Changing Lanes in China : Foreign Direct Investment, Local Governments, and Auto Sector Development

The primary purpose of the book is to understand how China has used foreign investment to promote local development. It uses the case studies of five Chinese regions that have joint venture projects in the auto industry. The analysis covers two decades, both before and after Chinese accession to the World Trade Organization, and is based on hundreds of interviews.

This book addresses two of the most important trends in political economy during the last two decades - globalization and decentralization - in the context of the world''s most rapidly growing economic power, China. The intent is to provide a better understanding of how local political and economic institutions shape the ability of Chinese state-owned firms to utilize foreign direct investment (FDI) to remake themselves in the transition from inefficient and technologically backward firms into powerful national champions. In a global economy, the author argues, local governments are increasingly the agents of industrial transformation at the level of the firm. Local institutions are durable over time, and they have important economic consequences. Through an analysis of five Chinese regions, the treatment seeks to specify the opportunities and constraints that alternative institutional structures create, how they change over time, and ultimately, how they prepare Chinese firms for the challenge of global competition.