The Fight For The Middle: Upgrading, Competition, And Industrial Development In China

Abstract

When China acceded to WTO in 2001, there were fears that Chinese firms would lose market share in key sectors to foreign-invested enterprises (FIEs). Although aggregate data often indicate a shift in favour of FIEs, indigenous firms in many cases have slowly increased market share and deepened their technical capabilities. Through an analysis of aggregate industry-level data and interview data from both OEM and key supply firms in three sectors, we show how the dynamics of competition between Chinese and FIEs in China’s domestic market enhance the upgrading prospects for Chinese firms. China represents a new development model in which industrial upgrading efforts are domestically-driven and globally integrated and intensely competitive.