In the late 1980s and early 1990s there was profound scepticism that China could develop a successful market economy under the leadership of the Communist Party. Few tenets of the ‘transition orthodoxy’ were held more strongly than this. Since then, the Chinese Communist Party has increased to about 74 million members. The country’s growth performance has been remarkable, achieving average annual gross domestic product (GDP) growth of about 10%, compared with a global average of about 3%.
The ‘transition orthodoxy’ also contended that China would be unable to establish internationally competitive firms under state ownership. By 2009, China had 35 firms in the Fortune 500 and 27 firms in the FT 500, all of which were state-owned enterprises. In the FT 500 list for 2009, Chinese companies accounted for three of the top five. Chinese firms were second only to those of the US in terms of their total market capitalisation. There is a widespread feeling that China’s large firms are rapidly catching up with those headquartered in the high-income countries.
