This thesis provides a political economic analysis of the development of corporate governance in China. This research focuses on the corporate governance of the Small and Medium-sized Enterprises (SMEs) in China, and analyzes the dynamic changes of social relationships within the corporate field. It highlights the importance of cultural logic behind different types of social relationships and takes the changes of structure of social relationships as the process and consequences of cultural struggle. Guanxi has important influence within Chinese society by engaging individuals into the embedded social networks so that governance within many Chinese corporate organizations is achieved by following its own cultural logic. The mainstream theory of corporate governance developed in the West does not fit with the social reality in China. But the development of capitalistic economy in China has broken the historical social relationships and demanded the capitalistic corporate governance. As fundamentally the reflection of capitalistic cultural logic, the mainstream theory of corporate governance satisfies the requirement of capital power and helps legitimize the capitalistic governance so that the consent to guanxi-based governance could be replaced with the consent to capitalistic governance. This thesis analyses the transformation process under the framew ork of the corporate field and points out that the present is a critical period for many SMEs in China in that the breaking of historical social relationships is leading to the struggle for hegemony between the capitalistic cultural logic, on the one hand, and the regeneration of guanxi among the workers within that same corporate field, on the other.