The Monopolies of the Future Will Be Chinese — and State-Owned

A Sinopec employee looks on in Polypropylene Plant No. 3 of the Sinopec Yanshan Petrochemical Company (SYPC) during a tour arranged by the State Council Information Office in Beijing.
SourceGetty Images, Composite by Sean Culligan

The Monopolies of the Future Will Be Chinese — and State-Owned

By Ben Halder


From energy to utilities and infrastructure, China’s state-owned monopolies are taking over the world. 

By Ben Halder

A last-minute escalation in the trade dispute between Beijing and Washington meant West Virginia state representatives and business leaders had to put on hold plans for a rare welcome to a team from Beijing last June. But the state isn’t giving up: It’s still lobbying the federal government to facilitate a deal crafted originally during President Trump’s visit to China in late 2017. There’s too much at stake.

The expected visitors were from China Energy Investment, the oil and gas firm that had promised an $84 billion investment deal — larger than West Virginia’s GDP in 2017 of $75 billion — to inject life back into the state’s floundering energy industry. The allure of that deal highlights how a wave of giant firms with little name recognition outside China are quietly taking a dominating lead internationally in industries ranging from energy and utilities to infrastructure. While the West is preoccupied with security threats posed by telecommunications players such as Huawei, these other companies — most of them state-owned — are emerging as the global monopolies of the future.

In 2010, there were 49 Chinese companies on the Fortune 500 list, compared to 139 from America. Now, they’re neck and neck. In 2018, China had 120 representatives on the iconic roll call of the world’s highest revenue-earning firms, against 126 from the U.S. Both countries today have three firms among the top 10 — two decades ago, the U.S. had five, China none. Unlike the top American companies — Walmart (ranked No. 1), Exxon Mobil (No. 9) and Berkshire Hathaway (No. 10) — their Chinese peers at the top of the global pecking order aren’t household names in the West: utilities giant State Grid (No. 2) and energy majors Sinopec Group (No. 3) and China National Petroleum (No. 4). But their rapid rise — none of them figured in the world’s top 45 companies just 15 years ago — suggests you’ll likely be hearing a lot more about these firms, all state-owned, in years to come.

State-owned enterprises are … an entrenched part of the political system.

Wendy Ng, Melbourne Law School.

And already, the next band of aspiring Chinese monopolies is at the gates. Seven of the eight companies that rose the most in the latest Fortune 500 rankings are Chinese, including recognizable private tech giants Alibaba and Tencent. But leading that pack is none other than state-owned China Energy Investment, which rose 175 positions to rank 101 globally the year West Virginia hoped it would revive its energy economy.

“Government support is vital,” says Vik Singh, assistant professor in the Global Management Studies program at Ryerson University.

Chinese state-owned enterprises (SOEs) benefit from favorable legislation and regulation changes, virtually unlimited access to cheap financing and some degree of protection from anti-competition laws, say experts — advantages their private counterparts in China and outside can rarely match. But while that explains the sharp rise of Chinese SOEs globally, it also means that as the communist nation’s economy continues to grow rapidly — despite a slowdown by its double-digit growth standards — the biggest monopolies of the future will likely be state-owned.


We’re already getting there. State Grid, the world’s largest utility firm, has annual revenues of $348 billion. That’s equivalent to South Africa’s GDP and more than the combined revenues of the next five largest utilities companies. The Chinese firm has bought Brazil’s second-largest utility firm, CPFL Energia, and has the contract to run the Philippines’ national grid until 2058. It also has significant stakes in major Australian and Portuguese utility firms.

The world’s six largest engineering and construction firms are all Chinese, led by China State Construction Engineering, which is also the world’s 23rd biggest company overall. The company — which in 2018 recorded annual revenues of $156 billion — renovated the Alexander Hamilton Bridge in New York earlier this decade and has built the Federation Tower, Europe’s second-tallest building, in Moscow. The Chinese giant is currently building everything from Ethiopia’s largest soccer stadium to Egypt’s proposed new capital, and it has just completed the construction of the Algiers Grand Mosque.

Sinopec and China National Petroleum, both with revenues around $326 billion, are the world’s two largest oil and gas companies. Sinopec owns oil fields across Africa — in Nigeria, Gabon, Sudan, Ethiopia, Cameroon and Angola — and firms in Canada, Australia and the U.K. By the end of 2017, the company’s annual report says, it had completed more than 800 projects in 40 countries — from America to Argentina. China National Petroleum, meanwhile, is building an unparalleled empire in countries where it’s difficult to do business: It operates in Iraq, Iran, Afghanistan, Syria, South Sudan, Kazakhstan and Uzbekistan, among other nations.

The world’s two largest mineral extraction firms — China Minmetals and Amer International Group — are Chinese. As are the world’s three biggest commercial banks: Industrial & Commercial Bank of China, China Construction Bank and Agricultural Bank of China.      

For the Chinese Communist Party, it makes sense for the government to promote and facilitate the rapid expansion of these firms. “SOEs are not only important economic players; they are also an entrenched part of the political system,” says Wendy Ng, a senior lecturer at Melbourne Law School. Singh agrees that many of China’s SOEs also act as “instruments of Chinese political interests.” Most of these companies, for instance, are central to the execution of President Xi Jinping’s Belt and Road Initiative, a grand network of highways, ports and railroads connecting East Asia to Europe and Africa.

To be sure, these Chinese giants still face challenges — and have some way to go to displace Walmart as the world’s richest company, with annual revenues topping $500 billion. Amid growing concerns within China over monopolization of industries domestically, the community government has recently tightened its anti-monopoly legislation. Outside China, these companies lose some of their edge. “Chinese companies are still subject to the competition laws of the countries in which they operate,” says Ng. And while the advantages they enjoy at home have helped stimulate incredible rates of growth, there is an ingrained skepticism in the political motives of Chinese companies operating on foreign soil, highlighted by the ongoing debates around Huawei and its role in the global 5G roll-out.

But many experts believe the Chinese state will shield its biggest corporate ambassadors from the competition law, which a new anti-trust bureau is expected to enforce. “I would expect the anti-trust bureau to get off to a slow start,” says Adrian Emch, a partner at law firm Hogan Lovells’ Beijing office. By dominating their respective industries within China, these firms are able to build up vast revenues, which they can invest in foreign markets on a scale their international competitors are increasingly struggling to match. West Virginia’s dilemma might soon be the world’s.