Peter Nolan 
Is China Buying the World? 

China has become the world’s second biggest economy and its largest
exporter. It possesses the world’s largest foreign exchange
reserves and has 29 companies in the FT 500 list of the world’s
largest companies. ‘China’s Rise’ preoccupies the global
media, which regularly carry articles suggesting that it is using
its financial resources to ‘buy the world’.

Is there any truth to this idea? Or is this just scaremongering
by Western commentators who have little interest in a balanced
presentation of China’s role in the global political economy?

In this short book Peter Nolan – one of the leading
international experts on China and the global economy – probes
behind the media rhetoric and shows that the idea that China is
buying the world is a myth. Since the 1970s the global business
revolution has resulted in an unprecedented degree of industrial
concentration. Giant firms from high income countries with leading
technologies and brands have greatly increased their investments in
developing countries, with China at the forefront. Multinational
companies account for over two-thirds of China’s high technology
output and over ninety percent of its high technology exports.
Global firms are deep inside the Chinese business system and are
pressing China hard to be permitted to increase their presence
without restraints.

By contrast, Chinese firms have a negligible presence in the
high-income countries – in other words, we are ‘inside them’
but they are not yet ‘inside us’. China’s 70-odd
‘national champion’ firms are protected by the government
through state ownership and other support measures. They are in
industries such as banking, metals, mining, oil, power,
construction, transport, and telecommunications, which tend to make
use of high technology products rather than produce these products
themselves. Their growth has been based on the rapidly growing home
market. China has been unsuccessful so far in its efforts to
nurture a group of globally competitive firms with leading global
technologies and brands. Whether it will be successful in the
future is an open question.

This balanced analysis replaces rhetoric with evidence and
argument. It provides a much-needed perspective on current debates
about China’s growing power and it will contribute to a
constructive dialogue between China and the West.

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List of Tables vii

Acknowledgements ix

Introduction 1

1 Who are We? Who are They? 11

2 Who are We? 15

2.1 Globalization and industrial concentration 15

2.2 Evidence from automobiles and beverages 25

2.3 Globalization and ‘going out’ by global firms 38

3 Who are They? 55

3.1 China catches up 55

3.2 China is still far from ‘catching up’ 66

3.3 China’s deepening relationship with developing countries 70

3.4 Oil companies and energy security 75

3.5 Multinational companies ‘going in’ to China 84

3.6 Chinese fi rms ‘going out’ of China into the high-income economies: ‘I have you within me but you do not have me within you’ 95

3.7 Constraints on China ‘buying the world’ 102

4 The Complexity of ‘Us’ and ‘Them’: The Case of Strategic Industries 110

4.1 Banks 110

4.2 Commercial aircraft 119

Conclusion 132

Is China buying the world? 132

Who are we? 133

Who are they? 136

The complexity of catching up 142

References 144

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Peter Nolan is Professor of Chinese Management at the University of Cambridge and Director of the Chinese Big Business Programme at the Judge Business School. He has been centrally involved in discussions about the integration of China with the global economy and business system. He has testified before the US Congress’ US-China Economic and Security Review Commission and served as an Advisor to the World Bank.