The Financial Impact of Ownership Reform on State-owned Enterprises in China

State-owned enterprise reform in China has progressed through an extended and rocky path. Basically, state-owned enterprises (SOEs) are created to shoulder commercial activities on behalf of the government. The government may accept full or partial proprietorship of a SOE, which is usually allowed to take part in specific activities. Feasibly, the major driver for SOEs has been the introduction of ownership reform leading to competition across China's changing economy; both the efflux of contemporary types of domestic ownership and the burgeoning ingress to technology and business methods from abroad. In China, the Chinese government manages a large number of SOEs that administer strategic sectors as well as banking, and maintains policies that provide favourable treatment of these firms. By spotlighting the public good feature of China's SOEs, this paper accentuates the financial impact of ownership reform on SOE in China. The paper reviews the phases of the reform of China's SOE sector over the past 30 years, reflecting on the literatures that narrates the intentions, achievements, and shortfalls of China's reform program. The paper reviews recent and some old literatures and examines the financial impact of ownership reform on SOE in China, including the rational of the guidelines to clearly distinguish between the public service and commercial mission of individual SOEs, so that their financial impact can be visible.