Economic interventionism in the form of subsidization and operation of state-owned enterprises (SOEs) is today among the main frontlines of international trade conflicts. Along with trade restrictions and new legislation designed to impact cross-border investment, mergers, and acquisitions, the use of subsidies and countervailing measures by governments and trade-distorting effects of SOEs have lately caused harsh controversies within and outside the World Trade Organization (WTO) between its members. Going forward, there are reasons to expect these tensions to intensify rather than diminish in number and importance. This Special Issue aims at examining the development of international trade rules regulating state interventionism against the background of the Covid-19 global pandemic and present shifts in global geopolitics and the economy. This introduction, in presenting the state of the art on the questions tackled by this Special Issue and highlighting its contribution to existing literature on the topic, offers different considerations aimed at bringing together various trends emerging from the Articles contained in this Special Issue. It also explores avenues for further research and reflection.

State-Owned Enterprise (SOEs) are business entities owned by governments. Unlike private enterprises which operate on profit-motivation, SOEs often act on motives different from profit-making such as fulfilment of governmental or political purposes. Due to this peculiar feature, activities of SOEs sometime are disruptive of competitive market. In order to regulate activities of SOEs so that international market would not be unduly disturbed, GATT: Article XVII states that SOEs shall operate on a profit-motive in international trade. More recently, CPTPP (Comprehensive and Progressive Agreement on Trans-Pacific Partnership) and other FTAs include chapters devoted to the regulation of SOEs which provide that Contracting Parties ensure that their SOEs act on profit-motive so as not to cause disruption to the international market. On the other hand, competition laws of trading nations provide rules for prohibiting abusive conducts of dominant enterprises and this includes the prohibition of abuses by SOEs. However, applications of those two sets of regulations (GATT and CPTPP on one hand and competition laws on the other) are made independently from each other without being coordinated. This article surveys details of regulation of SOEs under CPTPP as a representative example of FTAs regulation and of competition laws of nations and suggests ways in which those two sets of rules can be coordinated in order to increase the effectiveness of legal disciplines imposed on SOEs’ activities.

This article analyses the role of the Chinese Communist Party (CCP) in the corporate governance of Chinese state-owned enterprises (SOEs), including a case study of a central-level SOE holding group. Relying on official documents, secondary literature and interviews with enterprise managers, government officials and academics, the article documents how the CCP has actively formalized its role in Chinese business by embedding itself in the corporate governance structure of SOEs. Through the application of Chinese indigenous administrative corporate governance concepts such as “bidirectional entry, cross appointment” and “three majors, one big,” the CCP has consolidated its dominance of enterprise decision-making procedures and personnel appointment and created a hybrid, Party-led model of corporate governance. While this hybrid model can secure enterprise compliance, communication with higher state and Party organs, as well as long-term development planning, it is unlikely to help solve SOE efficiency problems and may even undermine other SOE reforms.

Although state-owned enterprises (SOEs) are recognized as important economic actors, the literature to date has assumed close state control over SOEs and, therefore, their passive stance towards institutions. Drawing on the institutional work and historical institutionalism literatures, we challenge this view. We develop a multilevel framework of SOE top management teams’ (TMTs’) embedded agency, spanning the national macro-institutional level, the meso-level of regimes of state-SOE relations, and sector-specific institutions. We then derive propositions regarding the factors across these multiple levels that shape SOE TMTs’ motivation, resources, and scope for institutional work. This framework allows us to explain the leeway for and likelihood of SOE TMTs’ engagement in institutional work across institutional contexts.

This article examines the so-called “central State Owned Enterprise (SOE) problem” in China's environmental governance system, namely central SOEs' defiance of environmental regulation. We present evidence showing that, in the last decade, central SOEs have been the source of a large number of serious pollution incidents and have often failed to comply with environmental guidelines and regulations. Central SOEs in the electricity generation and oil and gas industries are particularly culpable, with six firms alone accounting for 62 per cent of all 2,370 reported violations (2004–2016). We argue that a combination of “central protectionism” of state-owned national champions and insufficient regulatory capacity in the environmental bureaucracy have provided state firms under central management with both incentives and opportunities to shirk on environmental regulations. Yet, while the institutions of central protectionism are deeply rooted, countervailing forces within the complex Chinese state are also gaining momentum. In spite of the considerable regulatory challenges, officials in the environment bureaucracy display increasing resolve and ingenuity in trying to strengthen their enforcement capacity.

Choi, Jiang, and Shenkar (2015) offer an interesting and new perspective on the relationship between local governance and firm performance in China. This commentary focuses first on how we conceive of the nature of China's capitalism and then examines what that suggests about their metrics and findings.