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Abstract on Bamboo capitalism, Mar 10th 2011, The Economist

China has become the world’s second-largest economy and in many ways the most
dynamic. This growth can be attributed to both government’s efforts to eradicate
physical and technological obstacles and more importantly to the new breed of vigorous
private entrepreneurs: a fast-growing thicket of bamboo capitalism. More than 90% of
China’s companies are private. The average return on equity provided by the private
entrepreneurs is 10% higher than the modest 4% provided by state-owned companies.
These businesses are also very flexible and are able to adapt to the ever changing
needs of the market. But these private businesses are vulnerable to inconsistent
business laws and bureaucracy in China.  If the government can provide a proper legal
framework and provide loans to new businesses, it would make the system a very
sustainable business model. “State owned Capitalism” has so far worked wonders
whenever the state has stood back and let capitalism take its course.

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