State-Owned Enterprise Reform under the Planned Economy in China

A Re-examination of the Contract Management Responsibility System

Abstract

The Contract Management Responsibility System, implemented by the central government of China, has resulted in significant improvements in technology, management, and factor input efficiency. With the powerful support of both government officials and enterprise managers, this new institutional arrangement among the government and state-owned enterprises has resulted in significant behavioral and attitudinal changes concerning work from those suited to a command economy to those befitting a market economy. Consequently, these new arrangements have served as an interim mechanism that has resulted in the smooth transition and institutional transfer to a market economy.