Legitimating State Capital: The Global Financial Professions and the Transnationalization of Chinese Sovereign Wealth

Imogen T. Liu and Adam D. Dixon

Development and Change, 2021, vol. 52, issue 5, 1251-1273

Abstract: Increasing Chinese investment has raised the spectre of strategic state influence in Europe, yet the transformative potential of state capital as a global phenomenon remains under‐explored. This article sheds light on the dual imperatives of transnationalizing state capital wherein the movement of capital entails both profit maximization and the extra‐profit interests of the state. State‐capitalist entities such as sovereign wealth funds (SWFs) are both market‐facing and politically driven, disrupting ideological norms surrounding the strictly safe‐keeper role of the state in private capital accumulation. The authors draw on the case of the China Investment Corporation, China's premier SWF, to argue that the transnationalization of state capital is a process deeply embedded in the liberal international order, and that it signals the metamorphosis of global capitalism in palimpsest‐like ways. The global financial professions, namely investment banking, corporate law and management consulting along with other advisory services, have legitimated state capital by normalizing its political origins through technocratic, expert‐driven practice to the effect that it is treated as no different from private capital in global capital networks. The article identifies three logics of practice by which professionals legitimate state capital: adoption, alliance and recreation of financial practices that have facilitated the embeddedness of state capital in global markets.

Date: 2021
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