Reshaping Global Capital: The Politics of Uncertainty in China's Financial Transnationalization

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Six years following the global financial crisis, we are as unsure as ever about how to sustainably and equitably harness the power of global finance, and scholars, policymakers, and practitioners continue to seek better understandings of authority and power within an interdependent financial system. Meanwhile, as China's financial system becomes increasingly transnational in scope and influence, new ideas of how political authority and financial power can and should relate to one another are evolving in key sites of the global financial order such as Hong Kong, London, and Shanghai. This project investigates the dynamics and implications of this process, examining how and why different political values are reshaping the distribution of risk and the pursuit of stability within global finance. It is centered on two interrelated issues:1. How do different conceptions of authority and power affect a financial system's stability and distribution of risk?2. How is China's entry into global finance reshaping these financial outcomes?These are questions at the nexus of the macro-level of China's rise in global politics, and the micro-level of effective financial governance, however international political economists have not provided adequate tools for addressing them. Even as macro-prudential regulation improves in key global financial hubs, we are constantly reminded that financial governance is a deeply political and social process, as well as an exercise in technocratic regulation. We need better research into how the process of China's financial transnationalization is affecting both the micro-dynamics and macro-shifts of financial governance.Dynamics at both levels are sociopolitical in nature, and involve different conceptions of the relationship between political authority and financial power. Such 'conceptions of finance' are thus an important factor in determining how both public and private financial decision-makers respond to the uncertainty of financial investment and governance. They are unstable and experience both short-run change in response to crisis, or long-term shifts as the global economy evolves structurally. This project explores the implications of China's financial transnationalization by asking how different conceptions of the relationship between state, market, and society in a central process of decision making-the management of uncertainty-are reshaping financial governance in Hong Kong, London, and Shanghai. It draws upon research methods from cognitive psychology to develop an innovative research design that generates insight into how financial governance is being practiced by different actors in specific environments. It systematically maps out 'conceptions of finance' in these financial hubs, traces how this produces different responses to uncertainty, and then analyzes the implications for macro-financial stability and distribution of financial risk. Collaborating with research and policy institutions in London, Berlin, Beijing, Hong Kong, and Shanghai, the project makes an immediate, original, and significant contribution to our understanding of how China is affecting financial governance in an era of global change and flux.This contribution enables the project to speak to three different audiences. It fosters the development of the academic disciplines of international political economy and economic sociology, illustrating how novel empirical research methods can connect micro-level dynamics and macro-level outcomes of political economy. It speaks to practitioners in public policy and financial services, providing an empirically rich insight into the shifting landscape of global finance, whilst demonstrating how different conceptions of finance generate different governance outcomes. Finally, it speaks to the wider public by broadening the debates on financial governance and China's rise, exploring how 'China' and 'the West' are interdependently connected in global finance.