Abstract
The bulk of the literature on transition economies such as the Eastern and Central European and Asian economies has explored transformation mechanisms from different perspectives and aspects. The study aims to answer two questions. Question one concerns the role of ownership, competition and management in the process of public enterprise transformation. Question two asks how public enterprise transformation interacts with the labour system and the relation to social safety nets. To address this question, the study investigates the impacts of enterprise transformation on labour by interviewing affected employees. This paper is particularly devoted to an examination of existing literature on the Chinese transition case. The second section briefly outlines the debate over China's reform path-whether it is radical or gradual, and a general review of literature on transition economies. Then it examines the three groups of arguments over the transformation mechanisms. The fourth section looks at literature concerned with the interaction between the transformation and labour. The final section provides a conclusion.