China’s integration into the global financial system

Abstract

This article critically reviews theories of global economic networks and refines their application to China’s state-controlled financial sector. Current approaches view global production networks and global financial networks (GFNs) through an agency focus on inter-firm relations and a structural emphasis on neoliberal forces. This market-driven perspective exposes several shortcomings when it comes to understanding the governance of GFNs in China. In the Chinese context, these networks are characterized by complex bargaining that bridges different levels of the Chinese party-state and corporate interests. This article exploits the theoretical synergies between economic geography and theories of Chinese elite politics and institutional change to develop a politically sensitive reading of GFNs. It identifies channels through which multilevel bargaining in the Chinese party-state shapes the competitive positions of firms. By integrating recent findings on Chinese cross-border finance, the article develops an empirically grounded theoretical approach of GFNs ‘with Chinese characteristics’. This opens up a promising research agenda in the GFN literature on the role of the state as an architect and entrepreneur behind GFNs and the outcomes they produce.