Document Type


Degree Name

Doctor of Philosophy (PhD)


Global Governance

Program Name/Specialization

Global Political Economy


Faculty of Arts

First Advisor

Eric Helleiner

Advisor Role

Thesis Supervisor

Second Advisor

Hongying Wang

Advisor Role

Second Committee Member

Third Advisor

Gregory T. Chin

Advisor Role

Third Committee Member


What role have foreign financial institutions (FFIs) played in China’s financial evolution since the early 1990s? My research finds that FFIs, which include foreign commercial and investment banks, as well as private equity (PE) firms, have played a role in China’s financial evolution in three respects. First, US financial institutions have leveraged their influence in the US government, their ties to other business groups, and mobilized connections with the Chinese elite, to help China to join the World Trade Organization in 2001. This outcome created a relatively open formal, legal environment to foreign actors—helping in the cause of liberalizing China’s financial system. Second, and much more significantly, FFIs have aided in Premier Zhu Rongji’s push to reform the Chinese banking system and state-owned enterprises in general by creating linkages between the Chinese state and global finance and, in the process, helping to create a vast market of overseas Chinese equities in Hong Kong, New York, and elsewhere. Thirdly, and also very consequentially, FFIs trained Chinese financial professionals and precipitated the flow of ‘returnees’—Chinese professionals returning to work in the Mainland after studying finance in Anglo-American institutions and moving on to work in finance on Wall Street, London, and Hong Kong—back to the Mainland, where the latter collaborated with Chinese officials to build up a native PE industry. In this way, FFIs have also helped to transfer Anglo- American financial expertise to Mainland China.

By helping Chinese policymakers to use Anglo-American financial expertise to reform corporate finance, banking, and private equity, not to mention insurance, investment banking, and a host of other sub-industries, as well as to fund Chinese SOEs and state banks in their time of need (in the late 1990s and early 2000s)—and to do so while maintaining state ownership over these enterprises—FFIs have, ironically, precluded the need for policymakers to give them a greater role in China’s domestic financial system. This process alludes to Vernon’s (1971) notion of obsolescing bargaining. From a theoretical point of view, FFIs’ role can be seen as one of internationalizing China’s financial system, not liberalizing it. I define the concept of internationalization as a process of connecting a country’s economy to the global economy through particular channels or linkages— through adopting international practices or by making use of globalized space, such as global cities or production chains. This is described as being distinct from liberalization, which implies the withdrawal of the state from determining market outcomes and the removal of legal, regulatory, and informal barriers to competition.

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