Township and Village Enterprises in China

In the Chinese context, Township and Village Enterprises (TVEs) are heterogenous group of enterprises that have played a significant role in the industrialization of that country since the 1970s. Generally, when these enterprises became a part of China’s industrial growth, ownership of TVEs was dispersed across all members of a local community, with ownership shares being non-transferable. TVEs were substantially under local government control, with the benefits to the community being returned as wages or public services. With the prices or distribution of certain inputs controlled also through government, the success of some TVEs could be partially attributed to being connected to the planning system via local government. Various reforms have tried to address concerns over the somewhat nebulously defined property rights in TVEs over the years. Given the increasing demands on local government finances throughout the 1990s, the pressures on successful TVEs to provide more resources to local governments to fund services has resulted in an increasingly difficult environment for them.

The structure of TVEs in China owes much to the particular bias towards public, rather than private, ownership of assets during the country’s development. Rather than being a strictly defined class of enterprises, TVEs encompass a wide variety of ownership structures that differ depending on the local circumstances. Nevertheless, through subsequent decades of economic reforms, more and more TVEs are being privatized, management duties are increasingly being separated from ownership, and the ownership of assets held by the TVEs are being more strictly defined.


Wei Zou (2003), “The Changing Face of Rural Enterprises”, China Perspectives, available online at