Chapter 9: Financialisation of the State Sector in China

Since 2013, changes in the governance of state firms in China has resulted in the entire state sector becoming increasingly “financialised.” In a purely definitional sense, this means that control over state firms is increasingly exercised by financial means, operating at a distance, through corporate governance institutions similar to those in other economies. However, it must be emphasised from the outset that this financialisation has taken place in a particular context. After decades in which the Chinese government was primarily withdrawing from direct management of the economy (through market-oriented economic reforms, 1978 to about 2006), China has begun to re-emphasise the primacy of government-defined national goals. Crucially, though, these goals are mainly pursued through financial means. The result has been an increasingly interventionist government, steering increasingly important state firms, through financial instruments. Changes introduced as part of the broad reform package of the 2013 Third Plenum have, perhaps unexpectedly, been an important part of this phenomenon…