Fortune's August edition includes the magazine's annual list of the world's biggest companies, and No. 1 is no surprise: Walmart. Mississippians, like millions of others throughout the country, spent countless hours and dollars there buying just about every product conceivable. The Arkansas-based retailer brought in more than $500 billion in 2017, up 3 percent from 2016.
While it’s expected for Walmart to dominate, the next three on the list are eye-opening: State Grid at $348 billion, Sinopec Group at $326 billion and China National Petroleum at $326 billion. Never heard of them? We hadn't either, but all three are state-owned Chinese companies. The first is a power utility in China and the other two are related to oil. The government owns those major industries there, unlike in the United States where it’s left to the market.
The rest of the top 500 is sprinkled with Chinese companies, illustrating that the biggest threat to the United States’ status as the world’s top economy is China.
The irony is that China has ascended to that status as our chief rival by selling things to the United States. That’s been at a great cost to American factories and jobs, but to the benefit of U.S. consumers, who save money by buying Chinese. Few want to admit that, but we’ve spoken with our wallets.
The best way to check China’s growth and influence would be for Americans to stop buying its stuff, but we’ve proven unwilling to do that on our own.
However, we’re about to be given more reasons to do it as President Trump’s tariffs — taxes on items bought from foreign countries — drive up the costs of things made in China. Such trade wars are dangerous because China is retaliating by charging more on U.S. goods sold there, and the end result will undoubtedly be higher prices everywhere, an inefficient outcome.
But while there are costs, this seems to be an ideal time to challenge China. For one, our economy is running so it can take small hits from a trade war without catastrophic effects. Secondly, China can apply tariffs all it wants, but it has far more to lose because the U.S. buys much more from there than China does from here.
Regardless of how the trade conflict plays out, it is going to be just one battle in the ongoing influence war between China and the U.S. It brings to mind the rivalry between America and the Soviet Union from the end of World War II to communism’s collapse in the late 1980s.
The difference this time is that China has adopted elements of free markets, allowing its economy to grow much more than communism ever allows, while rejecting individual freedoms associated with democracy. In China, the state comes first and individuals don’t matter much. It doesn’t tolerate dissent from the party line or go to much trouble to defend the rights of the poor and downtrodden.
Even though our nation may be beset with moral weakness and social strife, we remain confident that freedom — both to do business and to live how you want — will triumph over state control in the long run.
To prove that point, think about this: Do masses ever want to migrate to China, even with its economy growing rapidly? No, yet the United States remains the shining beacon on a hill that the world aspires to reach, including many of China’s brightest minds. That’s why freedom is so important.
While tariffs – a form of government regulation rather than letting buyers and sellers decide the winners in business – aren’t exactly the best way to convey that message, it is important that the U.S. be willing to confront China on points of difference.
Those differences are clearly seen in the types of companies at the top of the Fortune list: Government-sponsored monopolies, which give competitors no chance, versus a retailer which started as a single, rural store selling the exact same products as everyone else, but grew to be the world’s largest company through a single-minded focus on getting its customers the lowest prices possible.
It goes to show that American moxie and work ethic will win in the long run over Chinese top-down control.
