However, enterprise reform does not seem to have fully achieved the original objective of transforming the state owned enterprises (SOEs) into efficient economic identities. In fact, the reform of the state-owned enterprises has been slow and the SOEs continue to have poor economic performance. It is not until recent years that the situation has improved.

The primary obstacle for state enterprise reform is the lack of efficiency in state sectors. Even so, it is difficult to specify a decisive cause for that. Instead, it would be more appropriate to state that the SOEs' inefficiency is generated by various intertwined elements rather than by one specific factor.

This paper is going to address some major obstacles encountered by the state enterprise reform. Nevertheless, the main focus will be on one specific topic only --- the management autonomy for enterprises.

Problem Child: The State Enterprise Reform

The reform of the SOEs is indispensable for the achievement of China's economic reform. Without t

China¡¦s state owned enterprises have experienced significant transformation in the past 25 years. Market mechanisms, replacing the planning system, becomes increasing important in determining SOEs¡¦ production. The state gradually withdraws from most of the decision making for enterprises¡¦ daily operation and incentives were restructured to stimulate employees¡¦ efforts.

Theoretically, SOEs are owned by the state but operated by managers (or employees). From an economic point of view, it will be more efficient if the managers have the right to make decisions because they know the enterprises better than state bureaucrats and can respond to changes in the environment more quickly. Not only does the continue interference by the government hamper the development of markets, but the close ties of the SOEs to the state administrative apparatus also prohibit the SOEs from making fundamental changes. The result of this is widespread management inefficiency. Also, since SOEs receive preferential treatment from the government, including large financial subsidies, their poor performance has a negative impact on various aspects of China¡¦s economic activity.

Some topics in this essay:
Enterprise Reform, Theoretically SOEs, McNally Christopher, Conclusion China¡¦s, Party Congress, , Responsibility System, Huang Duncan, Wang Yijiang, Enterprise Autonomy, enterprise reform, enterprise autonomy, economy system, mcnally christopher 2002, policy burdens, mcnally christopher, christopher 2002, soe reform, shareholding system, performing soes, worst performing, worst performing soes, management autonomy enterprises, well-functioning market system, child enterprise reform,