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Reasons Why Co-Optation With Capitalists

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The final section of this paper discusses the ideological and practical reasons why co-optation with the Capitalists seems the rational decision. The party since the early reform period prior to the Tiananmen Incident believed private business could perform several functions the party and state could regulate ad hoc. It believed private businesses could absorb many of the unemployed, provide a new source of revenue through taxation, and through competition against SOEs, the latter would improve its efficiency and productivity. The main worry for the Party during that time was the rising costs of living, which meant citizens could no longer afford to be unemployed, thus having the private sector absorb the unemployed became an optimal solution.

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