Local politics and foreign ventures in China's transitional economy: the political economy of Singaporean investments in China

The re-articulation of China into the global economy since December 1978 ha s led to a tremendous influx of foreign capital during the past two decades . Constrained by the limited domestic market and encouraged by home-country government, transnational corporations from Singapore are regionalising in creasingly into the Asia Pacific region. To date, a significant amount of S ingaporean investments abroad has gone to China. Based on personal intervie ws with parent companies in Singapore and their subsidiaries and/or affilia tes in China, this paper aims to examine the political economy of Singapore an investments in China. Specifically, I argue that successful cross-border operations of Singaporean firms are embedded in dense networks of social a nd political relationships. These relationships provide the political lever age and strategic resources to enable the establishment of Singaporean firm s in China. This establishment, however, is contingent on blending with loc al politics in China through which foreign firms use leverage on the partne rship advantage of local governments (difang zhengfu), their enterprises, a nd business activities. This rise of local corporatism is a key institution al consequence of the recent rescaling of China's political economy. Case s tudies of ventures by Singaporean firms in China are presented to support m y arguments. Taken together, these empirical materials shed light on the im portance of understanding the role of politics at different spatial scales in influencing transnational corporations and their international business operations. (C) 2000 Elsevier Science Ltd. All rights reserved.