3. The Structural Shift of the International Framework on SOEs

This chapter delves into the structural shift in the international framework governing state-owned enterprises (SOEs), driven by geopolitical tensions and China's economic ascent. It explores three key legal frameworks: the Government Authority Framework, which ties SOE status to public functions; the Ownership and Control Framework, focusing on state ownership and influence; and the Functional Framework, which links SOE status to the performance of state functions in strategic sectors. The chapter argues that the shift towards the Ownership and Control Framework reflects a broader geopolitical objective to constrain China's state-capitalist model. It also highlights the limitations of the Government Authority Framework in addressing modern challenges posed by SOEs, particularly those from China. The analysis underscores how the Ownership and Control Framework has become the predominant model in international trade and investment agreements, driven by the need to regulate newer forms of state capitalism. The chapter concludes by emphasizing the strategic convergence of the USA, EU, and Japan in adopting this framework to address the challenges posed by China's economic influence.