Corporate Governance in China

Abstract

China has become the world's second largest economic entity following its economic reform process begun over 30 years ago. Corporate governance plays an important role in China economic success, but it also has many problems. These include the concentration of state ownership, management accountability and shareholder rights. Economic reform has made the problems more apparent. This thesis studies the evolution of corporate governance with the China's economic reform process, and explores its strengths and weakness by comparing current Chinese practices with western corporate governance models, primarily that of the USA.

By investigation and the comparison, this thesis proposes four ways to improve China's corporate governance. These concern the following: (1) implementation guidelines, (2) independence of board of directors, (3) functionalities of internal audit, and (4) external structures of corporate governance.