Why Low-Skilled Chinese Don't Always Back Labor-Intensive FDI

Foreign direct investment (FDI) into developing countries such as India and China often provokes domestic backlash. Rising protests and disruptive behavior have increased the salience of public opinion for FDI policy, making it important to understand how citizens form preferences about incoming projects.

🔎 How preferences were measured

One of the first survey experiments on Chinese citizens' attitudes toward FDI uses a novel conjoint design to isolate how individual respondent characteristics and specific FDI features shape support. Key aspects of the research design:

• Method: Conjoint survey experiment administered to Chinese respondents
• Focus: Variation in respondent characteristics and FDI project attributes (including labor intensity, country of origin, and expected impact on local jobs)

📊 Key findings

• Low-skilled respondents are not necessarily more likely to support labor-intensive FDI, contradicting the conventional expectation that labor-rich populations will favor low-skilled, labor-using projects.
• Citizens place greater weight on the FDI project's country of origin and its perceived impact on the local job market when forming preferences, rather than on the project’s labor intensity alone.

⚖️ Why it matters

These results challenge simple assumptions about how factor endowments translate into public support for different types of FDI. For policymakers and investors in developing countries such as China, the origin of investment and employment consequences matter politically and can drive public opposition or acceptance more than whether a project is labor- or capital-intensive.