This article analyses the evolution of SOE reform in China, especially focusing on how SOEs benefited from the Chinese government's favourable policies and how such SOE favouritism impacts the Chinese macro economy and causes social problems. The article outlines SOE reform before Hu Jintao and Wen Jiabao took over the leadership of the country in 2002–2003 and investigates the nominal as well as the real performance of SOEs since 2003. The article also discusses the nature and functions of Chinese SOEs as well as the future direction of Chinese SOE reform.
