re, according to simple economic performance, securitisation system reform can't solve the problem of inside management. Because the securitisation reform will produce many minority stockholder, which are unable to supervise the manager layer of enterprise. No matter what kind of method will be implemented, we should appraise the affect of transition by whether it can promote enterprise's benefit, government revenue, enhance the return of banks loan and enlarge the income of workers after enterprises reform.
Nowadays, an " ice-roll theory" prevails in Harbin, a city with deep SOE tradition: If state-owned enterprise does not keep on reforming (transition of the ownership), its assets will also reduce rapidly like ice-roll under the sunshine, and even disappear at last. On the contrary, even though the assets belong to private, the private capital is still social capital too, which will concentrate on increasing in value and keeps on operating the asset well.
Based on the reform history in China, if we emphasize only on losses of state-run assets, it does not help transformation of enterprise smoothly, on the contrary, it will lead to assets shift. This kind of case has taken place in early township enterprise transformation. Since some villages and towns government insisted to keep a certain portion of government share in the process of transformation, this made the operator of reformed enterprises worry about the change of the government policy. So, those operators managed to take enterprise's assets away and set up new enterprises in their own control. So, to ensure a smooth and efficient reform, government should give new owner or operators of the enterprises more confidence and legal guarantee.
What is more, the government plays continually an important role in the whole process. At one side, it should bear relative responsibilities in the course of reform, that is, to undertake the cost demand of the reform. Reform should not be a free lunch either for new operators or owner of the reformed assets nor for the government. At another side, to create a suitable circumstance for the reform is also very important, the government should strengthen the construction of a fair market and relevant regulations, because even under private ownership system, the questions such as information asymmetry, encourage incompatible, and responsibility reciprocity also exist. So that enterprise operator can also infringes the owner, if there were no a competitive market, which reflects abundant information of the management of enterprises performance.
Whether we can strip out the social burden of SOE, also depend on a series of changes of external environment condition. If the problems such as price twist, industrial structure twist and undeveloped labor market cannot be dispelled through macroscopically policy reform; property transition can only cause inflation, unemployment and a series other problems.
5 Conclusion
The SOE reform is one of the big issues during the Chinese market economic reform since 1978. China has turned out to be the largest and most advanced economy. Concerning the SOE reform there are also many thorny problems, though since 25 years the Chinese government has been taking efforts to promote economic competition, to strengthen the financial system, to facilitate labor market flexibility, to set up social security system in order to cooperate the SOE reform. SOE problem in China has its own historic and practical background, even we didn’t discuss the transformation in former Soviet Union and East European Countries, but the situation is more complicated in China. But if Chinese government keeps on implementing a gradual reform policy, supporting the transition of state-owned properties and at the same time enhancing the internal market fairer and competitiver, the SOE problem will be solved eventually. The SOE reform will be end till there is no concept of SOE, that means that all the enterprises will be treated alike according to the market rules and national regulations.

Fig 1 china’s industrial output by ownership






Fig. 2 national fixed-asset investment in china





Fig 3 rate of urban unemployment in china






notice:
1, http://www.nhh.no/geo/chinese/: the History of Soe in China
2, http://www.nhh.no/geo/chinese/: the History of Soe in China
3, Chinadaily 2002
4, Liu Dongsheng :Corporate governance of state owned enterprises in China, 2000
5, World bank report 1996, p.42
6, Yingyi Qian: Enterprise Reform in China: Agency Problems and Political Control, 1996
7, As it has been showed in Fig2, till 1998, the SOE can obtain more than 50% of the fixed-asset investment from the state, part of them are subsidize in essential.

References:
1,Broadman, Harry G.: Policy Options for Reform of Chinese State Owned Enterprises, Proceedings of a symposium in Beijing, June 1995 by The World Bank 1996

2, Chen, Yueyuan: State-Owned Enterprises in China: History, Reform, and Prospects,NHH Bergen, 2001
3,China Statistical Yearbook, 2000,2001, China Statistics Press

4, Consulate of the People’s Republic of China in Germany www.china-embassy.de

5, Drysdale, Peter and Song, Ligang: China’s Entry to the WTO, Strategic Issues and Quantitative Assessments, Routledge, 2000

6, Nolan, Peter: China and the Global Business Revolution, Palgrave, New York, 2001

7, Otsuka, Keijiro and Liu, Deqiang and Murakami, Naoki: Industrial Reform in China