ABSTRACT

A central objective of China’s reform of state enterprises, begun cautiously in the early 1980s, has been to decentralize decision making from the planning authorities to enterprise management. This chapter presents the result of a study of decision levels for six state enterprises in Beijing during 1985, 1988 and 1993. Results show that

the enterprises now enjoy autonomy of decision making for most issues and bureaux are kept separate from enterprise operations;

a new governance structure has emerged within large industrial firms, where strategic decisions are now taken by the headquarters or the board, which has replaced the bureau as the managerial authority;

within enterprise management the trend is to delegate less, as the directors and senior executives exert more control over activities.

The progress of the decentralization programme has been accomplished by separating the government from management, and a hybrid economy has appeared in which the state more frequently applies regulatory measures and exerts its control over infrastructure to administer both the enterprises and economic relations governing transactions. As the enterprises are now more exposed to market transactions, decision making has become concentrated at the director and executive levels. These findings highlight the growth of strategic business decision making and the development of a professional management class in China.