State Inc.: The most important new forces in global business are aggressive, wealthy, and entrepreneurial. But they aren’t corporations: they’re authoritarian governments.

Joshua Kurlantzick – The Boston Globe

Copyright The Boston Globe
IT WAS THE biggest corporate deal in the history of sub-Saharan Africa: Last October, a foreign firm spent nearly $6 billion for a chunk of Standard Bank, the South African company that has long dominated finance on the continent.
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Yet the foreign suitor was not Citigroup, or UBS, or some other titan of private commerce. It was the Industrial and Commercial Bank of China, a company owned wholly by the Chinese government.
On a business level, the deal gave ICBC’s Chinese customers access to banking across Africa, and set the stage for closer relations between Chinese companies and African nations. In a bigger sense, it embodies a change that is reshaping the dynamics of global business.
In the past five years, governments around the world have been transforming themselves into deal makers and business players on a scale never seen in the modern era. In China, state-owned oil giant PetroChina has become the largest company in the world, worth more than $1 trillion. In Russia, state-owned Gazprom has grown into the world’s largest gas company. States are also wielding influence by directly buying into major private firms: 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. By 2015, according to an estimate by Morgan Stanley, such state-owned funds will control a staggering $12 trillion, far outpacing any private investors.
The rise of states as global economic players marks a sharp reversal from decades in which private enterprise seemed an unstoppable force in global finance, commerce, and culture. It represents a new and unexpected fusion of state control with the business principles of capitalism. And it is already causing a significant shift in global power.
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