained by depending on the intro-source financing. While in terms of extro-source financing, the loans from the financial organizations are mainly short-term fluid capital, and the mid-term and/or long-term loans are few. In the condition of undeveloped capital market, it is very difficult for non-state owned economy to get financial support from stock, security markets. And venture capital is specially designed for non-state owned technical business, but not for ordinary non-state owned business. Thirdly, the chamber of commerce is 'the third hand' regulating market economy, with no substitute for its unique function. However, currently, the strength of the chamber of commerce is weak, its function can not be made full use. As to the reasons, on the one hand, it is resulted from unclear separation from government and the chamber of commerce, on the other hand, it is caused by lagging of construction of the chamber of commerce itself. Fourthly, it is lack of culture of start-up a business, lack of sense of credit, much sense of family ideas and lagging of construction of enterprise culture. Fifthly, the restraint on the realization mechanism is mainly because a lot of policies encouraging, supporting, guiding development of non-state owned economy by the State remain on the macro level, lack of the matched system arrangement in details. The worst is that the problems of market permit and property protection for non-state owned economy are still not fully resolved. (2) It is necessary to hasten institutional innovation to increase institution supply for non-state owned economy. Firstly, property relationships within the family enterprises and 'be labeled red' enterprises should be clearly defined. Secondly, in terms of indirect financing, the current state-owned commercial banks should establish loaning department for non-state owned economy, and the financing ratio to non-state owned economy should be stipulated by the law. Meanwhile, the middle and small banks for non-state owned economy should be established. As to direct financing, it is necessary to establish multi-level capital market system. Thirdly, the chamber of commerce should build up its own strength, strengthening its construction and improving abilities to replace the functions shifted by the government, and establishing good interaction mechanism with the government. (3) The idea of establishing a system of insitutions for thenon-state owned business is raised, which consists of fundamental institution, key institution and general institution. All the institutions should go together, and the most important is that the supervision and assessment mechanism to carry out the institutions should be established.In addition, as to the study methods, this thesis integrates new institutional economics, development economics, Maxism economics and regional economics, adopting combination of theoretic analysis and experimental analysis, qualitative analysis and quantitative analysis, comparative analysis and synthetical induction. From theory to practice, from history to reality, from individual to general, from concrete to abstract, the theory of institutional change is used to study the important issues of development of non-state owned economy since Reform & Opening Up.The points created by this thesis are as follows:K Leaving development of non-state owned economy into the background of macro economy, a systematic study is made on developing situations, characteristics and laws of the four development stages, i.e. recovery, fast growth, readjustment and full development by using full & accurate data, deliberate analysis.2^ Starting from the dynamic factors, this thesis considers that development of economy results from the common push by capital, human resources, technical progress and institutions, etc., in which the institution plays an important role. A study on the general dynamic of economic development shows that the most important is all kinds of institutional arrangement behind the dynamic factors of economic development. On such basis, the thesis presents structure of institutional dynamic for development of non-state owned economy and points out that the development of non-state owned economy is resulted from institutional change that is tremendous impetus for, development of non-state owned economy. Each change of the important policy has made great impetus on development of non-state owned economy.3, A comparison made on the pattern of the south of Jiangsu, the Wenzhou pattern and the Pearl River pattern existed in development of non-state owned economy from a point of view of institutional change shows difference of pattern resulted from the ways of institutional change and the restraints. So each pattern shows its own characteristic. But the three patterns are changing along with change of envirnoment. The successful experience of the three patterns is worth to draw lessonsfor The Western Development, the Rise of Center China and Rejuvenation of North-east Industrial Base. In the process of using for reference, it is needed to integrate experience with regional specific conditions and situation to create suitable regional distinguishing pattern, but not competely to imitate transplant. To use for reference, four points we must pay attention to are: firstly, it is needed to increase support of local government for development of non-state owned economy. Secondly, it is needed to develop chambers rapidly. Thirdly, it is needed to actively develop industrial clusters of non-state owned economy. Fourthly, it is needed to actively cultivate Start-up culture, advocate pioneering spirit, innovative spirit, striving spirit and a spirit of working in earnest, and to construction excellent atmosphere of culture for development of non-state owned economy.4^ With respect to the current problems existed in development of non-state owned economy, the thesis presents new arrangement and design of institution to facilitate development of non-state owned economy. In terms of indirect financing, the current state-owned commercial banks should establish loaning department for non-state owned economy, and the financing ratio to non-state owned economy should be stipulated by the law. Meanwhile, the middle and small banks for non-state owned economy should be established. As to direct financing, it is necessary to establish multi-level capital market system. And this thesis further points out that the main reasons of difficult implementation or bad effect of implementation of institution is lack of supervision mechanism and effect assessment mechanism for implementing institution. Therefore, this theis presents supervision mechanism and effect assessment mechanism for implementing institution and gives an idea of establishing a system of institutions for development of non-state owned economy.