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It argues that understanding SOE governance requires moving beyond agency-cost analysis in listed firms to studying the relational ecology and institutionalized mechanisms connecting business groups with party-state organs. It raises research and policy questions about comparative corporate governance theories, the effects of Chinese SOEs abroad, and how U.S. market and investment regulation addresses hybrid business-political actors.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/we-are-the-national-champions-understanding-the-mechanisms-of-state-capitalism-in-china/199329/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/we-are-the-national-champions-understanding-the-mechanisms-of-state-capitalism-in-china/199329.png","ImageObject",300,407,{"name":92,"@type":93},"Felix Montgomery","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-09-04",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",18,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"Why does the article move away from standard agency-cost analysis of listed firms?","Question",{"text":113,"@type":114},"Because key features of the SOE sector, especially organizational structure and governance of SOE groups, remain a “black box.” The article argues that explaining these features requires examining the relational ecology and institutionalized mechanisms linking groups to party-state organs.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What institutional mechanism does the article emphasize for understanding Chinese state capitalism?",{"text":118,"@type":114},"It emphasizes linkages that enable Chinese managerial elites to assemble an “encompassing organization,” a coalition with incentives to be actively concerned about how productive society is.",{"name":120,"@type":111,"acceptedAnswer":121},"What kinds of questions does the article suggest for scholars and policymakers?",{"text":122,"@type":114},"It asks whether prevailing comparative corporate governance theories explain the rise of Chinese SOEs, how their operations in foreign markets may change corporate capitalism’s institutional trajectory, and whether U.S. market and investment regulation adequately contemplates hybrid business-political actors like Chinese SOEs.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},199329,1788505661,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":140,"language":141,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":142,"faqs":143,"seo_title":144,"seo_description":67,"update_tm":130,"read_time":145,"preview_page_count":4},549768064778,"https://ap-avatar.wpscdn.com/davatar_6f874abed73319feea01a86fa6f0fab8","WE ARE THE (NATIONAL)CHAMPIONS:  \nUNDERSTANDING THE MECHANISMS OF STATE CAPITALISM IN CHINA  \nLi-Wen Lin & Curtis J. Milhaupt*  \nChina now has the second-largest number of Fortune Global 500 companies in the world. Most of the Chinese companies on the list are state-owned enterprises (SOEs) organized into massive corporate groups with a central government agency, known as SASAC, as their ultimate controlling shareholder. Despite these groups’ importance to China’s domestic economy and foreign investment strategy, many features of the SOE sector—particularly the organizational structure and governance characteristics of the SOE groups—remain a black box. Unpacking the black box requires moving away from the standardfocus on agency costs in listed firms that predominates in the corporate governance literature. Instead, we examine the relational ecology in which the SOE groups exist, with a focus on institutionalized mechanisms linking the business groups with other organs of the party-state. We argue that through these linkages, Chinese managerial elites in the economy have assembled what Mancur Olson called an “encompassing organization”—a coalition whose members “own so much of the society that they have an important incentive to be actively concerned about how productive it is.”  \nExposing the mechanisms of Chinese state capitalism in this way raises many questions for scholars and policymakers, the salience of which increases asthe global interaction of Chinese firms expands. For example, is the rise of Chinese SOEs adequately explained by prevailing theories in the comparative corporate governance literature? How might the increased operation of Chinese SOEsin foreign markets change the institutional trajectory of corporate capitalism in  \n* Lin is a Ph.D. Candidate in the Sociology Department of Columbia University and received her J.S.D. from the University of Illinois at Urbana-Champaign. Milhaupt is the Parker Professor of Comparative Corporate Law and Fuyo Professor of Japanese Law at Columbia Law School. Helpful comments on a draft of the Article were received from Yuen Ang, Donald Clarke, Robert Ferguson, Ronald Gilson, Jeffrey Gordon, Nicholas Howson, Sung-Yong Kim, Benjamin Liebman, Mariana Pargendler, Hugh Patrick, Randall Peerenboom, Frank Upham, and participants at workshops in Beijing and Seoul, and at Columbia, Cornell, Fordham, and Vanderbilt Law Schools and NYU School of Law. We also thank interviewees in Beijing from business, government, and academia who generously shared their knowledge and insights with us. Interviews were conducted on an anonymous, background basis.  \n697  \n698 STANFORD LAW REVIEW [Vol. 65:697  \nChina? Do the institutions of market and investment regulation in the United States adequately contemplate hybrid business-political actors like Chinese SOEs? By examining the organizational structure of SOEs, this Article provides a foundation for future research on a pivotal aspect of China’s contemporary political economy.  \nINTRODUCTION.......................................................................................................699  \nI. UNDERSTANDING CHINESE INDUSTRIAL ORGANIZATION .................................704  \nA. Introduction ................................................................................................704  \nB. Chinese Industrial Organization as a Networked Hierarchy .....................706  \n1. A simple analytical construct ..............................................................707  \n2. A stylized model ..................................................................................709  \nC. Origins of Chinese Corporate Groupism ...................................................712  \nII. NATIONAL BUSINESS GROUPS ..........................................................................716  \nA. Components ................................................................................................717  \n1. Core (parent) company ...............","cbCaikT0Sng3tT3n","https://ap.wps.com/l/cbCaikT0Sng3tT3n","pdf",466137,64,"English","# INTRODUCTION\n# I. UNDERSTANDING CHINESE INDUSTRIAL ORGANIZATION\n## A. Introduction\n## B. Chinese Industrial Organization as a Networked Hierarchy\n## C. Origins of Chinese Corporate Groupism\n# II. NATIONAL BUSINESS GROUPS\n## A. Components\n## B. Membership and Internal Governance\n## C. Networks\n## D. Examples\n# III. THE PARTY-STATE AS CONTROLLING SHAREHOLDER\n## A. SASAC as Controller\n## B. Consequences\n# IV. IMPLICATIONS AND QUESTIONS","[{\"question\":\"Why does the article move away from standard agency-cost analysis of listed firms?\",\"answer\":\"Because key features of the SOE sector, especially organizational structure and governance of SOE groups, remain a “black box.” The article argues that explaining these features requires examining the relational ecology and institutionalized mechanisms linking groups to party-state organs.\"},{\"question\":\"What institutional mechanism does the article emphasize for understanding Chinese state capitalism?\",\"answer\":\"It emphasizes linkages that enable Chinese managerial elites to assemble an “encompassing organization,” a coalition with incentives to be actively concerned about how productive society is.\"},{\"question\":\"What kinds of questions does the article suggest for scholars and policymakers?\",\"answer\":\"It asks whether prevailing comparative corporate governance theories explain the rise of Chinese SOEs, how their operations in foreign markets may change corporate capitalism’s institutional trajectory, and whether U.S. market and investment regulation adequately contemplates hybrid business-political actors like Chinese SOEs.\"}]","WE ARE THE (NATIONAL) CHAMPIONS - UNDERSTANDING THE MECHANISMS OF STATE CAPITALISM IN CHINA | PDF",161]