Employee Ownership in Chinese Rural Industry and Lessons from Comparison to the Russian Case

The dichotomous nature of Chinese rural industry is explored. The central fiscal policy change of the reform era that has given rise to the general township-and-village enterprise form remote from major metropolitan areas, is clarified. The traditional socialist form of state-owned enterprises of the rural areas surrounding large cities is described and the capital constraints upon both sub-categories that have prompted stock capitalization and employee ownership are analyzed. The diversity of ownership and management systems that have developed among both township-and-village enterprises and stateowned enterprises is discussed. China's grass-roots, experimental, "inductive" approach to enterprise reform is contrasted with Russia's top-to-bottom, "deductive" approach. The indigenous and gradualist character of Chinese reform is compared to the externally influenced and "big bang" character of Russian reform.