Toward "the Modern Corporation": Recent Developments in the Institutional Reform of State-Owned Enterprises in Mainland China

Abstract

At the Chinese Communist Party`s (CCP`s) Fifteenth Congress, held in September 1997, the Central Committee endorsed both the corporatization of large state-owned enterprises (SOEs) and the restructuring of small SOEs and decided to step up the speed of reforms. The central component of the government`s reform program is ”zhuada, fangxiao” (”grasping the big, enlivening the small”). First, the government is creating a number of large enterprises and enterprise groups through encouraging mergers in strategic sectors. Second, it is encouraging small and medium-sized SOEs to experiment with ownership reform. The aim of this paper is to review these recent initiatives and evaluate the problems still confronting state- sector reform. Within this general framework, a specific objective of the paper is to provide information on recent developments in areas (such as bankruptcies, mergers, and shareholding reform) where the government is experimenting with new institutional forms.