The Struggle over Ownership: How the Reform of State-owned Enterprises Changed China

Abstract

Events in the 1980s became the driving force behind state-owned enterprise (SOE) restructuring in the 1990s and beyond. In particular, the 1992 decision to seek listings for state-owned enterprises overseas had a tremendous impact on China's politics, economy and society. It may have been inevitable that the financial surgery on state enterprises would have serious social consequences. The assumptions behind this effort to create national champions, however, also defined the limitations on the Chinese government's response to the 2008 global financial crisis that broke out on the thirtieth anniversary of the 'reform and opening' policy. While SOE reform may not be the single most important determinant of how China has developed, it has had a unique directional impact by implanting the core of the Western financial system inside the Chinese state. This paper seeks to briefly review the evolution of corporate reform and show how Western capitalism has made its broader impact.