The era of globalization saw China emerge as the world's manufacturing titan. However, the "made in China" model—with its reliance on cheap labor and thin profits—has begun to wane. Beginning in the 2000s, the Chinese state shifted from attracting foreign investment to promoting the technological competitiveness of domestic firms. This shift caused tensions between winners and losers, leading local bureaucrats to compete for resources in government budget, funding, and tax breaks. While bureaucrats successfully built coalitions to motivate businesses to upgrade in some cities, in others, vested interests within the government deprived businesses of developmental resources and left them in a desperate race to the bottom.
In Manipulating Globalization, Ling Chen argues that the roots of coalitional variation lie in the type of foreign firms with which local governments forged alliances. Cities that initially attracted large global firms with a significant share of exports were more likely to experience manipulation from vested interests down the road compared to those that attracted smaller foreign firms. The book develops the argument with in-depth interviews and tests it with quantitative data across hundreds of Chinese cities and thousands of firms. Chen advances a new theory of economic policies in authoritarian regimes and informs debates about the nature of Chinese capitalism. Her findings shed light on state-led development and coalition formation in other emerging economies that comprise the new "globalized" generation.
About the author
Ling Chen is Assistant Professor in the School of Advanced International Studies at Johns Hopkins University.
"There is an urgent need to understand the sources of China's industrial prowess. Avoiding sweeping generalizations, Ling Chen spotlights China's divergent development paths and convincingly argues that each city's use of foreign capital in the heyday of FDI attraction has shaped and altered its government-business coalitions, with important consequences for industrial upgrading and innovation. This is a must read for anyone interested in China's political economy and its global implications."
—Dali L. Yang, The University of Chicago
"This book should be required reading for anyone hoping to understand how China's relations to foreign capital work in practice. It represents the next generation of research, showing how the strategies of local governments vary fundamentally across regions, how these variations are rooted in local political history, and why some are significantly more effective than others."
—Peter Evans, University of California, Berkeley
"In this impressively researched and tantalizing book, Ling Chen advances capitalism literature by bringing it to subnational development in China. She offers this key development lesson: choices made in the early stages of economic liberalization profoundly shape the subnational political economy for years to come."
—Edmund Malesky, Duke University
"Contrary to the popular image, Chinese localities vary tremendously in their interactions with the global economy. In the past two decades, Beijing has moved from pressing Chinese cities to attract FDI at all costs to upgrading capacity through "indigenous" innovation. Ling Chen gives a masterful account of the interaction of local governments, firms, and vested international coalitions, and why Beijing's new direction could be welcomed in some areas, but not others."
—Margaret M. Pearson, University of Maryland
"One of China's key challenges is managing the shift away from export-led manufacturing toward more profitable, innovation-rich industrial policies. Despite intense leadership attention, implementation remains puzzlingly mixed at best. In this wonderful book, Ling Chen takes us to the very nexus of this shift, arguing that the size of locally-investing foreign firms influences and reinforces coalitions of local bureaucrats, leading some locales to foster and others to stifle these national policy priorities."
—Andrew Mertha, Cornell University