My dissertation investigates the policy foundations of China’s technological rise. Specifically, it examines how the Chinese state’s strategic interests and its bargaining power over foreign firms shape China’s use of technology extractors, which I define as policies that condition foreign access to China’s market on transfers of technology to Chinese firms. I argue that top-down national and regime security concerns lead China to pursue technology extraction in strategically important industries, such as high-speed rail, aircraft manufacturing, and semiconductors. However, the Chinese state’s policy enforcement capacity and China’s position in global value chains constrain its leverage over foreign firms, limiting the use of overt technology transfer requirements. China’s bargaining power over investors should be weakest, I argue, when enforcement capacity is low and when China sits in the middle of global value chains, such that most of what it imports consists of foreign inputs to be processed locally and re-exported, as more finished goods, abroad. This leaves China dependent on foreign multinational enterprises as employers and as gatekeepers to overseas consumer markets.

I test my arguments using an original industry-level dataset on technology extractors from 1997-2020 and qualitative case studies. The dataset, based on manual analysis of over 500 pages of Chinese-language central state laws and regulations, reveals that strategic industries account for 85 percent of the six-fold increase in the use of technology extractors between 2002-2012. At the same time, statistical analyses indicate that China is more than twice as likely to use these policies in strategic industries in the bottom 10 percent in terms of imports tied to processing trade than in those in the top 10 percent. Case studies of technology extraction in wind turbine manufacturing, semiconductor design and fabrication, and aerospace engineering provide compelling evidence that reliance on foreign firms constrains China’s use of technology extractors when China is intermediate to global value chains. In addition, I find that foreign government pressure led China to remove most formal technology transfer policies after 2015, but that China continued to pursue transfers through indirect means thereafter.