The SOE reform in China/周大勇(16)
2) The capability of private sector were unconvinced before the 15th conference of CPP. The private economic sector has been viewed as beneficial supplement of the socialism economy. There were previously suspect about the ability and contribution of the non-state owned sector. As we have seen in Fig 1, the non-stated sector increased very rapidly and accumulated tremendous properties in relative short period, the state had to affirm the legal position of the private sectors. Only after the 1994, when the Party decided to let some medium and small SOEs contracted out or leased to private, the non-state economy began to obtain the equity right and chance as state-owned sector.
3) When the whole economic environments are taken into account, then we can find that there were no condition to reduce the some public burdens of SOE, because before the establishment of a consummate legal system and the social security system, SOE must act as the natural insurance for the citizens. The private economic sector pursues only profit, thus it is not tend to take the responsibility of accommodation more labor forces. In the case that the economic situation turns worse or the reform was not successful or fail, the SOEs can still keep the society from collapse even through inefficient operation.
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