Mainland China's economic reform since 1978 can be divided into several phases. In each phase the Beijing government has implemented a mainstream reform program. Since 1992, when the CCP's Fourteenth National Congress reached a consensus on the adoption of a market economy, the new trend in reform in the state sector has been corporatization, which will convert a large number of large and medium-sized state enterprises into shareholding corporations. At the same time, most small state concerns will be either leased out or completely privatized. This is bound to generate far-reaching consequences for mainland China, as it will fundamentally change the nature of state-enterprise relations. This paper is an attempt to analyze this new direction in mainland China's economic reform.