China's Corporate Governance: Emerging Issues and Problems

As China approaches economic superpower status, its need to achieve considerably higher standards of corporate governance is becoming paramount. Despite impressive recent advances in its capital and stock exchange markets, the on-going overhang of state ownership in its former state-owned enterprises, together with an unwieldy and ineffective dual board governance system, has left China facing major corporate governance problems that will deter the private investment necessary for its continued growth. This paper illustrates these problems, and suggests possible reforms that will provide the foundation for the efficient further development of China's capital markets that is needed to help China become a major economic superpower.