Industrial policy and technology linkages: Conceptualizing China’s approach

China presents a compelling case for the study of industrial policy, but its conceptual foundations remain underexplored in the academic literature. In this article the authors propose a schematic framework to analyze China’s industrial policy. 

Based on a systematic review of Chinese-language sources, they show how industrial policies in China concentrate on technology linkages between different industry types that the government defines. 

Future industries are high-tech fields of strategic importance with immature markets. Once scientific advances in these fields lead to commercially viable products, future industries become emerging industries. The development of emerging industries is shaped by China’s large base of traditional industries. Firms in traditional industries adopt emerging high-tech, which allows them to upgrade and to expand their international competitiveness. In turn, traditional industries provide an initial market for firms in emerging industries, helping them to scale up and shaping the trajectory of the underlying technologies. 

By concentrating state support on the linkages between these industry types, industrial policies in China aim to accelerate mutually reinforcing cycles of scientific innovation, technology commercialization, and technology diffusion. Implementation schemes grant favored firms preferential access to state-controlled production factors, but also aim to match suppliers with buyers, talent with firms, and firms with R&D institutes. 

Case studies on China’s electric vehicle, textiles and apparel, and advanced semiconductor industry illustrate how this framework can be applied to analyze China’s industrial policy in specific sectors.

This academic article was published as a discussion paper by the Research Center for Regional Economics, VIVES, of KU Leuven. It was written by Robin Schindowski, Doctoral Researcher at KU Leuven, Jeroen Groenewegen-Lau, Lead Analyst at MERICS, and Max Zenglein, Asia Economy, Strategy and Finance Center Leader and Asia Pacific Senior Economist at The Conference Board.

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This discussion paper is part of the project “Dealing with a Resurgent China” (DWARC) which has received funding from the European Union’s Horizon Europe research and innovation programme under grant agreement number 101061700.

Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union. Neither the European Union nor the granting authority can be held responsible for them.