The Wall Street Journal reports that the Chinese leadership will soon be unveiling a set of reforms meant to foster consolidation in the Chinese state-owned enterprise (SOE) sector. The goal behind these reforms is twofold: firstly to increase the role of the private sector in the overall Chinese economy, and secondly to create the economies of scale needed for Chinese companies to compete in international markets.

Though substantially reduced from its 1990s heyday, the Chinese state-owned sector is still sizable. In 2012 the World Bank estimated that 4.5 percent of China’s enterprises were state-owned, accounting for a combined 30% of the country’s GDP. They also accounted for around 27 percent of China’s industrial output.

Any attempt to reform the state-owned sector is daunting due to the vested interests involved; many of the higher-ups in SOEs ‘have the ear’ of officials in the governments that own them. Conflicts of interest are also common, such as Party-appointed SOE overseers having the same or higher rank than those in the regulatory bodies monitoring their enterprise.