Informal privatization through internationalization: The rise of nomenklatura capitalism in China's offshore businesses

China's remarkable business expansion abroad since the mid-1980s cannot be explained simply by applying existing theories, which focus on conventional international businesses from capitalist systems. Many puzzling phenomena in Chinese investments abroad become intelligible only when we introduce a key variable - illicit privatization through internationalization. So far o nly advantageously-placed nomenklatura members and their kin have had acces s to crossborder ownership, but many of them are accumulating sizeable priv ate wealth at the cost of nationalized property. Contrary to an impression held by many in the West, the Chinese economy under Communist rule experien ces spontaneous privatization parallel to what has happened in European pos tcommunist nations - though with a few Chinese characteristics. An examinat ion of informal privatization in China's multinationals adds a new dimensio n to our understanding of the shift from state socialism to market capitali sm.