Abstract

Corporations controlled by the Chinese government originated as state-owned enterprises (SOEs) and still constitute the foundation of the Chinese economy. In addition to their profit-maximization goal, they are expected to contribute to the national welfare, maintain a harmonious society, and ensure sustainable economic development. They thus pursue both firm goals and national goals. This dual goal has shaped corporate governance under state control. While Chinese SOE performance has improved in recent years, certain problems remain. This Article suggests how the governance of these firms can be reformed in line with their dual goal.