Industrial Policy In China Research Articles

Getting robots in ‘our own hands’: Structural drivers, spatial dynamics and multi-scalar industrial policy in China

Getting robots in ‘our own hands’: Structural drivers, spatial dynamics and multi-scalar industrial policy in China

How Does China Conduct Industrial Policy: Analyzing Words Versus Deeds

This paper analyzes how China’s industrial policy works focusing on the setting of objectives (“words”) and their implementation (“deeds”). In particular, we investigate how objectives vary across central and local Five-Year Plans (FYPs), in terms of industry preferences, and also compare such objectives with those included in China’s landmark industrial policy, “Made in China 2025.” Notwithstanding China’s centralization of policy planning, we find relevant sectoral differences between central and provincial planning and key industrial policy documents. Secondly, we look at how decisions are made in the realm of China’s industrial policy (“deeds”). To this end, we assess empirically why certain companies are selected under the most recent grand industrial policy strategy, the 10,000 Little Giants, a spin-off of “Made in China 2025.” Out of the key four criteria of selection (i.e., “words”), one is missed in most cases, namely the concentration of the business activity in the relevant sector. Secondly, the intensity of R&D is only significant in the most recent batches of selected companies. For the last two (revenue generation and leverage), there is no noticeable difference between the selected companies and the others. Our results point to the complexities in conducting industrial policy in China as words and deeds do not necessarily align.

Perilous Evolutionary Paths of Industrial Policy in a Developmental Context: Evidence from the Chinese Medical Industry

AbstractIndustrial policy, as one of the most potent weapons employed by governments, is recommended to adhere to the principles of high relatedness and high economic complexity, which can minimize risks and maximize returns. However, this approach may not be optimal in developing countries with poor industrial bases, limited innovative capabilities and weak institutional frameworks. Based on relatedness and economic complexity, this study illustrates the evolution paths of industrial policy in China and identifies underlying influencing factors deciding the patterns of policymaking. Different from developed countries, it takes several steps for developing countries to reach the final target, the smart specialization approach, instead of one‐step jumping. Moreover, industrial policy is not always the panacea, and the effects of industrial policy vary depending on local contexts. In sum, this study extends research towards the complex co‐evolution process of policy and industries in developing countries and provides more insights for policymaking.

From text to effectiveness: Quantifying green industrial policies in China

The evolution of green industrial policy in China is deeply embedded within a unique political, economic, cultural, and social milieu. The intricacies and complexities inherent in this context present challenges for quantitative policy research. In the existing literature, the study of thematic clustering of green industry policy instruments and their effectiveness measures in large-scale policy text repositories remains a relatively unexplored area. To fill this research gap, this study provides an analysis of China's green industrial policies from 1994 to 2022. By adopting the Latent Dirichlet Allocation (LDA) topic model, implicit and optimal themes are identified, and key policy instruments are systematically and comprehensively parsed. Based on this, the cutting-edge Policy Modeling Consistency-Text Encoder (PMC-TE) index model was used to conduct an in-depth quantitative evaluation of various policy tools. The findings reveal 15 policy instruments from 7891 Chinese green industry policy documents. Notably, technical support, information resource demonstration project policies emerged as the most frequently deployed and efficacious. Conversely, government procurement and service outsourcing policies, while showing incremental growth year-on-year, lagged in utilization and effectiveness. These policy instruments can be broadly categorized into three primary archetypes: supply-type, demand-type, and environment-type. The supply-type instruments dominate, while environment-type instruments remain underutilized. Additionally, this study delineates the four chronological phases of China's green industrial policy evolution, illuminating China's strategic pivots-transitioning from resource allocation, to market dynamics, and ultimately to environmental governance trajectories.

How does industrial policy experimentation influence innovation performance? A case of Made in China 2025

Made in China 2025 (MIC 2025), an industrial policy, aims to position China among the global leading manufacturing powers. Different from other industrial policies in China, MIC 2025 is implemented by policy experimentation of pilot cities, which gives priority to the local governments. However, whether MIC 2025 pilot cities promote firm innovation is unclear in current literature. Using MIC 2025 pilot cities as a quasi-natural experiment, this study analyzes the effect and the mechanism of MIC 2025 on firm innovation. The sample consists of 4422 firm-year observations of Chinese listed manufacturing firms in 2012–2022. The result indicates that focal firm located in MIC 2025 pilot cities facilitates its innovation. Mechanism analysis show that MIC 2025 promotes firm innovation through tax incentives, public subsidies, convenient financing, academic collaboration and talent incentives. This study extends industrial policy literature with regard to how place-based policy experimentation promote the implementation of China’s industrial policies. Local governments’ participations and their interaction with the central government are vital for a successful policy experimentation.

Value‐added export tax policy, credit constraints, and quality: Evidence from China

AbstractThis paper examines the effect of an industrial policy in China named the VAT export tax on product upgrading. In particular, we use Chinese transaction data during 2003–2010 to isolate the causal impact of the exogenous variation of VAT refund and within the city‐product quality change in HS6 exported products. Our identification strategy entails the utilization of duality of the Chinese trade system to isolate the impact of the rebate by comparing a group of trade flows exempt from the refund and another that remains eligible. Our results suggest an increase in product upgrading in response to an increase in VAT refund. In this study, we also introduce the credit constraint to understand the change in quality. The industries that are confronted with tighter credit constraints impel firms to settle for low‐quality products. The model demonstrates that VAT refund provided a counterbalance force to credit constraints, thereby prompting firms to adjust quality. By increasing the refund granted to ordinary traders, firms leverage this excess cash flow to invest (in a fixed asset or innovative project) and improve the quality of products. This effect is reinforced for products exported to developed countries, heterogeneous products, or from larger industries. The Chinese policymakers formally introduced environmental objectives under the 10th and 11th FYP, respectively. The Party leaders put substantial weight on promoting products embedded with high‐added value or technological content. At the same time, they underscored the willingness to downscale the export share of energy‐intensive or polluting industries. We evaluate whether environmental and economic concern impacts product upgrading. According to the results of this study, the VAT refund is effective only for products produced in “cleaner” industries, for products necessitating technical skills, a range of know‐how in manufacturing, and high‐level technology or engaging in research and development activities. Our paper introduces a new and unexplored variable in the trade literature. We use the stock of non‐trade barriers to explicate the change in product quality. In the import market, Chinese exporters comply with the change in regulation by making upward adjustments in the quality.

Five-year plan and agricultural productivity in China

PurposeChina's economy has transformed from a high-speed growth phase to a high-quality development phase. The agriculture sector has grown substantially since the economic reform in 1978. Considering the five-year plan (FYP) as a collection of policies, this study explores the relationship between the FYP and agricultural total factor productivity (TFP).Design/methodology/approachThis study uses 31 provincial-level panel data of the five FYPs from 1996 to 2020. The data envelopment analysis (DEA) is used to compute Malmquist productivity indexes. The authors analyze the temporal and spatial changes and convergences of China's agricultural TFP, and investigate the impact of economic planning on China's agricultural TFP and its regional difference.FindingsThere is a slow but upward growth trend in China's agricultural TFP. The technical change has played a leading role in the growth of China's agricultural TFP. The agricultural TFP of all provinces has shown a “catch-up” effect and is developing toward their respective steady-state levels. The regional difference in productivity growth among the eastern, central and western regions exists. Test results show that the FYP has a positive effect on the agricultural TFP, and the effect has obvious regional heterogeneity. The FYP also plays a positive role in the gross value of agricultural output, and the impact effect is greater than that on the improvement of agricultural productivity.Originality/valueThere are many forms of industrial policy in China, among which the FYP is the guiding document of industrial policy, which makes a systematic plan for industrial development in the subsequent five years. The development objectives, guidelines and overall deployment for agriculture in the FYP not only describe the general context of China's agricultural development but also show the key ideas of agricultural development. Therefore, this study explores its impact on agricultural quality development from the perspective of FYP. The results provide evidence for examining the governance performance of the government and the objective evaluation and restraint of the FYP. As agriculture moves toward the stage of high-quality development, the Chinese government should strengthen the critical guiding role of the FYP and pay attention to quality indicators such as technical progress, efficiency improvement and regional coordination in the formulation of the FYP.

Experiments on flexural behavior of the prefabricated RAC and NWC composite slab

The development of prefabricated buildings is a long-term industrial policy in China. In the prefabricated frame structure, the slab is one of the critical components. However, two kinds of famous prefabricated slabs in China need the template system and sometimes need a particular fabrication site. The paper proposed a novel prefabricated concrete composite slab, which adopts the high-strength bolt as the shear connector. Compared with the traditional precast concrete composite slab, the novel prefabricated concrete composite slab does not need a template and temporary support. Compared with the conventional composite slab, it has analogous rigidity. Still, it does not require a fireproof coating. It has fast construction speed and a low comprehensive cost. The paper conducted 13 slab specimen bending tests on the novel composite used recycled aggregate concrete (RAC) and normal weight concrete (NWC) to reveal the slab's flexural behavior. The test data and analysis show that the three-inch-high profiled steel sheeting as a shear connection can have an excellent composite effect. The neutral axis of the whole section always locates within profiled steel sheeting. And the profiled steel sheeting has been participating in the load-bearing work of the composite slab. The composite slabs showed good bending bearing capacity and ductility. The RAC with a replacement ratio of 50% recycled aggregate has the same material performance and member performance. The composite slab proposed can meet most civil buildings' design requirements. The standard push test revealed that the bolt shear connectors' ultimate bearing capacity meets the Chinese design code with the floor's considerable slippage.

Multiscale Spatial Distribution Pattern and Influencing Factors on Inland Fishing Gardens in China

Recently, a significant number of freshwater fishing gardens have sprouted up across mainland China. These recreational facilities are an important component in promoting the upgrading of the fishing industry and rural revitalization, and they are a key component in the high-quality development of rural tourism. This paper uses fishing gardens points of interest (POI) in China as data sources and employs kernel density estimation and geographical detectors to systematically uncover the multiscale spatial distribution pattern of these gardens, as well as the factors influencing their distribution. The results show that: (1) There are 15,090 fishing gardens in inland China. The spatial distribution of Chinese fishing gardens corresponds well with the “Hu-Line”, with a greater number of gardens clustered in the southeast and few in the northwest. The density distribution exhibits a polarized pattern with multiple high-density centers. (2) The number of fishing gardens varies significantly across regions, with the eastern > central > western > northeastern; Guangdong has the most fishing gardens. The top five provinces have 43.4% of the total number of fishing gardens in the country. Large-scale fishing gardens are common in developed cities such as the Pearl River Delta, Beijing-Tianjin-Hebei, and the Yangtze River economic belt. (3) In natural environmental factors, land altitude and contour are negatively correlated with the distribution of fishing gardens, whereas winter temperature is positively correlated with the distribution. More than 50% of fishing gardens are located within 6 km of urban built-up areas. (4) GDP, population, and tourism revenue are the most important social development factors influencing the distribution of fishing gardens. The moderate factors are per capita income and the rate of urbanization; the weak factors are fishery output value and freshwater products production. In the discussion, suggestions on how to guide the rational layout and healthy development of the fishing garden industry in the region are put forward. We believe that these suggestions could be part of the pursuit to improve the fishing garden industrial policy in China.

Marine biopharmaceutical industrial policies in China: Evolution, characteristics, and challenges

Marine biopharmaceutical industry (MBI) is an important part of the marine biological resources development. This study outlines the evolution of China's MBI policies since 1978, which can be divided into four stages: the cultivation period (1978–2003), the initial development period (2004–2010), the rapid development period (2011–2015), and the High-quality development period (2016–present). However, there are still challenges in policy formulation and implementation, including a lack of systematic and specialized industrial planning, insufficient incentives for independent innovation, incomplete Industry-University-Research cooperation, imperfect environmental regulation, and inefficient policy implementation. Moreover, environmental issues in the exploitation of marine biological resources and structural overcapacity in marine strategic emerging industries are discussed in this study and policy recommendations are given. The results of this study can provide a reference for marine resource development and other strategic emerging marine industries.

Flexural performance and design method of the prefabricated RAC composite slab

Prefabricated buildings recently became more prominent, providing significant benefits. Thus the development of prefabricated buildings is a long-term industrial policy in China. In the prefabricated frame structure, the slab is a critical component. In order to provide more and better floor options, the paper proposed a kind of prefabricated concrete composite slab, which adopts the profiled steel sheeting as the prefabricated formwork and the shear connector connected with the surface concrete. Combined with the test results, based on the analysis of load–deflection curves, the finite element software ABAQUS was used for the numerical parametric study of the prefabricated RAC composite slabs. The steel deck thickness, concrete strength, the yield strength of the reinforcements, the tensile reinforcement ratio, the wave height of profiled steel sheeting, and the RCA percentage have carried on the finite element analysis. The results show that the steel deck thickness, the strength of concrete, and the RCA percentage slightly influence the flexural performance of prefabricated RAC composite slabs, the reinforcement yield strength and the wave height of profiled steel sheeting have a certain influence on the flexural performance of prefabricated RAC composite slabs, and the reinforcement ratio of tensile steel bars significantly impacts the flexural performance of the prefabricated RAC composite slabs. In addition, the peak load of specimens increases with the increase of the reinforcement ratio of tensile steel bars. A comparative analysis was carried out between the theoretical calculation results and the experimental or finite element simulation results. And the bending design method of the new prefabricated composite slab was proposed based on the analysis result, including the calculation formula of flexural bearing capacity, short-term stiffness, and the maximum crack width. This study will provide a theoretical basis for designing and engineering the new prefabricated RAC composite slab.

Accounting Lean Management Model Based on Big Data

In the environment of slowing down world economic development, the uncoordinated extensive production and industrial policies in China in the past caused the imbalance of economic supply in China. In this paper, through the use of literature analysis, comparative analysis and case analysis, taking l manufacturing enterprise as a case, through the analysis of enterprise production mode and cost management mode, through the construction of lean accounting cost management framework, the cost management of l enterprise is studied from four aspects. Through the analysis, it can be seen that the non productive resources of employees account for 36.37%, of which the rework time accounts for 61.05%, and the handling time accounts for 23.26%. Compared with the traditional cost management, lean accounting is more suitable for the management of lean enterprises. Finally, the lean management of the enterprise is predicted.

Catch‐up industrial policy and economic transition in China

AbstractThis paper studies how catch‐up industrial policies in China affect economic development in a two‐sector neoclassical growth model. To fulfil their aspirations of catching up with the output of the capital‐intensive sector of developed countries, Chinese political leaders adopted industrial policies that subsidise this target sector at the expense of other sectors from 1952 until the economic reform in 1978. The static effect of this industrial policy distorts the allocation of resources across sectors and lowers the aggregate TFP. The dynamic effect discourages the accumulation of capital. We show that although the output of the capital‐intensive sector boosts initially, it will be lower than its first‐best counterpart in the long run if catch‐up aspirations are too strong. Our theoretical predictions are consistent with the experience of the Chinese economy from 1952 to 1978.

Escaping the middle-income technology trap: A comparative analysis of industrial policies in China, Brazil and South Africa

Instead of catching up with advanced economies, most middle-income countries have remained stuck in a middle-income trap. We identify and analyse the triple challenges of ‘breaking into’ the global economy, ‘linking up’ into global value chains while ‘linking back’ to the local production system, and ‘keeping pace’ with technological change and innovation. We focus specifically on what we term the ‘middle-income technology trap’: specific structural and institutional configurations that are not conducive to increasing domestic value addition and to sustained industrial and technological upgrading. We explore this through case studies of China, Brazil and South Africa and the analysis of the evolution of their industrial policies and specific institutions, specifically InnoFund model in China, the Embrapa system in Brazil, and the Manufacturing Competitiveness Enhancement Programme in South Africa. Industrial policy implications for middle-income countries in particular, and for developing countries more widely, are finally discussed.

Erratum to: Industrial Policy in China: The Planned Growth of Specialised Towns in Guangdong Province

Erratum to: Industrial Policy in China: The Planned Growth of Specialised Towns in Guangdong Province

Industrial Policy in China: Some Intended or Unintended Consequences?

The authors explore the impact of a 2004 tax reform in China that reduced the value-added tax (VAT) on investment goods. Although the goal of the reform was to encourage upgrading of technology, results suggest there was no significant increase in fixed investment, new product introductions, or productivity. Rather, the authors find that firms shifted the composition of investment toward machinery and increased the capital intensity of production, which is consistent with a fall in the price of capital relative to labor. As a result, employment fell significantly in the treated provinces and sectors. Results are robust to a variety of approaches and suggest that the primary impact of the policy has been to induce labor-saving growth. In 2009, the VAT reform was extended to the rest of China.

Industrial Policy in China: The Planned Growth of Specialised Towns in Guangdong Province

AbstractWe analyse one of the most important policy experiences for industrial clustering in Southern China—the Specialised Towns programme—that has transformed some Chinese clusters into the backbone of global production chains. We offer a long-term, detailed overview of the policy programme and of Guangdong’s specialised towns, classifying them as endogenous or exogenous according to their features, and investigate their contribution to local growth and rebalancing. This analysis of the Specialised Towns programme contributes to the international debate on revisiting industrial policy and suggests that the discussion should conceive them as articulated processes to reach long-term societal objectives.

China’s Industrial Policy: an Empirical Evaluation

Despite the historic prevalence of industrial policy and its current popularity, few empirical studies directly evaluate its welfare consequences. This paper examines an important industrial policy in China in the 2000s, aiming to propel the country's shipbuilding industry to the largest globally. Using comprehensive data on shipyards worldwide and a dynamic model of firm entry, exit, investment, and production, we find that the scale of the policy was massive and boosted China's domestic investment, entry, and world market share dramatically. On the other hand, it created sizable distortions and led to increased industry fragmentation and idleness. The effectiveness of different policy instruments is mixed: production and investment subsidies can be justified by market share considerations, but entry subsidies are wasteful. Finally, the distortions could have been significantly reduced by implementing counter-cyclical policies and by targeting subsidies towards more productive firms.

Selective industrial policies in China: investigating the choice of pillar industries

PurposeChina’s experience of industrial growth is noteworthy for several reasons, not least because it has made a massive use of selective industrial policies. The industrial development guidelines set by the Five-Year Plans are extensively based on the choice of “strategic” or “pillar” industries to be promoted and supported. What remains unclear is the way in which such industries are identified among many. The purpose of this paper is to propose a debate on how to improve the government choice of strategic sectors and suggests a methodology to make this choice more transparent and rigorous.Design/methodology/approachThe methodology allows ranking the different industries according to their strategic importance in the Chinese economy. The authors employ an uncertainty analysis methodology to verify the robustness of the ranking.FindingsThe results point to a list of strategic sectors for China. Comparing the ranking of the strategic sectors to the list of strategic priorities described in the Twelfth Five-Year Plan, we find that, by and large, the ranking coincides with the list of strategic sectors of the Chinese government.Social implicationsThe authors argue that improving the transparency and the rigor of the choice of pillar industries can be crucial for the Chinese government to maintain social legitimization in the transition to a “market” economy.Originality/valueVery little is known about the choice of strategic sectors in China in the international literature. By addressing the debate on the choice of pillar industries in China, the paper discusses a topic scarcely studied offering a unique and original contribute.

The impact of innovation on IPO short-term performance – Evidence from the Chinese markets

Based on the regulation of the Chinese stock market, the current study explores the relationship between pre-IPO innovations with the IPO short-term performance (IPO underpricing and honeymoon period). We investigate R&D spending, characterized by information asymmetry and valuation uncertainty, which can aggravate IPO underpricing. Conversely, we found a positive signal effect for patents which may significantly reduce the extent of IPO underpricing. Therefore, public disclosure of information pertaining to innovation can help issuers to reduce their IPO costs. In conclusion, more R&D spending by IPO firms results in greater IPO underpricing, while a higher number of patents reduces the extent of IPO underpricing. Additionally, we provide extensive analysis of the industrial policy in China under which, the absolute effect of innovation input and innovation outcome on IPO underpricing were greater prior to 2014. However, considering the macroeconomic environment, the industrial policy plays an entirely different role in the Chinese capital market for IPO since 2014. Therefore, we recommend that the government makes use of industrial policy as the “visible hand” to guide the development of industry and further improves the macroeconomic environment for IPO firms.