Functional Hierarchies and Strategic Control: Reassessing the Role of Chinese State‐Owned Enterprises in Chinese Communist Party Statecraft

ABSTRACT This paper argues that Chinese state‐owned enterprises (SOEs) operate within a functional hierarchical structure that allows the Chinese Communist Party (CCP) to direct strategic behavior from atop while granting operational flexibility below. This approach challenges the conventional dichotomy that frames SOEs as either profit‐driven firms or mere extensions of the state, offering a more nuanced explanation of how SOEs contribute to China's grand strategic aims—especially in the Xi Jinping era. It shifts the unit of analysis from individual, public‐facing SOEs to the corporate group level, where Party oversight, cadre management, and strategic integration are more visible. Through case studies of two central SOEs—China COSCO Shipping Corporation and the State Grid Corporation of China—the article demonstrates how the CCP translates broad political goals into coordinated global economic activity. This study contributes to the literature on state capitalism and reveals how the CCP mobilizes corporate actors to extend geopolitical influence.