The Power of Money: Chinese Investments and Financialization in an Asian Hinterland

Abstract

In February 2002, a Chinese State-Owned Enterprise (SOE), Sinotrans Xinjiang, partnered with a local Pakistani collective, the Silk Route Dry Port Trust, to finance and operate a dry port in mountainous north Pakistan. Given minimal overland trade between China and Pakistan, this was an unlikely place for investment by a subsidiary of one of China’s largest SOEs. Individuals who commanded extensive social networks and possessed local knowledge were instrumental in brokering the joint venture. Brokers both Chinese and Pakistani leveraged the implicit power of money to create a new institution, the dry port joint venture, that helped normalize the presence and operations of Chinese business leaders in north Pakistan. The joint venture also enabled Pakistani strongmen to exert their control over local land and draw funds from a public bank, activities that ultimately undermined the joint venture itself. This episode is more than just a cautionary tale of an unsuccessful joint venture between a Chinese SOE and local partners. The episode highlights how, in an epoch of transnational financialization, money empowered local leaders, public officials, and official organizations to engage in and indeed benefit from loss-making activities that combine both regular and irregular processes.