Chapter 3 surveys enterprise reforms in China since the late 1970s to highlight evolving constraints and space for leadership in SOEs. It examines five periods: emergence and decline of “dual track” economic reform (1978–91), establishment of a socialist market economy (1992–94), retrenchment of state ownership in the “commanding heights” (1995–2001), internationalization and consolidation of the state sector (2002–12), and combination of limited economic liberalization with increased political control (2013 to present). Since the late 1970s, SOE leaders have transitioned from managing production to determining how to restructure their firms, managing state-owned capital, and expanding in both domestic and international markets. Although the overall trend has been toward expanded space for leadership, the current Xi Jinping administration has tightened political and commercial control.

Chapter 4 opens up the black box of the firm to assess the effects of leadership on reform outcomes in China Infrastructure (CI) (pseudonym), a central SOE in the construction industry. The chapter features paired comparisons of the consecutive tenures of chairmen in CI and process tracing of original data gathered during fifteen months of fieldwork inside the company, primarily in its Beijing headquarters, between January 2014 and June 2016, with follow-up visits in June 2018, December 2019, and December 2023. It presents evidence that the chairman’s leadership generated variation in the degree to which market expansion was decentralized and in the balance of influence among intra-firm actors. The chapter also evaluates and rules out alternative explanations: guanxi with and intervention by higher-level officials, shifts in policy by administrative superiors, and changes in industry competition in domestic and international markets.

Chapter 5 examines the effects of leadership on reform outcomes in four other central SOEs: State Grid, China General Nuclear Power Group, Sinochem, and China Railway Engineering Corporation. These companies are selected to capture full variation along two key dimensions: industry strategic importance and firm type. For each of these four central SOEs, the chapter compares the consecutive tenures of their chairmen to assess the effects of leadership on reform at the firm level. This survey provides additional evidence that successive leaders’ decisions about organizational strategy and structure are an important driver of variation in reform outcomes. Cross-firm analysis further suggests that the effects of leadership on reform are a matter of degree and are conditioned by existing institutions, policies, and economic factors.

Chapter 2 defines leadership and outlines a leadership approach to studying China’s politics and economy, centered on the top-ranked individuals in public-sector organizations. It explains how the autonomy of Chinese public-sector leaders originates from multiple sources: the discretion built into the CCP’s cadre management system, guanxi (关系) with superiors and allies, decentralization of authority in the Chinese bureaucracy, and policy ambiguity and uncertainty. It critically reviews recent studies of China’s politics and economy to uncover the importance and influence of leadership. It concludes by discussing how a leadership approach helps to account for divergence, inaction, and subversion in reform outcomes.

Chapter 6 develops an integrated framework of leader–subordinate dynamics in Chinese SOEs. How do leaders interact with subordinates to execute their agendas, and how do subordinates respond? Grounded in reward, coercion, and legitimate bases of power, the chapter identifies SOE leader tactics such as leveraging position authority, conducting personnel ploys, emphasizing material and status gains, invoking external threats, underscoring superiors’ directives and policies, and appealing to subordinates’ personal duty and morality. Subordinates may react by praising and supporting the leader or by expressing alternative views, delaying or subverting implementation, shirking, engaging in critical expression, or quitting. Leader–subordinate interactions are iterative and evolve over time.

Chapter 1 introduces the book’s core argument: that leadership in China’s public sector helps to explain variation in reform outcomes at the organization level. Focusing on Chinese state-owned enterprises (SOEs), it introduces the book’s analysis of the effects of leader decisions about strategy and structure and their execution on two types of reform outcomes: (1) the degree to which SOE market expansion is decentralized and (2) changes in the balance of influence among intra-firm actors – who gains and who loses during reform. This chapter also provides an overview of Chinese SOEs’ domestic economic presence and their strategic functions for the state. It distinguishes between SOEs owned by central and local governments and situates them in China’s administrative hierarchy. Next, the chapter takes a closer look at central SOE leaders: their demographics, integration in China’s political system, and attributes relative to other Chinese officials. It concludes by previewing the content of the remaining chapters.