Abstract: Taking China’s solely state-owned industrial enterprises during 1999-2007 as the research objects, this paper empirically tests the relationship between the reform of mixed ownership, the proportion of state-owned shares and the industrial added value. The results show that compared with the solely state-owned enterprises that have not carried out the reform of mixed ownership, the state-owned enterprises after the reform have higher industrial added value. There is an inverted U-type relationship between the proportion of state-owned shares and the industrial added value, and the optimal proportion of state-owned shares is 46.6%. Further studies show that during the mixed ownership reform, we should still take state-owned capital as the principal, and the optimal proportion of state-owned shares should be increased to be 56.7%. While in the mixed ownership reform of small and medium-sized state-owned enterprises, the non-state-owned capital should be put in a dominating position, and the government intervention on the production and management activities of enterprises should be minimized.

Key words: reform of mixed ownership; proportion of state-owned shares; industrial added value