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 Reform in state-owned enterprises in China started from 1978 when six SOEs in Sichuan province were selected for a reform to become more independent and increasing their enterprises autonomy (Hay, et al, 1994).

Problems of SOEs

Before reform, the state played an important role in organizing the production and consumption on the economic system and also controls their employees by the Chinese traditional system called danwei (work unit). The work unit was important to Chinese people daily life as Lu and Perry (1997, p.3) mentioned that: "one could be without a job, but not without a danwei." (Lu, Perry, 1997, p.3) Through work unit in SOEs, they offered all employees a social welfare benefits, inexpensive housing, free medical care and retirement pensions. https://www.51lunwen.org/economics/ Once people were assigned to the enterprises on a permanent contract, they were expected to work there for their entire life. The employers had responsibilities to look after them when their retired. This job secure system was often referred as 'iron rice bowl' (Tie fan wan) which proved a huge burden on SOEs (Wang, 2004). Therefore these become a heavy social burdens for the government and led to an increasingly of less competitive compared to the non-state sector (Gu, 2001).

The other problem of SOEs is over-staffed. SOEs need to achieve large scale of de-staffing in order to achieve competitiveness. All the enterprises plan to cut of their worker in order to reduce costs, improve productivity and make them can compete internationally (Morris, et al, 2002). Large scales of lay-off have been taken since 1997 (Hassard, et al, 2002).留学生论文网

Before reform, SOEs were not an independent enterprise and could not make their own management decisions (Komiya, 1987). SOEs had little discretion over their business, all decided were made by the government. There are poor performances in terms of the growth of total factor productivity. The enormous burden on national budget was created by an increasingly inefficient SOEs. They use 70% of labour but only make 40% of output, so this is a statistic sign of the SOEs inefficient management (Satya, 1998). Moreover, SOEs had to submit all there profits to the government and when incurring looses they received the subsidies from the government (Otsuka, et al, 1998). The government had to shoulder some failures resulted from the SOEs inefficient management. In order to prevent the enterprises from the bankruptcy and avoid social unstability, the government gives them the loan. A large number of these loans become a large burden of non-performing loans to the state commercial banks (Yuan, 2007). According to Yuan, from mid to late 1990s, SOEs were accouting for less than half of net asset growth in China's industry, but they are consuming 70-80% of credits from the state banks. Even in 2003, the loan to SOEs from state bank gone down to about 50% of total state banks loan but it's still very high amount and if the loans were gone down, the growth may be gone down too.留学生论文网 Consequently, the ratio between the asset growth and loan credit are still the same amount (Yuan, 2007). Many SOEs can survive just because of the government's protection and subsidies (Nie, 2005).

Reform of SOEs

During the 1980s the 'Contract Responsibility System' (CRS) was raised to solve the SOEs problems. The first step was allow the enterprises to retain certain profits and no lo本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。