The functioning mechanism of China’s state owned enterprises is in essense a special commis sinned agency i, c.,the dual commission agency with three parties:nationals,governments and the executives of the enterprises. A comparison of dual comnussion agency and the regular commissioned agency in present enterprises reveals that there exist some serious defects in the fields of truster,a-gents and the mechanism of incentives and governings and it leads to low benefits of enterprise opera-Lion and the serious leakage of state owned assets. The mass productive mode of modern society and the assets scales of SOE decide that the functioning mechanism has to be the commissioned agency be-rwecn owners of assets and managers under certain types of contract. The reform orientation of SOE should be rbe discarding of dual Commissioned agency. Tentative considerations are:1)returning rbc original face of nationals;2)reducing rbe functioning agent-rnngs in cnrcrpnscs;3)fostering rbe marker of managers;1)forming an incentive and governing mechanism by rrusrers to rbe agents.
