The offshore city, Chinese finance, and British capitalism: Geo-economic rebalancing under the Coalition government
| Author | Jeremy Green |
| DOI | 10.1177/1369148117737263 |
| Published date | 01 May 2018 |
| Date | 01 May 2018 |
| Subject Matter | Original Articles |
https://doi.org/10.1177/1369148117737263
The British Journal of Politics and
International Relations
2018, Vol. 20(2) 285 –302
© The Author(s) 2017
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DOI: 10.1177/1369148117737263
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The offshore city, Chinese
finance, and British capitalism:
Geo-economic rebalancing
under the Coalition
government
Jeremy Green
Abstract
This article examines the embrace of Chinese finance under the United Kingdom’s 2010–2015
Coalition government. The article argues that the City of London’s centrality within British capitalism
has been reinforced, not displaced, since the Global Financial Crisis. Geo-economic rebalancing
towards China, not the Coalition’s professed spatial and sectoral ‘rebalancing’ ambitions, prevailed.
To explain the City’s renewed pre-eminence in the wake of the crisis, the article draws upon a
modified version of the ‘City–Bank–Treasury nexus’ theory of British capitalism. Breaking from
structuralist approaches that underplay the City of London Corporation’s role within economic
policy-making, the article illuminates the Corporation’s agency as a key parastate institution that
reoriented the City–Bank–Treasury nexus towards Chinese finance under the Coalition.
Keywords
China, City of London, coalition, offshore
Introduction
From the early 1990s until 2007, as Western economies experienced sustained low-
inflationary economic growth, the City of London enjoyed spectacular success. A combi-
nation of global and domestic conditions placed the City within a propitious conjuncture.
Globally, a huge build-up of foreign savings (the so-called ‘global savings glut’) led
investors looking for high yield returns to pour capital into the City, while domestically,
the New Labour government eagerly sought to accommodate the interests of the City by
promoting a series of favourable institutional and regulatory changes.
Jesus College and Department of Politics and International Studies (POLIS), University of Cambridge,
Cambridge, UK
Corresponding author:
Jeremy Green, Jesus College and Department of Politics and International Studies (POLIS), University of
Cambridge, Cambridge CB5 8BL, UK.
Email: jbg35@cam.ac.uk
737263BPI0010.1177/1369148117737263The British Journal of Politics and International RelationsGreen
research-article2017
Original Article
286 The British Journal of Politics and International Relations 20(2)
The Global Financial Crisis (GFC) of 2007/2008 interrupted the global trajectory within
which the City’s success was framed. The aftershocks of the crisis, and the recession that
followed, gave rise to a distinctive set of political-economic conditions. How has the City’s
role changed within this new post-crisis era?1 This article argues that the City of London’s
status within British capitalism has been reinforced, rather than diluted, in the years since the
GFC. Despite public anger with stricken financial institutions and the Coalition govern-
ment’s professed commitment to regional and sectoral rebalancing (Berry and Hay, 2016),
the post-crisis conjuncture witnessed the continuation of a traditional concentration of insti-
tutional power: the City-Bank-Treasury nexus. This occurrence owes much to a very differ-
ent kind of rebalancing. In practice, the central form of rebalancing under the Coalition
government was of a geo-economic nature. It centred upon a long-term strategy to enable the
financial services firms of the City of London to tap into new business opportunities pre-
sented by Chinese currency internationalisation. The City’s new pivot to China has involved
combined efforts by a wider network of institutional actors: the City of London Corporation,
the Bank of England, the Treasury, and major UK-based international banks. Acting in con-
cert, these institutions have reinforced the centrality of the City within the commanding
heights of British economic policy. In terms of the prevailing finance-dependent orientation
of the UK growth model (Hay, 2013; Thompson, 2013), then, the post-crisis period repre-
sents continuity. But within the dominant institutional configuration of that model, the City
Corporation’s intensified global lobbying and market-making function regarding Asia
denotes an important change from its more reactive pre-crisis role. Given the challenges of
Brexit, this more proactive stance from the Corporation is likely to intensify, as the wider
City of London attempts both to redefine its relationship to the European Union (EU) and
reinforce its commitment to emerging Asian financial markets. Conceptually, the article
addresses important gaps within existing literature on the City-Bank-Treasury nexus by
examining the subnational agency of the City of London Corporation as an exceptional local
authority that weaves together private financial interests with public institutions of govern-
ment. Empirically, the article draws on policy documents from the City Corporation and data
from semi-structured elite interviews with the City of London Corporation’s Special Advisor
for Asia, Sherry Madera, and an anonymous UK government official.2
In the first section ‘The City’s entrepôt role and British development’, the article builds
conceptually upon scholarship on the City’s entrepôt role and offshore orientation, identifying
the City’s sensitivity to changes in the international monetary order. The ‘Renminbi interna-
tionalisation and the dollar order’ in the second section examines renminbi internationalisation
within the post-crisis international monetary order. In the ‘Disaggregating the City of London’
section, the article breaks from traditional structuralist approaches to the City–Bank–Treasury
nexus by framing the unique political agency of the City of London Corporation as a parastate
institution. In the third section ‘Reorienting the City–Bank–Treasury nexus’, the article exam-
ines the role of the City–Bank–Treasury nexus in embracing Chinese currency liberalisation
and reasserting the national predominance of financial services. Finally, the article concludes
by addressing the continuing centrality of the City within British capitalism and assessing
what clues the geo-economic rebalancing towards China under the Coalition might offer for
understanding Britain’s post-Brexit economic prospects.
The City’s entrepôt role and British development
The importance of the City of London’s role within British capitalism has been the sub-
ject of broad scholarly interest (Auger, 2000; Ingham, 1984; Kynaston, 2011; Longstreth,
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