Abstract: Separation of enterprise from administration is a major mode in the reform of state-ownedenterprises，which is rational in the levels of state function，business fairness，and state image.However，both history and reality have shown that separation of enterprise from administration is nothing but the scholars’ dream.The dilemma of separation of enterprise from administration lies in that，enterprise and administration，both as the important value of state existence，are incompatible，that is，separation of enterprise from administration will never come true due to the public character of state power.A new thinking should be taken into consideration，which defines state ownership as a power of public commercial affairs restricted by public law.Following this，we might solve the dilemma of separation of enterprise from administration.

Key words: separation of enterprise from administration, state ownership, reform ofcorporate system