Corporate Governance in China: Then and Now

Abstract

Corporate governance has become a globally debated topic. As multinational corporations enter new global markets, complications abound due to the myriad of corporate governance rules existing among the various legal systems. One example of a new market becoming more available to American investment is the Chinese market. In light of both the grant of permanent normal trade relations to China and China's recent membership in the World Trade Organization, the American business community is apt to find more opportunity for investment in China.

American investors will likely be increasingly interested in understanding the current Chinese corporate governance regime as they consider the Chinese market for investment of their assets. The goal of this paper is to provide an analysis of the corporate governance system in China and offer some suggestions for improvement to make the Chinese market more attractive to foreign investors.

This paper is organized as follows: Part I provides general background information on the historical corporate governance structures prevalent in China. Part II analyzes current governance issues, in particular those occurring in the context of the corporatization of China's State-owned enterprises. Part III offers proposals for reform. Part IV contains our concluding remarks.