This chapter investigates the drivers of a puzzling instance of policy change in China, one with great significance for the present-day advance of the state. Beginning in the late 1980s, central policymakers introduced a series of policies which had, as their common aim, the establishment and nurturing of large, state-controlled business groups in key industries. Enterprise groups selected for inclusion in the ‘large enterprise strategy’ (qiye jituan zhanlüe 企业集团战略) now under SASAC authority are now relentlessly called upon to ‘go bigger and go stronger’ (zuo da zuo qiang 做大做强) via scaling up and striving to attain global standards of competitiveness. This muscular SOE-directed national champions strategy is a surprising development, not only because it does not gel easily with a widely held image of Chinese economic reform as a process of gradual state retreat from the market, but it is also inconsistent with pre-reform practice, meaning that this cannot easily be explained as an instance of continuity from the command economy era. Indeed, China's sprawling state-owned business groups, some of which, like Sinopec and China Mobile, are now household names the world over, would have been anathema to the official ideology of the late Maoist period which upheld small-scale, non-specialized industrial enterprises as the economic ideal.

Using the tools of ideational analysis, the key finding of this chapter is that the push to develop state-controlled national champions in key sectors drew support and gathered institutional firmness incrementally as the solution to a number of problems – both economic and political – faced by China's policymakers at different points in time. Both these problems and the policy solutions are objects of inquiry in this chapter. As recent work has emphasized, policy problems are, like babies, not delivered by storks (Mehta 2011; Béland 2009). They do not arrive unbidden on policymakers' desks fully formed, but instead take their shape and develop under the care of individuals who strive to identify their nature and then persuade their colleagues and superiors of the urgent need to address them. In the process of problem definition, ideas inform both the formulation and the presentation of a given problem, as well as its reception by the policymaking audience.