The following is an excerpt from JOHN PSAROPOULOS | February 2, 2018 | Weeklystandard.com |
Over the past five years, the State Grid Corporation of China has come close to performing a feat that the European Union, despite its 13 trillion euro economy, has failed at for two decades: create an electricity grid stretching across much of Europe, introducing efficiencies and economies of scale that national transmission operators are incapable of. With a 4.75 billion euro acquisition spree, China’s State Grid has acquired stakes in the grids of Greece, Italy, Portugal, and, shortly, Spain, making it Europe’s leading investor in electricity transmission.
State Grid’s astonishing foray into what were until recently jealously guarded national assets has been a wake-up call to the European Union. For years, the E.U. has been trying to decouple the transmission of electricity from its generation, as it broke up old state monopolies. When the eurozone directed its indebted Mediterranean members to raise money by privatizing state power companies (among other assets) in the wake of the 2008 financial crisis, few imagined that these would be snapped up by a single state-owned company.
Meanwhile, China moved in the opposite direction. State Grid was formed in 2002 as an experiment in state capitalism. The galloping pace of China’s economy over the past two decades helped ensure its growth. It is now the world’s largest utility by revenue (it operates 60 subsidiaries in China alone). Released into the free market world, State Grid has been devastatingly effective. Its ambitions have made it a stakeholder in electricity generation and transmission in Brazil, Australia, and the Philippines. Today it has revenues of $315 billion and controls assets of almost half a trillion dollars. Most of these assets are still in China, but it is halfway to its goal of buying up to $50 billion in assets abroad by 2020.
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