Models of Corporate Governance for Chinese Companies

This paper examines China’s recent approach to the development of corporate governance and discusses some major corporate governance issues that need to be resolved. It focuses on the corporate governance issues of China’s larger state owned enterprises that have been corporatised and partially privatised. While the state enterprise sector has been on decline in terms of its contribution to industrial output, its dominance in urban employment, key industries and access to bank finance continues. The publicly listed and partially privatised enterprises portends in many ways the future path in corporate governance arrangements for all other kinds of enterprises in China. The study is based on results of survey data collected by the author on Shanghai’s publicly listed companies. An attempt is also made in this paper to outline a new corporate governance model that may be more appropriate for China’s social and economic conditions. The paper is organised as follows. Section 2 outlines the way the Chinese government has approached the development of corporate governance structures in China in recent years. Section 3 examines some major issues for corporate governance development in China. Section 4 outlines a new corporate governance model that may be better suited to China for the near future. Section 5 provides some conclusions.