By Alan Murray and Tom Huddleston Jr.
January 25, 2017

Good morning.

As Donald Trump pursues his ‘America First’ policies, China’s Xi Jinping continues to offer himself as the new leader for a global economy. In addition to his speech in Davos last week, he is aggressively touting China’s multi-billion dollar “One Belt, One Road” initiative to provide infrastructure investment in some 60 countries in Eurasia, East Africa and Oceania—a kind of modern-day Marshall Plan.

But a big problem with China’s global ambition is that it lacks global companies. While more than 100 Chinese companies now rank on Fortune’s Global 500 list, the vast majority are state-owned—companies like State Grid, China National Petroleum, and Sinopec (Nos. 2, 3 & 4)—that do very little business outside of China. They owe their massive size to the massive size of the Chinese market and to government protection from outside competitors, rather than to any proven ability to compete in the world. It’s hard to imagine how China can replace the U.S. as the world’s economic leader until that changes.

One of the few exceptions is Huawei, which has long sold telecommunications equipment around the world, and is now posing a serious challenge to Apple and Samsung in the smartphone business. It has struggled in the U.S., in part because of national security concerns, but has been a powerhouse elsewhere. In Finland, for instance—home to Nokia, the one-time leader of the cell phone business—Huawei in the last year passed both Apple and Samsung to take the market lead.

My colleague Scott Cendrowski profiles Huawei’s rise in the February issue of Fortune magazine, but you can read the story online today, here. If Xi Jinping’s bid for global economic leadership is going to be taken seriously, he will need to stop coddling state-owned companies, and start nurturing a lot more Huaweis.

News below.


Alan Murray


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