Politically, the post-Tiananmen conservative leadership mounted a nationwide crackdown on China's private sector. The prevailing economic policy in the 1990s was to favor the urban areas over the rural areas and to favor foreign capitalists--FDI--over indigenous capitalists.\
Fittingly, 1989 marked both the decadal and policy turning points.
In the 1990s, China reversed many of its productive policies of the 1980s, with real consequences.
The barriers to entry or to expansion of rural entrepreneurship increased profits to incumbent businesses, thus explaining why non-farm business income increased in the 1990s.
The TVEs succeeded in the 1980s and failed in the 1990s for exactly the same reason--- that they were substantially private. It was the national policy environment that changed between the two decades.
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