China has more private business owners

In China’s active market socialism society today, more private enterprises appeared. The number of registered private enterprises were expanded from 1.31 million over 2001 to 3.34 million in 2004. The number increased twice during the two years. These enterprises were mainly located in the eastern coastal region, like Jiangsu, Guangdong, Zhejiang, Shanghai, Shandong, and Beijing. Half of China’s private enterprises are in these six areas. “Private companies are growing pluralistic in main industrial sectors.”

From my experience, I know that before China became market economy, we used a lot moral incentive; however, after China went to market economy, moral incentive did not work very well, so the material incentive had an effect. The victims were the workers in state owned firms, they lost their jobs. Because of soft budget restraint, managers and workers did not have incentive to work hard, some of them even corrupted. I am happy to see China has more and more private business owners, because it will make our market economy more competitive. Although competitive market makes inequality problem even more serious, I think that we are trying to make our “cake” bigger (aggregate profit increase). Even though the income is not equality, at least everyone can have more than before.