State-led Financialization in China: The Case of the Government-guided Investment Fund

China is witnessing a growing trend towards financialization by the state. Drawing on the concept of state-led financialization, this study is the first to explore how the government-guided investment fund (GGIF) has evolved and spread throughout the country. The promotion policies and practices of the central government have laid the key foundation for the development of GGIFs, while local governments have quickly adopted this new financial tool, resulting in its widespread take up. State-owned enterprises are heavily involved in the operation of GGIFs, indicating that this market-oriented tool has largely failed to attract capital from the private sector. This study shows that state-led financialization in China has strengthened rather than weakened the influence of the state in the economy, which is not the case in most Western economies. However, the limitations and risks of the GGIF are also related to the dominant role of the state in GGIF operations.