State-owned enterprises of China

When China's SOEs were first created, they served as instruments for carrying out national goals and providing social stability via the iron rice bowl.[6]^: 84 Financial performance of SOEs was not a major concern until China's reform era.[6]^: 84–85

As of 2017, China has more SOEs than any other country, and the most SOEs among large national companies.[7] In 2018, half of the country's centrally-owned SOEs were among the world's 500 largest companies.[6]^: 95 As of the end of 2019, China's SOEs represented 4.5% of the global economy[8] and the total assets of all China's SOEs, including those operating in the financial sector, reached US$78.08 trillion.[9]

State-owned enterprises accounted for over 60% of China's market capitalization in 2019[10] and generated 40% of China's GDP of US$15.97 trillion (101.36 trillion yuan) in 2020, with domestic and foreign private businesses and investment accounting for the remaining 60%.[11][12] Ninety-one (91) of these SOEs belong to the 2020 Fortune Global 500 companies.[13]

SOEs have a primary role in China's energy sector.[14]^: 24 Its five large state-owned power generation companies are: Datang, Guodian, Huadian, Huaneng, and China Power Investment Corporation.[14]^: 40 Its state-owned grid companies are State Grid Corporation of China (SGCC) and China Southern Power Grid Corporation.[14]^: 41

Most Chinese universities are SOEs.[14]^: 217

China's SOEs are at the forefront of global seaport construction, and most new ports built by them are part of the Belt and Road Initiative.[15] State-owned banks are important sources of funding for port construction.[16]^: 272

In addition to their own operations, SOEs invest in private enterprises.[5]^{: 217–218} From the perspective of these private enterprises, this form of partial state ownership is helpful in obtaining financing from banks, particularly as prompts banks to require less collateral.[5]^: 21 Sometimes in investing in private enterprises, SOEs acquire enough shares to nationalize them.[5]^: 218 Over the period 2018-2020, 109 publicly traded enterprises with more than $100 billion in collective total assets were nationalized in this way.[5]^: 218

According to academic Wendy Leutert, China's SOEs, "...contribute to central and local governments revenues through dividends and taxes, support urban employment, keep key input prices low, channel capital towards targeted industries and technologies, support sub-national redistribution to poorer interior and western provinces, and aid the state's response to natural disasters, financial crises and social instability."[7]^: 146

Following the CCP victory in the Chinese Civil War, one of the party's early steps was to nationalize enterprises that the defeated Nationalists had controlled.[17]^: 36 By 1952, China's SOEs accounted for more than 40% of industrial production, and by 1956 nearly all large-scale commerce and industry had been nationalized.[17]^: 36

During the Third Front campaign to develop heavy industry in China's interior regions, almost 400 state-owned enterprises were re-located from coastal cities to secret sites in the Chinese interior where they would be more protected in event of foreign invasion.[18]^: 3

In 1984, the State Council issued a directive to expand the autonomy of SOEs.[19]^: 81 SOEs were also allowed to sell surplus goods on the market once they had met their quotas.[19]^: 81

With the goal of boosting innovation and efficiency, more than half of China's largest SOEs had established technical development centers by 1993.[14]^: 24 The same year, the CCP issued its "Decision on Issues Related to the Establishment of a Socialist Market Economy System."[20]^: 215 In the wave of reform thereafter, one goal was to separate SOE management from government and to empower a select group of SOEs with special property rights and autonomy.[20]^: 215

Consistent with President Jiang Zemin and Premier Zhu Rongji's strategy of "grasping the large, letting go of the small," major SOE reform occurred in 1997,[20]^: 215 which represented a change from the previously incremental reform efforts.[21]^: 96 The state was encouraged to preserve large SOEs and to allow weaker ones to be "let go" through closing or consolidating.[20]^{: 215–216} Other major policies that were part of the 1997 reforms included management and employee buyouts and the inclusion of foreign strategic partners.[21]^: 96

SOE mergers have been routine since 2000.[7]^: 140 Beginning in 2003 with Hu Jintao's administration, the Chinese government increasingly funded SOE consolidation, supplying massive subsidies and favoring SOEs from a regulatory standpoint.[5]^: 217 These efforts helped SOEs to crowd out foreign and domestic private sector competitors.[5]^: 217

As part of China's Great Western Development program, China's five large state-owned hydropower companies planned, underwrote, and built the majority of dams on the river and its tributaries.[22]^: 220

SOEs were major beneficiaries of China's stimulus program following the 2008 global financial crisis, which began a period where the private sector withdrew and the state-owned sector expanded.[5]^: 216

Governments below the national level operate portfolios of SOEs which operate both domestically and abroad.[7]^: 137

• List of government-owned companies
• State ownership