Essays on Power Dynamics in Chinese Innovation Policy

China watchers find it helpful to speak in terms of eras: the Mao era, the Open and Reform era, and now the Xi era. The two foundational themes in this story arc have been the use of autocratic power structures and the degree of integration into the global economy. Developments in the last decade have increasingly melded the more personalist, ideological, and centralized politics of Mao Zedong with the regulatory architecture his successors put in place for markets and internationalization. In this regard, a key dynamic—and a key tension—of the last four decades remains as fascinating as ever: What happens when institutions adopted from more liberal contexts are grafted onto an authoritarian power structure?/nThe following essays illustrate how this power dynamic plays out in three regulatory areas central to innovation policy: finance, antitrust, and intellectual property. These areas are not only major foci for Chinese policymakers in their prominently articulated goals of indigenous innovation and global technological leadership for the next stage of Chinese development; they are also key institutional frameworks for organizing and facilitating markets./nThe first essay focuses on the arrangement that over 80 Chinese companies— often from the scrupulously regulated and highly sensitive tech sector—use to attract foreign capital. In so doing, it grapples with the empirical puzzle of widespread permittance of the circumvention of China’s FDI regime. Drawing on case studies and descriptive statistics, it probes the advantages of allowing firms to operate within the meso-layer between permissibility and proscription. The essay concludes that the understated application of state power has enabled the temporal flexibility necessary to meet evolving state goals. Post-Covid politics render this modulating power dynamic as salient as ever./nThe second essay asserts that the regulatory scrutiny Chinese internet platforms have received illustrates that antitrust can function as both a limitation of firms’ social power and a delegation of economic responsibility. This perspective comes from transporting the Brandeisian emphasis on antitrust as a tool for limiting power in democracies to an autocratic context in which various articulations of the Dictator’s Dilemma for maintaining regime power are the most common theoretical starting point. After linking this exercise in conceptual travel to well-established Chinese governance motifs, a close reading of primary sources around the antitrust crackdown on internet platforms in late 2020 and early 2021 provides evidence that Chinese regulators have indeed used antitrust to remind corporate entities that the state views them as its de-facto agents for implementing the state’s economic vision. The essay therefore contextualizes key developments in China’s political economy while pointing to antitrust as a regulatory tool that addresses a more diverse set of political objectives than traditionally theorized. Finally, the third essay investigates how Chinese firms reconcile contradictory incentives from patent policy in their home market on the one hand and the globalization of technology markets on the other. Standard essential patents for 5G telecommunications are the empirical focus because they are a prime example of the interplay between intellectual property being regulated territorially while the underlying technologies are traded in global markets. Chinese firms are major declarers of SEPs for 5G technologies, but filing practices that previous research identifies as responses to Chinese patent policy can disadvantage firms aiming to have their proprietary technology included in international standards and licensed globally. Patent data for their 5G SEP declarations show a partial but incomplete response to this dilemma: While filing patterns reflect the schedule of international standard setting instead of a year-end surge to meet state targets, evidence remains for a year-end drop in patent quality and limited patent filings abroad. These findings illustrate the tensions that China’s evolving patent policy must navigate in transitioning from an emphasis on quantity to an emphasis on quality. Taken together, these essays invite a more precise contextualization of the major changes underway in China’s political economy: Rather than asserting the demarcation of eras, it is instructive to address iterations of fundamental tensions across them. Even amid Xi Jinping’s current calls to “better balance security and development with a greater emphasis on security,” Chinese leadership is affirming the commitment to “high level openness.” The essays in this dissertation point to a reason why. Be it the way companies are financed, monopolistic actors are addressed, or intellectual property promoted, there is an affirmation of frameworks’ value and just as strong an affirmation to bend them in the most facile way possible to the strategic or political imperatives of a given moment. Defining both that moment and those needs is the essential power dynamic in Chinese innovation policy specifically and Chinese political economy more generally. Geopolitics and national security concerns are indeed pushing toward the selective decoupling of Chinese technologies. Xi Jinping’s reassertion of the state is generating considerable uncertainty for the private sector. Momentous though those changes may be, they must operate through institutional structures already in place. How those institutional structures are repurposed and to what ends will shape this new era of Chinese politics. But it is premature to declare China’s openness a relic of the past. It may be increasingly less fulsome and more calibrated, but it is an inheritance not easily erased and a benefactor not easily discarded. In this regard, the power dynamics of Chinese innovation policy are truly befitting of the dialectical nature that has long defined communist rule.

Advisor: Vogel, Steven K.
O'Brien, Kevin J.