The Household Responsibility System allowed peasants to lease land for a fixed period from the collective, provided they delivered to the collective a minimum quota of produce, usually basic grain. They could then sell any surplus they produced, either to the state at government procurement prices or on the newly free market. They were also permitted to retain any profits they might earn.
Reform in Industry
Prior to 1978, enterprises were almost all owned by the state in one form or another. At the top of each sector were the State-owned Enterprises (SOEs), answerable to the national government. Below these were other enterprises reporting to provincial, municipal, or county authorities. Private enterprises, meaning family-run shops, were not allowed until after 1978, and even then they were limited to seven employees.
China's SOEs were typical of large industrial firms in a centrally planned economy. They functioned not only as industrial units but also as social agencies, providing housing, daycare, education, and health care for the workers and their families.
Because SOEs are large industries and focusing on foreign trade, China has a huge surplus.As of 2012, large state-owned enterprises (SOEs) were the backbone of China's economy, producing over 50% of the nation's goods and services, and employing over half of China's workers. Sixty-five of the Chinese companies in the 2012 Fortune Global 500 list were state-owned. Reform efforts were focused on splitting state-owned firms or creating competing state-owned firms—rather than privatization
In China, the majority of investment is carried out by entities that are at least partially state-owned. Most of these are under the control of local governments. Thus booms are primarily the result of perverse incentives at the local-government level. This is the way how they control Foreign direct investment for the best benefit of its people.
3. Deng & Li had their slogan: "Who cares if a cat is black or white, as long as it catches the mice." Meaning they just care about the result.
China story that insulted them from regional crisis
China had huge reserves due to foreign trade done by SOEs, a currency that was not freely convertible, and capital inflows that consisted overwhelmingly of long-term investment and its not to devalue had been a major stabilizing factor for the region.
How China manage its control?
The State Constitution of 1982 specified that: