Which Theory Is Directing China’s Reform of State-Owned Enterprises: From 1978 to 2008 and Onward?

China’s reform of state-owned enterprises (SOEs) has achieved notably through 30 years of reforms while the performance of SOEs is still low. Basing on a summing-up of reforms of SOEs the paper gives an evaluation of economic theories affecting China’s reform of SOEs. Focuses in different periods of the reform are varied, as are the theories guiding decision-making. This paper, taking the three representative arguments of Wu Jinglian vs. Li Yining, Justin, Yifu, Lin vs. Zhang Weiying, and Lang Xianping vs. Gu Chujun within the 30 years as a clue, has put in a model theories that affect China’s reform of SOEs like market economy theory, modern property right theory, modern firm theory, and management of state assets. The paper holds that economic theories that are able to guide China’s reforms of SOEs should possess at least the two theoretical characteristics: They can build SOEs into subjects of socialist market competition macro-economically and they can explain and solve the multi-level principal-agent relations of SOEs micro-economically.