ABSTRACT
In 1995, 72 per cent of the smaller state-owned enterprises under the direction of local authorities were in the red, compared with 24 per cent of the centrally held firms (International Finance Corporation 2000: 14). In response, the Chinese government devised a policy towards state enterprises of ‘keeping the large and letting go of the small’. This entailed keeping under the ownership of the central government a core of between 500 and 1000 large state enterprises. Local authorities were instructed to put the state enterprises remaining in their care through a process of reorganisation. This would include a raft of measures including mergers, acquisitions, leasing and sale.
