ABSTRACT
The Chinese government has taken a gradual approach to economic reform, and has been particularly cautious in privatising the state-owned enterprises (SOEs). The government decided to privatise only the small and medium-sized SOEs, through a program called gaizhi. This vague term, which means ‘changing the system’, covers not only privatisation but incorporation, listing on the stock market, and the restructuring of internal and external governance. Through gaizhi more than 80 per cent of enterprises owned by local governments at the level of the county and below have left state control. In the large cities, many small state and collective enterprises, and some large ones, have also been privatised. This qualifies as nothing less than a property rights revolution.
