ABSTRACT
This chapter focuses on the publicowned enterprises, especially the state-owned enterprises (SOEs). An SOE, according to a World Bank publication, is defined as a government owned productive organization that is expected to earn a significant portion of its revenues from the sale of the goods or services it produces, possesses an accounting system separate from any government agency that controls or supervises it, and is a distinct legal entity. The chapter examines the industrial reform at the micro level, i.e. the enterprise reform, in the Xiamen SEZ from the early 1980s to 1997. A local economist disclosed that in the early 1980s the authorities had to spend up to RMB60 million on such price subsidies each year. This huge financial burden severely handicapped the authorities' ability to carry out infrastructure development, central to the success of the SEZ. Not surprisingly, they chose the removal of price subsidies as the first priority of the enterprise reform.
