Paper short abstract:

This paper investigates the strategic reform of the central SOEs in the oil industry.

Paper long abstract:

With domestic and international expansion, the scale of China's central state-owned enterprises (SOEs) has increased to the extent that most commentators concluded that they have emerged as a new political cluster that is immune from governmental supervision, especially since the mode of China's policy decision is still embedded under the institutional constraints of 'fragmented authoritarianism' (Liberthal and Oksenberg 1988). However, such account seems to be unable to explain the recent restructure of state-owned assets in the pursuit of political efficiency in the past decade. In this article, we use the theory of energy security to reinvestigate the strategic reform of the central SOEs in the oil industry. We argue that the role of SOEs experienced a parallel change in political and economic decision-making during the reforming process. The changes reflect the division of powers in three different levels - the parent group company retained the old entity, group subsidiaries listed regenerated the high-quality assets from the group company, and diversified subsidiaries as the ultimate practical business operation - allowing the dual restructuring aimed at both maximising economic gains and minimising political red-tape surveillance in order to enhance its global competitiveness. This paper challenges the neo-liberal understanding of energy governance in China and argues that it is both the informal political centralisation and economical decentralisation measures that allow the SOEs to play a dual role as an enterprise through managerial autonomy while being a political actor that has been supervised by the central government of China.