While the global economy limps along, China’s is booming: its GDP grew 7.9 percent in the first half of 2001. High capital expenditure, strong domestic demand, sustained inflow of foreign investment— all are helping to fuel this expansion. Western companies have been particularly attracted to China’s vast manufacturing sector, which has become increasingly open as a result of the country’s continuing economic reforms.

Much about the current state of Chinese manufacturing, however, remains unknown to foreigners. How sophisticated are Chinese firms? Do they understand and use modern manufacturing strategy and supply chain management? How advanced is their technology? Are state-owned enterprises a wise investment?

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