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Industrial policy in China: Its development and ongoing transformation

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  • Fu, Xiao
  • Lin, Ping
  • Ye, Gaofen

Abstract

China’s industrial policy has evolved significantly since the 1980s, serving as a key driver for its technological catch-up and transition from a planned to market economy. Although government-backed sectors have achieved notable economic successes, these policies have also led to negative effects, including overcapacity, ineffective innovation support, and repeated investments ignoring comparative advantages. Recent central government decisions emphasize allowing market mechanisms to play a decisive role in resource allocation and prohibit local authorities from creating discriminatory policies. Looking ahead, China is expected to better coordinate industrial and competition policies, while developing strategic emerging industries and strengthening supply chain resilience through independent innovation and high-standard opening-up measures.

Suggested Citation

  • Fu, Xiao & Lin, Ping & Ye, Gaofen, 2026. "Industrial policy in China: Its development and ongoing transformation," International Journal of Industrial Organization, Elsevier, vol. 104(C).
    • Handle: RePEc:eee:indorg:v:104:y:2026:i:c:s0167718725000955
    DOI: 10.1016/j.ijindorg.2025.103229
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    Keywords

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    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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