Guest Editor's Introduction

If Jiang Zemin's speech to the Fifteenth Party Congress in September 1997 represented the central leadership's plan to reform China's vast state-owned industrial sector, then the blueprint for that bold proposal can be found in the following translation. Written in 1993 by Wu Jinglian and his team of China's "best and brightest" economists, this work outlines the radical organizational and societal changes that, they believe, must be made to convert the country's lumbering and largely money-losing socialist industrial sector into what Jiang Zemin and Wu Jinglian describe as a "modern enterprise system."¹ State-owned enterprises now operating under an administrative system of central planning will, under this plan, be converted into relatively autonomous "corporations" that will be managed by boards of directors responsible to public and private shareholders who, unlike government bureaucrats, will be concerned with the bottom line rather than political power and influence. Clear lines of ownership and well-defined powers and responsibilities will replace the current maze of cross-cutting and often contradictory lines of authority by central ministries and provincial and local governments that too often subject enterprises to irrational and misguided policies. Instead of following administrative dicta and operating with funds allocated from the government, these new invigorated enterprises will be driven by market forces and will rely on capital provided by self-interested shareholders. In this way, Jiang Zemin asserted, "China will establish highly competitive large enterprise groups with trans-regional, inter-trade … and transnational operations."²