The Chinese economy is no longer the state-owned and state-managed system that it was when I first visited more than 30 years ago. In those days, there was no private enterprise, and it was illegal for anyone but the government or a state-owned enterprise to hire an employee. Today, only 20% of employees in China work for SOEs. The rest of the Chinese economy is dynamic, decentralized, and privately owned. American multinational companies and other foreign firms are an important part of the economic scene...
The Chinese government is therefore considering several policies to increase the pace of urbanization, including the creation of several new large cities to accommodate some of the 600 million individuals who still live in rural China. Similarly, the government will phase out the hukou system of residency permits that now prevents migrants to the cities from obtaining full health care and education benefits.
A third policy change aimed at promoting urbanization will be to allow Chinese farmers to sell their land rights at realistic market prices, thereby increasing their incentive to cash out and move. And the introduction of a Western-style rental market will allow families without substantial cash or parental support to move to cities (where families currently must purchase their apartments).
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