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Institutional Investors in China: Corporate Governance and Policy Channeling in the Market Within the State

Time: April 16, 9:45 AM (Beijing Time)

Speaker: Professor Dan W. Puchniak, National University of Singapore (Faculty of Law)

Organizer and Moderator: Professor Sang Yop Kang

Sponsored by Forum of Finance, Business, Innovation, and Law (Professor Sang Yop Kang, President Liang Chen, Vice Presidents Tianhang Zhang, Fanbo Sun, and Yanfei Qian).


Dan W. Puchniak is an Associate Professor at the National University of Singapore Faculty of Law (NUS Law) and a Research Member of the European Corporate Governance Institute. Dan is an internationally recognized scholar in the field of comparative corporate law and governance in Asia. He has received numerous domestic and international awards for his academic research and teaching. Dan sits on the editorial boards of several leading Asian and comparative law journals. His research has pioneered the emerging field of intra-Asian comparative corporate law and governance.

During his time at NUS Law, Dan has served as the Director of the Centre for Asian Legal Studies (CALS), Editor-in-Chief of the Asian Journal of Comparative Law (Cambridge University Press), and Director for Corporate Law of the EW Barker Centre for Law & Business. Dan has held visiting academic positions at leading universities around the world, including Chulalongkorn University, Columbia University, IDC Herzliya, Lomonosov Moscow State University, Melbourne University, Nagoya University, Oxford University, Queen’s University, Seoul National University, Stanford University, University of Chicago, University of Tokyo, University of Trento, University of Victoria, Vanderbilt University, and Yangon University.

Dan has advised international organizations on the development of corporate law in Asia, served as an expert in high stakes complex corporate law disputes in Asia, and his research has been cited several times by Singapore’s apex court. Prior to entering academia, Dan worked as a corporate commercial litigator at one of Canada’s leading law firms.

Summary of Talk:

The extraordinary rise of China’s economy has made understanding Chinese corporate governance an issue of global importance. A rich literature has developed analyzing the Chinese Communist Party’s (CCP) role as China’s largest controlling shareholder and the impact that this has on Chinese corporate governance. However, the CCP’s role as the architect—and direct and indirect controller—of institutional investors in China has been largely overlooked in the legal literature.

In their recently published Article in the Columbia Journal of Asia Law, Lin Lin and Dan W. Puchniak, take the first step to fill this gap in the literature by drawing on Chinese sources and fresh hand-collected empirical, interview, and case study evidence to analyze the meteoric rise of institutional investors in China. They provide a taxonomy of institutional investors in China and reveal how the market for institutional investors has grown and has become increasingly “atomized” as different types of institutional investors have proliferated. Their Article reveals how the CCP has actively and gradually promoted the growth of domestic institutional investors, in terms of types and size, through the relaxation of policies and law reforms to improve corporate governance and stabilize the stock market, while limiting the influence of foreign institutional investors. It further analyzes all the Activist Campaigns undertaken by institutional investors in China and maps the network of government bodies, regulations, and tactics that the CCP has developed to directly and indirectly control State-Owned Institutional Investors (SOIIs) and Private-Owned Institutional Investors (POIIs) for the purpose of policy channeling. 

Lin and Puchniak’s Article concludes by taking a step back and briefly considering what this examination of institutional investors tells us about China’s unique form of capitalism and system of corporate governance. It suggests that the rise of institutional investors in China has been strategically developed in a way to reinforce the CCP’s ultimate control over the financial system. However, contrary to what some conceptions of “state capitalism” may suggest, the CCP does not micro-manage institutional investors on a day-to-day basis. Rather, institutional investors normally function according to free-market forces and increasingly perform an important corporate governance role—with the CCP using its policy channeling in a targeted way to stabilize the market in times of crisis, execute important legal and market reforms, and to maintain calm in society during critical political events: what their Article calls the “market within the state” for institutional investors in China.