The authors maintain that the principal-agent problem, free-rider, soft budget constraints and monopoly are not related to ownership.The idea that attempts to confine state-owned enterprises to no-competition areas has neglected the particular nature of state-owned enterprises under circumstances of socialist market economy.Therefore, it is hard to operate and isagainst the goal of gaining and raising profits.Nor is this idea backed up by relevant policies.Studies of enterprise history show that large enterprises take a dominant position in a country’s economic growth.Development of major state-owned enterprises is beneficial to the developmentof China s socialist market economy.

　　

Editor: Zhou Miao