“Beyond ports, roads, railways: Chinese statecraft, the Belt and Road Initiative and the politics of financial infrastructures” – WG3 talk

Beyond ports, roads, railways: Chinese statecraft, the Belt and Road Initiative and the politics of financial infrastructures

In recent years, scholars have increasingly focused on how the Belt and Road Initiative (BRI) serves as a tool of economic statecraft for China and how this might contest the global economic orders. A common thread in these analyses is how connectivity through China’s construction of physical infrastructures (e.g. ports, roads, railways) represents a source of economic statecraft and power for China. While finance is one of the ‘five connectivities’ of the BRI, existing analyses mostly focus on the activities, impact and significance of BRI-related financial institutions in lending for physical infrastructures (e.g. AIIB), and how these influence global and regional power constellations. However, next to the provision of physical infrastructures, one important but hitherto neglected aspect in these debates on China’s economic statecraft is the construction of financial infrastructures along the BRI – the socio-technical arrangements that enable the financing, trading and investing of/into BRI-related projects via capital markets.
In this research project, I examine the politics behind the construction of these financial infrastructures and technologies along the BRI by analysing their development by Chinese financial institutions in three BRI countries – Pakistan, Kazakhstan and Bangladesh. In these countries, China’s state-owned stock exchanges (partially) acquired the respective national stock exchanges (PSX, AIX, DSE). More than a merely technical process, I illustrate how controlling and shaping financial infrastructures is itself a source of power. Through creating such financial infrastructures China’s state-owned stock exchanges enable investment into BRI projects (investment opportunities), bring Chinese investors into BRI markets (investors structure) and gradually create capital markets with Chinese characteristics (investment rules). Therefore, the construction of BRI financial infrastructures should be understood as a strategy of financial statecraft, complementing other mechanisms of influence and power. By shaping capital markets via financial infrastructures, China increasingly contest the rules, norms and procedures that underpin the liberal global economic order – laying the foundations for a parallel system of capital markets with Chinese characteristics. I therefore argue that also beyond the BRI financial infrastructures should therefore be more thoroughly included into IPE and IR scholarship as an important objects of analysis.

Johannes Petry is a IRC Postdoctoral Fellow at the SCRIPTS Cluster of Excellence in Berlin and a Research Fellow at the Centre for the Study of Globalisation and Regionalisation, University of Warwick. Johannes holds a PhD in International Political Economy from the Department of Politics and International Studies at the University of Warwick. His research focuses on the differential development and organisation of capital markets as well as the role that financial infrastructures such as exchanges, index providers or clearing houses play in global finance. Thereby, he comparatively analyses the organisation and development of capital markets in China with ‘global’ capital markets as well as on the gradual integration of Chinese markets into global finance and their increasing internationalisation. He is a co-founder of the Warwick Critical Finance Group, a Management Committee member of the China in Europe COST-Action Research Network and the Principal Investigator of the DFG-funded StateCapFinance-research project which comparatively analyses capital markets across emerging economies. His research was published in the Review of International Political Economy, Economy & Society, New Political Economy, Finance & Society and Competition & Change.