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The Fight for the Middle: Upgrading, Competition, and Industrial Development in China

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  • Loren Brandt
  • Eric Thun

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 data and 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 model of development in several important respects: industrial upgrading efforts are often domestically-driven, within this domestic market there is intense competition between both domestic and foreign firms, and this competition is driving and stimulating the upgrading efforts of domestic firms.

Suggested Citation

  • Loren Brandt & Eric Thun, 2010. "The Fight for the Middle: Upgrading, Competition, and Industrial Development in China," Working Papers tecipa-395, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-395
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    References listed on IDEAS

    as
    1. Thun,Eric, 2006. "Changing Lanes in China," Cambridge Books, Cambridge University Press, number 9780521843829, October.
    2. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
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    6. Steinfeld, Edward S., 2004. "China's Shallow Integration: Networked Production and the New Challenges for Late Industrialization," World Development, Elsevier, vol. 32(11), pages 1971-1987, November.
    7. Alice H. Amsden & Wan-wen Chu, 2003. "Beyond Late Development: Taiwan's Upgrading Policies," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011980, April.
    8. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    China; industrialization; FDI; upgrading; value-chains; emerging markets; automotive;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

    NEP fields

    This paper has been announced in the following NEP Reports:

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