The Comparison of the Chinese SOEs with the Firms in the Coordinated Market Economies

The fundamental reform of the Chinese state sector started from the mid 1990s, it brings the fundamental change in the state Firms' governance structure. After the reforms, Chinese state firms' governance structure is similar to the coordinated firms' governance structure in coordinated market economies (CMEs) (like Japan, Germany and other Germanic countries). Therefore, the coordinated firms' governance structure in the Chinese state sector generates the organizational competitiveness and the coordinated type of innovation system as that in the CMEs. FDI and technology transfer from CMEs to China drive the convergence of the Chinese state sector towards CMEs. It contributes to the superior performance and technology modernization of the Chinese state sector. The reform of the state firms also makes the state play the coordination role in the technology modernization based on its controlling shareholding in the state firms from the mid of 1990s to the first decade of 2000s.