April 06, 2023

The Dragon Strikes Back: The Geopolitics of FDI in China

Tomás Costa de Azevedo Marques, Federal University of ABC
Business Administration and Business Economics, Developing Nations, Economic Development, Economic Growth, Economic History, Economic Innovation, Economic Policy, Economics, Heterodox Economics, International Economics, International Relations/Trade, Law and Economics, Local-Global Relations, Macroeconomics, Political Economy, Politics and Law, Public Economics, Regional Economics, Technological Change
Keywords - China, Foreign Direct Investment, Development Policy, State, Transnational Corportions

In the 21st century, the People’s Republic of China has risen as one of the main centres of world capitalism. This can be in large part attributed to the opening process that started in the late 1970s, which is promoting China’s integration into the Global Value Chain (GVC). The role of the State and the public policy aiming at modernisation through the attraction of foreign direct investment (FDI) with modern technology and knowledge from capitalist countries have played a key role in this process. Nonetheless, the rise of the Asian Dragon in the world economy did not go unnoticed. While transnational corporations (TNC) have fed the Dragon in the last four decades, they have also been struggling to control it. This paper discusses the rise of the leading Chinese companies and the role of regulation policy for inward FDI. It does so by applying the political economy approach to understand the relationship between the State and the market, looking at two case studies. Our findings show that besides the so-called trade war with China, it is still too early to affirm that there is a decoupling process going on.