As the economist Joseph Schumpeter saw it, creative destruction is a positive force, driving weaker companies to disappear and be replaced by more innovative ones. The Gavekal report, written by Indiana University political scientist Scott Kennedy, looks at statistics showing annual registration of new enterprises and company closures compiled by China's State Administration for Industry and Commerce. Indeed, the numbers show that last year 11.3 million new companies were registered in China, with 95% of them private enterprises or so-called getihu, tiny firms also known as sole proprietorships.