Fortune Magazine’s Global 500 list is noteworthy. For the first time, the number of Chinese companies in the list (119) nearly equals that of the US (121). If one were to add companies from Taiwan (10), the number of Chinese companies (129) comfortably surpasses that of China.
be pertinent to point out however, that the revenue of Chinese companies counts
for a little over 25% (25.6%) of the 500 companies as opposed to that of the US
which accounts for 28.8%.
top 5, there are three Chinese companies (all state owned); Sinopec group
(ranked number 2), China National
Petroleum (ranked number 4) and State Grid ranked number 5). The percentage of
State Owned Enterprises in the list has risen from last year (over 80% in 2019
from 76.3% last year).
of Chinese banks like the Industrial and Commercial bank of China, followed by
China Construction Bank, Agricultural Bank of China were also on the list.
list, once again reiterates the point, that China’s growth has been largely
propelled by a model of ‘State Capitalism’, where state run enterprises have
helped China increase its clout globally.
recent years however, a large number of private enterprises have also emerged
like Ali Baba, Huawei, Xiaomi, Oppo, Dashang Group, Ping An and legend holdings
which is a tech giant as well which feeds its data algorithms with data
harvested from its close to 200 million customers stood at the 29th place on the
list with an annual revenue of $163.5 Billion.Huawei telecom jumped 11 spots
from last year and was at 61st place,with revenue estimated at$ 109.03
Billion.Ali Baba witnessed fastest growth jumping 118 spots and was ranked at
Capitalism vs the model of liberal democracies
Capitalism has been one of China’s major successes, because the Chinese
government has no ambiguity in backing mega projects of its enterprises
overseas like Twyford factory in the Kenyan Capital, Sunshine group’s mining
activities in Tanzania, and many more infrastructural projects in the African
Continent and other parts of the world. One of the most important investments
is that of the Chinese Export-Import Bank provided 85 percent of the funding
for the $475 million Addis Ababa Light Rail.
be important to point out, that even private companies, a prominent example
being Huawei, are not free from Chinese interference. Australia has banned
Huawei from rolling out 5G network. Trump who has dubbed Huawei as a national
security threat had imposed a ‘government blacklist’. Recently, while trying to
relax some of the restrictions, the US did state that Huawei was still on the
entity list and would need a US government license to buy American technology.
growth in democracies on the other hand is not solely dependent upon state
enterprises. The number 1 company on the Fortune 500 list is Walmart. If one
were to look at the case of Indian companies which are there on the list, there
are two private sector companies while the rest are PSU’s. While Reliance is
ranked at 99. Oil & Natural Gas Corp (ONGC) a PSU ranks 160, State Bank of
India (SBI), Tata Motors, Bharat Petroleum Corp Ltd (BPCL) ranked 275 and
Rajesh Exports a private sector company is ranked at 495.
Chinese companies are benefitting from BRI
of Chinese companies (a prominent example being shipping giant COSCO) are
seeking to benefit through the Belt and Road Initiative (BRI) .
has injected massive amounts of capital into Chinese public financial
institutions, which make borrowing costs very low as their bonds are treated
like Chinese government debt, allowing them to lend cheaply to Chinese
companies working on BRI projects. This enables the Chinese companies to outbid
their counterparts to due to the inexpensive availability of funds. China’s
state owned enterprises that suffered a drought for a while, due to the slowing
of the domestic market, are getting a push due to BRI as they are now investing
in over-sees infrastructural projects. Most of the BRI initiatives have thus
far been implemented by Chinese Companies. Right now, 89% of BRI projects have
been implemented by Chinese companies, with the main beneficiaries being
construction and infrastructure sector companies.
Chinese Industry to gain from BRI, is the tech export industry. For example ,
Haier Electronics which is a Chinese appliance manufacturer has built six
industrial parks in BRI countries.
that initially started as merely China funded projects, they were later on
leased or taken over by Chinese Companies, one such project is the Hambantota
port. The port was built with 85% funding from the EXIM Bank of China, but in
2016, 80% of it was leased to a Chinese company called China Merchants Ports
holding company (CMPort) for debt for equity swap.
and private sector
US, Japan, India and Australia have been speaking about an alternative vision
to the BRI , through the FOIP (Free and Open Indo Pacific). One of the distinguishing
factors of the FOIP can be greater participation by Private players from these
countries in connectivity and infrastructure projects.
Trump administration has been supporting a greater role for the private sector
in FOIP related connectivity initiatives.
on US involvement in the Indo-Pacific, US Secretary of State Mike Pompeo had
stated:‘….. We want these to be commercially available projects led by the
American private sector in a way that benefits the entire region and the
Secretary of State during an address at the US Chamber of Commerce while
outlining the US vision for the Indo-Pacific (which included 113 Million USD
for areas such as Digital Economy, Energy and Infrastructure as well as ) while highlighting the important
role of the private sector in the Indo-Pacific stated that US private
BUILD (Better Utilization of Investment leading to Development) act which
received bipartisan support in the US Senate as well as House of
Representatives, has helped in creating a new agency the U.S. International
Development Finance Corporation (USIDFC) to replace the earlier Overseas
Private Investment Corporation (Corporation) which encouraged private companies
to invest in Africa. USIDFC is different in a number of ways first its budget
is 60 Billion USD as opposed to the earlier 29 Billion allocated for OPIC.
Second, it can make deals and provide loans in local currency which makes it
Fortune 500 list brings to the fore many points, one of them being that liberal
democracies such as US, Japan, Australia and India, need to come up with an
alternative model to that of China’s State Capitalism. While the FOIP has
lacked clarity, one area where it can improve is to come up with clear aims and
objectives beyond countering China (the BUILD act is a positive step in this
direction). This will also help counter ambiguity surrounding the versions of
Japan and US’s FOIP versions. A first step could be roping in private players
from US, Japan, India and Australia into infrastructural and connectivity
projects and not merely depending on governments.
Singh Maini is a New Delhi based Policy Analyst associated with The Jindal
School of International Affairs, OP Jindal Global University, Sonipat, India
Lingala is a student at The Jindal School of International Affairs, OP Jindal
Global University, Sonipat, India