3 - Globalizing Patient Capital: A Theoretical Framework

Summary

How does China’s emergence as a global creditor a?ect national policymaking? The international and comparative political economy literature has long debated the extent to which international capital mobility constrains national autonomy, but has mainly focused on private capital ?ows. Incorporating China’s state-led capitalism into this political economy framework, I expect that Chinese credit enhances national governments’ room to maneuver. It is a distinct form of long-term capital characterized by a risk-tolerant ?nancial system that marshals China’s patient form of domestic capital internationally. Its lack of policy conditionality endows governments with more ?scal space to intervene in their economies. For developing country governments facing strong redistributive pressures, su?cient ?scal space to supply more jobs, higher wages, and better public services is often key to political survival.However, patient capital has its costs. The ?ne print of these state-to-state deals often involves commercial conditions, ranging from contracting with Chinese ?rms and suppliers to providing state guarantees or commodity collateral, that risk intensifying national debt and dependency.