Reforming China's State-Owned Enterprises

A visiting scholar discusses whether China’s corporate reforms are for real.


April 15, 2008 (NEW YORK) -- Visiting Scholar Ding Ding, Professor and Associate Dean of China’s University of International Business and Economics, reviewed the past several decades of reform in China’s Company Law and regulation of State-owned enterprises in a lunch presentation to students and faculty on Tuesday, April 15.

In 1993, China issued its first Company Law, a series of rules and regulations that sought to guide the country in its transition from a rigid state-run economy. While there have been subsequent revisions, “some believe that the law continues to protect state-owned enterprises,” Ding said. Many of these state-owned companies are huge and unwieldy — Sinopec, a petrochemical company, employs more than 1 million — and China has struggled with how best to modernize them.

Ding looked at one recent example of reform, whereby the government has tasked “outside directors” with overseeing the performance of state-owned enterprises. These directors evaluate management, determine compensation and make hiring and firing decisions. But it remains unclear just how independent these outside directors are. “It’s too early to evaluate if these outside directors are effective,” she said.

Ding’s presentation was part of a series of guest lectures hosted by the Law School’s Center for Chinese Legal Studies.

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