An Analysis of Foreign Direct Investment Policies in China: Implications for Technological Capability Development

Document Type : Original research

Authors

1 assistant professor technology studies instititue

2 the Institute for Science and Technology Studies, Shahid Beheshti University

3 Niroo Research Institute

Abstract

Today, many advanced technologies are monopolized by multinational corporations. Nevertheless, some countries have successfully leveraged foreign direct investment (FDI) to enhance their technological capabilities. This study aims to examine China’s policies in utilizing FDI for the development of its technological capacity. The research adopts a historical case study approach, drawing data from various sources including academic articles and reports from international databases such as the World Bank, Google Scholar, and Scopus. The study analyzes China’s political and economic transformations across four key time periods: the pre-reform era (before 1979), the initial reform period (1979–1991), the era of major transformation (1992–2001), and the period of accession to the World Trade Organization (2001–2008). The findings indicate that China’s FDI policy evolved through multiple stages. Initially, China embraced open-door policies and attracted foreign investment in labor-intensive assembly industries to build foundational technological infrastructure. In subsequent phases, China imposed conditions on foreign companies to facilitate the transfer of advanced technologies, particularly in sectors such as electronics and information technology. One of China’s major successes in this context was the establishment and expansion of Special Economic Zones (SEZs) and technology clusters, which served as critical instruments for attracting investment and fostering innovation.

Keywords

Main Subjects

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History

  • Receive Date: 27 April 2025
  • Revise Date: 08 June 2025
  • Accept Date: 19 June 2025

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