Redefining Critical Industry: A Comparative Study of Inward FDI Restrictions in China and the United States




Zhao, Can

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International political economy scholarship largely focuses on the motivations and determinants of FDI flows and their effects on economic wellbeing, stability and peace. An overlooked question, however, is the restrictions of inward FDI. Extant research widely regards national security and economic security as the justifications for FDI restriction. This is an oversight because there is a broad overlap in conceptualizations of national security and economic security. In this thesis I study the phenomenon of the use of the concept “critical industry” to justify FDI restrictions. I investigate eight cases of restricted FDI transactions occurred in China and the United States between 2005 and 2012, and the relevant institutions and practices of both countries. This study argues that the protection of critical industry is the key driver of inward FDI restrictions and that the security of critical industry is better understood to protect individual industries, defense-sensitive industries, critical infrastructures, and industries pertaining to regime-security.



Political economy, FDI transactions