It has been a long held theoretical myth that China’s state-owned enterprises (SOEs) operate inefficiently in the era of 1949-1980. The construct is greatly attributed to the efficiency determinism of Western economics with its close-system methodology. In terms of a country’s economy, efficiency is a measurement not only of its individual firm’s input-output ratio but also of the realization of a country’s comprehensive development goal. Thus, from holistic and multi-disciplinary perspectives including that of Western economics, in 1949-80 era, China’s available inputs is horrifically limited, to the extent of infinitesimal times that of the Western countries. Thus China’s actual growth and the realization of its comprehensive development goals indicate an efficient performance by its SOEs, and their achievement is rather remarkable. Therefore, the notion that SOEs must be inefficient is simply a product of pseudo-science.

Editor: zhang Jiangang