ABSTRACT
Since the beginning of the 1990s, the reform of state-owned enterprises (SOEs) has been facing formidable challenges. The first challenge is the continued decline in the economic performance of SOEs, particularly since the latter half of 1997. The second challenge is that, along with the deepening or economic reforms, SOEs have been trapped into a dilemma between fulfilling their social obligations and combating market forces. The third challenge to SOEs reforms are the difficulty of 'separating government from enterprises', as a clearly defined government-enterprise relationship is still lacking. The ambiguous relationship between SOEs and the government has further contributed to the prolonged decline in the economic performance of the SOEs. Finally, there is the belief that current difficulties in SOEs reforms are the result of conflicting interests. In sum, SOEs reforms in China still have a long way to go before accomplishing the goal of turning themselves into modern enterprises.
