China's Industrial Upgrade in Global Factor Specialization

China has operated as a proactive destination of technology transfer and diffusion from the Western world since reform and opening-up in 1978.This enabled the country to seize strategic opportunities of global factor specialization and helped it achieve great industrial development and upgrade.Nevertheless,the traditional path of integration into the global system of factor specialization has also brought about problems of imbalance and incoordination such as an excessive consumption of natural resources and environmental damage,making it necessary for China's industrial development to increase sustainability.Deepening of global factor specialization,increased cross-border liquidity,and the strategy of "reverse integration" of multinational firms based on developing economies are tendencies highly consistent with the direction of China's industrial development and upgrade and present new strategic opportunities for integration into global factor specialization and industrial transformation.Rather than simply acting passively as a destination of foreign investment,a new round of opening-up is required for China to take a more efficient route in the global system of factor specialization.Therefore,in the area of industrial development,China must keep a down-to-earth attitude,effectively utilize the existing comparative advantages,and follow a gradual and science-based approach.Only by following this course will China be able to take advantage of the new opportunities,foster advanced indigenous and international factors,and increase its capabilities of innovation and global operation on the basis of global resources integration.

Liberalize or Not？ Societal Conflict, Plural Political Competition, and the Political Economy of FDI Liberalization

While the existing literature suggests political liberalization enhances the freedom of foreign direct investment （FDI）, the observation that some countries with more liberal political regimes have more restrictive policies toward direct investment than others remains unexplained. With a theoretical model of plural political competition and empirical evidences gathered from panel data, I argue that the liberalizing effect of political liberty on foreign direct investment hinges on the local factor endowment of the country experiencing democratization. I develop a theory of investment policy formation that takes into account the strategic response from domestic societal actors to redistribution of political power and its impact on FDI liberalization. Consistent with the theoretical prediction, the empirical results show political liberalization is more likely to lead to liberalization of foreign direct investment when the capital-labor ratio in the economy is relatively low.