This study investigates whether the enterprise reforms were helpful fo
r the technical efficiency of China's state-owned enterprises. A stoch
astic varying coefficients frontier approach is applied on enterprise
survey data in 1992. The results suggest that exposure to market compe
tition (or less state intervention) is positively correlated with firm
s' level of technical efficiency. There is no evidence, however, of po
sitive contribution by adoption of the new enterprise institutions to
technical efficiency.