The recent round of debate over China’s state and private economy has fundamentally touched upon whether or not China should abandon or strengthen the socialist elements within the market economy. In this paper, we argue that the debate is, in essence, a continued class struggle in the political and ideological superstructure. Then we discuss the foreseeable future of state-owned enterprises (SOEs) under current political and economic conditions. We will further propose the necessary reforms for the SOEs to move towards a truly socialist form of public ownership.