ICBC has more than US$4 trillion in assets and employs nearly half a million people. It listed simultaneously in Hong Kong and Shanghai in 2006, in what was at the time the world’s largest initial public offering.

Its business as grown with the Chinese economy, bypassing other banks, said Gordon Tsui Luen-on, the managing director of investment company Hantec Pacific. “ICBC is also very aggressive with introducing new technology. Its Hong Kong arm, ICBC (Asia), along with Tencent Holdings has secured a virtual banking licence”, which will help it continue to develop, he said.

“One of the four metrics for the Forbes list is total asset size, which is very much in favour of banks and insurers versus other sectors,” said Timothy Mak, China banking analyst at brokerage Everbright Sun Hung Kai.

Also, a bank’s total assets include not just its capital – the money raised through issuing shares or earned through business – but also debt in various forms. This makes banks’ asset sizes very large, Mak said.

Chinese banks’ staggering size comes in part from the huge amount of profit they generate. ICBC’s net profit rose 4.1 per cent to 298 billion yuan (US$43 billion) in 2018 from a year ago.

A key factor that determines banks’ profitability is their net interest margin (NIM), or the ratio that measures how successful a firm is at investing its funds in comparison to its expenses on the same investments.

Chinese banks enjoy a much higher NIM than their international peers because interest rates are not fully market determined, Mak said. In a report published on April 25, he points out the average NIM of the eight major Chinese banks he covers was 2.02 per cent last year, higher than the 1.62 per cent for eight major Asian banks in Hong Kong, Singapore, Japan, Taiwan and Australia.

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“China is in the process of fully liberalising interest rates. However, inertia means old benchmark rates that have no real legal force are still elevating NIM well above international levels,” Mak said.

Terry Sun, an analyst at CMB International Securities, said despite ICBC’s return on equity being similar to top US banks, at about 13 per cent, its share price in price-to-book ratio terms was, however, currently trading at a discount.

“I believe ICBC’s valuation discount versus US peers is largely due to investors’ concern about asset quality, which is a persistent overhang on Chinese banks. Although Chinese banks’ recognition of non-performing loans is getting stricter, overseas investors still worry about the possibility of hidden NPL problems among these banks,” Sun said.

He added the valuation discount also reflected the less market-oriented operations at China’s state-owned banks, which also have to support China’s economy, even if it means lower profitability.

Sun said ICBC should be considered a “global bank”, as it is already counted among systemically important banks globally.

The 2,000 companies in this year’s list account for US$41.2 trillion in revenue, US$3.4 trillion in profit, US$186.7 trillion in assets and US$56.8 billion in market capitalisation.

China and the US dominate the list – America is home to 575 companies, while China and Hong Kong together account for 309. In third place is Japan with 223 companies. In 2003, in the first Global 2000 list, the US was home to 776 companies, while China and Hong Kong had 43.

Thirteen newcomers from China, including Xiaomi, the world’s fourth-largest smartphone maker, have made the cut this year, thanks to flotations. Xiaomi was upgraded to a “buy” by Hong Kong-based securities advisory services company Blue Lotus Capital Advisors on Thursday.

It sits below major competitors Alibaba Group Holding, which owns the South China Morning Post, and software giant Tencent Holdings in terms of market capitalisation, with a 240.7 billion yuan (US$34.9 billion) cap, compared with their 3.1 trillion yuan market cap each.

So far this year, Xiaomi’s stock has dropped 20.28 per cent as of Wednesday’s closing price. It closed down 1.72 per cent at HK$10.30 on Thursday.

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The list paints a grim picture as far as Beijing’s ambitious “Made in China 2025” programme is concerned. The initiative aims to boost hi-tech industries such as aerospace, biotechnology, robotics, new materials and energy efficiency through research and development spending and innovation.

According to the list, aerospace is dominated by US and European companies, which together had 20 entries, with only one for China, AVIC Holdings at no. 1,974, and one for Russia.

Among the biotechnology companies listed, nine out of 14 are based in the US, with only one, Sino Biopharmaceutical, based in Hong Kong, and none in China.

In semiconductors, an industry that underpins everything from smartphones to spacecraft, the US continues to dominate. Of the 30 companies listed, 16 with a combined revenue of about US$215 billion are from America. Only one Chinese company, Longi Green Energy Technology, with US$3.1 billion in revenue, made the list at number 1,794. In software and programming, 25 US companies were listed, against three from China.

As part of the Made in China 2025 plan, Beijing has reportedly set a goal of US$305 billion in output by 2030 for the semiconductor industry.

Additional reporting by Enoch Yiu, Georgina Lee and Yujing Liu