Over the past 30 years, the development of the private sector in China has been marked by rapid growth and development (Zheng and Yang 2). In the past, the private sector in China was constrained, but over the period mentioned, the sector has developed to become an important factor in the economic development in the country. The main challenges that faced the development of the private sector in China included the nature of the sector; whether it was socialist or capitalist, and whether the private sector should have voting rights in the Communist regime. Other challenges included the protection of private property and the issue of market entry for private enterprises. However, the reform policy adopted by China, coupled with the increasing adoption of the open-door policy has helped in the continued improvement of the private sector.
Essentially, the open door policy refers to the allowance of equitable trade opportunities to all enterprises and countries in the economic environment (Tersptra, Tersptra, Xueli and Egri 12). In China, the development of the open-door policy has greatly helped in the development of the private sector, with the granting of measures that support the private sector. The Chinese economy did not previously support the use of the open-door policy, since it meant that employees had access to the management in enterprises, and therefore, had an option to change or improve management techniques.
The development of the private enterprise in China has been marked by different policies by the Chinese government. The first factor that the government focused on in the private sector was the introduction of flexible interest rates, a factor that expanded the lending rate band for small and medium-sized enterprises. The second factor is the improvement of accounting and audit practices, which were previously targeted as the detriment in the development of the private sector. The government has also embarked on a mission to improve the capital markets, which will help
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