World Bank - TVE's: China's largest economic success

Wenzhou
The story of China's economic growth is largely the story of the township and village enterprises (TVE's) that have outrun both state-owned and foreign invested companies. Two region were singled out by Zhang Bujiang of the ministry of Agriculture during the ongoing World Bank Conference in Shanghai to illustrate this development: South Jiangsu province and the city of Wenzhou.
Both areas followed a very different path, he says. In Jiangsu the local authorities took the initiative to develop industries to solve the problem of surplus labor and get money into the region and into the agriculture. Later the goverments changed their strategy in attracting outside investment by creating a favorable investment climate. Suzhou and Nanjing are two cities who followed that trend successfully.
This part of China enjoyed good transportation, was relatively rich and had a well educated population.
Wenzhou based its current prosperity on a long-time maritime trade tradition, starting off with handicraft products. Wenzhou was rather isolated in a mountainous part of Zhejiang province.Wenzhou now is the major producer of many relative simple products, like shoes, lighters.
Both regions, says Zhang, are now studied all over the country as they have successfully elevated themselves out of poverty. Institutional reform is the basis for the success in both regions, says Zhang. In South Jiangsu the government started off as an enterpreneur and has been instrumental in building up the current investment climate. In Wenzhou the government was protecting private property and created a favorable market order.
TVE's have grown on average 20 percent per year in the past 25 years, said Zhang. They created 135 million jobs on the country side and it percentage in the total employment in CHina grew from nine to 28 percent. TVE's have plouged 200 billion Renminbi back into the modernization of the agriculture.
I would firmy disagree with his analysis of the development of Wenzhou. The problem at this kind of conferences is that government officials dominate and tend to find themselves more important than they sometimes are. In Wenzhou the isolation has protected the region against much of the negative fall-out of policies and people had a tradition of doing their own thing without much interference. Most money in the region comes from overseas Chinese that started to migrate to Europe about ninety years ago to avoid the rampant poverty. In the past fifteen years those now sometimes wealthy emigres redirect they savings to their home region and have triggered off its economic development much more than government policies.