Chapter 3: Technology Access through FDI and Technology Transfer
3. Technology access through FDI and technology transfer1 China is eager to make the most of new technology to modernize the country rapidly and lay a strong foundation for its sustained future industrialization. Simultaneously, the country must provide employment for its huge and still expanding labour force and improve its living conditions. To this end China has again, since its Open Door Policy, embarked on a twofold strategy. On the one hand its has opened its markets and industries to foreign direct investment (FDI), initially to boost exports, although at the same time laying the foundation for industrial and technological upgrading that will facilitate China’s technological catch-up with the advanced countries. On the other hand the leadership has systematically promoted FDI in labour-intensive processing and assembly (P&A) industries that have the potential of absorbing signiﬁcant portions of unemployed or underemployed people in rural areas. One can ﬁnd apparent similarities between this strategy and the Great Leap Forward in 1958. However, there are also very important differences which have made it possible to reap great beneﬁts continuously from the industrialization strategy that was initiated in the early 1980s. EVOLUTION OF INDUSTRIAL POLICY IN CHINA China at the time of the creation of the People’s Republic in 1949 was almost desolate of industries outside a few selected places, of which Shanghai was one of the most important. With assistance from the Soviet Union a substantial number of heavy industry kombinats2 were created primarily in the Northeast provinces, using large...
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