RESUMEN
Under what conditions can the state discipline private equity firms into delivering the investment required to meet the coming needs of industrial transformation? States have sought to crowd in private capital to finance industrial development, but the results have so far been less than satisfactory. Prevailing accounts of financial industry power largely characterise an arms-length state-finance relationship that has unfolded in private-led markets where private equity firms have contributed to the secular growth in non-productive economic activity. This article problematises the assumption of private-led markets and argues that state-led markets present a counterfactual in which the disbursement of public money entails strict policy discipline and tight embedding between the state and private equity firms, which provides the conditions for them to emerge as unlikely champions of industrial policy. Two cases of co-investment between Chinese and European sovereign wealth funds demonstrate the power dynamics at play. Where PE firms in the Sino-Irish co-investment facilitated the international scaling of Irish firms in China, the PE firms operating in Europe failed to embed Chinese firms into regional supply chains in the Sino-Belgian co-investment.
RESUMEN
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.