Although the word "privatization" is still taboo in China, about 90% of small and medium SOEs (state-owned enterprises) had already been restructured by the end of 2003. The proposed project examines two questions: How did de facto privatization occur on such a large-scale in China despite the state's professed opposition? And why did privatization in some cases generate growth with distributive justice, while in other cases privatization motivated corrupt behavior? The goals of my dissertation are to analyze the political and institutional factors that lead to the choice of specific privatization strategies across China's SOE's, and to assess the impact of such strategies on privatization outcomes-in terms of both economic profitability and distributional consequences. This project involves three levels of analysis (the central government, local governments, and SOEs), examines the preferences of local officials in different institutional contexts, and discusses the choice of privatization strategy through the lens of institutional changes. The study questions the common belief that there may exist one optimal privatization strategy, which will bring about both economically and socially desirable outcomes. In contrast, the two major hypotheses in this project proposes that first, the choice of different privatization strategies is an outcome of the bargaining between local governments and SOEs under specific institutional contexts; and second, compared with privatization through administrative means, privatization through market mechanisms may be more likely to bring about economic efficiency, but may have deleterious consequences for social justice. To test these hypotheses, I will conduct a comparative study on the de facto privatization of small and medium SOEs in Chinese cities during the period of2000 to 2003.