Using a sample of 916 Chinese listed state-owned enterprises (SOEs) from 2001 to 2005, we find that the likelihood of top management turnover is negatively associated with firm performance, suggesting the existence of an effective corporate governance mechanism in an emerging economy that is highly controlled by government. We also find that the negative turnover-performance relationship is stronger when the SOE is held by the Central Government, is directly held by a local government, or holds a monopolistic position in a local economy or in a strategic/regulated industry. The results indicate that the market-based corporate governance mechanism that punishes top executives as a result of poor performance is not only used in Chinese SOEs, but is used more frequently when the governance control of SOEs is more intensive. Our findings support the notion that government control strengthens rather than weakens the turnover-performance governance mechanism. Our additional analysis shows that this complementary effect persists in regions that lack pro-market institutions such as investor protections and a functioning capital market.