This dissertation examines China's changing development trajectories, highlighting how the country can no longer sustain economic growth by relying on past land financing models and foreign direct investment. With double-digit growth no longer viable, Xi Jinping has proposed a new vision for China’s economy: cultivating “high quality” growth by investing heavily in “strategic emerging industries” to transform China into the world’s next science and technology powerhouse. To realize this new development trajectory, Xi Jinping has introduced a series of economic reforms that are fundamentally transforming both market and state institutions. In particular, the dissertation shows how the central government is creating powerful market actors to diversify funding sources for strategic industries by transforming existing industrial state-owned enterprises (SOEs) into full-fledged institutional investors, a process that involves financializing their existing physical state assets into financial state capital. These state investment vehicles, known as the State Capital Investment and Operation companies (SCIOs), have proliferated across the country, enabling the state to engage with capital markets in unprecedented ways. Financializing state assets, that is, increasing the importance of financial institutions in the management of state resources, signals a new chapter in China’s state capitalism that has yet to be engaged with systematically. To remedy this gap, this project touches upon various aspects of the politics that unfold from fundamentally transitioning China’s engine of growth. I first delineate the historical legacies of business groups and China’s capital markets that allowed for these new state investment vehicles to gain power within China’s financial scene in just under a decade. Then, I ask, can authoritarian regimes have financial systems that enable efficient resource allocation? I explore this question at both the central government and local government levels. To answer this question, I introduce shareholding politics, where business groups use their ownership of state assets to channel resources through capital markets towards industrial projects and firms deemed important by the Communist Party of China. I utilized Chinese business databases, which provide official business registration records, to ascertain the organizational structure, shareholding relations, and investment patterns of the SCIOs in this project. I find that, at both the central and local government levels, the increasing autonomy of SCIOs and local governments results in resource distribution that is not always conducive to economic development. I conclude the dissertation with discussions of how this project can provide insights on whether or not China can escape the “middle income trap.” Furthermore, I demonstrate how the rise of institutional investors challenges the long-held state-private dichotomy in Chinese political economy. This trend is likely to intensify as Xi Jinping continues to centralize control over China’s financial system.