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• Case | HBS Case Collection | September 2020

  China's Management of Covid-19 (B): Victory?

  Meg Rithmire and Courtney Han

  Keywords: coronavirus; pandemic; China;

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  Rithmire, Meg, and Courtney Han. "China's Management of Covid-19 (B): Victory?" Harvard Business School Case 721-008, September 2020.  View Details

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• Article | Studies in Comparative International Development | September 2020

  The Rise of the Investor State: State Capital in the Chinese Economy

  Meg Rithmire and Hao Chen

  The nature and extent of the role of the Chinese state in the economy is fundamental to many empirical and theoretical debates about that country’s political economy. We document and explain the rise of a novel form of intervention on the part of the Chinese state: the expansion of state capital beyond ownership of state firms. We argue that state investment as a mode of state intervention in the economy is conceptually distinct from both “state capitalism” and the “developmental state” in its introduction of new agents to distribute state capital to firms and new mechanisms through which states, especially authoritarian ones, monitor and influence business actors. We document the growth of the investor state in several ways. Case studies of three high-profile shareholding firms in China demonstrate that state capital can be deployed strategically, for example to respond to financial crisis or facilitate industrial upgrading, but also generates moral hazard, resulting in corruption and resource misallocation, and international alarm about the intentions of Chinese firms. We further compare the rise of state shareholding firms in China to similar phenomena in Brazil and Malaysia, concluding that the practice has both economic and political logics.

  Keywords: China's political economy; state shareholding; state-business relations; State capitalism; China's financial system; Economy; Business and Government Relations; Finance; System; China;

  Citation:

  Rithmire, Meg, and Hao Chen. "The Rise of the Investor State: State Capital in the Chinese Economy." Studies in Comparative International Development 55, no. 3 (September 2020): 257–277.  View Details

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• Working Paper | HBS Working Paper Series | 2020

  The Rise of the Investor State: State Capital in the Chinese Economy

  Hao Chen and Meg Rithmire

  The nature and extent of the role of the Chinese state in the economy is fundamental to many empirical and theoretical debates about that country’s political economy. We document and explain the rise of a novel form of intervention on the part of the Chinese state: the expansion of state capital beyond ownership of state firms. We argue that state investment as a mode of state intervention in the economy is conceptually distinct from both “state capitalism” and the “developmental state” in its introduction of new agents to distribute state capital to firms and new mechanisms through which states, especially authoritarian ones, monitor and influence business actors. We document the growth of the investor state in several ways. Case studies of three high-profile shareholding firms in China demonstrate that state capital can be deployed strategically, for example to respond to financial crisis or facilitate industrial upgrading, but also generates moral hazard, resulting in corruption and resource misallocation, and international alarm about the intentions of Chinese firms. We further compare the rise of state shareholding firms in China to similar phenomena in Brazil and Malaysia, concluding that the practice has both economic and political logics.

  Keywords: China's political economy; state shareholding; state-business relations; State capitalism; China's financial system; Economy; Business and Government Relations; Finance; System; China;

  Citation:

  Chen, Hao, and Meg Rithmire. "The Rise of the Investor State: State Capital in the Chinese Economy." Harvard Business School Working Paper, No. 20-120, May 2020.  View Details

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