V. V. CHUVANKOVA

Candidate of Economic Sciences

In more than 30 years of reform transformation in China, individual and private enterprises have achieved impressive success and proved to be a viable force in the economic structure of the PRC. They not only stimulate the country's economic growth, increase tax revenues, expand exports and increase employment, but also make a significant contribution to overcoming the consequences of the global financial and economic crisis (2008-2010) and ensuring stable socio-economic development of the country.

The country has formed a large layer of small and medium-sized owners who have created a huge number of new independent economic objects and were able to improve not only their financial situation, but also provide work to millions of people in need. Taking into account the fact that modern families in China consist of an average of 3 people, private entrepreneurship provides for the life needs of about 400 million people in the country.

In the development of individual farms and private enterprises outside the sphere of agriculture, two stages should be distinguished, each of which has its own characteristics and quantitative parameters: the pre-reform period (1949-1978), which is characterized by both periods of limited use and almost complete prohibition of entrepreneurial activity, and the reform period (from 1979 to the present) It is accompanied by its revival, and then development at an accelerated pace, stable growth of economic potential and share in the national economy of the country.

PRE-REFORM PERIOD

In the first years after the victory of the revolution, the Chinese leadership implemented a policy of allowing individual entrepreneurship and private farming. The General Program of the People's Political Consultative Conference of China (September 1949) stated that the People's Government should encourage the activity of all individual activities that are favorable to the country's economy and people's life. In 1950, there were 8.123 million private manufacturing enterprises in the country, employing 21.64 million people (123 thousand of them, employing 1.64 million). workers belonging to the national bourgeoisie) and 4.08 million people. private retail businesses. The total number of people engaged in entrepreneurship in urban and rural areas was 30-40 million. These enterprises accounted for 83.2% of total gross industrial output and 85% of retail turnover.¹

However, by the end of the "recovery period", i.e. by the beginning of the implementation of the 1st five-year plan (1953-1957), the structure of the economy had changed significantly. The share of individual and private farms in WFP in 1952 decreased to 51.2%, in retail turnover (RTO) - to 60.9%, and the share of the public sector increased to 41.5 and 34.4%, respectively (see Tables 1, 2).

As a result of the policy of "socialist transformation of capitalist industry and trade", implemented since the second half of 1953, individual and private enterprises were practically liquidated.² Socialization was carried out through cooperation, the creation of mixed public-private enterprises or their transformation into state-owned ones. In 1956, more than 80% of private industrial enterprises underwent socialist transformation. The number of private commercial farms decreased to 432 thousand ³ The number of people employed in the individual sector in cities and towns decreased to 160 thousand ⁴. However, the Chinese leadership was soon forced to admit that it had" too hastily " begun to transform handicraft industry and individual small-scale trade," too quickly "changed the forms of farming, and adopted "excessively uniform forms of cooperation", as a result of which difficulties arose in meeting the vital needs of the population.⁵

In 1957, there was some revival of individual labor activity. The number of sole proprietors in cities and towns increased to 1.04 million on the eve of the Great Leap Forward (1958-1960) ^.6 However, their share in WFP was less than 1%, in RTOS-2.7%, while the share of the public sector reached 53.8 and 62.1%, respectively, collective - 19 and 16.4%, mixed-26.3 and 16%, respectively (see Tables 1, 2).

During subsequent IVF periods-

Table 1

Structure of gross industrial output (1949-1978), %

* Includes public-private joint ventures.

Source: Compiled from: Chinese Statistical Yearbook (Zhongguo Tongji Nianjian) - 1985. Beijing, 1985, p. 308.

The Chinese leadership periodically returned to encouraging private enterprise activity of the population in the context of a decline in production and an increase in unemployment.

A new return to the use and support of individual entrepreneurship in order to revive the economy and saturate the market with consumer goods and services in the PRC was carried out during the "settlement" period (1961-1965) in order to revive the economy and saturate the market with consumer goods and services after the failure of the "big leap"policy. By the end of 1964, the number of sole proprietors in cities and towns had increased to 2.27 million, but since 1965 their number has been declining again.⁷

During the years of the " cultural revolution "(1966-1976) and the subsequent pre-reform period, as a result of another wave of "struggle against capitalist elements", the policy of restricting private entrepreneurship led to the fact that this sector of the economy actually ceased to exist again. The number of employees decreased from 1.56 million in 1965 to 0.19 million ^{in 1976.8}

In 1978, there were only 150,000 individual workers in China's cities and towns, working in the handicraft industry and trade. The share of their farms in the gross industrial output and retail turnover of the country was less than 0.1%.

Thus, by the beginning of 1979, the PRC was dominated by the economy of public ownership.

A COURSE FOR CREATING A MULTI-LAYERED ECONOMY

In the course of implementing China's economic reforms and opening up, following the decisions of the 3rd Plenum of the 11th CPC Central Committee (December 1978), a policy was adopted to create a multi-layered economy with state ownership as the basis, which led to a radical change in the existing ownership structure by that time. Allowing entrepreneurial activity gave an impetus to the revival and rapid development of first individual enterprises, and after the decisions of the XIII CPC Congress (10.1987), private enterprises. According to the system of classification of economic sectors that had been established by that time in the PRC, the main criterion for distinguishing these two types of management was the amount of hired labor used: individual enterprises - no more than 7 people (one or two assistants and three or five students), private enterprises-no less than 8 people.

However, in the published

Table 2

Structure of retail trade turnover (1952-1978), %

* The data includes the private sector.

Source: Compiled from: Chinese Statistical Yearbook (Zhongguo Tongji nianjian, 1985). Beijing, 1985. p. 465.

Table 3

Dynamics of individual sector development (1978-2010)

Sources: Compiled and calculated from: Zhongguo Tongji nianjian-2001. Beijing, 2001. pp. 110-111; Ibid. Beijing, 2009. pp. 112-113, 133; Ibid. Beijing, 2010, tab. 4-2, 4-10; Zhongguo siying qiye fazhan baogao (1978-1988) (Report on the development of private enterprises in China (1978-1998). Beijing, 1999. pp. 65-66; Zhongguo minyin jingji fazhan baogao N 5 (2007-2008) (Report on the development of the people's economy in China N 5 (2007 - 2008) / / Minyin jingji lanpishu (Blue Book of the People's Economy). Beijing, 2008. p. 75; People's Daily haiwaiban. 2009. 12.05. p. 5 -http://russion.com.cn/31518/7266481...

The State Council of the People's Republic of China in April 2011 in a new document "Regulations on individual enterprises in industry and trade" indicates that from November 1, restrictions on the use of employees in individual enterprises will be lifted. Individual entrepreneurs are allowed to hire employees according to the needs of the business ⁹.

Constitutional amendments and legislative acts adopted during the years of reforms defined the legal status and economic conditions of the activity of individual and private entrepreneurs, recognizing it first as "an adjunct to the socialist public economy", and then, since March 1999, as "an important component of the socialist market economy".

The revival of self-employment began mainly in cities and towns and was caused by the particularly acute problem of unemployment there, which reached 20 million people on the eve of the reforms, of which 8 million were in urgent need of employment. ¹⁰ Latent unemployment pressure has increased significantly due to the overflow of surplus labor from the countryside to the cities. Creating additional jobs required significant resources from the State, which it did not have on the required scale. As noted in the Chinese press, in the late 1970s, the creation of a single public sector job required 9-10 thousand yuan*, in which

* Currently, $ 1 is equal to 6.39 yuan (ed. note).

collective - 2 thousand yuan ¹¹. The organization of an individual enterprise did not require almost any investment from the state, but it could provide work and livelihood for a significant part of those in need of employment.

Already in 1980, the number of sole proprietors employed in industry and trade in cities and towns increased more than 5 times compared to 1978 and reached 0.81 million people (see Table 3).

In the subsequent period, the rapid development of individual labor activity continued not only in cities and towns, but also in the countryside, and at a faster pace due to the employment of excess labor force pushed out of agriculture as a result of the widespread introduction of family contracts. A particularly rapid increase in the number of people engaged in individual activities in rural areas occurred in 1983-1985 - an annual increase in rural areas averaged 4 million people, while in cities and towns - 1 million people. In 1987, the share of sole proprietors in villages reached its historical peak - 70% of their total population. The predominance of those employed in the individual sector in rural areas remained until 2002. In the future, against the background of a decrease in absolute population indicators, their share gradually decreased and in 2009 amounted to 36% (see Table. 3). This situation is largely due to the activation of the process of forming various types of cooperative associations in the sphere of circulation, their integration with peasant contract farms, with enterprises processing agricultural raw materials, and the active entry of individual farms into newly emerging structures.

The rapid development of the individual sector since 1978 does not mean that it has been growing steadily in all periods. Thus, in the middle of 1986, and especially in 1989-1990, there was a drop in the growth rate and absolute indicators of the number of people engaged in self-employment as a result of the decline that began in 1984-1985. (the last years of the 6th five-year plan) of the struggle against "overheating of the economy" and the course adopted at the 3rd plenum of the CPC Central Committee of the 13th convocation (1988) on "streamlining and improving the economy", as well as the political events of spring and summer 1989 (in particular, the confrontation in Tiananmen Square). The policy pursued during this period was aimed at curbing excessively high production growth rates, exorbitant increase in extra-budgetary investments in fixed assets, reducing the level of inflation, achieving a balance of finances, loans, and material resources, rational regulation of the industry structure, and partially limiting market influence.

The number of individuals engaged in individual activities in 1989 decreased by 3.64 million people compared to the previous year (from 23.05 to 19.41 million), mainly due to a decrease in the number of sole proprietors in rural areas by 3.53 million people. The level of 1988 was reached only in 1991.

In the subsequent period, up to 1999, the number of people employed in the individual sector continued to grow due to the beginning of the development of a unified legislative system for all business entities, no longer by form of ownership, but by the nature of the organizational structure of enterprises and the creation of the necessary conditions for equal participation in market competition. Their number increased 2.7 times in 8 years and reached 62.41 million people (see Table 3).

The second, longer wave of reduction in the number of people engaged in individual activities was observed in 2000-2004. It was connected with the introduction of partial adjustments to the procedure for registration and registration of individual farms and the transition of some of them to private status as a result of the accumulated economic and labor potential, as well as with the launch of a campaign to combat illegal activities and receive super-profits, the introduction of vertical management of their activities instead of the former subordination to local governments, etc. As a result, their number decreased by 27% during this period, to 45.87 million people.

Although the number of sole proprietors continued to grow in subsequent years, their number exceeded its historical maximum (1999) only in 2009, reaching 65.85 million people. Nevertheless, despite fluctuations in the number of employees, the economic potential and production indicators of the individual sector steadily increased. In 2010, the number of sole proprietors reached 34 million, and registered fixed assets exceeded 1.32 trillion yuan, ¹² an increase from almost zero in 1978.

Since 1988, the private sector has been rapidly gaining economic positions, and after 1993 it has become the most dynamically developing among other forms of ownership (see Table 4). (As the position of the private sector has strengthened, there has been a tendency to reduce the share of the individual sector in the PRC economy) The number of private enterprises has increased from 90 thousand in 1989 to 8.4 million in 2010, and the number of employees - from 1.64 million to 100 million. The volume of registered authorized capital increased from 8.45 billion rubles. The amount of fixed assets of individual enterprises increased by more than 14 times to 19.0 trillion yuan (see Table 4).

THE LEAP OF PRIVATE ENTREPRENEURSHIP IN THE 21ST CENTURY

The highest growth rates of private entrepreneurship in the-

Table 4

Dynamics of private sector development (1989-2010)

Sources: Compiled and calculated according to: Chinese Statistical Yearbook (Zhongguo Tongji nianjian) - 2009). Beijing, 2009. pp. 112-113, 132; Ibid. Beijing, 2010, tab. 4-2, 4-9; Zhongguo minyin jingji fazhan baogao N 5 (2007-2008) (Report on the development of the People's Economy in China N 5 (2007-2008). Minyin jingji lanpishu. (Blue Book of National Economy). Beijing, 2008. p. 076; People's Daily haiwaiban. 12.05.2009 -http://rassion.com.en/31518/7266484

observed since the beginning of the XXI century. The quantitative growth of individual and private enterprises is accompanied by a rapid expansion of areas of activity, production scales and fixed assets. In 2010, more than 42 million individual and private enterprises were officially registered in China, employing more than 180 million people, and more than half of them were employed in private enterprises. Currently, the number of people employed in private enterprise structures is more than two times higher than the number of workers and employees in enterprises of the public sector of the economy. Their share in the economically active population exceeded 20%.

The volume of the authorized capital of private and individual enterprises and the capital-to-capital ratio have sharply increased. In 2010 the total volume of fixed assets reached 20.32 trillion yuan and is close to half of the total amount of registered funds of self-supporting enterprises operating in China (43.9 trillion yuan).¹³. The average capital-to-capital ratio of private enterprises was 2.26 billion rubles. YUAN, individual - 38.8 million. RMB (see Tables 3 and 4). In 2010, the share of private national investment in fixed assets in cities and towns increased to 51.5%, which is 3% higher than in the previous year14.

During this period, there was a rapid increase in both private sector production itself and the efficiency of individual and private enterprises. According to the State Tax Service of the People's Republic of China, they were the leaders among enterprises of all forms of ownership in terms of value added of products of super-limited production enterprises and realized profit throughout the entire five-year period, including the crisis years. In 2010, these indicators increased by 20% and 49.4%, respectively, compared to the previous year (see Table 5). Private industrial enterprises generated a profit of 1.43 trillion yuan. Amount of tax payments made by private enterprises-

Table 5

Dynamics of industrial production growth in 2006-2010 (%)

Note:

* Businesses with annual sales revenue of at least $ 5 million. RMB.

** 2007-2010 - data for 11 months.

Source: People's Daily. 01.03.2007; 29.02.2008; 27.02.2009; 25.02.2010; 01.03.2011.

The total export volume of non-state enterprises exceeded 1.1 trillion yuan, and the total export volume of non-state enterprises reached $481.3 billion. USA ¹⁵.

The contribution of individual and private enterprises to the country's GDP amounted to more than 40%, the share in tax revenues to the budget-more than 13%, in the volume of capital investments in the national investment fund-more than 17%, in retail trade-more than 50%, in foreign trade turnover-more than 14%¹⁶. In addition, 65% of patents for inventions, over 75% of entrepreneurial technical innovations and 80% of new product developments were implemented by small and medium-sized businesses.¹⁷

The decisions of the 16th and 17th CPC Congresses, regular plenums of the CPC Central Committee, and sessions of the National People's Congress have formed the basis for such dynamic and effective development over the past decade.

A number of resolutions and measures have been developed and put into effect to create a more favorable legal and market climate, create conditions for equal competition in the interests of encouraging and supporting individual, private and other non-public sectors of the economy, as well as to encourage investment activities of the population.

INVITING PRIVATE CAPITAL TO NEW INDUSTRIES THAT WERE PREVIOUSLY CLOSED TO IT

A document issued by the State Council of the People's Republic of China on the eve of the 11th Five-year Plan in February 2005, "Some considerations of the State Council of the People's Republic of China on measures to encourage, support and direct the development of the individual, private and other types of non - public sector of the economy", gave an additional impetus to the development of individual and private entrepreneurship. ¹⁸ This document incorporated all the strategic guidelines aimed at to actively promote the development of the private economy and open up free access to private national capital in a number of previously closed industries and spheres of production, including state monopolies. These include electric power, computer science, telecommunications and communications, infrastructure, railway transport, civil aviation, finance, defense and technical complex, exploration and development of mineral resources, public utilities, etc.

Conditions for mobilizing financial resources were eased, both in the stock markets and in the credit market. It also encouraged the expansion of the participation of private entrepreneurs in the development and transformation of the social sphere, in the revival of the industrial base of the North-East, in the development of the Western and Central regions of the country. All this has allowed private enterprise sectors to achieve even higher positions in the economy, continue their progressive development in the context of the global financial crisis, and accumulate huge capital resources.

On the eve of the 12th Five-year plan (2011-2015), the State Council of the People's Republic of China issued two new policy documents aimed at further encouraging the development of private entrepreneurship and the active entry of national private capital into the implementation of state innovation programs, restructuring the industrial structure and accelerating the formation of new strategic industries, and engaging in the process of deep financing of these areas of China's economic development in the new five-year plan. The first document is "Some Considerations of the State Council of the People's Republic of China on the promotion, healthy development and orientation of private national investment" (May 2010) ¹⁹. In the Chinese press, it is briefly called "36 new guidelines". The second document is " Notification of the State Council Office of the People's Republic of China on the division of functions to promote and promote healthy development of private national investment "(July 2010) ²⁰.

Compared to the document issued in 2005, the "new 36 installations" significantly expands the list of industries available to private investors, including the main monopoly and high-tech industries. The document clearly defined the need to encourage and target private capital in the following areas: basic industry, infrastructure, utilities and planned housing construction, financial and social services, trade, defense industry, scientific and technical support, in such "high monopoly industries" as oil and gas, nuclear energy, railways and highways ports, civil airports, general aviation, postal and telecommunications, water, gas and heat supply, mining and exploration of minerals.

For the first time, China's oil and gas industry has opened up to private capital. So, already in August 2010, the China National Oil and Gas Company (CNPC) (Hangzhou, prov. Zhejiang) has proposed 119 investment cooperation projects to private enterprises. The project cost is 600 billion rubles. RMB. The company plans to attract at least a third of this amount from private investors, i.e. 200 billion rubles. RMB ²¹.

At the same time, private capital is encouraged to invest in rapidly developing industries: energy conservation and environmental protection, new generation information technologies, biology, high-level mechanical engineering, new materials and energy sources, high-speed railways, etc.²² The access of private investment to the financial sector is significantly expanding, in particular, to the establishment of private financial institutions: rural and urban financial cooperatives, credit companies, and the activities of commercial banks as shareholders. In addition, the document provides for the participation of private capital in the reorganization of state-owned enterprises, increasing their international competitiveness, as well as in increasing their own opportunities for independent innovation and modernization of their enterprises.

A wider opening up of basic and monopoly industries should play a positive role for the inflow of private investment in material production in the new five-year plan. During the 11th five-year plan, private capital was not yet able to take a prominent place in the monopoly sectors of the Chinese economy, despite the creation of a large number of new jobs in them. So far, for example, the private sector has controlled only 14% of the electricity market, 10% of financial services, 8% of communications and transport, and 7% of water services.²³

Along with a specific list of industries that are encouraged and open to private investment, the second document details 40 work areas for implementing the "new 36 installations". More than 20 ministries and departments, as well as Governments and relevant organizations at the provincial, autonomous region and central city levels, are responsible for overseeing and monitoring the practical use of these installations.

At the same time, the main document indicates that the Government still has to:

- establish the threshold of admission and scale of investment for various sectors of the economy, as well as create conditions for fair competition and equal access to the market;

- clearly define the areas for public investment, since public investment should mainly be used to ensure national security, support and strengthen the life of key industries and the competitiveness of key areas. At the same time, it is assumed that the market is not able to effectively allocate all resources and ensure economic and social stability;

- improve the procedure for allowing private investment in monopoly industries. Expand the scope and scope of private investment participation in various forms of industrial and financial cooperation: by transferring part of the objects on the rights of ownership, lease, equity participation, purchase of shares and other forms of public-private partnership;

- provide appropriate conditions for private capital to have equal access to the equity market, create a mechanism for compensation and state subsidies for bidders entering into leasing agreements, etc., and provide a favorable tax and regulatory environment.

administrative regime and a number of other measures.

The fourth session of the National People's Congress (March 2011) adopted a number of guidelines aimed at further enhancing the role of private national capital in the country's economy during the 12th five-year plan. The session decisions set out the following tasks::

- encourage, support and guide the development of non-social sectors of the economy, create an institutional environment that provides various sectors of the economy with equal access to the components of production based on the law, the opportunity to participate in market competition on an equal basis and be protected by law;

- encourage the investment structure, in particular, to actively implement the" new 36 guidelines " of the State Council of the People's Republic of China on encouraging and guiding non-state investment. Work closely to develop open and transparent criteria for market access, as well as appropriate support policies, so that this access can be practically expanded, overcome all kinds of visible and invisible barriers, encourage and target non-state capital to enter basic production and infrastructure, urban utilities, social services, financial services and other areas;

- support the development of new strategic production facilities, support the development of small and medium-sized businesses, as well as the service industry, actively promote sectoral structural regulation, mergers and restructuring of enterprises and their technical reconstruction;

- accelerate the process of forming innovation potential, identify the role of small and medium-sized enterprises of scientific and technical type. Mobilise enterprises to co-finance commonly used key technologies, encourage them to share risks together and benefit from the achievements. Promote the transformation of scientific and technological achievements into real productive forces;

- encourage non-state enterprises to strengthen independent innovation, transformation and escalation, encourage and lead non-state capital on the path of reorganization and merger, and participate in the reform of state-owned enterprises. Strengthen servicing and targeting of non-State investments, as well as their rationing and management.

The decisions of the fourth session of the National People's Congress pay special attention to the development of labor-intensive industries, services, small and mini-enterprises, as well as scientific and technical enterprises of innovative type in order to maximize the satisfaction of multi-level needs in workplaces.

In order to support the development of small and medium-sized enterprises, it is planned to continue implementing the policy of preferential income taxation for some small, low-profit enterprises.²⁴

All this indicates that in the coming years, China intends to change the way economic growth should be based on scientific and technological progress, improving the skills of workers and innovative management.

As follows from the materials of the 4th session of the NPC of the 11th convocation, a significant place in solving the tasks of the 12th five-year plan is given to the wide use of the economic potential of private enterprise structures.

Having reached a significant scale in recent years, these structures have become an important factor in maintaining and strengthening economic growth in the country, contributing to the transformation of the model of economic development and the creation of an innovative state.

Thus, if before 1979 private and individual pre --

If the Chinese leadership considered entrepreneurship as elements of capitalism that needed to be transformed through cooperation, and then completely eliminated, then at the present stage private national capital is involved in the global economic system of the country as an equal partner, actively participating in solving its socio-economic problems, restructuring the industrial structure, revitalizing urban and rural markets, and increasing employment overcoming the consequences of the international financial and economic crisis.

¹ Jingji zhibao. 19.02.2003; Beijing Review, 1988, N 7. p. 15.

² See for more details: S. A. Voevodin and A. M. Kruglov, "Socialist Transformation of Capitalist Industry and Trade in the People's Republic of China," Moscow, 1959; V. I. Vanin, "State Capitalism in the People's Republic of China," Moscow, 1974, et al.

³ Jingji zhibao. 19.02.2003.

⁴ Zhongguo tongji nianjian-1984. Beijing, 1984, p. 107.

⁵ Resheniye po nekotorykh voprosy istorii KPK so vremya obrazovaniya PRC [Decision on some issues of the CPC's history since the formation of the PRC]. IBAS, N7321, 01.07.1981.

⁶ Zhongguo tongji nianjian-1984. Beijing, 1984, p. 107.

⁷ Ibid.

⁸ Ibid.

⁹ People's Daily. 28.04.2011, item 20.

¹⁰ Struktura ekonomiki Kitay [Structure of the Chinese Economy]. Moscow, Progress Publ., 1984, p. 51.

¹¹ People's Daily. 16.11.1981.

¹² http://russian.people.cora.cn/31518/7060384.html

¹³ Ibidem.

¹⁴ People's Daily. 18.03.2011.

¹⁵ http://russian.people.com.cn/31518/7281644.html

¹⁶ http://russian.people.com.cn/95181/6649346.html

¹⁷ http://russian.people.com.cn/31518/7151545.html

¹⁸ People's Daily. 25.02.2005.

¹⁹ People's Daily. 15.05.2010.

²⁰ http://www.gov.cn/zwgk/2010 - 07/26/content_1663933.htm.

²¹ http://russian.people.com.en/31518/7098226.html

²² http://russian.people.com.en/31518/7134362.html

²³ http://uabankcr.net/daily//2010/05/05/410_0910.shtml

²⁴ People's Daily. 16, 18.03.2011.

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