In this chapter I discuss what I call China’s public economy, referring mainly to state-owned and provincially owned enterprises operated by central and provincial governments. The crucial questions are not those of management technique alone, but the social standpoint and historical conditions that determine what such enterprises can and cannot do. If public enterprises are judged merely by monetary profit, their social role is distorted and those engaged in them are driven toward short-term gains that betray the very purpose of a sound public economy. Conversely, a public enterprise may be successful even when its monetary capital does not increase, if it meets urgent social needs and supports the functioning of the general economy. Yet the prospects of China’s public economy are limited above all by its social prerequisites. Modern public economy in advanced capitalist countries expanded as private economy moved from free competition toward control, from industry-dominated to finance-dominated organization, and toward a national-defense economy. China’s case, however, is shaped by a long tradition of bureaucratic public undertakings rooted in landlord-based feudal relations, which continue to generate bureaucratism, commercial dominance, and regional frictions. Hence the future of China’s public economy cannot be grasped without confronting its social base—especially land relations.