Self-employment with Chinese characteristics: The forgotten engine of rural China's growth

This article sketches a picture of the self-employment sector in rural China and examines the nature of its emergence. Using a randomly selected, nationally representative household-level data set that contains detailed information on household self-employment activities, this article provides evidence that although the self-employed enterprises are small, they have grown fast, operate as relatively complex businesses, and perform well in a financially healthy way. These results, taken together with the pattern of the emergence of self-employed enterprises across China's regions, reveal that the expansion of self-employment is not symptomatic of a failing economy; instead it is a component of the dynamic development process that characterizes rural China during its reform period.