[1] After 2001, state-owned enterprises (SOEs) in China became more profitable than non-SOEs due to China's vertical industrial structure, with SOEs monopolizing key upstream industries while downstream industries were liberalized and open to private competition. [2] Abundant low-cost labor and China's structural economic change from agriculture to industry also contributed to higher SOE profits. [3] China's joining of the WTO and export-promoting policies after 2001 further drove this trend by expanding downstream private sectors, from which upstream SOEs could extract monopoly rents.