China's major SOEs have indeed made headway in building a modern corporate governance regime modeled on Western practice. They have largely established the modern corporate board system, something that was new in China even in the 1990s. Supervisory boards, too, are in place to supervise corporate activities and decision-making.

Yet such changes have been rather superficial, because modern corporate governance has not played its due role in supervising corporate affairs. In many corruption cases exposed by the media, board chairpersons used to dominate corporate decision-making leaving little room for the supervisory body.

Apart from strengthening the anti-corruption campaign, therefore, the authorities need to find a way to reform the current appointment-based mechanism to make the top leaders of SOEs subject to more effective supervision by supervisory boards and auditors. This is the real long-term solution.

Moreover, the authorities have to expedite market reforms in SOEs to attract more investors, which will not only improve the competitiveness of State companies but subject corporate activities to supervision by more investors. The authorities have vowed to develop a diversified ownership economy and allow more mixed-ownership in SOEs by inviting non-State investors into projects traditionally controlled by State capital.

Sinopec, China's top oil refiner, has taken the lead in restructuring its distribution business, allowing private capital to take up to 30 percent of its shares, with some other State giants deciding to follow in its footsteps. Such a reform has been rightly interpreted as a move to diversify corporate ownership to improve the long-term operational efficiency of the State sector. Attracting more investors will also make such SOEs more accountable to the market and thus curb corruption.

The author is a senior writer with China Daily. xinzhiming@chinadaily.com.cn