The reform of State-owned Enterprises (SOEs) is important not only for China's process towards marketization, but also for its long term growth and competition worldwide. This paper provides a systematic review of the reform, which has been made in the past three decades. Then, it focuses on the localization process of SOEs, which is neglected by most of researches. Through localization, the ownership and supervision right of SOEs was transformed from upper level of government to lower levels of local government. Thus, the reform can potentially affect the performance of SOEs. This paper proposes several possible channels through which localization may work, such as more supports from local government, more unwanted interventions or worse market segmentation. Finally, it proposes suggestions which are beneficial for the further development of the reform.
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