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Foreign Direct Investment in China's High‐technology Manufacturing Industries

Mary E. Lovely and Zixuan Huang

China & World Economy, 2018, vol. 26, issue 5, 104-126

Abstract: This paper provides a survey of foreign investment activity in China's high‐technology manufacturing industry. In addition, we closely examine the relationship between industrial policy, foreign investment and China's high‐technology export success using the development of an indigenous integrated circuits industry as a case study. This paper finds that China's efforts to raise the productivity and innovative capacity of indigenous enterprises is consistent with rising domestic shares of high‐technology assets and profits. Nevertheless, foreign‐funded enterprises remain the source of most high‐technology manufactured exports, primarily from wholly foreign‐owned firms. In sum, despite indigenous development, Chinese high‐technology manufacturing and exports remain deeply tied to foreign investment.

Date: 2018
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