Although shareholding enterprisesShareholding enterprises and securities markets existed in China before 1949, they successively faded from the historical stage after 1949. When China’s economic reformEconomic reform started in 1979, domestic enterprises were mainly state firms, others being collective firms. State firms were directly controlled by the government and lacked clear property rights. The government and enterprises were unclear about their rights, responsibilities, and goals, and the government mandated production and sales. Therefore, enterprises had no investment rights or autonomy at all. To put it simply, enterprises were nothing more than appendants of the government. As for the collective firms, the property rights were also ambiguous. Who owned the property rights? Who were the investors? The concept of “collective” was always vague. The collective enterprises were also controlled by the government, and their production and sales were included in the government’s plans, so neither were they autonomous operators. This was the situation at the beginning of the reform.