This study investigates the process of the construction of a system of corporate governance in China's banking sector, with particular reference to the reforms of the SOBs since the late 1990s. The study provides a comprehensive analysis of both external and internal governance mechanisms of the banks. The study shows that the Chinese SOBs have been undergoing a profound transformation since 1998 from a qualitative point of view. A new governance structure of the SOBs has been established through institutional reforms, which have mainly focused on three aspects aiming at addressing the ownership, asset quality and governance issues of the banks. The study demonstrates that the Chinese government has emerged as still in 'control of the SOBs, which has seen little change throughout the reforms process. The reform efforts, however, have made significant changes in the ways that the government conducts its control over the SOBs. This has seen shifting from a system of direct influence and control of management to control through indirect forms. The study shows that corporate governance reforms of the SOBs have all been a strategic choice in the whole process of the Chinese economic reform. The forms, approaches and pace are all subject to the country's dynamic political and economic institutions. The major steps of the reform have been motivated by the improvement of the efficiency of state ownership and interference
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