To clarify, I still think Chinese FDI can offer tech benefits to the US through two channels:
1. Older tech: China's export controls put limits on transferring cutting-edge tech. But ironically I see this as enabling greater transfer of older generation tech. Beijing is encouraging Chinese companies to invest overseas while setting some boundaries on what can be shared rather than leaving this up to private firms.
2. Informal know-how: Arguably much if not most of China's gains from foreign tech were not in formal IP transfer, which foreign firms guarded closely, but from informal know-how. When you build a new plant and train a bunch of local staff and work with local suppliers, this can have huge positive spillovers far beyond engineering blueprints and design patents. For example, a lot of China's edge in LFP batteries is knowing how to reliably and efficiently scale production.
China will not make tech transfer easy. But neither did the US or other countries when they invested in China. Ultimately it boils down to how hard the host country bargains and what forms of leverage they can bring to bear. And the US has tremendous leverage, particularly at a time when Chinese firms are desperate for overseas markets.
Re-upping my piece on how China did this with FDI:
