This research deals with the problems of privatization in the context of two large transition economies. Despite their similarities, Russia and China adopted two very different strategies toward reforming their economic structure. Russian Federation launched the program of mass privatization of the state-owned enterprises, while People's Republic of China chose more gradual approach toward restructuring of the economy at large and its public sector in particular. In the years of the partial reform China demonstrated the high rate of economic growth, large inflow of Foreign Direct Investments and improvement of the performance of its state sector, while Russian economy experienced the prolonged and severe economic downturn with falling industrial production rate and hyperinflation.

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