one of the legacies that China carried into the communist era is the country’s population, which for centuries had been the world’s largest (Maddison 2007). In 1949 it totaled 542 million (Xu Dixin 1988, 493). In the ensuing three decades the population experienced substantial growth, surpassing 1 billion in 1981. To understand the role of the demographic forces associated with this growth in the causal mechanisms of privatization, it is important to consider several factors that influenced the structure and change of the population under Mao, which had long-lasting impact on the agendas and constraints of policymaking—especially at the national level—in the post-Mao era.
First, the 1950s and 1960s progressed in an essentially nonrestrictive policy environment for the growth of the population. Second, the economic development strategies of the state emphasized capital goods industries and made the underdeveloped rural economy the main repository for absorbing and supporting the vast majority of the growing population, resulting in pent-up demand for alternative avenues and spaces of job creation under increasing resource constraints. Third, the initially large base and young age structure of the population, coupled with the impact of the Maoist population and development policies, shaped the timing for the onset and persistence of the tidal wave of employment pressures in the late 1970s and thereafter, and for the pressing need to address the swelling size of retiring cohorts during the 1990s and beyond. Fourth, the politics during the Cultural Revolution (1966-1976) led to peculiar developments, such as restructuring of primary and secondary education and rustication of urban youths, that exacerbated the situation of job creation at the end of the Mao era, thereby triggering the initial decision by the central leadership to legalize self-employment in 1980. During the three decades following the end of the Mao era, the demographic pressures converging from these different directions forced the state to look beyond the public sector for solutions to job creation, thereby expanding the institutional space for private economic activities.