地方政府與外資的叛逆結盟：中國區域發展的失衡

行政院國家科學委員會專題研究計畫 成果報告

地方政府與外資的叛逆結盟：中國區域發展的失衡

中

華

民

國 92 年 9 月 10 日

FDI-dependency? Economic Transition from Import Substitution to Export-Led Growth: Wujiang, Jinjiang, and Boluo

Yia-Ling Liu Department of Sociology National Chengchi University

What strategies available for the late developers to catch up in global competition has been the main concern in social sciences. Different disciplines prescribe different alternatives for policy makers to solve the problem.

Developmental economists have long promoted foreign investment and foreign trade, the symbol of open economy, as the engine of growth for those who lack capital, technology, and resources to initiate development (Griffin 1999). For them, it is the comparative advantage enjoyed each country, which reduces the production cost, creates competitive edge, and then benefits each side in exchange of goods in the global market. For sociologist and political scientists, they are likely to cite

administrative capacity of the state, the model of “developmental state” based on the East Asia experience, in a way to design efficient institutions and policy instruments to guide market and promote growth (Evans 1995; Gerschenkron 1992; Wade 1990; Johnson 1982). For them, the state could be deeply involved in the economy, but able to maintain independence from the surrounded business interests, reaching embedded autonomy as the key to encourage the targeted industry and promote policy incentives for economic growth. Despite different aspects stressed by different disciplines, it might be concluded that the key to economic success for a late comer lies in a capable state successfully to promote foreign trade and export growth. In the wake of Chinese economic development, the concepts of local state corporatism or developmental community have been invented to characterize the strong

administrative capacity of local state administration to bring for economic success (Oi 1995; 1999; Walder 1998). The local state assumed the role of entrepreneur, directly involved in industrial production, in a way to pursue capital accumulation in locality and enrich local coffer. The concept of developmental community tends to

emphasize the making of alliances between the local state and foreign capital, in a way to expose rural enterprises to the worldwide market, and therefore, facilitateed export-led growth (Zweig 1995; 2002). However, regardless the administrative capacity in the notion of local state corporatism or developmental community, they both put too much stress on the alliance between the local state and the collectively owned firms or foreign capital, to the exclusion of the domestic private capital. Privatization of rural collective economy in the 1990s in particular has been

completely ignored by them. I would argue that the rise of the local private capital in the form of privatized firms might alleviate the outcome of FDI-dependence in the local economy. In this article, I would like to examine economic transition into

export-led growth in three different localities in rural China, focusing on the interaction among the local state, foreign capital, and domestic private sector. I would argue that despite triple alliance might emerge in rural China, local institutions of industrial structure, and the transformation of property rights might determine the outcome of export-led growth.

In this article, I explore economic transition in three different localities along the southeast China coast, Wujiang in southern Jiangsu, Jinjiang in Fujian, and Boluo in Pearl River Delta, focusing on the interaction among the local state, FDI, and the local private capital. With a comparative study of these three cases in the course of development, I found that Wujiang’s newly emerged computer industry and the export-led growth were mainly carried out by FDI from Taiwan, whereas Jinjiang’s prosperity and the fast growth of foreign trade was carried out by the local private capital in the guise of joint ventures and foreign invested firms. Boluo, with a weak economy to start with, is more dependent on FDI than Wujiang to initiate economic growth. In this sense, Boluo is more FDI-dependent than Wujiang. How to explain the differences in the path of development among them? I argue that so far as the local economy took root before the entry of FDI, regardless the nature of ownership, it is unlikely for the local economy to become FDI-dependent, despite a weak

subcontracting existing between foreign invested firms and the local ones, such as Wujiang and Jinjiang. However, if the local economy was weak to begin with and the private capital was also left out by the local state, the enclave economy of FDI-dependent is very much likely to occur, such as the case of Boluo.

THEORETICAL VIEWS ON FDI AND THE LOCAL STATE FOR ECONOMIC TRANSITION

Despite the positive view of FDI held by the neoclassical economics, the result of economic growth brought by spillover effect, technology transfer, and foreign market access, a recent dissident view based on the Latin American experience demurs that the pre-existing stock of FDI has no effect on the long-term growth for the host economy (Hausmann and Cortes 2001). Following this line of logic, many Chinese scholars worry about the leading and predominant position of FDI in the Chinese economy, despite the great contribution made by FDI to the rapid growth in the economy in general and foreign trade in particular,. Even though the ratio of FDI to the domestic capital formation has been declining in China since 1994 (see table 1), much more so after the Asian Financial Crisis, the sentiment of economic nationalism among Chinese intellectuals still holds. For them, FDI has penetrated into many traditional labor-intensive industries, particularly those where the Chinese crafts used to enjoy comparative advantage, such as textile, apparel, and footwear, etc..

Moreover, FDI has led the development of Chinese computer and technology information production, and stretched into service sector, such telecommunication, were well led by FDI.

Developmental state model.

Among different forms of foreign capital in the international financial market1, many economists seem to prefer foreign direct investment (FDI). Unlike the

short-term and speculative debt and portfolio investment, FDI is an equity investment, committed to industrial output. For this reason, FDI would eventually bring forth economic growth as a result of technology transfer, spillover effect, and access to foreign market (Griffin 1999; Oman 2001; Fernandez-Arias and Hausmann 2001). However, a different view appeared in recent studies on Latin American that FDI has not posed a long-term effect on economic growth as what many economists would believe, thus, the presence of many foreign firms is no avail to the long-term growth for the host economy (Hausmann and Cortes 2001; Hausmann and Fernandez-Arias 2001)2. For some economists, the high ratio of FDI to the total amount of foreign capital inflow in a society is not a good sigh for the health of the host economy. Unfortunately, this is the exact case for most of the poor and high-risk developing countries, where the protection of property rights is poorly enforced and market institutions are imperfect, whereas in most of advanced developed countries show a low rate of FDI, despite a larger inflow of foreign capital, mostly portfolio investment (Hausmann and Fernandez-Arias 2001). Because of the imperfect and insufficient market institutions, FDI in most developing countries tends to engage in vertically integrated production, rather than to take subcontracting with local suppliers. Therefore, the slower growth and higher risk the country is, the more dependent it is on FDI for development. China seems to fit this portray well since 1990s, and the Chinese economy as a whole has been regarded as FDI-dependent, with foreign firms concentrated in the development zones without forward and backward linkage with the local enterprises (Huang 2003). To the Chinese scholars’ further dismay, foreign multinationals had already acquired ownership rights in the formally state-owned firms, competed fiercely with many key sectors of manufacturing, including both traditional labor-intensive as well as newly emerged high-tech industries, and stretched into many service sectors, such as banking, insurance, telecommunication, travel industry, and retail distributing, after China’s acquisition of WTO membership

1 _{Foreign investment usually includes three different kinds: foreign debt, portfolio investment, and FDI}

(Lardy 2001; Reisen 2001).

2 _{In their research, Hausmann and Cortes indeed discovered that FDI inflow had positive effect on a}

contemporaneous increase in each five-year period of growth for the host countries. However, this effect is smaller than that of long-term private debt or short-term debt on growth.

in 2001. FDI was deemed to take the lead in the Chinese economy as well as in the export sector. Apparently, this has caused many Chinese scholars to lament that the development of the Chinese economy seems to have been constrained by FDI. From their point of view, China does not need FDI any more, and the less FDI inflows, and the healthier is the Chinese Economy (Huang 2003).

Is the Chinese economy as a whole truly FDI-dependent, despite the ratio of FDI to the domestic capital formation has been declining since 1994, even more so after the Asian Financial Crisis (see table 1)? Lardy argues that despite as the world’s second largest recipient of FDI in the 1990s, FDI in China has not contributed a great deal to the domestic capital formation, if the outflow of capital and foreign exchange are taken into account (Lardy 2001; 2002). For some other Chinese scholars, the volume of FDI inflow is not big enough in China, if FDI per capital is considered. Therefore, China should welcome more FDI inflow, with domestic market share in exchange of FDI and foreign technology (Hu 1999, p. 243). Which view is more true than the other?

If sentimental pessimism of economic nationalism can be outright eliminated and allow empirical facts to step forward and speak for themselves, the story might be different. So far as FDI in China is concerned, a considerable amount of research has been focused on the impact of FDI on specific industries and economic growth at national level (Huang 2003, Song 2001, Yang 2001). They have ignored the impact and dynamism of FDI on the local development in rural China. This article explores instead economic transition in three different localities along the southeast China coast, Wujiang in southern Jiangsu, Jinjiang in Fujian, and Boluo in Pearl River Delta, focusing on the interaction among the local state, FDI, and the local private capital. With a comparative study of these three cases in the course of development, I found that Wujiang’s newly emerged computer industry and the export-led growth were mainly carried out by FDI from Taiwan, whereas Jinjiang’s prosperity and the fast growth of foreign trade was carried out by the local private capital in the guise of joint ventures and foreign invested firms. Boluo, with a weak economy to start with, is more dependent on FDI than Wujiang to initiate economic growth. In this sense, Boluo is more FDI-dependent than Wujiang. How to explain the differences in the path of development of there cities to take? This article shows that so far as the local economy took root before the entry of FDI, regardless the nature of ownership, it is unlikely for the local economy to become FDI-dependent, despite a weak

subcontracting existing between foreign invested firms and the local ones, such as Wujiang and Jinjiang. However, if the local economy was weak to begin with and the private capital was also left out by the local state, the enclave economy of FDI-dependent is very much likely to occur, such as the case of Boluo.

In comparison with the other two cases, Wujiang began with an relatively strong collective industry in the 1970s, and this inward-looking industrialization with government protection continued throughout 1980s. However, the course of development in Wujiang changed from import-substitution to export-led growth by FDI in the late 1990s. Jinjiang started with a weak collective economy but a

stronger underground private sector in the pre-reform era. With the lift of ban on the private economy in the reform era, the local private sector went boom and took the lead in Jinjiang’s industrialization in 1980s. While in the 1990s as central policy started to promote FDI, many private enterprises in Jinjiang transformed into joint ventures or foreign invested firms to enjoy the favorable tax policy, and seize export opportunities in southeast Asia. Different from the export-led growth driven by FDI in Wujiang, the dynamism of economic boom has been in the hands of the local private capital in Jinjiang. Boluo suffered both weak collective and private economy to begin with. It also missed the chance of development in the market reform

throughout 1980s. The turning point for Boluo’s development began with the county government’s courtship of FDI from both Hong Kong and Taiwan in the mid-1990s. Like Wujiang, FDI took the lead in Boluo’s economy and the local export sector. But different from Wujiang, without a strong collective industry to began with,

Boluo’s development is solely FDI-dependent. How to explain the differences in the path of development in Wujiang, Jinjiang, and Boluo?

In the studies of rapid growth of local economy in rural China, the explaining focus has been put on the administrative capacity of the local state and its alliance with either the local collective enterprises or FDI. In this article, I would focus on the local legacies of socialist institutions, and the interaction among the local state, FDI, and the local private capital in explaining the differences in their courses of development. I would argue that so far as the local industry took the root before the entry of FDI, regardless the nature of ownership, it is unlikely for the local economy to become FDI-dependent, despite the weak subcontracting between foreign invested firms and the local firms, such as Wujiang and Jinjiang. However, if the local economy was weak in the beginning and the private capital was also left out by the local state, the enclave economy of FDI-dependent is very much likely to occur, such as the case of Boluo.

Before exploring economic transition of those three localities, recent reform in ownership rights and the policy to attract FDI needs to be examined first.

PRIVATIZATION AND TRANSITION TO EXPORT-LED GROWTH After two decades of economic reform in introducing market institutions, China

finally reached the stage of privatization in property rights in the late 1990s, as the major reform measures failed to improve productivity, efficiency, and the condition of red for the state-owned firms. With the passage of Company Law in 1994, many state and collective enterprises started the process of corporatization, transformed into limited-liability or joint-stock companies, and the smaller ones were sold into private hands. At the same time, many local state firms were forced together under political mobilization to form giant business groups, a form of conglomerate in order to issue shares in the burgeoning stock market, in a way to acquire capital from society. The rural collective enterprises followed the suit of privatization, not only putting many collective firms into private hands as shareholding companies, but forming local conglomerates and joint ventures, a way to strengthen their market competitiveness.

Why the booming of the rural collective industry in the 1980s lost its

momentum in the 1990s, and a large scale of privatization was undertaken by both township and village governments? On the one hand, as market competition became fierce in the 1990s, many rural collective enterprises were in red, unable to compete with both more efficient private firms and technologically advanced joint ventures in the market. In other words, the institutional legacy of socialist economy, economic shortage, was replaced by oversupply of consumer goods in the market since the late 1980s. On the other hand, political protection of import-substitution, soft budget constraint, and investment in hunger, the pattern behavior of socialist regime,

continued to overshadow rural industry. In fact, the “local state corporatism” in rural China is mostly built up by over-investment, a result of long-term debt and loans, and the local extra-budget funds. With extensive growth without intensive development in efficiency and productivity characterized the booming of rural collective industry in the 1980s. Demand for the consumer goods produced by the rural collective

enterprises derived not from the satisfactory quality, but from perennial shortage, the characteristic of socialist economy. Despite consistent political protection and government subsidies, the performance of the majority of rural enterprises, as their counterparts in the state sector, was in fact in bad shape as opposed to the private firms, joint ventures, and foreign invested firms. As the direct owners of rural enterprises--the township and village governments--were already in severe fiscal deficit, and their financial sponsors--the local bank branches--had long suffered bad loans and great losses, the majority of rural collective enterprises were in financial troubles and on the verge of bankruptcy. As fiscal collapse loomed large for both township and village governments, privatization of rural enterprises seemed to be an inevitable remedy to stagnation in the rural economy in the late1990s.

In such case, the role of state entrepreneurship and the notion of the “local state corporatism” collapsed, for administrative guidance and government intervention into

economy had not improved rural enterprises’ market competitiveness, increasing efficiency and productivity. As a result, privatization becomes the only means to improve market performance. In the process of privatization, some local officials withdrew from business running, returning to their original political posts, but many of them taking over the privatized enterprises lower than the market value as the new owners. Apparently, the local officials are the beneficiary of privatization of

property rights in rural industry.

Why privatization was first resisted but later embraced by the rural

governments? As rural enterprises were put into private hands, what will be the substitute for the main source of income— the extra-budget funds-- for the local governments. Moreover, without extra-budget funds to carry out rural

industrialization, on the one hand, and the long suppressed and weak private capital incapable of accomplishing the task, on the other, what is the available means for the local government to sustain the growth in order to maintain the national growth rate of 8 percent? In such case, FDI seems to be the sole hope and solution. Since FDI was expected to provide employment opportunities, generated tax revenue, brought in advanced management skills and technology, facilitated the rise of local service sectors, and pressed forward the economic growth in general, the local officials began to woo FDI. In doing so, they started to build local development zones, to improve local infrastructure, and provide favorable tax policy and special treatment. With FDI inflow, the local economy went booming in serving FDI-related sector, and rewarded the local officials with political promotion along power hierarchy. Thus, competition for FDI becomes fierce among the local governments in rural China. Making alliance with FDI seems to be an inevitable outcome for the local

governments to pursue sustained growth in rural China.

ECONOMIC TRANSITION IN WUJ IANG, J INJ IANG, AND BOLUO

Wujiang is located in the southeastern corner of Jiangsu, 115 kilometers to the north of Shanghai, and 113 to the south of Hangzhou. Both highways and

waterways of the Great Cannel passed through Wujiang, easily connecting the Wujiang was a county, administered by municipal Suzhou. But it was promoted to a county-level city in 1992, a result of fast economic growth (Wujiang city government 1999: 57-9). The population size in Wujiang was 773 thousands, and the urban income per capita reached 9,420 yuan, and 5,346 yuan for rural income in 2000 (Wujiang statistical bureau 2001:7), much higher than the national average of 2,280 yuan in rural China (Li 2001:4). Historically, Wujiang was well known for its silk industry since Ming and Qing periods, and silk weaving was the popular craft among the peasant households then, apart from agricultural production. Silk manufacturing

and its export in the early periods lay the foundation for later rural industrialization and transition into export-led growth in the reform era.

The path of development in Wujiang since 1949 followed the “Sunan model,” a variant of the local state corporatism, characterized by a relatively strong collective economy owned and run by the local government with a weak and suppressed private sector. But unlike the earlier developers of surrounding counties in Sunan, Wujiang was concentrated on agriculture production as its development strategy throughout 1960s and 1970s, rather than on rural industry. As the earlier birds of neighbors took the advantage of economic shortage, seizing a large market share in consumer

manufacturing and then enriched themselves and the local coffer, Wujiang was waken by the stark contrast of its poverty and then started to follow the suit. Like the neighboring counties in Sunan, the fast expansion of rural enterprises in Wujiang since late 1970s were financially supported by first the communal agricultural surplus, and then the politically designated loans and credits from the local banks and credit unions commanded by both the township and village governments. Despite as a late comer in rural industrialization in Sunan, Wujiang was still a step earlier than other areas in rural China to catch up the opportunity of market shortage, and reaped a handsome profit.

The incentive to promote rural industrialization by setting up many collective enterprises by the rural governments was the result of reform measure of fiscal decentralization. Since the profit generated by the local business running accounted for the bulk of the local extra-budget fund, the local officials were encouraged to take the role of entrepreneur to run the business and manage production. However, the administrative capacity and state entrepreneurship informed by the “local state corporatism” had not improved economic performance of the enterprises in the market. Rather, the majority of rural enterprises in Wujiang, and in many other counties in Sunan as well, suffered severe losses and lost competitive edge since mid-1980s, as economic shortage was relieved at that time. The rapid growth in Wujiang and in Sunan in general was mainly the result of quantitative expansion of the enterprises into different sectors, a consequence of local officials’ investment huger and political protection. The main reason for the local officials to pursue extensive growth lies in fact that political reward is mainly based on the production output of the local economy and the welfare facilities provided by the local

government. Thus, quantitative expansion made possible by the extra-budget funds, and debts and loans from the local financial institutes, long inflicted by soft budget constraint, was the essence of the “local state corporatism,” growth without increase in productivity and efficiency. Once banking institutes were banned to expand loan business, the majority of rural enterprises were on the verge of bankruptcy without

funding influx in the early 1990s, and the only way out of this impasse was privatization.

On the other hand, even though many socio-political studies assume the local government as the main initiator to make alliance with foreign capital in promoting growth, they have no empirical support to put forward the claim that each part of the local bureaucracy would enter into alliance with FDI. In this article, I would argue that only those which deal with FDI directly would be entering into coalition with FDI.

Secondly, the relative success of the Chinese economic reform has recently put forward the concept of developmental state based on East Asian experience. The local officials are portrayed as wise pursuers of effective policies in guiding the economy, not only playing the role of entrepreneur directly involved in production in the 1980s, but also actively courting FDI and entering into alliance in the 1990s in facilitating local economic transition (Oi 1995; 1999; Zweig 1995; 2001). However, the notion of local state corporatism and developmental community has

over-exaggerated the administrative capacity of the local state and ignored the widespread corruption and rent-seeking behavior among local officials. Moreover, the large scale of privatization of collective enterprises in rural China in late 1990s demonstrated organizational mismanagement of the local officials, and the insued inevitable prvatization was a necessity to avoid fiscal collapse on the part of local government. Despite the entry into alliance with FDI by local government, it is not the bureaucracy as a whole soliciting and working for the foreign capital. Rather it is only the colation

Following this line of reference, to the Chinese scholars’ dismay, as the world’s second largest recipient of FDI3, China has become FDI-dependent, and Chinese economy has been severely constrained by FDI (Huang 2003). As Chinese

government started to woo foreign capital in the beginning of 1990s, FDI in the form of joint ventures or foreign firms have not only invaded many traditional

labor-intensive manufacturing sectors, but also taken the lead in the newly emerged computer and information technology industries as well. FDI has also further stretched into many service sectors such as banking, insurance, telecommunication, distributive retailing, and printing, after China’s acquisition of WTO membership in

3

China might have exceeded the United States as the world’s top choice for and the largest recipient of FDI in 2002, according to the New York Times report (Section 3, March 2, 2003: 1, 11).

2001. Worst of all, as market share is gradually encroached by joint ventures and foreign firms, both state and private firms were losing the ground to the technology-and management-advanced foreign firms. Like Marxist-informed dependency theory, the Chinese scholars lamented that in spite of the contribution made by FDI, the fast growth of the Chinese is brought up by resource investment, rather than by promotion of productivity. Moreover, the FDI-dominated economy is prone to crisis, as what happened in Asian Financial crisis in 1997 (Yang 2001; Song 2001; Huang 2003).

Regardless the different views held by different scholars, they all point the important role of FDI in the development of Chinese economy. Lardy

With more than two decades of transition into market economy, China has

emerged as one of the world’s fastest growing countries, with an annual growth rate at 9.7%4, and as the world’s seventh largest trading economy, with $475 billion of trade value in 2000 (Lardy 2002:4). Certainly, China’s impressive economic performance among the developing countries derives partially from the export-oriented foreign direct investment (FDI). Specifically, as the world’s second largest recipient of FDI in the past decade China appears to be the world’s largest export processing

manufactory, producing a variety of labor-intensive goods such as toys, footwear, and apparel. Moreover, China is also part of global production network for computer components and information technology hardware. According to Chinese official statistics, the export-oriented FDI has contributed to more than half of China’s total export in the last decade. FDI serves as the engine of growth in the past decade in China. It has prevailed not only in many traditional manufacturing sectors and in the newly emerged high-tech industry, but also stretches into many service sectors such as banking, insurance, telecommunication, and printing as well, after China’s acquisition of WTO membership in 2001. With export sector and major manufacturing and services predominated by foreign capital, Chinese critics has revealed its weary that the Chinese industry has been constrained by the incessant inflow of FDI. Thus, the Chinese economy is characterized as FDI-dependent, despite its great contribution to the formation of domestic capital and the speedy economic growth. Furthermore, to the Chinese scholars’ dismay, the rapid growth of the economy derives from capital and resources investment, rather than the improvement of factor productivity.

Before China’s acquisition of WTO membership in 2001, the Chinese economy has already integrated tightly into the world capitalist system as a result of open door

4 _{According to Lady’s report, worldwide economists believe that China’s economic growth rate for the}

past two decades has been officially overstated. For instance, the World Bank’s estimation of the long-term growth rate between 1978 and 1995 was 8.2%, 6% from 1986 to 1994 for OECD, and 8.4% from 1978 to 1998 for the China’s National Economic Research Center (Lardy 2002:11).

policy in the two decades of economic reform. Specifically, the east coast of China has become the worldwide largest processing factory for all kinds of labor intensive manufacturing, and the flow of manufactured goods, services, and capital across the Chinese border has been increasingly voluminous in the last decade of the 20th century. As China became the world’s second largest recipient of foreign direct investment (FDI) for most of 1990s, the export-oriented FDI in China has partly contributed to an annual growth rate of 9.7% for the past two decades as well as a top accumulation of foreign exchange worldwide. Despite this unprecedented economic success, Chinese critics has revealed its weary that the Chinese industry in various sectors has been predominated and constrained by the incessant inflow of FDI (Huang 2003；Song 2001；Yang 2001). As Chinese scholars observed, FDI has been concentrated not only in the traditional labor-intensive manufacturing, but also prevailed in the newly developed high-tech sector, such as computer, information technology, and

telecommunication industries in China. With export sector and many important industries are in the hands of foreign capital, many Chinese scholars have shown their worries that in the process of integration of China into the world economy, China is overshadowed in the bottom position by the international division of labor. Thus, China is characterized as FDI-dependent, contributing to a large portion of domestic capital formation (Huang 2003).

The large inflow of FDI may not raise the overall rate of investment and domestic capital formation (Lardy 2001; 2002)5, Chinese scholars cited the fragmented nature of the Chinese economic system, the most prestigious and

important position of the state sector, and the politically and financially discriminated private firms as the main institutional culprit for the leading position of FDI in the Chinese economy. Moreover, the rapid growth of the Chinese economy has been lamented as the result of resource mobilization from FDI rather than productivity improvement (Huang 2003；Lardy 2002；Song 2001). Once FDI withdraws in response to a world crisis, the Chinese economy would have suffered immediate collapse as the Southeast Asian counterpart did in the 1997 Asian financial crisis. Thus, to the Chinese scholars’ dismal, FDI-led growth to the exclusion of the rise of local industry in many sectors is prone to potential crisis and instability.

Despite the pessimistic view on the path of Chinese capitalism, China has witnessed a transition from traditional import substitution to export-led growth in the last decade. Specifically, different localities have chose different paths for their

5

In Lardy’s 1995 analysis of Chinese export economy, the inflow of FDI into China had not formed an important component for the domestic capital formation at that time, if the net outflow of capital was taken into account (2001;2002). However, Chinese scholars maintained that the inflow of FDI reached peak in 1994, accounting for a large share of the domestic capital formation, in comparison with other developing countries (Huang 2003；Yang 2001).

transition, regardless the predominance of FDI. This article attempts to dispute the dependency theory informed perverseness in the Chinese economy as a whole, by examining different paths of economic transition in Wujiang, Jinjiang, and Boluo in East coast of China. I argue that the relative success of local economic transition lies in the way in which an interest alliance is achieved between FDI, local state, and local private capital, and in the balance of power of each against one another, despite the privileges enjoyed by FDI.

REFERENCES

Evans, Peter. 1979. Evans, Peter. 1995.

Fernandez-Arias, Eduardo and Ricardo Hausmann. 2001. “Capital Inflows and Crisis: Does the Mix Matter?” pp. 93-110, inForeign Direct Investment Versus Other Flows to Latin America：Finance and Investment. Preface by Jorge Braga de

Macedo and Enrique V. Iglesias. Paris: OECD.

Gerschenkron, Alexander. 1992. “Economic Backwardness in Historical Perspective,” Pp. 111-30, in The Sociology of Economic Life. Ed. By Mark Granovetter and Richard

Swedberg. Boulder, Co.: Westview Press.

Keith Griffin. 1999. Alternative Strategies for Economic Development. 2nd Edition. London: Macmillan Press.

Hausmann, Ricardo and Eduardo Fernandez-Arias. 2001. “Foreign Direct Investment: Good Cholesterol?” Pp. 19-49 in Foreign Direct Investment Versus Other Flows to Latin America：Finance and Investment. Preface by Jorge Braga de Macedo and

Enrique V. Iglesias. Paris: OECD.

Hausmann, Ricardo and Patricia Cortes. 2001. “Will the FDI Bring More Growth?” Pp. 117-140, inForeign Direct Investment Versus Other Flows to Latin America: Finance and Investment. Preface by Jorge Braga de Macedo and Enrique V.

Iglesias. Paris: OECD.

Hu, Angang. 1999. “Waishang Touzi Gueimo Shifou Guoda? (Is there too much FDI inflow?) Pp. 240-270, in Zhougguo Fazhang Qianjing(The Future of Chinese Development). Huzhou: Chejiang Renmin Shubanshe.

Huang, Yasheng. 2003. Selling China：Foreign Direct Investment During the Reform Era. New York: Cambridge University Press.

Lardy, Nicholas R. 2001. “The Role of Foreign Trade and Investment in China’s Economic Transformation,” Pp. 385-417, in Growth Without Miracles: Readings on the Chinese Economy in the Era of Reform, ed. By Ross Garnaut and Yiping

Huang. Oxford, UK: Oxford University Press.

D.C.: Brookings Institution Press.

Li, Peilin. 2001. “Zhongguo zai Gaige kaifang Xinjeduan de Xuanze— 2000-2001 Nian Zhongguo Shehei Xingshe Fenxi yu Yuce (The Choices in the New Stage of Chinese Development— Analysis and Prediction on Chinese Society from 2000 to 2001),” Pp. 1-23, in Analysis and Prediction on Chinese Society in 2001. Beijing:

Shehui kexue wenxian chubanshe.

Oman, Charles P. 2001. “The Perils of Competition for Foreign Direct Investment” Pp. 63-84, inForeign Direct Investment Versus Other Flows to Latin America: Finance and Investment. Preface by Jorge Braga de Macedo and Enrique V. Iglesias. Paris:

OECD.

Reisen, Helmut. 2001. “A Comment by Helmut Reisen, “ Pp. 55-62, .in Foreign Direct Investment Versus Other Flows to Latin America: Finance and Investment..

Preface by Jorge Braga de Macedo and Enrique V. Iglesias. Paris: OECD. Song, Quin. Ed. 2001. Ershiyi shiji chu guoji jingji geju yu zhongjuo jingji fazhan

(International Economy in the 21st Century and Chinese Economic Development.) Beijing: Renmin chubanshe.

Wujiang Remin Zhefu (Wujiang People’s Government) ed. 1999. Wujiang

Nianjian 1999(Wujiang Annuals1999). Huangshan: Hefei Chubanshe.

Wujiangshe Tongjuju (Wujiang Statistical Bureau) ed. 2001. Wujiang Tongju Nianjian

2000 (Wujiang Statistical Yearbook 2000). Jiangsu: Wujiangshe Zhefu.

Yang, Shengming. 2001. Zhonguo jingji kaifang lilun chuangxin (Theoretical

Innovation in Chinese Economic Liberalization.) Beijing: Huawen chubanshe. Zweig, David. 1995.

Zweig, David. 2002. Internationalizing China: Domestic Interests and Global Linkages. Ithaca: Cornell University Press.