Paper Tigers, Hidden Dragons: Firms and the Political Economy of China's Technological Development

by Douglas B. Fuller

Overview

China presents us with a conundrum. How has a developing country with a spectacularly inefficient financial system, coupled with asset-destroying state-owned firms, managed to create a number of vibrant high-tech firms?

China's domestic financial system fails most private firms by neglecting to give them sufficient support to pursue technological upgrading, even while smothering state-favoured firms by providing them with too much support. Due to their foreign financing, multinational corporations suffer from neither insufficient funds nor soft budget constraints, but they are insufficiently committed to China's development. Hybrid firms that combine ethnic Chinese management and foreign financing are the hidden dragons driving China's technological development. They avoid the maladies of China's domestic financial system while remaining committed to enhancing China's domestic technological capabilities.

In sad contrast, China's domestic firms are technological paper tigers. State efforts to build local innovation clusters and create national champions have not managed to transform these firms into drivers of technological development.

These findings upend fundamental debates about China's political economy. Rather than a choice between state capitalism and building domestic market institutions, China has fostered state capitalism even while tolerating the importing of foreign market institutions. While the book's findings suggest that China's state and domestic market institutions are ineffective, the hybrids promise an alternative way to avoid the middle-income trap. By documenting how variation in China's institutional terrain impacts technological development, the book also provides much needed nuance to widespread yet mutually irreconcilable claims that China is either an emerging innovation power or a technological backwater.

Looking beyond China, hybrid-led development has implications for new alternative economic development models and new ways to conceptualize contemporary capitalism that go beyond current domestic institution-centric approaches.

Product Details

ISBN-13:	9780198843221
Publisher:	Oxford University Press
Publication date:	07/16/2019
Pages:	304
Product dimensions:	9.10(w) x 6.10(h) x 0.60(d)

About the Author

Douglas B. Fuller, Professor, School of Management, Zhejiang University

Douglas B. Fuller is a Professor in the Department of Business Administration of Zhejiang University's School of Management. He previously taught at King's College London, Chinese University of Hong Kong, and American University in Washington, DC. His research spans the political economy of development, technology policy and strategy, and comparative capitalism with a geographic focus on East Asia.

Table of Contents

Part 1: Setting the StageIntroduction1. The FrameworkPart 2: State Policy, Firms and Upgrading Outcomes2. California (and Hsinchu) Dreaming: China's Flailing Efforts to Replicate Technology Clusters3. Paper Tigers: The Weakness of China's National Champions4. State-driven Technology Commercialization versus the Globalization of R&DPart 3: The Integrated Circuit Industry5. IC Fabrication6. IC Design: From Reverse Engineering to InnovationPart 4: China in Comparative Perspective7. China's Global Hybrid Model for Development under Globalization8. Importing Institutions and Comparative Capitalism9. China's Economic Future and the Future Role of HybridsAppendix: Interview List

Editorial Reviews

"The lacklustre performance of most state enterprises in high-tech activities, the billions of yuan wasted in central government technological upgrading projects, and the presence of corruption around state subsidy programmes is also beyond contention. Fuller provides detailed post-mortems of ill-managed state projects, with the most rigorous treatments reserved for IC fabrication and IC design." - Joe Studwell, China Economic Quarterly

"This book gives a rich and vivid account of the origins and development of China's high technology entrepreneurship based on the author's extensive fieldwork and longitudinal data over the course of 12 years. The result of Fuller's research is a meticulous, theoretically insightful book on the political economy of China's high technology development. It is an essential text for those who are interested in the development in East Asia and the political economy of development for late industrializers." - Michelle Hsieh, China Quarterly

"Fuller's explanation is exhaustively researched and persuasive. This book is required reading for anyone who seriously wishes to understand China's difficulties and successes in high tech. It is well written and perceptively researched. Fuller's Hidden Dragons are not only promising for China, they show how in an ever-more-connected world, developing economies can draw creatively on foreign institutions." - Andrew Tylecote, China Journal

"Valuable scholarly work always stimulates debate, and Fuller's brilliant contribution is no exception. With its provocative theory and extraordinary data, the book should be required reading for anyone interested in knowledge economy, comparative institutions, the political economy of development, and/or the relationship between industry and the state in contemporary China." - Abigail E. Coplin, Journal of East Asian Studies

From the Publisher