By pursuing pluralistic learning and strategic integration, China avoided dependence on foreign technology and developed its own high-tech systems. By the 2010s, this approach had enabled the country to move beyond its role as a low-cost manufacturer, emerging as a front-runner in selected advanced technologies.
China’s Path to Technological Independence Through Strategic Innovation
China’s technological ascent reflects a deliberate, phased strategy that moved from importing foreign innovations to integrating and improving them domestically. In its early phase, China relied heavily on absorbing foreign technology through special economic zones, foreign direct investment, and joint ventures. However, experience demonstrated the risks of dependency on a single foreign model, as had occurred under the Soviet system in the 1950s. To mitigate such risks, China pursued multiple, competing sources of technology, ensuring strategic redundancy and the flexibility to extract and synthesize the best features of each system.
High-speed rail exemplifies this approach. China imported trains and technology from France’s Alstom, Japan’s Kawasaki, and Germany’s Siemens. Instead of adopting any single system, Chinese engineers reverse-engineered multiple models, integrated their strongest features—such as Japan’s reliability, Germany’s safety systems, and France’s aerodynamics—and ultimately developed the indigenous “China Standard EMU,” evolving from CRH to Fuxing trains. Similarly, in nuclear technology, China acquired reactors from Russia, France, Canada, and the United States. By studying all of them before standardizing, Chinese engineers created the Hualong One reactor, a domestic model that incorporated global best practices. This strategy prioritized resilience, mastery of core technologies, and comparative analysis over simple cost efficiency.
Underlying these achievements was a unique combination of structural advantages. China’s vast domestic market provided an unparalleled testbed for deploying and refining technologies at scale. Its mixed economy model—state-led investment coordinated with competitive market forces—enabled the construction of massive projects, such as high-speed rail networks and nuclear power plants, with both efficiency and scale. Furthermore, the state’s capacity to integrate universities, research institutes, state-owned enterprises, and private firms facilitated “integrated innovation”: the ability to combine, adapt, and improve multiple imported streams rather than inventing entirely from scratch.
The historical significance of this strategy is profound. By absorbing and integrating diverse foreign technologies, China avoided lock-in, achieved technological independence, and positioned itself as a leader in selected high-tech sectors. By the 2010s, it had transitioned from a low-cost manufacturer to a global innovator, demonstrating a distinctive model of development: one that goes beyond imitation or pure invention, emphasizing pluralistic learning, strategic integration, and large-scale domestic application. China’s experience offers a compelling example of how nations can climb the technological value chain through deliberate, coordinated adaptation and innovation.
China’s “Selective, Independent Opening-Up”
Historically, countries seeking development have faced two extreme strategies: full self-reliance and complete openness. The first emphasizes autarky, rejecting foreign competition and isolating the domestic economy, as seen in Mao-era China. While this approach can preserve control over domestic industries, it often leads to stagnation, inefficiency, and technological backwardness. Conversely, complete openness prioritizes unrestricted trade and foreign investment, sometimes at the expense of national sovereignty and strategic planning, exemplified by Eastern Europe’s rapid liberalization in the 1990s. Such sudden exposure frequently caused domestic industries to collapse, strategic sectors to be lost, and economies to become dependent on foreign multinationals. Both extremes—autarky and indiscriminate openness—proved flawed.
China’s response was a “selective, independent opening-up,” a strategy that combines gradual liberalization with strategic protection. Rather than opening indiscriminately, China adopted a sector-by-sector approach, retaining control over sensitive industries such as defense, media, and gambling, while allowing more competitive sectors to engage with foreign markets earlier. This gradual, competence-based liberalization enabled domestic firms to upgrade technology, management practices, and production standards while learning from exposure to foreign competition. In this way, opening the economy became an instrument for capability building, rather than an end in itself.
Compared to Eastern Europe’s “big bang” liberalization, China’s approach mitigated risk by combining openness with industrial policy and selective protection. Domestic firms were shielded from premature competition, allowing them to develop globally competitive capacities in electronics, textiles, and manufacturing. This strategy surpasses traditional Western models, including Schumpeterian creative destruction and other neoclassical frameworks, by fostering competition and innovation incrementally rather than relying on uncontrolled market forces. China’s experience demonstrates a novel approach to economic strategy that cannot be fully explained by existing theories such as exogenous growth models or the Wallerstein core-periphery framework.
The broader implication is that strategic openness, coupled with industrial policy, can generate sustainable competitiveness. By modulating exposure based on domestic capabilities and national priorities, China created a self-reinforcing cycle in which firms gain experience, accumulate capabilities, and become globally competitive, all while preserving control over critical sectors. This approach not only ensures economic resilience but also introduces an innovative model of governance, showing that openness need not be pursued indiscriminately to drive growth and innovation.
China’s Strategic Autonomy as the Basis for Post-1978 Reform
China’s first three decades of socialist construction (1949–1978) laid the essential groundwork for independent economic and strategic development. Despite Western blockades, technological embargoes, and geopolitical pressures, early planned economy efforts enabled the country to build critical infrastructure, industrial bases, and defense capabilities. Many perceived inefficiencies during this period were not inherent flaws in socialism, but responses to external coercion, such as the Sino-Soviet border conflict of 1969 and nuclear threats from both the U.S. and the Soviet Union. Without these foundational achievements, China would have lacked the capacity to implement the independent and strategic reforms that began in 1978.
Strategic autonomy—military, technological, and economic—has been central to China’s ability to pursue independent policy. Unlike countries constrained by external influence, China can plan and execute large-scale infrastructure projects, such as highways and high-speed rail, while safeguarding key technological and defense sectors. Comparatively, Greece’s attempts to leverage Chinese investment during its financial crisis were stymied by EU and German control over privatization and bailout terms, illustrating how dependence on external powers can limit a nation’s capacity for independent recovery. Similarly, Japan’s policy autonomy remains constrained by U.S. security influence, and the former Soviet Union weakened itself by submitting to IMF-imposed conditions.
China’s careful sequencing of reforms contrasts sharply with the experiences of Eastern Europe, where indiscriminate privatization often led to economic instability. Poland’s retention of key state-owned enterprises and banks allowed it to weather financial shocks, whereas Hungary’s rapid privatization and reliance on foreign capital left it vulnerable to crises. In China, state-owned enterprises (SOEs) play a strategic role by stabilizing the economy and enabling private firms to compete globally against multinational corporations. Historical reform proposals to break up major SOEs were rejected at key levels precisely because maintaining these institutions was essential to national economic sovereignty and global competitiveness.[1]
In sum, China’s development demonstrates that economic success is context-dependent, shaped by historical experience, geography, and geopolitical conditions. Early socialist achievements created a foundation for independent growth, strategic autonomy enabled selective and careful reforms, and SOEs provided a stabilizing backbone for sustainable development. This model underscores that prudent state guidance, rather than unrestrained market liberalization, can serve as a catalyst for long-term economic resilience and strategic independence.
Globalization, State Autonomy, and Economic Transition
The transition from socialism to market economies does not automatically yield liberal democracy or sustained prosperity. In Eastern Europe, the rapid adoption of market reforms—often labeled “shock therapy”—resulted in high unemployment, widening inequality, and social instability. What appeared as economic “success” for these countries was, in reality, a shift from one form of dependence to another: from Soviet control to reliance on the European Union and Western capital. This demonstrates that liberalization alone does not guarantee broad-based development or political stability.
The role of the state is central in navigating globalization, particularly for countries in the periphery or semi-periphery. Dependent openness, as seen in Eastern Europe and parts of Latin America, can leave nations vulnerable to exploitation by international capital. By contrast, independent openness, exemplified by China and other East Asian economies, enables states to strategically acquire technology, build infrastructure, and compete globally. China’s avoidance of the so-called middle-income trap illustrates that economic outcomes are not predetermined by technical constraints but are shaped by deliberate political choices and institutional design.
Marketization does not necessarily entail democratization. Western-style liberalization can disproportionately benefit elites and foreign interests, rather than fostering inclusive growth. China’s gradual, dual-track reforms—state-led, yet market-oriented—preserved autonomy, promoted industrial learning, and avoided social collapse, highlighting that the structure of institutions matters as much as economic policy itself. The contrasting experiences of Eastern Europe and East Asia underscore that successful transition requires careful balancing of state strategy, economic reform, and political control.
Conclusion
China’s economic transformation cannot be explained by simplistic factors such as low human rights, demographic dividends, or cultural traits, nor fully accounted for by conventional Western frameworks like comparative advantage, exogenous growth theory, or Wallerstein’s core-periphery model. Instead, its success reflects a novel approach to industrial and economic strategy, grounded in selective and independent opening-up, strategic planning in industry and technology, and careful institutional design. By leveraging latecomer advantages, ensuring institutional compatibility, and preserving state autonomy while promoting industrial learning, China achieved rapid modernization in a way that challenges conventional neoclassical and dependency-based explanations.
References
[1] “The Controversy over China’s Path and the Myth of Neoclassical Economics”, Chen Ping, May 4, 2012, https://www.guancha.cn/chenping1/2012_05_04_72416.shtml