China's Asset Management Companies as State Spatial–Temporal Strategy

Abstract

Chinese authorities created four new asset management companies (AMCs) in 1999. These have since undergone profound transformations which have been influential in China's contemporary integration into the world market. Conventional interpretations see these powerful AMCs in largely technical and asocial terms. By contrast, we employ a critical geographical analytical framework to understand the transformation of these AMCs as an expression of the state's spatial–temporal strategy to create conditions of political economic stability now by displacing the conditions of financial instability and crisis into the future. This strategy does not come without unintended and destabilizing consequences, nor is it without class-based social and political implications.

Uneven and combined state capitalism

“…At the macro-level, this led to the growing presence of state-owned or state-controlled capital in the global corporate network and the global financial system, and generally the growing significance of states as investor-shareholder (Haberly and Wójcik, 2017). State-capital hybrids like state asset management companies have also been used to absorb over-accumulated capital and centralise geographically diverse financial risk, thereby ridding firms of ‘bad’ debt (non-performing loans) and allowing them to expand (Ho and Marois, 2019). Central banks in advanced capitalist economies, although rarely considered to be state capitalist institutions, play an increasingly important role in this respect.…”

China's financialized soybeans: The fault lines of neomercantilism narratives in international food regime analyses

“…Moreover, as Ho and Marois (2019, pp. 731–732) point out, the increasing expansion of financial institutions and the consequent subjugation of productive capital reflects ‘historically specific relations of power’ instead of a supposedly apolitical and technical solution to China's economic problems as often portrayed by the mainstream literature.…”

“…COFCO's role in the international food regime can only be understood by looking at the recent transformations in China's political economy. As many scholars indicate (Ho & Marois, 2019;Lan & Zhang, 2021;Pan et al, 2020;Tsai, 2015), China's neo-Keynesian response to the 2008 global financial crisis and ongoing pro-liberalization economic reforms led to increasing flows of interest-bearing capital and limited lucrative investments in the 'real economy'. The domestic credit boom and debt financing have propelled the proliferation of new financial instruments for speculation, through which capital has moved away from the sphere of production.…”

Investing for the state

“…The state has established state-owned institutional investors such as SWFs and investment divisions of state-owned commercial banks to facilitate the circulation of Chinese state capital into global markets where higher returns can be earned (C. Walter & Howie, 2012). Asset managers have been created to bail out the state banking sector and stock exchanges in times of financial crisis (H. Chen & Rithmire, 2020;S. Ho & Marois, 2019).…”

“…State-owned institutional investors have often played a developmental role in China's domestic financial markets. They have had an active hand in mitigating financial crises and supporting urban development and mitigating financial crises in China (Chen & Rithmire, 2020;Feng et al, 2021;Ho & Marois, 2019;Wu, 2021). In recent years, state-owned institutional investors have been encouraged to service transnational production-based growth in a clear articulation of industrial policy.…”