Local officials are responsible for processing business licenses, company articles of incorporation, and subsidies. This gives them tremendous influence over how foreign-invested enterprises (FIEs) are organized, what they make, how much they make, and even where they make it. For example, in February 2020, during the coronavirus outbreak, government officials nationalized an FIE producing surgical masks and put export restrictions in place.1
With regard to controlling where things are made, it’s common for local officials to steer manufacturing operations into development zones. In 2011, there were 1,600 development zones in China.2 By 2019 that number had climbed to 2,543. Today, China is home to more than half ...
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