For the first three decades of the People’s Republic, the Chinese economy consisted solely of state-owned or collectively owned enterprises.The emergence of private businesses following China’s reform and opening-up in 1978 ushered in a private economy that has since grown to account for up to 50 percent of the country’s GDP,70 percent of its jobs and 30-40 percent of its tax revenue. However,2008 has been a challenging year for China’s private enterprises,particularly small and medium-sized ones,as rising labor and raw material costs,the appreciation of the RMB,and a downturn in exports caused by the U.S.sub-prime loan crisis have combined to drive some out of business,and to lead others to shift from conventional manufacturing to technology-intensive production. For the first three decades of the People’s Republic, the Chinese economy consisted solely of state-owned or specifically owned enterprises. The emergence of private businesses following China’s reform and opening-up in 1978 ushered in a private economy that has had grown to account for However, 2008 has been a challenging year for China’s private enterprises, particularly small and medium-sized ones, as rising labor and raw material costs, the appreciation of the RMB, and downturn in exports caused by the USsub-prime loan crisis have combined to drive some out of business, and to lead others to shift from conventional manufacturing to technology-intensive production.