With the world paying close attention to the geostrategic tensions between the United States and China, it is surprising that little coverage was given to what could be seen as a major development in superpower competition. Last week Fortune released its latest Fortune Global 500 list, and for the first time China had the largest number of companies represented. Chinese firms slightly outpace those from the United States, 124 to 121, and are way ahead of third-place Japan, which now has only 53 companies on the list. China now has more firms on the list than France, Germany and Great Britain combined.
Fascination with China’s place in global rankings goes back at least to the early 1990s, when the International Monetary Fund (IMF) began issuing estimates of gross domestic product (GDP) calculated by purchasing power parity (PPP) that showed China’s economy was approaching the size of Japan and the United States. According to the IMF, China passed the US in PPP terms in 2014, and now the debate is about when it will take the lead in nominal terms.
The Fortune list is the most conspicuous corporate equivalent of the economy-wide GDP comparison. Although eye-catching, the reality is that in some ways both are overhyped. We have dug a little deeper into the numbers – and individual companies – and the overall rankings tell far from the whole story. China now has the largest number of companies on the list and some of them have become much more formidable in their industries, but in general Chinese companies are still far from the world’s strongest. This conclusion is not new, but in an era of greater conflict and loudening calls to counter growing threats, it is more important than ever to be empirical. Here is what the data tells us.