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The Challenges of Chinese Industrial Policy

In: Entrepreneurship and Innovation Policy and the Economy, volume 3

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  • Lee Branstetter
  • Guangwei Li

Abstract

This essay presents a historical overview of the extensive evolution of Chinese industrial policy and summarizes the limited yet expanding body of literature on the effectiveness and impact of such policies. In addition, it provides concise descriptions of three industry case studies—shipbuilding, semiconductors, and electric vehicles—that highlight significant trends in recent Chinese industrial policy. The evidence regarding China’s success in this regard is a complex mixture. Our analysis in this essay suggests that as China’s economy continues to mature and the enduring benefits from earlier waves of economic liberalization and demographic dividends gradually diminish, industrial policy will become more challenging. The disparity between policy ambitions and capabilities is expected to widen, and conflicts arising from competing policy objectives are likely to intensify. Moreover, managing the opportunistic responses of regions, companies, and other actors involved in the industrial-policy arena is likely to become increasingly arduous. Finally, the opportunity cost of policy mistakes is poised to grow.
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Suggested Citation

  • Lee Branstetter & Guangwei Li, 2023. "The Challenges of Chinese Industrial Policy," NBER Chapters, in: Entrepreneurship and Innovation Policy and the Economy, volume 3, pages 77-113, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:14871
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    Cited by:

    1. Gegner, Martin, 2023. "Die Akzeptanz gesetzlicher Initiativen zur Energiewende: Das Beispiel "Gesetz zum Neustart der Digitalisierung der Energiewende"," Discussion Papers, Research Group Digital Mobility and Social Differentiation SP III 2023-603, WZB Berlin Social Science Center.
    2. Steitz, Janek & Kölschbach Ortego, Axel, 2023. "Implikationen langfristiger Energiekostenunterschiede für energieintensive Industrien und den Wirtschaftsstandort Deutschland," Papers 277911, Dezernat Zukunft - Institute for Macrofinance, Berlin.

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    More about this item

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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