China Standard Time: A Study in Strategic Industrial Policy

Abstract

China's industrial policy for high-technology industries combines key features of the policies pursued elsewhere in East Asia such as opening to foreign investors and supporting domestic firms. Leveraging its large market size, China has gone further than other developing countries by promoting standards for products that compete in China with products controlled by major electronics companies. This paper analyzes the experience to date of this Chinese policy in the consumer optical storage industry in the context of China's evolving national innovation system. China's standard-setting policy is politicized but ultimately pragmatic, which avoids imposing excessive costs on the economy. It may also have dynamic learning benefits for Chinese firms who are starting to compete in global markets.