Employee compensation reform in China's state firms : Results of the first decade

The authors point out that the goal of economic reform in China is to transform the socialist planned economy into a socialist market economy. According to the Chinese perspective, socialism is characterized by public ownership while a market economy is characterized by resource disposition with market mechanism. To attain this goal, the reform of enterprises, especially state-owned enterprises (SOEs), must be carried out under a guilding principle, namely, retaining state ownership while operating under the mechanism of the market. In order to operate under market mechanism, the enterprise must be given freedom to make independent decisions. The authors examine one aspect of the enterprise reform by scrutinizing the reform of the employee compensation system as a gauge of the economic reform in general. (DÜI-Sen)