Abstract: Policy burden causes the inside-born high production cost of the state-owned economy,and the incentive mechanism of government in reform encourages it to provide a subsidy for the state-owned enterprises.This paper provides a model of public choice to explain the soft budget constraint from the perspective of government’s pure reform benefits.After the state-owned economy stepped on the stage of strategic adjusting,direct and (or) indirect soft budget constraint became the power to constrain the economic growth pattern and the change of economic structure.The soft budget constraint and distorted capital price maintained the old technique structure of the state-owned enterprises that did not agree with the gifted resource advantage,and influenced the efficiency of the strategic adjusting of the state-owned economy.If we want to solve the transition problem successfully,we must change the old development strategy and realize the harmony between justice and efficiency.

Key words: soft budget constraint, state-owned economy, route for economic growth