Fixing up China's state-owned enterprises (SOEs) has been on Beijing's to-do list for decades. But as the companies have become increasingly buried under mountains of debt, addressing their deep structural flaws has once again moved to the top of the government's agenda. Chinese leaders are now working to speed the process of diversifying the firms' shareholders beyond the state, to expand corporate debt-for-equity swap programs and to phase out massive "zombie corporations" operating at a loss, all in hopes of keeping the nation's most important conglomerates afloat. Beijing's idea of successful reform, however, has less to do with instilling market principles that with preserving the power of the state. The Downside of Beijing's Business Strategy Over the past few decades, China's SOEs have racked up debt faster than they can pay it off. And for the most part, they have had little incentive to change their spending habits.