Corporate Governance with Chinese Characteristics: Party Organization in State-owned Enterprises

Abstract This article analyses the role of the Chinese Communist Party (CCP) in the corporate governance of Chinese state-owned enterprises (SOEs), including a case study of a central-level SOE holding group. Relying on official documents, secondary literature and interviews with enterprise managers, government officials and academics, the article documents how the CCP has actively formalized its role in Chinese business by embedding itself in the corporate governance structure of SOEs. Through the application of Chinese indigenous administrative corporate governance concepts such as “bidirectional entry, cross appointment” and “three majors, one big,” the CCP has consolidated its dominance of enterprise decision-making procedures and personnel appointment and created a hybrid, Party-led model of corporate governance. While this hybrid model can secure enterprise compliance, communication with higher state and Party organs, as well as long-term development planning, it is unlikely to help solve SOE efficiency problems and may even undermine other SOE reforms.