Although SOEs reform is not the main focus of this round Chinese profound reform, it is the most challenging issue that faces by the current government. ANBOUND research team emphasizes that the major obstacle is the combination of institutional and interest factors. As the special interest group, SOEs are under the protection of the system. ANBOUND does not think that China should remove SOEs, but the reform ideas and approaches need to be adjusted. These institutional problems can be effectively avoided if the government adopts mutual fund approach to reform SOEs.