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Introduction State enterprise reform was introduced at the very beginning of the reform period, and continuous reform efforts have been made since to improve state enterprise technical and economic efficiency. However, enterprise reform does not seem to have fully achieved the original objective of transforming the state owned enterprises (SOEs) into efficient economic identities. In fact, the reform of the state-owned enterprises has been slow and the SOEs continue to have poor economic performance. It is not until recent years that the situation has improved. The primary obstacle for state enterprise reform is the lack of efficiency in state sectors. Even so, it is difficult to specify a decisive cause for that. Instead, it would be more appropriate to state that the SOEs' inefficiency is generated by various intertwined elements rather than by one specific factor. This paper is going to address some major obstacles encountered by the state enterprise reform. Nevertheless, the main focus will be on one specific topic only --- the management autonomy for enterprises. Problem Child: The State Enterprise Reform The reform of the SOEs is indispensable for the achievement of China's economic reform. Without t