Township and Village Enterprises in China

Abstract

Township and Village Enterprises (TVEs) have played a significant role in the growth of the Chinese economy since the economic reforms of 1978. This paper analyses the productive efficiency of a cross section of TVEs in the manufacturing sector, and compares them with those for state-owned enterprises (SOEs) and major international competitors of TVEs. TVEs are found to be much more efficient than comparable SOEs. They are also competitive in the international markets. Their management which responds to market forces and their outward-orientation have contributed to their productive efficiency. The performance of TVEs suggests that efficient management, which successfully exploits the endowments and resources of the country rather than the nature of ownership of production entities, is crucial to the success of manufacturing firms.