Cameron: Is the rise of state capitalism a threat to economies like Canada's?

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February 13, 2012

I would not frame the issue quite that way. Canada is embracing a strategy of growth based increasingly on extractive industries, the pursuit of new export markets, and often unimaginative infrastructure projects. All this is combined with fiscal austerity and very little emphasis on long-term investments in productivity and competitiveness. China, on the other hand, is using liberalization and competition to advance its industrial development without abandoning dirigisme – much less surrendering control to foreign multinationals. They have a longer-term perspective. Our obsession with (and naïve faith in) trade agreements will leave us at a competitive disadvantage over the long haul. Trade agreements don’t make businesses competitive, and the Chinese know that. It is not quite right to frame the issue in terms of “state capitalism” vs. free markets, because both countries are pursuing market models. But in 5 years China will be the world’s largest economy and we’re lagging because we’re too distracted by giant pandas and pipelines to get on with promoting innovative industries.