The mission of China Development Bank (CDB), which was founded in 1994, is to support “the state's policies to implement disciplined development and build a harmonious society.” Barclays bank, which was founded in the early days of the Qing dynasty, exists to serve its customers and shareholders. The fortunes of this unlikely pair are now joined: the Chinese bank announced this week that it is taking a stake in Barclays—as is Temasek Holdings, part of the government of Singapore's investment arm. This will boost Barclays in its bid for ABN AMRO, a Dutch bank. It also marks a new adventurousness on the part of China's government. When it bought a $3 billion stake in Blackstone in May, the party men gained no control over what the private-equity partnership did with its money. This time CDB will have a seat on the board.

Although CDB is a state-owned bank, most governments buy their foreign assets through state-run investment pools, known as sovereign-wealth funds. These funds are getting bigger and bolder. They have some $1.5-2.5 trillion to play with, according to America's Treasury, a sum expected to grow fast. Although sovereign funds began investing conservatively, the Barclays deal shows that they can provide an attractive source of funding for mergers and acquisitions. Some sovereign funds are also getting into the buy-out business. Delta Two, a fund backed by the government of Qatar, is currently bidding for Sainsbury's, a British supermarket. Yet despite making their presence felt in financial markets, little is known about these funds.

To understand them, it helps to think about where their money comes from. Many emerging markets, notably China, have built up vast reserves of foreign exchange. Such reserves are traditionally invested in liquid assets like Treasury bonds, which could be sold quickly if the central bank had to prop up the currency. But many countries have far more reserves than they need for this purpose. And China is in any case protected by capital controls. That leaves the government free to buy more exciting things where it might make a better return. Earlier this year China decided to set up a sovereign fund.

Most of the other funds get their money from oil exports. Such funds have been around for some time—Abu Dhabi, for example, started a fund in 1976—but have been multiplying recently. Russia intends to channel some of the money from its Oil Stabilisation Fund, which invests in safe, liquid assets, into a more adventurous sovereign-wealth fund. Kazakhstan, Azerbaijan, Venezuela, Bolivia, Nigeria and Angola have all either set up funds recently or are looking at doing so.