Macroscope | State vs market capitalism: expect a titanic clash as China seeks CPTPP membership

Name: CPTPP could become game changer and supplant 'out-of-date' WTO, after mainland China, Taiwan apply
Uploaded: 2021-12-05T19:30:14.000Z
Duration: 11 min 11 s
Description: CPTPP could become game changer and supplant 'out-of-date' WTO, after mainland China, Taiwan apply

China’s SOEs are in the centre of debate, amid US and EU concerns and a desire to update global trade rules

But China is not the only SOE-dominated economy. Those picking a fight may find themselves outflanked

Reading Time:3 minutes

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Ministers of CPTPP member countries pose for a group photo on May 16, 2019, in Santiago, Chile. CPTPP members Vietnam and Malaysia also have large SOE sectors, as do several EU states. Photo: AP

Anthony Rowley

Published: 3:30am, 6 Dec 2021

The battle of the titans is about to commence between those countries including China and others whose economies are based on state-owned enterprises (SOEs) belonging to the people, and Western nations that hew to the principle of a market economy where companies are owned by shareholders.

This coming clash is likely to provoke a reassessment of market and state capitalism, especially as it will occur as the ability of investor-driven financial markets to fund long-term socio-economic projects such as climate change mitigation and infrastructure is being questioned.

The trigger for the confrontation is China’s expressed desire to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but it is the result also of a broader desire to have the “rule book” of international trade and investment rewritten and updated.

A widespread assumption is that China will need to agree to play by Anglo-Saxon rules to be accepted into CPTPP membership and have a determining say in how the rule book of international trade, as drawn up by the World Trade Organization, is rewritten.

A critical aspect of this debate, according to British peer and former secretary of state Lord Peter Mandelson in a recent debate organised by the Global Counsel consultancy and the Centre for China and Globalisation, is the dominant role that SOEs play in the Chinese economy.

11:11

CPTPP could become game changer and supplant 'out-of-date' WTO, after mainland China, Taiwan apply

As the former European Commissioner noted, in addition to the issue of what stance CPTPP partners will take with regards to the “subsidising” of SOEs, the European Union is considering putting restrictions on SOEs bidding on public sector contracts awarded by member states.

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.css-1m2rp1p{color:#34b8b5;}Macroscope | State vs market capitalism: expect a titanic clash as China seeks CPTPP membership

Macroscope | State vs market capitalism: expect a titanic clash as China seeks CPTPP membership