William Overholt argues that as China reaches a threshold where success has eliminated the conditions that enabled miraculous growth, Xi Jinping is pursuing the riskiest political strategy of any important national leader. Alternative outcomes include continued impressive growth and political stability, Japanese-style stagnation, and a major political-economic crisis.
Doug Fuller Discusses His Book "Paper Tigers, Hidden Dragons"
Douglas Fuller's book provides an in-depth longitudinal study of China's information technology industry and policy over the last 15 years.
About the Book
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 corporation's 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 Paper Tigers, Hidden Dragons' 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.
This video is also available on the USCI YouTube Channel.
About the Author
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.
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Events
April 26, 2018 - 4:00pm
Los Angeles, California
Please join the USC U.S.-China Institute and USC professor Brett Sheehan for a discussion on the evolution of Chinese capitalism chronicling the fortunes of the Song family of North China under five successive authoritarian governments.
June 5, 2018 - 7:00pm
Los Angeles, California
Please join the USC U.S.-China Institute, the East Asian Studies Center, and the USC School of Cinematic Arts for a screening of the 1993 Chinese film Woman Sesame Oil Maker (香魂女). It tells the story of a woman in a small village who buys a peasant wife for his mentally disabled son after her sesame oil business becomes unexpectedly successful. The screening will be followed by a Q&A with the director, Xie Fei (谢飞).