Reducing the proportion of state-owned shares (SOSs) in China is a complicated undertaking related to several reform issues, including the strategic reform of the economy and its industrial policies, the sustainable development of listed companies and the establishment of a social security system. It is to occur within a context in which the quantity of SOSs is continuing to increase. The analysis in this paper shows that what is therefore required is a set of thorough and differentiated reduction strategies based on the industrial structure of the SOSs, existing industrial policies, and timing issues. This process should be followed straight through, that is from SOSs to key corporations, to key industries, and then to the economy as a whole. Despite the fact that China has started to reduce the number of SOSs in listed companies, there is still a long way to go, either in terms of increasing the allocative efficiency of state-owned capital or through improving and reforming the country's economic and political systems.