Abstract
Unlike other countries, sole traders in China have conventionally been defined in law in terms of “households” or hu, of which there are two types: individual industrial and commercial households and rural contractual management households. The former are currently the main legal sole traders in towns and cities, while the latter are mainly farmers in rural areas who engage in individual business. The concept of the household, as the vehicle for the two types of sole trader in China, stresses the collective, group, and family nature of sole traders and is not the simple sum of individual interests. This article explores the emergence of households as vehicles for individual businesses, examines the deep-rooted reasons for their adoption, and considers the debates over their ongoing relevance and reform. The article concludes by suggesting that China’s policymakers have chosen to pursue institutional reform in a moderate and pragmatic way, prioritizing order and incremental changes in order to minimize the impact of institutional change on society, strengthen institutional expectations, and highlight institutional stability. The example of the “household” provides insights into the process of legal reform and change in China more generally.
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