Abstract: Since the 70?s of the 20th century, western governments were commonly faced wi th the crises in finance, management and credit. To get out of the dilemma, th ere emerged a huge worldwide wave of privatization of public utilities under the leadership of the UK. Since the 90?s, with the theoretical development of gov ernance, privatization has gradually become the most applicable tool for the g overnance of public sectors. Based on the governance ground of privatization of public utilities, the article makes deep analysis of the situation and problems with privatization reform in terms of governance capability, market developmen t and that of the third sector, and accordingly puts forward new strategies for propelling privatization reform in China.