China’s industrial policy has worked better than critics think
Jan 2nd 2020EARLY IN ITS trade dispute with China, America declared that Chinese industrial policy was a form of “economic aggression”. America’s negotiators hoped to rein it in. No such luck. The very week in December that America and China announced a mini-deal on trade, China’s president, Xi Jinping, vowed that the Chinese government would do more in 2020 to support strategic sectors, ranging from robotics to biomedicine. Having seen its vulnerability to American export controls, China is more determined to build up its domestic abilities than it was before the trade war began.This raises an obvious question: does industrial policy work? Since at least Jean-Baptiste Colbert, France’s finance minister under Louis XIV in the 17th century, governments have used taxes, tariffs and subsidies to cultivate national champions. Colbert worried about the dominance of Venetian glassmakers; Mr Xi worries about the dominance of American chipmakers.Choose us for news analysis that respects your time and intelligenceSubscribe to The EconomistWe filter out the noise of the daily news cycle and analyse the trends that matterWe give you rigorous, deeply researched and fact-checked journalism. That’s why Americans named us their most trusted news source in 2017Available wherever you are—in print, digital and, uniquely, in audio, fully narrated by professional broadcastersThis website adheres to all nine of NewsGuard‘s standards of credibility and transparency.ORContinue reading this articleRegister with an email address