The transformation of Chinese rural collective enterprises in the 1990s : the Guangdong experience

Abstract

The role of rural collective enterprises has evolved as the Chinese rural economy has shifted from agriculture-based to industry-based since the post Mao era. Due to the rapid changes in the economic environment, governmental policies and legislation, the rural collective enterprises transformed so quickly and unexpectedly that it is sometimes difficult to define ownership. However, all these overwhelming changes are geared towards privatization of rural collective enterprises. We have seen that the property rights of the traditional collective enterprises transformed radically in the past decade, breaking the traditional legal concept that ownership was not recognized as private rights under the old Chinese Marxist socialist jurisprudence. Stepping into the 1990s, the collective enterprises entered another transitional period. The legal and economic reform has had a considerable impact on the ownership transformation. A number of local ministry level regulations and several pieces of important national legislation including "the Chinese Company Law (1993)", "the Law of the People's Republic of China on Rural Collective Enterprises (1996)," and "the Constitutional Amendment (1999)," were enacted to facilitate the collective enterprise transformation. As a result, a new and significant ownership, "shareholding cooperative enterprise (SCE)," has surfaced out of the stimulating environment. In earlier chapters, an introduction will be made to the historical background, ideological considerations and the ambiguous nature of the traditional collective enterprises. Subsequently, the focus will turn to the new concept of SCE ownership. The discussion centres on the process of ownership transformation of the SCEs including their legal development. The SCEs will be further analysed through study of their legal characteristics, comparisons with other Chinese business associations, and a review of their achievements, problems, possible solutions and prospect. The study also explores factual findings regarding the changing ownership status from the traditional collective enterprises to the SCEs in the 1990s. The conclusion is that the SCEs act as a transitional model through which an irreversible process of privatization is already taking place in rural China to bring more dynamics to the market. The SCE ownership facilitates the transition from a planned to market oriented mechanism, from socialized to individualized production and from a cooperative system into a private economy. The research lays the ground work and offers new insights for future studies on related areas. As we begin to realize the ownership transformation, we may also perceive how efficacious China's reform and open policies actually are and what upcoming major problems need to be tackled in the twenty first century.