The Role of State Enterprises in Asian Development
The effects of China’s growing economic and strategic demand for fossil fuels are shaping the way in which Beijing interacts with petroleum suppliers throughout the developing world. The large amount of fuel supply that China has identified as vital determines much of its foreign investment, foreign policy priorities, and international capital ventures. Furthermore, in many ways, this dynamic has shaped China’s economic and financial model as one that can be described as mercantilist since it creates a trade relationship by the export of manufactured goods and the import of commodities. However, the data shows that this model is not necessarily the result of an economic policy, but rather a consideration based on political economy. This distinction is key because it means that China’s foreign investment and trade policies are more the result of a political consideration than the result of an economic one.
The Role of State Enterprises in Asian Development
Within China’s political and economic structure, national State-Owned Enterprises (SOE) are major players in terms of both social development and national security. In many regards, by playing a key role within China’s industrial and infrastructural development, national SOE are legitimizing the authority of the national government in Beijing. Simultaneously, these national SOE are maintaining national security through an effective global presence of the Chinese government within industries and sectors that are normally reserved for private capital and companies. This dynamic is most evident in the role played by national SOE, such as the China Petroleum & Chemical Corporation (Sinopec), Sinochem, and the China National Offshore Oil Corporation (CNOOC), in energy markets throughout Asia, Africa, and Latin America.
Meanwhile, the structure and the industries in which Chinese national SOE are most active has also changed throughout the last several decades. Back in 1998, national SOE represented almost 82% of all enterprises active within China’s petroleum and natural gas extraction sector. Likewise, national SOE represented approximately 86% of the firms within China’s electricity and heat power production and supply sector. However, in 2011, national SOE accounted for some 66% of the electricity and heat power production and supply sector in China, while national SOE totaled 40% of the firms active within the country’s petroleum and natural gas extraction sector. Currently, the key economic sectors in which Chinese national SOE are present include defense, petroleum, petrochemicals, electricity, telecommunications, shipping, and aviation.
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