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Under the policy of establishing Chinese featured socialist economy put forward by Xiaoping Deng, China has advanced clearly along two processes-- marketization and privatization. During the earlier period of reforming before 1984, the level of economy national wide exactly was improved. However, the reform of state enterprises relapsed into a puzzledom in this process, and the reform of price encountered a serious impingement. When the continuously ahead process of marketization and privatization was in the choke point where the economic growth lost substantial support, enterprises in villages and towns (TVEs) grew surprisingly rapidly, which revivified the reform of China. Those TVEs, to some extent, acted as an important role to stabilize the relationship between the nation and the society. After several times of review and observation of experimental units, in 1984 the center government of China finally dismissed the People¡¦s communities that were set up in the planned economy system, and took big strides to the market oriented organization system. Seeing the significant change in China, the study makes a thorough literature review. Basing on the review, the study first presumes this reform relates to the change of the relationship between the nation and the society. Then, according to the theory of country-centered or society-centered organization evolution, the study concludes this reform is exactly based on the adjustment of the relationship between the nation and the society. In details, this adjustment of relationship between the nation and the society mainly represents itself through the reform of organizational system that is called as a middle variable. This middle variable is influenced by the environment and reciprocally influences the environment. Therefore, in the earlier period of national transition when the market-oriented system was executed without deviating from the organization system of People¡¦s communities, the failure of market and failure of government emerged with the economic growth, which thereby influenced the relationship between the nation and the society. In order to prevent this related effects exacerbated and to avoid using the policy of high-handed control at the same time, the center government achieved the organization system transition from People¡¦s community to the modern enterprises in villages and towns, and achieved the whole economic reform depending on the achievements of those TVEs, thus achieved the stable relationship between the nation and the society.

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