Foreign Capital, National Strategy: Why China Managed FDI With Precision and India Often Didn't
Introduction: The Question Behind the Numbers Between 1980 and the early 2020s, China absorbed something on the order of $4 trillion in cumulative inward foreign direct investment, built the world's largest manufacturing base, climbed from a peripheral economy to the world's second-largest, and did all of this while maintaining tight capital controls, extensive sectoral restrictions, and — for much of that period — outright legal requirements that foreign investors partner with local firms and transfer technology in exchange for market access (UNCTAD, World Investment Report , multiple years; IMF, Foreign Direct Investment in China , 2002). This was not an accident of scale or timing. It was the product of a government that understood, with unusual clarity, that foreign capital is only as valuable as the terms attached to it — and that treated every stage of market access as something to be negotiated, sequenced, and earned by the investor rather than simply granted. India, ove...