ABSTRACT
Most China observers would have predicted that China’s externally oriented development strategy, especially the growth of foreign trade, private foreign investment, the reliance on international financial institutions, and an overall opening of global communications to the outside world, would weaken the redistributive and allocative power of the institutions of state socialism and undermine the strength and legitimacy of the Chinese Communist Party. This chapter addresses that assumption by looking at the impact of foreign investment and foreign trade on rural communities in coastal China. Overall, it seeks answers to the following key questions. First, what institutions have emerged linking domestic China and the international system? Who controls these institutions? How do the incentives these institutions and their linkages create influence domestic behavior? Second, have these linkages affected growth and inequality? Third, has the emergence of new transnational ties strengthened state power at the national or local level? Finally, has growth in China’s foreign trade affected the relative strength of different industrial sectors, as well as national policy on industrial development?
