ABSTRACT
This chapter provides a theoretical and empirical analysis of the technological level and competitiveness of Chinese corporations. It reviews how innovation, research and development are shaped by endogenous factors as well as by learning from the outside world. While Japanese and Western automobile companies manufactured in China, this had not resulted in technology transfers. China recognized the need to acquire Information Technology both through acquisitions as well as by supporting research-based universities such as Tsinghua University. In the 1960s, China's divorce from the Soviet Union severely disrupted access to new technology, which impacted on agricultural productivity. There has been a substantial change in the absorption of foreign capital in China since 1978, when there was little foreign direct investment. China has to coordinate state-business links with initiatives and policies. Chinese ambitions for long term growth had to be built on the basic sciences, industrial R&D and high levels of investment.
