SOE Megamergers Signal New Direction in China's Economic Policy

The Chinese government is seeking to revamp its state sector through a series of billion dollar “megamergers” involving central state-owned enterprises (SOEs). These megamergers consolidate state control in strategic sectors of economy and eliminate intra-state competition in China. However, they also contribute to increased debt levels among Chinese SOEs and undermine the competitiveness of U.S. businesses and other global firms. This report assesses the objectives of China’s megamergers strategy and evaluates the implications of SOE megamergers (and, more broadly, Chinese government control over the economy) for the global competitive landscape.