A top priority of China’s ongoing reforms of its vast state-owned sector is to convert SOEs into mixed-ownership firms—firms in which the state and private shareholders hold joint equity stakes. The chapter argues that ownership-based SOE reform, on its own, will not significantly alter a central feature of state capitalism as practiced in China: the close relationship between large firms and the state. It demonstrates that Chinese state capitalism is largely synonymous with capture of the state—that is, firms survive and prosper precisely because they have fostered connections to state power and succeeded in obtaining state-generated rents. As a result, large Chinese firms, regardless of ownership type, share substantial similarities in areas commonly thought to distinguish state-owned firms from privately owned ones. The chapter suggests that the promise for meaningful reform of China’s SOEs lies not with ownership reforms, but with policies directed toward establishment of market-neutral institutions.