This project will examine how the development of technological capability in Chinese firms is affected by the type of ownership and by the structures of corporate governance. The rapid development of China's economy since 1980 has not been matched by that of technological capability in Chinese firms. This already counts as failure for Chinese industrial policy and could in future undermine China's economic growth. Work by the principal applicant in and on Europe has shown how corporate governance affects technological development; it has been extended and adapted to China in a pilot study of mobile telecoms. It appears that while private firms are handicapped by finance, state-owned firms are held back by corporate governance. Work by the co-applicant in Britain and China has shown how lower-level employees can contribute to developing technological capability. This project will build on the work of both. It will focus mainly on electronics (including telecoms) and begin with about seven case studies of firms of different ownership types, based mainly on semi-structured interviews at different levels of the firm, followed by questionnaires addressed to senior managers in a sample of about 200 firms. Tsinghua University's Department of Technology Economics and Management will collaborate.