Transforming Corporate Governance in Chinese Corporations: A Journey, Not a Destination

Andrew Keay, Jingchen Zhao | January 1, 2018

The article offers a systemic, historical, and rigorous study of the transformation of Chinese corporate governance, focusing on its development from a totally administrative model, being one which relies on government and administrative power and imposes on corporations’ controllers administrative duties and objectives, to a hybrid model which has both administrative and economic governance characteristics. The article assesses whether administrative power will hinder corporate governance transformation in China on its journey towards a sound and sustainable model. We opine that the government continues to have a key role to play in corporate governance in China which makes administrative interference and power something that is embedded in corporate governance regimes through public and political policies, law enforcement, and strategic management policies for corporations. The administrative involvement might sacrifice efficiency, and effective market and corporate responses. However, it is observed that it may bring comparative advantages for Chinese corporate governance in terms of supporting long term strategic planning and the set-ting of multiple goals for State Owned Enterprises (SOEs, hereinafter), with government interference producing immediate action in order to prevent market failure.