Implications of Chinas on-going dependence on foreign technology

This paper examines the on-going high level of dependency of Chinas economy on foreign sources of technology during the period since accession to the World Trade Organisation (WTO). Because this dependency is a major cause of concern for Chinas leaders and policymakers, they have sought to shift the direction of the economy particularly since 2006 towards a greater focus on indigenous innovation. Achieving such a major transformation, however, in an era when much of Chinas economic activity has become integrated within the global value chains of major corporations, is very challenging, and the evidence to date suggests only a modest level of success on the part of Chinese companies to substitute for the on-going dominant position of foreign companies particularly in Chinas high technology sectors. Some progress has been made, however, in the private sectors share of economic activity in contrast to the declining share of State Owned Enterprises (SOEs). (C) 2014 Elsevier Ltd. All rights reserved.