Rethinking the Role of State-owned Enterprises in China’s Rise

“Jones and Zou (2017) explore the case study of a Chinese SOE investing in hydropower energy in Myanmar.”

“The state is fragmented and decentralized, and various actors such as state-owned enterprises, local governments, and business groups leverage on the party state’s Belt and Road Initiative to pursue their own interests (Jones and Zou 2017; Ye 2019; Liao 2019; Li and Zeng 2019).”

“…might differ among firms; for instance, state-owned firms have privileges in accessing information—especially those related to the government (Jones & Zou, 2017)—which biases the estimation of the impact of external knowledge breadth and depth on innovation, raising concerns about…”

“In reality, the nature of cross-border state investment is often fragmented and only rarely part of a grand geopolitical strategy (Jones and Zou 2017).”

“Similar to SWFs, the (geo-) political question also dominated discussions about the global role of SOEs (Carney, 2018; Cuervo-Cazurra, 2018; Jones & Zou, 2017; Meckling et al., 2015).”

“As the study of Jones and Zou (2017) on Chinese SOEs in Myanmar shows, Chinese SOEs ‘clearly defied and subverted central regulations’ for the sake of corporate profit, leading to the damage of official Sino-Myanmar relations, while central agencies in Beijing are struggling to deal with the…”

“Yet, the state’s primary aim is to create conditions for China Inc. to ‘enter global markets as profit-driven actors’ (Jones & Zou, 2017, p. 755).”

“Thus, this literature sees the reinvention of state–capital hybrids as a path-dependent evolution of existing “developmentalist” or “state capitalist” elements in the political economy (Nem Singh and Chen 2018, 1091; see also Kim 2019).”

“National regulators have also tightened the rules governing overseas investment (Jones and Zou 2017, 754–755).”

“Fifth, as international latecomers, Chinese firms and lenders are forced into higher-risk markets that established competitors shun (Jones and Zou, 2017: 750).”

“This proposition opposes that of Li (2012, p. 613) and Jones and Zou (2017), who believe China has “weak government, strong interest groups” and that the central government has a declining capacity to effectively control key SOEs.”

“For example, the Chinese regional and provincial state has played a notorious role in supporting the internationalization of capital, or in supporting “national champions” going abroad (Jones and Zou, 2017).”

“The Myitsone project’s leading state-owned dam company defied the Chinese fragmented party-state’s own regulations, while seeking profit, eventually damaging Beijing’s diplomacy in Burma (Jones and Zou 2017).”

“The reality is much more complex, and ‘the analytical distinction between state-driven or market-driven internationalization is problematic’ (Alami and Dixon, 2020: 81 – commenting on Jones and Zou, 2017).”

“SOEs have made alliances with domestic capitalists in BRI states to realise projects that reflect more the competition and threat of moral hazard within the state than a productive use of state capital (Jones & Zou, 2017; Shi, 2015).”

“This internationalization process is primarily driven by the economic interests of individual companies, often leading to competition for foreign market shares, even among SOEs controlled by different state agencies (Gu et al., 2016; Jones and Zou, 2017).”

“This impetus may take the form of state leadership and control but may also be more indirect, exerting leadership, as suggested by Jones and Zou (2017), through setting broad targets and guidelines for profit-seeking SOEs.”

“While its DWF industry has an independent capacity to pursue profit-maximising fishing activities, it is inherently regulated and controlled by the Chinese state (Jones and Zou 2017, Leutert and Eaton 2021).”

“…nature of SOEs in China, a daunting task given the level of variation among them, there is general agreement that the vast majority of SOEs remain at least under indirect control of the central government (Zhang 2010, Breslin 2012, Jones and Zou 2017), something that is echoed in our study here.”

“Understanding the differences between SOEs and non-SOEs is important, given their distinct institutional contexts and strategic priorities (Jones and Zou, 2017; Lin et al., 2020).”

“Being one of the most pre-eminent political parties in an economy that has undergone tremendous reforms and transformations, the CCP’s governance model has become an academic and policy issue of interest (Jones and Zou 2017; S. Wang, Zheng, and Tu 2023).”

“…which is used to explain the capacity of China as a rising state (Hameiri and Jones 2016), to dispel common misconceptions of strong affiliations of Chinese state-owned enterprises (SOEs) with the Party (Jones and Zou 2017) and to analyse the evolution of global regulatory regimes (Hameiri 2020).”

“Today, China continues to be ‘groping for a way forward’ in its pragmatic economic transition towards ‘socialism with Chinese characteristics,’ as can be observed in multiple rounds of often protracted privatization and restructuring reforms and cautious marketization (Meidan et al. 2009, Brødsgaard and Mertha 2017, J…”

“…foreign and security policymaking and implementation, including the growing international footprint of China’s SOEs, regulators, and provincial governments, which operate internationally with considerable latitude (Jones & Zou, 2017; Bell & Feng, 2013; Chen & Jian, 2009; Chen, Jian, & Chen, 2010).”

“, 312; for examples in the Chinese context, see Eaton and Kostka, 2017; Jones and Zou, 2017).”

“At present, however, we now have a rich strand of studies (e.g., de Graaff, 2020; Jones & Zou, 2017; ten Brink, 2019; J. Zhang & Peck, 2016) indicating it would be misleading to conceive of Chinese state–capital relations as monolithic.”

“…in English and Chinese, have also paid attention to the growing importance of subnational actors and even NSAs in China’s foreign relations, such as local governments, government-backed business associations, and enterprises (Yan, 2021; Jones and Zou, 2017; d’Hooghe, 2015; Li, 2013; Wang, 2008).”

“…to divest from profitable sidelines in real estate and finance (Milhaupt & Zheng, 2015), while industrial SOEs participating in ‘Belt and Road’ projects overseas have also been found to pursue narrow profit-maximisation at the expense of Chinese foreign policy objectives (Jones & Zou, 2017).”

“Second, state-owned and non-state-owned fi rms have distinct institutional contexts and strategic priorities [86,87], which may lead to di ff erences in their pursuit of innovation.”

“Multiple scholars point to visible tensions between policy and practice along the Belt and Road, describing Chinese state power as fragmented (Jones and Zou 2017; Min 2019) or fractured (Jones and Hameiri 2021), and characterized by “con-stant, dynamic and evolving interactions between forces…”

“…guidance, and the fact that significant environmental, social and governance risks plagued over half of Chinese overseas projects from 2000–2017, call into question its efficacy, though efforts are underway to improve regulatory oversight (Jones & Zou, 2017; Parks et al., 2023, pp. 122–124).”

“Jones and Zou (2017) have argued that party-state control over SOEs has diminished as they have been afforded growing autonomy to operate in the market according to their own profit-seeking interests.”

“Jones and Zou (2017) even argued that the massive overseas expansion of Chinese SOEs is a core driver of China’s rise to great-power status.”

“Second, centrally managed SOEs’ preferential access to premium land plots, namely high-value plots with great potential for value capturing, demonstrates that they leverage financial capacity and political mandates to make investment decisions (cf. Jones and Zou, 2017).”

“According to Jones and Zou (2017) and Brenner (2015), after KIO and the military regime signed the ceasefire agreement in the early 1990s, they began to collaborate with each other to lure China into investing and exploiting the resource-rich region.”

“Jones and Zou (2017) proposed that the state-owned enterprises not only take the responsibility of implementing national economic policies but also contribute to the national economic growth.”

“Other work has problematised the capacity of the central state to directly control SOEs, instead positing a more nuanced relationship whereby firms are directed to follow state priorities, but often also maintain considerable autonomy (Jones and Zou 2017; Breslin 2021; Lu 2022).”

“For example, subnational governments in charge of SOEs often interpret and implement central SASAC directives in accordance with their own conditions and interests, further revealing the disconnect between central and local level economic priorities (Jones & Zou 2017).”

“The complex relationship between Chinese SOEs and host countries regarding dam projects, particularly in Asia and Africa has spawned numerous festering conflicts (Abdalla, 2016; Kiik, 2016; Jones and Zou, 2017).”

“Thus the ‘connection for protection’ hypothesis cannot explain easily how political strategy – especially co-optation – operates for this institutional cadre, owing to the mixed ownership status of many organizations (Jones and Zou, 2017; Maynard et al., 2019).”

“The second relates to strategic public services, including ensuring national economic security and facilitating industrial transformation and upgrading (Jones and Zou 2017; Li and Guan 2022).”

“The failure of China’s Myitsone dam project in Myanmar in 2011, which seemed to catch Beijing by surprise, became emblematic of the challenges inherent in the principal-agent information asymmetry problem between Beijing and SOEs operating beyond its borders (Jones & Zou, 2017; Li, 2014).”