
Contents
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Explaining Policy Divergence across Industries Explaining Policy Divergence across Industries
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Deploying FDI for Growth: A Comparative Case Study Deploying FDI for Growth: A Comparative Case Study
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Automobile Industrial Policy: A Consistent Focus on National Champions and Technology Upgrading Automobile Industrial Policy: A Consistent Focus on National Champions and Technology Upgrading
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Semiconductor Industrial Policy: Divergence and Recentralization Semiconductor Industrial Policy: Divergence and Recentralization
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Comparing the Consequences of Liberalizing FDI Contracting Authority Comparing the Consequences of Liberalizing FDI Contracting Authority
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Reassertion of Central Activism in Semiconductors Reassertion of Central Activism in Semiconductors
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Testing Sources of Policy Divergence Testing Sources of Policy Divergence
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Results and Findings Results and Findings
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Whither the National Champions? Whither the National Champions?
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5 FDI and the Quest for National Champions
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Published:October 2021
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Abstract
This chapter describes why World Trade Organization (WTO) entry has undermined rather than strengthened the governance of China's national champion industries. It returns to the clash of interests between the central government and its subnational authorities. This tension has been a constant feature of China's political economy, but WTO liberalization exacerbates the problem by enhancing the access of subnational governments to external resources in the form of foreign direct investment (FDI). The chapter then examines the comparative case studies of the automotive and semiconductor industries, illustrating the causal mechanisms behind why greater subnational authority over FDI generates policy divergence in strategic industries. It then turns to a quantitative analysis to assess the broader relationship between FDI access and relative developmental activism in central versus subnational policies in China's manufacturing industries. Ultimately, the chapter simplifies the analysis by comparing the interests of the central versus subnational (i.e., provincial and local) governments. This is because provincial and local government behavior is fairly aligned when it comes to FDI policy.
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