Making over the corporate landscape is on the cards as Beijing 'rejuvenates the nation'. Guidelines have dropped to make firms more competitive, yet aligned with (Chinese-style) socialist principles. But rather than placing workers in control of the means of production (Marxism-Leninism 1.0), the measures merge Party leadership, operational efficiency, and scoring officials on both innovation and social responsibility.
The Party Central Committee and State Council rolled out ‘Opinions on improving Chinese-style modern corporations’ on 26 May. Issued to the public only recently, the text circulated within the CPC since a June 2024 CCDRC (Central Comprehensively Deepening Reform Commission) meeting.
The policy’s origin reaches back even further—launched at the 19th Fourth Plenum in 2017, the Opinions listed 19 reform measures, focused on aligning state/market interests, rewarding innovation and streamlining corporate governance.
While affirming the equal rights of public and private entities, the NDRC (National Development and Reform Commission) insists on Party leadership as the pillar of reform.
decoding ‘Chinese-style’
The PRC corporate governance model merges Marxist principles with ground reality, explains Ding Xiaoqin 丁晓钦 Shanghai University of Finance and Economics.
It has, for Chen Su 陈甦 Chinese Academy of Social Science, two definitive features
uninterrupted dominance of public ownership
both explicit and tacit Party guidance over business
Given current laws and regulations, SOEs are now embedded into Party command, while private firms are on notice to find Party-building options.
These desiderata must be balanced with well-structured property rights, the ‘modern’ component, argues Chen Run 陈润 NDRC Institute of Economic System and Management. The political and economic standing of firms complying with civil and legal directives will be respected.
consolidating a decade of SOE reform
The state-owned sector often appears dual in nature: firms are directed by Party Committees yet retain market-based management. This dualism dates back to 1997, when public ownership through mixed ownership was legitimised.
Direct Party control has, since 2013, been rolled out via networks. A three-tier structure appeared in the 2020–22 SOE reform plan: Party Committees were to set policy, boards to manage risk, and executives to handle business strategy.
The Opinions seek to entrench previous changes while demarcating Party/board boundaries. Based on enterprise type and level, SASAC (the State-owned Assets Supervision and Administration Commission) will update matters that need to go to Party committees.
It will also expand the pools of external directors via market protocols, enabling boards to function as ‘decision-making centres’—no doubt under Party leadership.
Multi-polar structures and robust property rights, argues Chen Jiabai 陈嘉白 Tsinghua University Law School, would ease the pressure on SOEs to juggle social responsibility and commercial imperatives.
Yet ambiguity lingers. The 2023 Company Law and the Opinions fail to offer clear guidelines for Party-building in mixed ownership firms. For partially state-funded firms, major shareholders may still be able to override Party provisions in corporate charters.
Clarifying SOEs’ role in the market, Jiang Daxing 蒋大兴 Peking University Law School urges placing them under public law: detaching them from their 'profit-driven' status.
Shoring up public duties, SOEs should be afforded preferential tax and fee status. Whether competitive or strategic, they after all 'manage funds for the people’.
remoulding the private sector
Easing financial risk, the Party clamours for governance safeguards on private firms. As firms develop rapidly, they are often left with inflated valuations and overly complex business structures, notes Ding Zuohong 丁佐宏 Yuexing Group Board and ACFIC (All-China Federation of Industry and Commerce), needing measures to ensure compliance.
Sustainable growth is urged by Gao Yunlong 高云龙 ACFIC (All-China Federation of Industry and Commerce), with private firms aligning their management with national demands.
They should adopt clear and transparent equity structures, lectures China Business Times, ACFIC’s mouthpiece. These would (ideally) be safeguarded by pre-emptive warnings and rigorous oversight, merging audit, financial and anti-corruption checks.
To set examples in corporate reform, guidelines are in draft for ACFIC's 270,000 EC (Executive Committee) member enterprises. CASS (Chinese Academy of Social Science) researchers propose a four-body model
shareholder meeting: highest authority
board of directors: decides and takes responsibility
management: policy execution
supervisory board (or board audit committee): oversees the board and management
Suitability for all of board-centred governance is, however, questioned by such pundits as Xie Hongfei 谢鸿飞, Chinese Law Society Civil Law Research Institute. Small firms are, he cautions, often run directly by all shareholders, with board and management functions overlapping. A one-size-fits-all approach may fail to fit some firms.
connecting the dots
Streamlined property rights and governance structures aim to drive scitech innovation. By clarifying responsibilities, the Party/state aims to hasten circulation of market factors, while building central command. Firms are encouraged to adopt measures that could drive innovation, for instance, rolling out a long-term dividend policy to incentivise R&D professionals.
The Opinions seek to unleash enterprise vitality in innovation, argues Zhang Huiming 张晖明 Fudan University Enterprise Research Institute. Firms must remain in policy feedback loops, remarks Zhang, with state agencies constantly surveying business needs and offering tailored solutions to address challenges.
SOEs ought to leverage their dominance in the chain-chief system to advance major national sci-tech projects, comments Zhao Chaoyi 赵长轶 Sichuan University School of Business. Notably, they should help facilitate exchanges between up- and downstream enterprises, providing stable funding for high-risk and long-cycle R&D.
Private sector giants are asked to play supportive roles. To counter resource constraints faced by SMEs, larger firms are expected to share innovative resources and offer technical support. They would build and share tech transfer mechanisms and verification systems, cultivating a full-cycle innovation chain.
The plan is not fail-proof. Yin Zhichao 尹志超 Capital University of Economics and Business notes that even though private firms make up 95 percent of specialised and innovative SMEs, they face constant funding constraints, as most institutions favour short-term, high-return projects.
Homogenised competition tends to amplify the issue. Such issues are prevalent above all in the ‘new three’ industries (new energy vehicles, lithium batteries, solar products), warns Zhang Jie 张杰 Renmin University Economics Professor. Given recent criticism by Beijing of harmful competition in emerging sectors, nationwide coordination plans may undergo another round of reshuffling.
Party leadership is clearly a cornerstone. Public commentary, meanwhile, reflects nuanced debates about the balance between political control and economic efficiency, and cautious appraisal of outcomes in practice.
expert opinion
Chen Su 陈甦 | CASS academian and China Commercial Law Society vice president
The concept of a ‘modern’ corporation entered PRC policy vocabulary after the 14th Third Plenum, notes Chen, when a shift began from top-down control to market-based governance. Early reform called for clear property rights, defined roles and duties, and separation between state and enterprise. It launched rational corporate structures for decision-making, execution, and oversight. The current shift toward a ‘Chinese-style’ model is meanwhile rooted in SOE reform.
As early as 1999, a mutual entry system allowed Party leaders to sit on SOE boards, while Party members of boards, management and trade unions could join Party committees. The Party‘s leading role became prominent in post-2012 Party-building. Over time, SOE reforms are expected to guide private sector governance, with local-level Party leadership trials already underway.
Chen has worked at the CASS (Chinese Academy of Social Sciences) Institute of Law since taking his LLM from CASS Graduate School in 1998. An expert in civil and commercial law, he has taken part in legislative work for the Company Law, the Securities Law and the Civil Code. He is currently a China Commercial Law Society vice president, and a State Council State-owned Assets Supervision and Administration Commission legal adviser. He is editor-in-chief of the Chinese Journal of Law, among other positions.
Jiang Daxing 蒋大兴 | Peking University Law School professor
SOEs should be governed under public law protocols argues Jiang, preferably a dedicated Public Enterprise Law. He critiques earlier reforms that deemed SOEs to be profit-driven entities, hence under private law. Citing US state corporations, Jiang notes that even the liberal West operates many public firms: run by elected officials, guided by public law, and that carry out administrative duties through market mechanisms. SOEs should, urges Jiang, be likewise deemed public enterprises.
Inseparable from state governance, their roles include generating public revenue, serving social needs, supporting credit markets, and preserving socio-political stability. Evaluation metrics should hence include social contributions: jobs, public order et al. They must nonetheless face direct public oversight. Jiang proposes creating ‘national trust funds’ to distribute dividends to the population, mandating public disclosure via SASAC and credit platforms, and allowing citizens to sue for state asset losses with a dedicated watchdog agency installed.
Corporate law specialist Jiang is a former deputy dean of Nanjing University’s Law School. Teaching at Peking University since 2008, he is currently a part-time expert member of the Supreme People's Court Case Guidance Work Expert Committee.
Yin Zhichao 尹志超 | Capital University of Economics and Business vice president
To better back private innovation, remarks Yin, the PRC must cultivate full-chain, multi-faceted support. This should span institutional safeguards, resource supply, collaborative innovation, and policy support. The private sector, accounting for over 92 percent of PRC firms, plays a major role in innovation, totalling 95 percent of specialised and innovative SMEs (‘little giants’). Private firms are responsive to industry demand and streamline decision-making. Some apply effective incentives—Huawei launched employee stock ownership.
Yet startup is a volatile stage: investors favour short-term, high-return projects, with unclear prospects for innovative firms. Funding shortages and uncertainty deter talent and scaling. Yin calls for precise early-stage and long-term investment support, alongside improved equity incentives to attract talent. Easing mobility between industry and academia helps to cultivate talent, fostering collaboration. Notably, ‘little giant’ firms require support for core strategic breakthroughs to consolidate supply chain resilience.
Sitting on the Party Committee of Capital University of Economics and Business, Yin is one of the first batch of ‘outstanding youth talent’ selected by the Central Propaganda Department in 2012. Taking a PhD in economics from Southwest University of Finance and Economics, he served in his alma mater for a decade before moving to Beijing. Well published in family finance, financial economics and micro-econometrics, Yin has hosted multiple national and provincial-level projects.
context
26 May 2025 CPC Central Committee and State Council released ‘Opinions on improving the modern enterprise system with Chinese characteristics’ to the public.
30 Apr 2025 Private Economy Promotion Law released, signalling central commitments to equal rights and access for different market entities.
11 Jun 2024 CCDRC approved ‘Opinions on improving the modern enterprise system with Chinese characteristics’, stressing enterprise autonomy and ownership-specific approaches to reform.
29 Dec 2023 NPC Standing Committee revised Company Law, refining sections on company organisation structures and SOE governance, incorporating ‘building Chinese-style modern corporate system’ as guiding principle.
19 Jul 2023 CPC Central Committee and State Council jointly issued ‘Opinions on promoting development of private economy’, calling for breaking down market access barriers and ensuring equal legal standing of all entities.
16 Oct 2022 The 20th Party Congress Report made clear the need to advance Party leadership in public, mixed and private ownership firms, refining the ‘Chinese-style modern corporate system’.
31 May 2021 CPC Central Committee enacted ‘Opinions on improving central SOEs’ administration by strengthening Party leadership, clarifying issues that ought to be discussed by Party units prior to board meetings.
23 Oct 2020 NDRC and four other agencies dropped ‘implementation opinions on supporting private enterprises to accelerate reform, development, transformation and upgrading’, signalling support for innovation and property rights structure optimisation.
12 Oct 2020 SASAC kickstart ‘SOE reform three-year action plan (2020–2022)’, calling for consolidating market-oriented management and mixed-ownership reform under Party leadership
05 Jan 2020 CPC Central Committee put forward ‘Provisions for CPC grassroots organisation work at SOEs (trial)’, making explicit the Party-building procedures according to membership size in SOEs
05 Nov 2019 CPC Central Committee issued ‘Decision on major matters related to upholding and perfecting socialism with Chinese characteristics and modernising state governance system and capacity’, introducing ‘Chinese-style modern corporate system’ into CPC lexicon
15 Mar 2017 Central Organisation Department and SASAC jointly released a notice to demand adding SOE Party-building as a mandatory requirement in company charters
03 May 2017 State Council introduced ‘Guiding opinions on improving SOE corporate governance structure’, clarifying the role of boards of directors, shareholder meetings, supervisory boards and Party units in SOEs.
29 Dec 2015 SASAC rolled out ‘Guiding opinions on SOE definitions and classifications’, separating competitive commercial-oriented SOEs and those that mainly back social purposes
24 Aug 2015 CPC Central Committee and State Council put forward ‘Guiding opinions on deepening SOE reform’, outlining the need to optimise legal person structure, state capital allocation and Party-building
15 Nov 2013 CPC Central Committee released ‘Decisions on major issues concerning comprehensively deepening reform’, calling for SOEs to build modern corporate systems
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