The Political Economy of China’s R&D Internationalization: Policy-led Innovation and Changes in China’s Growth Model

The extent and speed with which China has captured gains from R&D internationalization sets the country apart from other emerging economies and has furthered its aspirations to upgrade from innovation follower to innovation leader. In this chapter, we discuss how the internationalization of China’s industrial R&D has evolved in the interplay between firm strategies, domestic government policies and international policies and regimes. First, we outline the development of China’s R&D internationalization, identifying its major drivers and motives. Second, we link this to China’s broader domestic and international political economy: its growth model, domestic S&T upgrading (e.g., the Made in China 2025 plan), firm-level internationalization (e.g., in the Belt and Road Initiative), and the emergence of more restrictive inward FDI regimes in Western countries. Finally, we comment on the likely future trajectory of Chinese R&D internationalization against a global backdrop characterized by increasing economic nationalism, trade frictions, and geopolitical security concerns.