On the desks of the heads of China's 50-odd biggest state companies, amid the clutter of computers, family photos and other fixtures of the modern CEO's office life, sits a red phone. The executives and their staff who jump to attention when it rings know it as "the red machine," perhaps because to call it a mere phone does not do it justice. "When the 'red machine' rings," a senior executive of a state bank told me, "you had better make sure you answer it."

The red machine is like no ordinary...