The New Economic Superpowers

A recent Boston Globe article
tells of a new category of global economic player: the state-controlled enterprise. The most chilling phrase in the article to my mind is “comprehensive national power.” After decades of understanding this concept and working to win the Cold War through our own comprehensive strategy, it seems the United States has reverted to a more unilateral militaristic strategy in its “war on terror.”

The Globe article does mention the weaknesses of these state-owned enterprises, foremost of which are nepotism and corruption. But one wonders if any collapse will be too late for the West. Some quotes:

In Beijing, policy makers have developed a definition of China’s strength called “comprehensive national power,” which goes far beyond military strength to include economic might….

The state capitalists also are gaining influence through their power in global finance. As firms like Merrill Lynch and Citigroup have found out, state funds provide a vital new source of investment across a world in need of capital. The funds are increasingly bailing out American banks, giving them significant leverage over the US financial sector…

As Chinese oil companies have tried to win contracts to explore fields in Vietnam, they have come head to head with Western competitors. According to two people with knowledge of the negotiations, Chinese government officials have informed these Western firms that, if they want continued access to Chinese markets, they should give up their efforts in Vietnam…

In China, the government’s co-opting of entrepreneurs, now allowed to join the Party, has helped ensure that the middle class, which in the 1980s usually supported reform, increasingly tolerates the regime. In Russia, nationalizing the energy industry has reduced the possibility that any future Mikhail Khodorkovsky, a tycoon who once used his petroleum wealth to fund civil society groups, might emerge within Russia itself…

The investment fund run by the Arab emirate of Abu Dhabi is now the world’s largest, and recently spent $7.5 billion to become the top shareholder of the American financial giant Citigroup. Singapore’s state-controlled wealth fund, Temasek Holdings, sank $5 billion into Merrill Lynch, the largest US brokerage.

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