Monday, April 12th, 2010
Are you a Statist? Libertarian? On the ‘left’ or the ‘right’? Take The World’s Smallest Political Quiz and find out.
Terence Corcoran, The Financial Post
April 12, 2010
From Syncrude to Greece to China-U.S. currency and trade wars, global enterprise is threatened by rising state power
The greatest unresolved issue in global economics is the rapidly expanding role of governments. Daily events draw attention to the transformation underway, but there is little corresponding acknowledgment that the new world order may not be exactly what anybody really wants. Europe’s subsidized bailout of Greece at the expense of non-Greeks, the China-U.S. war over trade and currencies and the continuing expansion of state enterprises and sovereign wealth funds around the globe suggest world economic activity is shifting away from private enterprise and into the hands of state enterprise, with few questions being raised about the implications for the future.
The announcement yesterday that Sinopec, one of China’s national energy giants, will pay $4.65-billion for 9% of Canada’s oil sands pioneer, Syncrude, rekindles the issue of foreign ownership in Canada. The company selling the Syncrude stake, ConocoPhillips, is a private enterprise based in Houston. The Texas firm has world-wide operations based on a well-known corporate model – maximize profits for shareholders. ConocoPhillips has no nationality, answers to no government and has no access to state force to achieve its shareholder objectives.
Few Canadians object to ConocoPhillips role in the Canadian economy. But there is less enthusiasm for sovereign state corporations. An opinion survey released yesterday by the Asia Pacific Foundation of Canada (APFC) found that only 18% of Canadians would favour a Chinese state-owned enteprise buying a controlling stake on a Canadian company. Sinopec’s is not buying control of Syncrude, but the survey appears to reflect Canadian concerns about the role of a foreign-government controlled enterprise in Canada.
A China state takeover of a Canadian entity is an obvious next stage. Yuen Pau Woo, head of the APFC, said that “If Canada wants a share of Chinese investment capital, we will have to learn to live with state-owned companies.” There is more to come, said Mr. Woo. “With the likely appreciation of the renminbi, we can expect an even greater amount of Chinese outward investment in the years ahead.”