Paper Tigers, Hidden Dragons

Firms and the Political Economy of China's Technological Development

Douglas B. Fuller

Provides an in-depth longitudinal study of China's information technology (IT) industry and policy over the last 15 years
Draws a connection between China's financial system and technological development outcomes thus demonstrating how China's financial inefficiencies impact the real economy
Places Chinese tech firms in their Chinese institutional context thereby challenging widespread misconceptions about the strength and weaknesses of China's increasingly prominent tech firms
Acts as a useful tool to help students analyse the competitive strengths and weaknesses of Chinese tech firms

Paper Tigers, Hidden Dragons

Firms and the Political Economy of China's Technological Development

Douglas B. Fuller

Description

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.

Paper Tigers, Hidden Dragons

Firms and the Political Economy of China's Technological Development

Douglas B. Fuller

Part 1: Setting the Stage
Introduction
1:The Framework
Part 2: State Policy, Firms and Upgrading Outcomes
2:California (and Hsinchu) Dreaming: China's Flailing Efforts to Replicate Technology Clusters
3:Paper Tigers: The Weakness of China's National Champions
4:State-driven Technology Commercialization versus the Globalization of R&D
Part 3: The Integrated Circuit Industry
5:IC Fabrication
6:IC Design: From Reverse Engineering to Innovation
Part 4: China in Comparative Perspective
7:China's Global Hybrid Model for Development under Globalization
8:Importing Institutions and Comparative Capitalism
9:China's Economic Future and the Future Role of Hybrids
Appendix: Interview List

Paper Tigers, Hidden Dragons

Firms and the Political Economy of China's Technological Development

Douglas B. Fuller

Author Information

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.

Paper Tigers, Hidden Dragons

Firms and the Political Economy of China's Technological Development

Douglas B. Fuller

Reviews and Awards

"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."

"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 Fullers 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." - Abigali E. Coplin, Journal of East Asian Studies