attendant upon the Cultural Revolution of the late 1960s and early 1970s.
After Mao's death, his successor Deng Xiaoping as head of the Chinese State and General Secretary of the Chinese Communist Party (CCP) and those who have succeeded him in power since the mid-1990s pursued new and radically different economic policies. Schaller (1990) said that Deng believed that "economic growth, not class struggle, must become China's priority" (199). Deng's overriding priority was to modernize the Chinese economy. According to Garson (1994), Deng believed that "a sustained interaction with the West was crucial to the modernization process" (156). Thus began the 'era of reform' during which the Chinese government welcomed the MNCs and their FDI, more advanced technology and skills and opened up China to outside influences. That process accelerated even further after the massacre at Tiananmen Square in 1989 convinced China's leaders that China must integrate its economy with the world economy, a process which received a powerful boost by China's accession to the World Trade Organization (WTO) in 2002.
In the late 1970s and early 1980s China enacted laws which enabled MNCs to operate in China either through equity joint ventures with Chinese partners, contract arrangements with local entities or through wholly-or partially-owned subsidiaries in China. In the 1980s coastal areas, known as Special Economic Zones (SEZs), were opened to foreign investors.
In the 1990s large sections of the interior and along the Yangtze River were opened to foreign investors. According to Nash (2003), in 1997 CCP officially acknowledged that "the state should endeavor to restrict its holdings to industries that are of strategic importance" (Nash 2003 432). Areas open to foreign investment for the first time included many manufacturing and mining industries, land development, real estate, insurance, information consulting and on a pilot project basis civil...