ABSTRACT
China has won praise for its gradualist, pragmatic reform path since 1978, particularly in comparison with the countries of Eastern Europe and the former Soviet Union (EEFSU) (Child, 1994; Nolan, 1995). But successful though it has been to date, the reform programme has now come to the point where all the relatively easy and less controversial steps have already been taken, and what remains to be tackled are much more difficult and politically sensitive issues such as employment restructuring, ownership and property rights issues, and the relationships between state-owned enterprises (SOEs) and central and local government. The very nature of the SOE in pre-1978 China means that this stage of reform is inextricably bound up with other wide-ranging reforms such as the abolition of subsidized housing and the effort to set up an urban welfare state in China under local government auspices. It is also occurring at a time of great economic difficulty throughout the region. Some of the steel corporations in this study are finding themselves having to compete for domestic business with Japanese and Russian firms as these seek new markets to replace those lost in South-East Asia because of the financial crisis and economic downturn there, at the same time as they themselves are having to look for new export markets for the same reason. The resulting price competition has reduced profit margins which were often not generous to begin with (Interview 2, 1998).
