Egan-Jones released a new commentary examining how large-scale industry rollups, led by China, are reshaping global competition and creating major implications for sophisticated institutional investors and risk managers.

According to the article, lower cost labor and a permissive regulatory environment initially supported this rise, but a large and skilled engineering workforce has enabled progress beyond what many expected. The commentary highlights China’s strength across areas such as solar, autos, electronics, batteries, telecommunications, and drones, supported by high levels of patent activity.

The analysis challenges common assumptions about centrally planned economies, noting that while China faces inefficiencies such as overbuilt infrastructure and high debt levels, its government retains the ability to move quickly to support and scale businesses. At the same time, the article acknowledges significant risks, including state control, forced changes to ownership structures, and the potential for re nationalization of foreign investments.

The commentary also examines the Western response, noting that trade remedies often arrive too late to prevent long term damage, while tariffs have limited impact given China’s trade structure. A comparison is drawn to Japan’s post war rise and subsequent stagnation following an asset bubble and credit crunch.

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Egan-Jones, an NRSRO founded in 1995, offers timely and accurate credit ratings and proxy services.

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