Necessary Fictions: The State, Stock Markets and Growth in East Asia

Despite the market transformation in E. Asia’s financial systems, regulators continue to employ hard paternalist approaches to their stock markets that are viewed as counterproductive to their development. Focusing on the Chinese stock market, this talk argues that the persistence of hard paternalistic regulatory practices can be explained by a regulatory vision – a common analytical framework to order complex uncertain environments that serve as regulatory first principles – centered on an irrational investor. A regulatory vision works alongside pressures emanating from foreign investment, state capitalism and state-business relations. This understanding of investor rationality is in marked contrast to a liberal market variant, which emphasizes a rational investor. The study draws on over 90 elite interviews of senior regulators, stock exchange officers and market practitioners conducted in China, Japan, Korea and Taiwan from 2015 to 2019.

John Yasuda is an Assistant Professor of Political Science at Johns Hopkins University, specializing in regulatory governance, bureaucratic politics and comparative political economy. He is an Academic Visitor at the University of Oxford China Centre for Michaelmas Term 2022.