Foreign direct investment (FDI) has been an important part of the Chinese economy since the 1980s. During the Mao period, most foreign companies halted their operations in China, though China remained connected to the world economy through a limited scale of international trade. Since 1978, China was again open to foreign investment and within two decades it became the largest recipient of foreign direct investment among developing countries. While China's acceptance of foreign investment is commonly associated with Deng Xiaoping’s policies, Chinese leaders including Mao Zedong and Hua Guofeng already acknowledged the need to import foreign capital and technology in the early 1970s. The investments from the 1970s up till the 2000s mainly focused on the manufacturing sector, earning China the label “world’s factory”. However, female migrant workers who contributed to the growth through participation in the foreign-owned manufacturing sector had to work in poor conditions, with insufficient labor protection, and under restricted migration opportunities due to the hukou system.
Mao period (1949-1976)
Self-reliance
During the Mao period, the Chinese Communist Party adhered to the policy of self-reliance. Foreign direct investment basically did not exist, except for a very small number of foreign-owned companies which continued operation in China, like the Royal Dutch Shell. During the Cultural Revolution, the concept of self-reliance was added with revolutionary values, with Learning from Dazhai in Agriculture and Learning from Daqing in Industry as two notable examples. The adhere to the self-reliance policy, however, does not mean that China was cut off from the world economy. Japan, for instance, was an important trading partner with China since the 1950s. Chinese leaders were eager to emulate the Japanese experiences of state-led development in Manchuria in the 1930s and 1940s.
Post-Mao period (1976-2003)
Initial state policies
After assuming power in 1978, Deng Xiaoping prioritized the policy of attracting foreign investment, giving the term self-reliance a new meaning. To justify this shift from the self-reliance principle in the Mao period, Deng directed the drafting of a party resolution that interpreted the history of the Chinese Communist Party after coming into power in 1949 and evaluated the role and achievements of Mao Zedong. Its full name is “Resolution on certain questions in the history of our party since the founding of the People’s Republic of China” and was adopted during the Sixth Plenary Session of the Eleventh Central Committee of the Chinese Communist Party in 1981.
In regard to foreign economic relations, the resolution asserts that by adhering to the principle of self-reliance, the party overcame the wartime blockade from the Nationalist Party and Japanese army. Subsequently, “victory in the Chinese revolution was won because the Chinese Communist Party adhered to the principle of independence and self-reliance and depended on the efforts of the whole Chinese people.” After 1949, the party continued to adhere to the principle to achieve economic development. The resolution states that in 1979, the central leaders adopted new policies to “correct the shortcomings and mistakes of the previous two years in our economic work and eliminate the influence of ‘Left’ errors that had persisted in this field.” To improve the people’s livelihood, the leaders believed that “active efforts must be made to promote economic and technical co-operation with other countries on the basis of independence and self-reliance.”