Why does China have a state capitalist system and what is the role of the financial system in this system? It is this overarching question within political economy that this PhD dissertation is looking to contribute to. It does so through a case study following the 1999-2013 evolution of the four Chinese asset management companies, from policy tools for the state to reorganize the banking system in China, to state-owned shadow banks – some of the largest shadow banks in China in terms of assets.

The purpose of the case study is to propose a mechanism that can contribute to explaining how the political economy of state capitalism works. The argument put forward is that through using the conceptualization of capitalism developed through Weber and Veblen, the nature and mechanisms of Chinese state capitalism can be usefully defined and theorized. Specifically, the dissertation is based on using process-tracing methods to build a theory proposing a key mechanism at work in Chinese state capitalism – Financialized Political Capitalism.