Reforming the governance structure of China's state‐owned enterprises

Over the last 20 years, China's state-owned enterprises have been the subject of significant reform. As discussed in this article, they were previously state-run work units within the centralized governmental hierarchy, but in recent years they have been transformed in such a way as to have a recognized legal personality. Provision has also been made for them to be reconstituted as modern corporate entities under the Company Law (which came into effect in 1994) and to become an integral component of an appropriately organized system of state asset management. Progress has been slow in this regard, but some positive developments have occurred and, in late 1997, the door was officially opened for some of them to be partially or even fully divested.