improve living standards, develop a more collective economy and finance investment in agriculture. $ ^{50} $ In January 1983, $ ^{51} $ China declared that rural factories were important to introduce a commodity economy and solve the excess labor issue in the rural areas. They also positioned the rural enterprises as a key of rebuilding the rural economic structure. In January 1984, China clearly defined the necessity of developing rural enterprises in an official document. $ ^{52} $

Since then, TVEs have accelerated their development. TVEs utilized a lot of rural resources like agricultural products and excess labor power. TVEs can contribute a lot in the development of rural villages, like increasing rural income and restructuring the rural economy.

Though TVEs played an important role in the rural economy, they were nothing but “outsiders” in the official command system. During the tightening policy period from 1989 to 1991, TVEs became the object of this policy, and the total number of TVEs and TVEs' employees decreased. $ ^{53} $

These few years from 1992, the official treatment to TVEs became much better. They are now creating references and lessons for SOEs' reform. TVEs are operated completely under a market system, and show the future enterprise system. Now, TVEs are functioning as a key factor not only in the rural economy but also in China's transition to a complete market economy.

## 2 -2 Open Door Policy

## 2 -2-1 Brief Overview of the Opening

After the Cultural Revolution, the Third Plenum of the 11th Party Congress was held in December 1978. In this Plenum, they decided not only to reform their economy, but to make the transition to an open system from the former closed economy.

Open policy first began from the idea of establishing “Special Export Zones” in Guangdong and Fujian provinces in 1979. Soon, this idea changed to “Special Economic Zones (SEZ),” realized in four places. This terminated the first stage. The next step was composed of “Fourteen Coastal Open Cities.” $ ^{54} $ The “Coastal Economic Open Area” $ ^{55} $ is the symbol of the third stage.

In March 1988, the “Coastal Area Economic Development Strategy” appeared. This idea is based on the perception of the strong necessity to join the world economy. This strategy expressed the importance of labor-intensive industries, enlarged the processing trade, and pulled more foreign investment into China. $ ^{56} $ In 1989, there was a change in the situation. A two-year tightening period began, but the basic trend of the opening policies has not changed since the strategy was developed. China has re-accelerated this policy since 1992.

## 2 -2-2 Roles and Meaning of the Opening Policy

In the beginning of those years, the People’s Republic of China got a seat in international organizations like the IMF and the World Bank. $ ^{57} $

The purposes of China’s opening policies are clear. Under the newer policy, “opening to the outside” is defined as a basic policy to achieve modernization. Through the opening, China seeks to improve production by introducing foreign investment and technologies. $ ^{58} $ The SEZ was a key point, and was characterized as “four windows” to the outside. The four