The start of economic reform under Prime Minister Zhu Rongji and PresidentDeng Xaoping in the late 1980s was widely seen as the turning point for thetrajectory of Chinese economy. Key to the reform was the increased privateownership of the production of goods and services as well as the opening totrade and foreign direct investment.77 The reason for the push toward privateownership is not so much ideological – China remains a socialist country – butpragmatic. Private-owned enterprises’ (POEs) return on assets has remainedstubbornly higher than that of state-owned enterprises (SOEs) – and not justcentrally owned state enterprises but local state-owned companies, too.78More importantly, state-owned companies having undergone partial privateprivatization, and the so-called mixed ownership companies also tend to havehigh returns on assets. In other words, China’s economic success cannot beunderstood without the dynamism of its private sector and its openness tothe rest of the world.
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