As of last year, automobile manufacturers don't require joint ventures any more. As time goes on, the number of industries that require joint ventures is decrea

As of last year, automobile manufacturers don't require joint ventures any more. As time goes on, the number of industries that require joint ventures is decreasing. The joint-venture requirement for automobile parts was removed in 1993, for example. The thinking of the Chinese government was that as an undeveloped country, Chinese companies had no hope of directly competing against companies from the developed world. Chinese car manufacturers in 1990 would have simply been wiped out by Toyota, Ford, BMV et al. The Chinese government wanted foreign investment, so they created a middle ground, where foreign companies could exploit cheap Chinese labor and gain access to the growing Chinese market, but in which they would have to work with Chinese companies. This sort of policy makes sense for a developing country, which aspires to be more than a platform for cheap labor, but also to develop its own domestic capabilities. It actually follows in the tradition of a theory advanced by Alexander Hamilton, the "infant industry argument." As know-how at Chinese companies has increased, however, these restrictions have started to make less sense. There are Chinese electric car companies (such as BYD) that can legitimately compete with foreign manufacturers now. As a consequence, JV requirements are also being scaled back.