The early 21st century will be remembered for its shift in global economic power dynamics. Within three decades, China has fostered the growth of globally prominent firms and its capital market advanced as the world’s second most meaningful market.
Chinese firms—many of which are subject to an illiberal, political governance—are increasingly integrated with the world economy, attracting domestic and global public investors. Neither state ownership and control, political influence, nor weakly functioning legal institutions stand in the way of these firms’ access to capital. This reality challenges law and development theories and notions of corporate governance best practices. This Article discusses the puzzling allure of Chinese public firms to external suppliers of capital, while illuminating the functions of illiberal governance in Chinese firms through both the state’s and Communist Party’s capacities. The Article shows how alongside its many obstructions, China’s illiberal governance system plays an important role in promoting market regularity, providing investors with the assurances necessary to secure the flow of external finance.
Implications for global investors and policymakers outside China are assessed against the backdrop of recent developments in U.S.- China relations.