During the global economic downturn I noticed a strong return of China  government officials representing economic development zones (EDZs) actively courting foreign direct investment. The couple years before that, though, and the same officials felt themselves in the cat-bird position, able to pick and choose investments as suited their mood.

Steve Dickson of the law firm Harris & Moure and one of the co-authors of the China Law Blog wrote an excellent column in the January 2010 edition of China Economic Review on the extent to which China will be able to unilaterally flex its newly found economic muscles in the world’s circus as the global ring master. He discusses how in 2009 China has been systematically snubbing its own laws (for instance, anti-monopoly and technology licensing) and is no longer courting foreign direct investment. Just as disconcerting is “the position that Chinese workers are available to do any job and that foreign workers have nothing to contribute to China. Of course, those of us laowai who have lived and worked in China for several years see a yawning chasm in that assessment. As Steve rightly observes, attempting to strong-arm the world to a nation’s own will has not worked according to plan as the US (in the ’70s and 2000′s), and Japan (in the ’80s) would have liked. Google’s response to having been hacked recently – presumably under government auspices – is a case in point: Google is sick and tired and not going to take it anymore.

Nevertheless, new foreign-invested entrants into China will find the investment membrane a bit thicker than in the past to penetrate; and current foreign ventures may find local authorities a bit more complacent than before, as their promotions are less stringently attached to the RMB-value of the investment projects they bring in.

Come the next economic downturn, though, Chinese policy will change 180-degrees – about face!, as they say in the Army – without a single administrator blushing.

Further reading: WSJ, NYT