Between Bureaucracy and Market: Chinese Industrial Groups in Search of New Forms of Corporate Governance

This article investigates the peculiar and contradictory nature of the ongoing construction of a system of corporate governance in China. The analysis attempts to overcome the limits of traditional corporate studies that tend to focus on enterprise management, and puts the issue within the framework of the systemic and political relationships that shape economic management and state intervention in large enterprises in transitional socialist systems. The emergence of a specific managerial culture within the market and of winners among the enterprises is related to the position still held by the state in the enterprise and by the access to competitive markets available to enterprises. State-owned enterprises enjoy the protection of their status but they are more successful and adopt a more profit-oriented management culture if they operate in internationalised and competitive markets rather than in the strategic low-profit, state-dominated sectors. Owing to continuous interaction between enterprise management and external (policy or macroeconomic) factors, and to the absence or underdevelopment of most of the institutions generally necessary for a sound corporate governance system (financial markets, bank independence, free press etc.) privatisation does not seem sufficient to engender all-round market-led governance.