An unprecedented 34 firms from mainland China made the list of the world's top companies by revenue, up from 25 last year. Conversely, the number of US firms fell to 140, the lowest since Fortune began the list in 1995.

The Chinese firms may not be global household names, but the impact of companies like top-10-ranked Sinopec is felt around the world as they jostle with other Fortune 500 firms to snap up acquisitions.

In the past month alone, the Chinese oil giant has signed deals in Iraq, Angola and Canada.

However, unlike other countries represented, the Chinese companies are all state-owned enterprises -- with one exception, steelmaker Shagang Group, which has been fully private since 2004.

"You can be big because you are competitive and you have rolled out good products," said Yasheng Huang, author of "Capitalism with Chinese Characteristics".

"Or you can be big because you are a state-sanctioned monopoly that stifles competition. The list makes no distinction," said Huang, a professor at the Massachusetts Institute of Technology's (MIT) Sloan School of Management.

Fortune's list is based on sales revenue, but if it were based on profitability, the Chinese contingent would shrink, said Zhang Ming, an economist at Beijing's China Academy of Social Sciences.

"Most of the (list's) Chinese companies are state-run because they enjoy monopolies, favourable policies and state funding. If they lost their monopoly positions, would they still be big and profitable? That's doubtful," he said.

After 30 years of reforms aimed at transforming China from a controlled economy to a market-based system, state firms' dominance shows the need for more private assets and allowing more competition, Zhang said.

"The monopoly role means they can reap profits very easily," he said, adding: "They lack the initiative to explore high-tech and research."

The list underlines the protection that Chinese government ties can provide against the financial crisis, analysts said, pointing to independent companies that dropped off the list this year including computer maker Lenovo and Ping An Insurance -- 16.8 percent owned by HSBC.

"State-owned enterprises have ample access to the financial and political resources of the state and they are protected. The private-sector firms are not so fortunate," MIT's Huang said.

That same support should help state firms rise further in global rankings as others fall, said Jianmao Wang, a professor at the China Europe International Business School in Shanghai.

China has predicted its economy will grow eight percent this year while the International Monetary Fund has forecast the Organisation for Economic Cooperation and Development grouping of 30 developed countries will see a four percent contraction.

Although state firms' dominance may hurt efficiency in the short term, they do not threaten China's economic long-term development because market reforms will continue, Wang said.

"As China's pension funds develop, they will own more and more shares in these listed companies and improve their corporate governance," he said.

But even if its control becomes less direct, the government is unlikely to let its giants go fully independent, Wang said.

"As a socialist country, China should not allow any individuals to control the most important firms in the country," he said.

Beijing aims to add even more state firms to Fortune's Global 500 under a plan to consolidate companies into 80 to 100 very large state-owned enterprises, half of which it wants to see on the list next year, Wang said.

Is there hope for an independent Chinese Sony or Apple?

Huawei Technologies in Shenzhen is a company to watch, analysts said. With 43 percent of its 87,500 employees dedicated to research and development and nearly 9,000 domestic filings last year, it led the world in patents, Wang said.

"Huawei is a company with great potential," Zhang agreed.

"But funding channels are very limited for private companies in China, especially after the financial crisis."

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