Based on anthropological fieldwork among urban Chinese household businesses during 1987,1988 and 1989, this article addresses the issue of employment generation and economic growth in the Chinese individual economy. Although a vast potential evidently exists, it is argued that the cultural conditions for small private enterprise in Chinese society must be accounted for alongside the objective, economic conditions when estimating overall growth potential. Small private enterprise is still faced with ideologically founded discrimination coinciding with widespread social debasement. Private businesspeople were earlier stigmatized as capitalist-roaders and turned into scapegoats for retarded development, and similar trends have survived under the disguise of decentralized control. While central government has engaged in massive media campaigns to encourage private enterprise, insufficient attention has been given to the development of a legal framework, the allocation of resources, housing, medical care etc. (World Bank, 1985. p. 4), which were all left in the hands of local authorities, less open to reform. In spite of the convincing incomes it generates, private enterprise is still highly controversial in Chinese society.