After 15 years of negotiation, and making maximum concessions to WTO members, China eventually gained accession to the WTO in 11th December 2001. The Chinese economy is now subject to the rules-based system of the WTO, enhancing economic competition and creating a more open environment for trade and foreign investment.
             This report will divide into four parts; they are the situation of state owned enterprise in China, the advantages and disadvantages of China upon joining WTO, the problems of the SOEs and the methods of reformation of China SOEs.
             The Situations of State Owned Enterprise in China
             The Chinese economy was comprised almost solely of state-owned industries. SOEs were an extension of government organizations and were managed through the Central Administration, while undertaking various social responsibilities which maintained a cradle-to-the-grave welfare system for their employees.
             In the 1980s, SOEs faced increasing competition from town and village enterprises. As a result, many SOEs, which were already famous for their low efficiency, inflexible production, high debt ratios and heavy social burdens, quickly lost ground and were operating at a loss. A series of government rejuvenation efforts ranging from "the manager contract responsibility system" and "debt-for-equity swaps" to intensive corporatization programmes failed to yield the desired results. Currently, many SOEs still have to rely on state subsidies to stay alive.
             By now, China has more than 68,000 state owned industrial enterprises which loss rate is more than 40%. Of these, 5,900 were large and medium-sized backbone industrial enterprises, almost 37% of all losing enterprises. Also, there are 10,000 to 12,000 losing SOEs are made the loss for long time.
             During these years, the rapid growth of small scale non-state enterprises is making larger SOEs less and less significant in the overall Chinese economy. While this is certainly true, at this poin...