At the Chinese Communist Party's (CCP's) Fifteenth Congress, held in September 1997, the Central Committee endorsed both the corporatization of large state-owned enterprises (SOEs) and the restructuring of small SOEs and decided to step up the speed of reforms. The central component of the government's reform program is "zhuada, fangxiao" ("grasping the big, enlivening the small"). First, the government is creating a number of large enterprises and enterprise groups through encouraging mergers in strategic sectors. Second, it is encouraging small and medium-sized SOEs to experiment with ownership reform. The aim of this paper is to review these recent initiatives and evaluate the problems still confronting statesector reform. Within theis general framework, a specific objective of the paper is to provide information on recent developments in areas (such as bankruptcies, megrers, and shareholding reform) where the government is experimenging with new institutional forms.