Skip to Main Content
In this paper, the mutual trust mechanism between government and state-owned enterprises (SOEs) is divided into three modes (Plan-Control, Guide-Coordinate, Supervise-Serve), in accordance with three different types of government-enterprise relationships. These types of relationships are identified according to the organizational form of SOEs in China as well as the present situation of relationships between government and SOEs. From the basic content of mutual trust mechanism, we apply Systems Dynamics (SD) model to simulate these three modes' and traditional state-owned assets operation under different market conditions. It indicates that Plan-Control mutual trust mechanism plays a better role when market demand is stable, while Guide-Coordinate mutual trust mechanism is more adaptable to demand disturbance. Besides changes in market demand, the internal structure of the system also has some influence on state-owned assets management under mutual trust mechanism.