The lead article in today’s New York Times, “China Fortifies State Businesses to Fuel Growth,” provides an interesting look at Chinese economic strategy and the role state-owned enterprises (SOE) play in their phenomenal expansion.

Apparently, the Chinese reserve key industries for SOEs and limit private entrepreneurs severely in these areas. The article mentions finance, communications, transportation, mining and metals as the key fields where competition is either non-existent, barely tolerated or opposed with all the power of the state.

For example, airlines initially experienced some competition between eight private competitors and the three big companies run by the Chinese government. However, after providing favorable terms to the big three for the state monopoly on jet fuel, the private competitors were reduced to just one.

In my opinion, the most important element for the United States, besides the growth of China as a formidable economic power, involves the degree their statist economic model is followed by other poorer countries. Even though Japan’s top-down economic systems eventually failed, you can’t argue with the success of China’s system, at least so far.

According to the Chinese, efficient management by the state can be more effective in helping poorer countries pull themselves up by their collective bootstraps than just capitalist market forces. The Chinese claim that the government can make decisions and organize more efficiently, as well as gathering resources for large projects. One only has to look at China’s success in the promotion of clean energy to recognize the validity of this latter statement.

The lead story in today’s New York Times, “China Seems Set to Loosen Hold on its Currency,” describes the possibility of letting the Chinese currency, the renminbi, rise against the dollar. This will help to curtail the U.S. trade deficit — China currently exports four times as much to the United States as it imports.

The article notes that China is not doing this out of the goodness of its heart towards the U.S. The artificial restraint on their currency is leading to inflation and costing the central bank 9.2 percent of the country’s economic output to maintain it.

Meanwhile, the United States has been meticulous in maintaining its silence about the matter to avoid a reaction against the move through nationalism or a desire to avoid the appearance of buckling to international pressure.

On the other hand, according to the article, a stronger Chinese currency could lead to losses in its labor-intensive industry with low-profit margins such as shoes and textiles. So, the internal debate in China is continuing.

These economic analyses can get very complex, and it seems like every economic move has significant pluses and minuses. But it seems fair to me that the value of a currency should be allowed to fluctuate according to its strength in the open market rather than manipulation by a central government.

The lead article in the New York Times today, “Google Closes Search Service Based in China,” describes the company’s decision to move its offices from China to Hong Kong as a protest against Chinese censorship. The search engine Google.cn will now be available in an uncensored format to Chinese users from the new location.

Google and China have been feuding for several months over the search engine’s policy, and Chinese authorities may have hacked into the Google source code to view the email accounts of Chinese dissidents.

This action appears to have had a major impact on Google, and today’s decision represents a continuation of their unhappiness with Chinese authorities. When Google first entered the Chinese market, it had hoped that the censorship would be gradually reduced. Instead, the government has tightened restrictions.

Google.cn has been losing market share to the Chinese search engine, Baidu, and was only drawing about 30 percent of the market. Some Google watchers have suggested that this was the main reason for the departure, not censorship.

According to the article, many multinational corporations have entered the Chinese market, only to find the competition stacked against them. Instead of Chiense society becoming more open as a result, it seems to have been pushed in the opposite direction.

It is unknown whether mainland China will block Google’s new Hong Kong headquarters from access by Chinese users.

The lead article in today’s New York Times is titled, “Google May End Venture in China Over Censorship.” It describes a decision by the company to leave China after its software was hacked in an attempt to gain access to Gmail accounts belonging to Chinese human rights activists.

The decision by Google should be commended as an altruistic reaction to increasingly sophisticated attacks on its security systems and source code. It seems like the latest incidents were the straw that broke the camels back. Google had previously agreed to block searches for terms like Tiananmen Square massacre or the Dalai Lama.

According to the article, Google’s action represents one of the first times a respected international business left China. Their departure is especially powerful because they will be losing Internet ad revenues from about 300 million Chinese web users.

China may have anticipated problems as their country has been promoting an alternate search engine, Baidu. The article states that Baidu has been steadily gaining market share over Google.

Google had faced difficulties with the Chinese government in the past. It was forced to disable a function that lets the search engine suggest terms to its users. And at one point, nationwide access to Google and Gmail was blocked. 

Anyway, kudos to Google for doing the right thing.

The lead story in today’s New York Times is titled, “Deals Help China Expand Its Sway in Latin America.” It describes China’s business dealings with Venezuela, Ecuador and Brazil in return for securing natural resources such as oil far into the future.

The business transactions include support of $6 billion for a development fund in Venezuela, $1 billion for a hydro electric plant in Ecuador and $10 billion for Brazil’s national oil company.

The transactions also include using the Chinese currency as a reserve instead of the traditional U.S. dollars. As such, they are particularly troubling.

One reason for China’s intrusion into our backyard was cited as the neglect of the Bush administration for the past eight years. Typically, the Inter-American Development Bank provided economic support to the region, but its typical size of donations was far eclipsed by China.

A very disturbing remark came from David Rothkoopf, a Commerce Department official in the Clinton Administration. He said, “This is how the balance of power shifts quietly during times of crisis.”

So, while we are trying to convince ourselves of the economic link between China’s investments in the United States and the ultimate outcome of the current economic crisis — e.g., China wants us to recover because they are dependent on their investments in our nation — China is beginning to diversify and expand its influence elsewhere.

Another problem for the Obama administration to tackle …

Today’s lead article in The New York Times is titled, “China Vies to be World’s Leader in Electric Cars.” It describes China’s plan to become the world’s leader in all-electric vehicles, and some of its accomplishments and barriers in doing so.

This was a very interesting article. China’s goal to reduce pollution and global warming will be hindered because it gets three-quarters of its electricity from coal, the worst possible source. Also, replacing a gasoline car with an electric one only reduces greenhouse emissions by 19 percent.

There are economic barriers as well. The cost of an electric vehicle will be almost twice a gasoline vehicle, $30,000 versus $14,600, despite the Chinese government’s subsidy of $8,800 per vehicle.

There are some benefits. Most Chinese have a short commute so the 120-mile range of electric vehicles between charges is okay. And many are purchasing vehicles for the first time, so they won’t notice the comparative differences.

The most hopeful part of the article, in my opinion, involves raising the consciousness of U.S. citizens about the strides other countries are making regarding alternative transportation. Maybe, just as Sputnik helped us win the race to the moon, China’s program will spur research by U.S. carmakers, and American ingenuity will win in the end.

Today’s lead article in The New York Times was titled, “China’s Premier Seeks Guarantee from U.S. on Debt.” The article described the concern of the Chinese premier, Wen Jiabao, about the country’s $1 trillion of holdings in U.S. government debt.

This criticism follows remarks in January about the folly of America’s low savings and high rate of consumption.

However, we shouldn’t be concerned, paradoxically because the Chinese hold so much of our debt. If they tried to unload it all, the value of the Treasury notes would decrease precipitously, and China would sustain a big loss. The article concludes that the Chinese would have to hold their Treasury notes until maturity.

One of the apparent criticisms of U.S. policy, and by the Europeans as well, seems to be our emphasis on stimulus programs instead of stricter regulation of banks and other financial institutions.

While it’s nice to know that the Chinese, one of the world’s strongest economies, is bound to us in a circle of mutual dependency, it leaves us feeling very vulnerable as well. Americans are used to going it alone, to consider our own national security without relying on any other nation. An inability to do so suggests a decrease in our power and that’s troubling to many of us.

How can we serve as a beacon of light and a city on the hill, when we have to be careful what we say about other countries. For example, many policy experts believe that today’s Chinese criticism was a response to our earlier criticism of the way they manipulate their currency.

This is a fine mess that Mr. Bush has gotten us into.