15 Biggest Chinese State-Owned Companies

Published on January 13, 2023 at 10:18 am by Mohammed Saqib in Economy, Lists, News

In this article, we will discuss the 15 Biggest Chinese State-owned Companies. You can skip our detailed analysis of the Chinese economy and go directly to the 5 Biggest Chinese State-owned Companies.

With a GDP of US$ 17.73 trillion, China has the world’s second-largest economy, trailing only the United States. Low labor costs and cutting-edge technology have made China the world’s manufacturing hub. According to UN data, China was home to 28.7% of the global manufacturing output in 2019—the largest share by any country. As per China SCIO, China’s manufacturing output increased from 16,98 trillion yuan in 2012 to 31.4 trillion yuan in 2021, and the country’s share in the global manufacturing sector rose from around 20% to 30% during the same period.

Since 2020, more companies from China have made the annual Fortune Global 500 ranking than any other country, further reinforcing its status as an economic superpower. Manufacturing is the largest revenue generator for China, followed by other sectors such as construction, real estate, e-commerce, and software development.

Currently, China is the USA’s only real economic rival and also one of its most important trading partners. But the two countries differ in their economic approaches. While the United States champions the free market system, China follows a unique system known as a socialist market economy. Similar to free market economies, China uses demand and supply factors to determine output levels and prices. However, in addition to private firms, state-owned enterprises are also used to meet this demand, where the government actively intervenes in the economy to achieve its economic goals. In fact, 71% of China’s Fortune 500 companies are state-owned. State ownership is most common in China’s strategic sectors, such as energy, telecommunications, and banking.

Over 150,000 SOEs dominate China’s economy, 98 of these SOEs are owned by the central government. A government entity called the “State-owned Assets Supervision and Administration Commission” is in charge of these companies. Other SOEs are managed by entities similar to the SASAC at the provincial and local levels of government. The number of centrally owned SOEs stood at 149 in 2008 but has since been declining as the SASAC continues consolidating its holdings through mergers and acquisitions.

15 Biggest Chinese State-owned Companies

Although these SOEs are large revenue generators, their profitability has not been very promising. As per a study, in 2020, Chinese companies’ average profit margin and return on assets were 4.5% and 1.9%, respectively. This performance did not change considerably in the following year, but most companies from other countries had improved their margins significantly. This left China with the lowest average profit margin and return on assets among all those countries having more than ten companies on the Fortune 500 2022 list.

Furthermore, Chinese SOEs are highly leveraged. In a study conducted by S&P Global, they found out that the bottom 90% of Chinese SOEs in the sample are stuck in a debt trap and will need external intervention. These companies only generate 15% of the earnings but account for 45% of the gross debt, indicating inefficiency.

The Chinese government also recognizes the need for industrial reforms to improve the efficiency of these SOEs. Since 2013, the government has pursued mixed ownership in the public sector. With this structure, some parts of these SOEs are sold to private investors so that government intervention in daily operations is minimized. This reform aims to ensure that the government is only responsible for strategically allocating state capital.

Our Methodology

To come up with the 15 Biggest Chinese State-owned Companies, we sorted data of the largest Chinese SOEs from the Fortune 500 Global 2022 rankings. Hence, we picked the biggest Chinese SOEs and ranked them in ascending order of their 2021 annual revenue.

15 Biggest Chinese State-owned Companies

15. China Minmetals Corporation

Annual Revenue 2021: $102.0 billion

China Minmetals Corporation is a SASAC-owned company that mines and processes metal products. Copper, tungsten, lead and zinc, rare earth, tin, antimony, nickel, aluminum, and other products are processed and distributed by the company. It is also involved in the financial and real estate development sectors. China Minmetals Corporation acquires significant international mining projects and secures offshore mineral assets that China does not have locally.

According to Fitch ratings, it also controls 90% of the contract value in domestic metallurgical engineering and construction.

In addition to China Minmetals Corporation, Sinopec Group, China National Petroleum Corporation and State Grid Corporation of China are included in our list of 15 biggest chinese state-owned companies.

14. China Mobile Communications

Annual Revenue 2021: $111.8 billion

China Mobile Communications is a state-owned company that provides communications and information services in all 31 Chinese provinces, autonomous areas, and directly governed municipalities, as well as in Hong Kong SAR. The company also operates a mobile network in Pakistan through its subsidiary CMPak (Zong). The Group had 446,068 employees, 970 million mobile customers, and 256 million wireline internet customers as of June 30, 2022. In 2021, its revenues climbed by 18%, with a net profit of $14.63 billion.

13. China Railway Construction Corporation

Annual Revenue 2021: $131.9 billion

China Railway Construction Corporation is under the supervision of the SASAC, with its operations including project contracting, planning, and design advice, investment operation, real estate development, industrial production, materials logistics, environmental protection, industrial finance, and other growing industries. It operates in 32 domestic provinces, autonomous areas, and municipalities, as well as over 130 nations and regions worldwide.

12. China Railway Engineering Corporation

Annual Revenue 2021: $141.3 billion

Although railway construction is its primary business, China Railway Engineering Corporation is involved in practically every other area of infrastructure construction, including highways, municipal facilities, housing and buildings, urban rail transits, water conservancies, hydropower plants, airports, harbors, docks, etc. It has constructed more than two-thirds of all railways in China, including 90% of the country’s electric railways. It also accounts for one-eighth of overall expressway mileage and three-fifths of China’s urban rail transit projects. It has also created numerous excellent projects throughout Asia, Africa, Europe, South America, and the Atlantic.

11. China Life Insurance Company

Annual Revenue 2021: $144.5 billion

China Life Insurance Company is China’s largest insurance firm, which provides various insurance products such as life, accident, and health insurance. The Chinese government owns 68% of the insurer. It is traded on both the Hong Kong and Shanghai stock exchanges. For 20 consecutive years, the insurer has consistently made it to the Fortune Global 500 rankings. In 2021, the company witnessed an 8.6% increase in revenue but saw a 33.6% decrease in profits from last year.

10. China Baowu Steel Group Corporation Ltd.

Annual Revenue 2021: $150.7 billion

China Baowu Steel Group Corporation Ltd. produces strip steels, steel plates, hot rolled steels, cold rolled steels, steel wires, and more. It is the second largest steelmaker in the world, with an annual crude steel production capacity of around 100 million tons. According to Fitch Ratings, Baowu is China’s largest auto-sheet and silicon steel producer, with a market share of 80% and 60%, respectively.

9. The Bank of China (SHA:601988)

Annual Revenue 2021: $152.4 billion

The Bank of China (SHA:601988) is owned by Central Huijin Investment Limited, which is a state-owned investment company. The Bank of China, being China’s most globalized and integrated bank, has a well-established global service network with institutions located throughout the Chinese mainland as well as in 57 countries and regions.

It offers a wide range of financial services, including corporate banking, personal banking, investment banking, insurance, and leasing. In their respective markets, its Hong Kong subsidiary and the Macau Branch act as local note-issuing banks.

8. Agricultural Bank of China (SHA:601288)

Annual Revenue 2021: $153.8 billion

Agricultural Bank of China (SHA:601288) provides international commercial banking and financial services. It is one of the “big four” banks in China and is headquartered in Beijing. Central Huijin Investment Limited, a state-owned investment company, owns 40.03% shares in ABC. This makes Agricultural Bank of China (SHA:601288) a state-owned company.

7. China Construction Bank (SHA:601939)

Annual Revenue 2021: $172.0 billion

China Construction Bank (SHA:601939) is a subsidiary of Central Huijin Investment Limited, a state-owned investment company. CCB provides a comprehensive range of commercial banking products and services. They have three principal business segments: corporate banking, personal banking, and treasury operations.

As per their website, the bank has 13629 branch outlets, with overseas branches in Hong Kong, Singapore, Frankfurt, Johannesburg, Tokyo, Seoul, New York, Ho Chi Minh City, and Sydney.

6. Sinochem Holdings

Annual Revenue 2021: $172.3 billion

Sinochem Holdings is a subsidiary of the SASAC and has 16 listed arms, including Yangnong Chemical, Pirelli, and China Jinmao Holdings Group. It was formed in May 2021 through the merger of two state-owned industrial giants – Sinochem Group and China National Chemical (or ChemChina). In addition to chemicals, Sinochem Holdings was also engaged in real estate and finance businesses, while ChemChina was China’s largest agrochemicals company. The combined entity has production and R&D facilities in more than 150 countries and regions, along with 220,000 staff.

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