China has experimented with two strategies of reform of its state-owned enterprises (SOE). One is diversification of SOEs’ ownership through introducing non-state sources of investment. Another is to improve the management of SOEs by granting SOEs’ managers autonomy and their employees...

There are two schools of thoughts on the important issue of reforming state-owned enterprises (SOEs). We call them the ownership school and the management school. The ownership school argues that the key to the reform is to diversify SOEs' ownership, including privatization, in order to...