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The Balanced Model of Privatizing State Enterprises

This article provides a theoretical conclusion concerning the practice of privatization and system transformation in China in recent years. This study discusses the causes and obstructions of privatization, while considering the interests and decision making in the process of system transformation of state enterprises. Based on the background emergence of privatization, the article also establishes a balanced model of privatization according to interrelations, goals, and behaviors. The core of the model is presented in the optimal target coefficient of entrepreneurs, which will be shown as the key that ensures that enterprises complete the system transformation successfully. The restricting conditions of the model reflect the assurance of the basic interests of those involved, so that their interests will not be affected by system transformation. Thus, by meeting the balancing conditions, the optimal system transformation is realized and demonstrated. An analysis of the model indicates that the best opportunity for state enterprises to undergo transformation is in meeting the optimal and balancing conditions for the realization of privatization.