Mixed Ownership Reform and Corporate Governance in China’s State-Owned Enterprises

32 Pages Posted: 29 Oct 2019 Last revised: 2 Nov 2019

See all articles by Jiangyu Wang

Jiangyu Wang

National University of Singapore (NUS) - Faculty of Law

Cheng Han Tan

National University of Singapore (NUS) - Faculty of Law

Date Written: October 27, 2019

Abstract

This Article provides an early assessment of the impact on corporate governance of the most recent wave of SOE reform announced by the CCP in 2013, officially known as the mixed-ownership reform (MOR). It offers a comprehensive and detailed account of the background, policy and regulatory frameworks, and rationale of the MOR in light of the history of ownership reform in China. It also conducts empirical studies of the change in ownership and board composition in over 30 SOEs which have recently completed their MOR experiments, as well as, several case studies including China Unicom’s MOR. We observe that MOR’s impact on SOE corporate governance has been embodied in the “retreat of the state”, the “advance of the (Chinese Communist) Party”, and a limited yet emerging separation of power between the Party and the board in SOEs. On the rationale, we argue that the MOR programme is driven by three current beliefs of the Chinese Party-state on the future of SOEs in China. First, ownership and ownership reform matter. Second, sharing control, rather than dominance by a single state shareholder, improves both the efficiency and governance of SOEs. Third, the MOR was designed to develop partnerships or alliances between the state shareholders and strategic investors in order to help the post-MOR state enterprises improve their efficiency and enhance market opportunities.

Keywords: State owned enterprises (SOEs); corporate governance; mixed-ownership reform; SOE reform; China

JEL Classification: K22; G32; G34; G38

Suggested Citation

Wang, JiangYu and Tan, Cheng Han, Mixed Ownership Reform and Corporate Governance in China’s State-Owned Enterprises (October 27, 2019). NUS Law Working Paper No. 2019/025; Vanderbilt Journal of Transnational Law, Vol. 53, 2020. Available at SSRN: https://ssrn.com/abstract=3476155

JiangYu Wang (Contact Author)

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

Cheng Han Tan

National University of Singapore (NUS) - Faculty of Law ( email )

469G Bukit Timah Road
Eu Tong Sen Building
Singapore, 259776
Singapore

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