Using firm level data, we examine how global concentration has changed over the last decade in light of the rise of China. We find that global concentration has declined in most industries, is falling on average across industries, and there is significant churning of firms at the top of the distribution. The enhanced industrial competition is partly attributable to the rising market shares of emerging market firms at the expense of incumbent industry leaders. However, global concentration has risen significantly in a number of industries where Chinese state-owned enterprises dominate, such as mining, metals, real estate and construction. Controlling for mergers and acquisitions and other factors, we find that the presence of a Chinese SOE at the top of the firm-size distribution is associated with a 4 percentage point increase in concentration. The results imply that while the overall impact of China’s rise has been a small but significant increase in global competition, state-ownership has significantly distorted global competition in a number of industries.
Available for download here.