There are both considerable horizontal and vertical governance problems with the Chinese state-owned-enterprises (SOEs), which mean the firm operators are basically unaccountable. Due to the SOEs’ privileged positions in the Chinese political economy, almost all kinds of traditional institutions of corporate governance are far from perfect. Thus the value of overseas listing as a governance mechanism is highlighted, and that could be well revealed by a deeper analysis of the cost-and-benefit balance done by the government, which controls the SOEs and makes the real decision of overseas listing. Such a listing would bring a variety of economic benefits to SOEs, but the major driver for the action is the government’s wishes to employ an effective mechanism to restructure and discipline the old SOEs, solve the problems such as manager slack and still keep things under control. A change of the main overseas listing place from New York to Hong Kong after the shock of a class action further testifies such considerations from the state. But interestingly, during this process, bound by the external rules, the powerful state itself has gradually been driven in a more market-oriented and rule-abiding direction. This implies the complexity of the interplay of the state and the firm and reflects a typical market-oriented reform and an institutional evolution story of China in the past decades.