Revisiting SOEs innovation in the large infrastructure sector

Theoretically, state-owned enterprises (SOEs) do not have incentives and thus capabilities of radical innovation. Factually, a great number of such innovations by Chinese SOEs in large infrastructure sector emerged in the last decade. The contradiction inspires further exploration on why and how the Chinese SOEs can create such accomplishments, and whether there is any potential limitation in such an approach. Accordingly, this chapter elaborates the five key determinants of the Chinese SOEs’ innovation achievements, proposes the corresponding mechanism, further examines the interplay between the market and government for an emerging economy’s catch-up, and discusses the limitations of the Chinese approach.