Township and Village Enterprises
Although Chinese paramount leader Deng Xiaoping was reported to have said that TVEs "appear(ed) out of nowhere" in 1987, the industrial development in rural China could be traced back to as early as 1950s.
[2] The political turmoil between late 1950s and early 1960s, like the Great Leap Forward, at one time halted the development of rural enterprises and some were suspended.
[3] During this period, however, rural enterprises were restricted to certain industrial and agricultural sections, including the production of iron, steel, cement, chemical fertilizer, hydroelectric power, and farm tools.
[8] After Deng Xiaoping's Southern Tour from 1992 to 1996, the township enterprises entered a phase of accelerated development and emerged with a new image following the transition and restructuring.
[5]: 51 TVEs are solely responsible for profits and losses, obtain all production factors (capital, raw materials, technology, personnel, and so on) from the market, use independent distribution and supply channels and operated under flexible management with little interference of government, etc.
[18] The political institutional environment favored these “public” enterprises during the early years of reform, since private businesses faced severe restrictions and discrimination in terms of resources and regulations.
[19] The TVEs moved in to take advantage of the gaps left in the market by the State-Owned Enterprises to produce colorful elastic bands, ID card holders, etc.
The TVEs benefited from first mover advantage as there was no competition in the early stages from private firms due to restrictions on the markets.
[20] The pent-up demand in China for a host of products provided ample profit-making opportunities for enterprises operating at this early juncture.
Official hostility toward Chinese entrepreneurship during the period of Jiang Zemin's administration caused many to go out of business, with some estimates suggesting that about 30 percent have gone bankrupt.
[24] According to the World Health Organization (WHO) and United Nations Development Programme (UNDP), TVEs in China are responsible for more than 10 billion metric tons of industrial waste water, which is more than half of the total.
[25] According to World bank (1997), It also emit 60% of China's air and water pollution, endangering human health and posing a serious threat to agro-ecosystems.
In general, the analysis found that people living near TVEs have a more significant rate of diseases and a shorter lifetime; the unregulated activities made Chinese rural areas pay a huge price for environmental damage.
[27] The fiscal decentralization in 1984 allowed local governments to retain profits from TVEs, incentivizing officials to foster economic growth as their promotions were tied to revenue generation.
[28] This flexibility allowed TVEs to adjust to market conditions, despite the state's control over enterprise ownership and price regulations.
