State Capitalism

Addressing the Challenges That Arise From State Capitalism

In many of the largest developing economies, state capitalism is an increasingly common tool for managing economic development, giving rise to state-owned companies and, in some cases, privately owned companies that retain close political influence and financial ties to their governments.
 
Where private sector companies are obliged to compete with such national champions, the market is often skewed against free enterprise. Where government is vested in state capitalism, its preference is often manifested in an array of regulatory actions—from oversight to licensing and procurement. 
 
Unfortunately, existing trade, investment, and antitrust disciplines are inadequately equipped to address these challenges. Governments often afford carveouts and sophisticated and subtle advantages to national champions that are designed to subvert international agreements and laws. 
 
The GRC has been at the leading edge of policy development, examining existing international disciplines on national champions; identifying gaps in U.S. trade, investment, and antitrust laws; and advancing potential solutions to ensure that where government is involved in the marketplace, private firms are not subject to discrimination.