Is China's Economic Dominance at an Inflection Point?
Mounting problems for China's largest enterprises provides significant opportunities and risks.
Chinese firms, while continuing to grow revenues, significantly lag their chief economic rivals in terms of profit margins. Historically, SOEs globally have underperformed privately owned enterprises (POEs), and this is true in China as well. The average profit margin for the Chinese SOEs on the Fortune Global 500 list was just 3.5%. And now, mounting state debt risks crowding out funding for Chinese firms, increasing business uncertainty, and reducing the strategic flexibility Chinese firms have traditionally enjoyed.
