China’s Mixed Ownership Reform: An Expanding SOE Equity Network

China’s latest round of SOE reforms introduced a mixed ownership reform (MOR) agenda aimed at improving efficiency, enhancing governance, and leveraging market capital without relinquishing Party-State control. This chapter examines how MOR has been implemented within the group-based structure of central SOEs, asking how equity diversification interacts with hierarchical governance in shaping the legal identity and accountability of outbound investment entities. The chapter distinguishes between two MOR pathways: ‘flow-in’ reform, where private capital is introduced into existing SOEs, and ‘flow-out’ reform, where SOEs invest in new mixed-ownership entities. It finds that both pathways have led to capital diversification at the subsidiary level while preserving centralised control through intra-group governance rules, capital layering, and Party leadership mechanisms. The reforms reconfigure formal ownership without displacing the parent company’s strategic authority or the institutional role of the Party-State. These findings challenge assumptions that MOR signals privatisation or diminished State control. By analysing how capital reform is structurally embedded within vertically integrated SOE groups, the chapter reveals the functional coherence of China’s State capital governance model. This insight is critical for evaluating control attribution, beneficial ownership, and regulatory responses to Chinese SOE investment in host jurisdictions.