Like other neighboring countries in Northeast Asia, China's economic growth has also been dictated by the government. China roots its strategy in the work of Friedrich List, a classical economist, who argues that government intervention is important to an economy's growth. In the early 1950's, nearly all the domestic enterprises in China were state-owned and the government use to set prices for key commodities, control the level and general distribution of investment funds, determine output targets for major enterprises, allocate energy resources, set wage levels and employment targets, and steer the financial policy and banking system. However, since 1978, China has conducted many economic reforms which has lessened the government's role by a great degree. While the role of the government in managing the economy has reduced and the role of both private enterprise and market forces has increased, the government still maintains a major role in the urban economy. There are three major economic policies which determine China 's economic model – import control, export subsidies and foreign direct investment (FDI) attraction. Government, under the control of the Chinese Communist Party (CCP), is head of the economic growth, creation of policies and intervention into the markets when necessary. For example, the government of China always devalues its currency to achieve export growth. China has a unique economic development model and the government intervention is also different from other economies. In China, government influences the market through State-owned Enterprises (SEOs). These enterprises are owned by local and provincial governments, and contribute massively to China's tax revenues and national revenues and also play a role in implementing economic policies. .
SOEs/SHEs (State-owned Enterprises/State Holding Enterprises) are defined as enterprises whose majority shares are owned by the government.