MERICS Journal Article (Abstract): The conceptual architecture of China's industrial policy

Abstract: This paper outlines the conceptual building blocks of China’s industrial policy architecture. Building on Juhász et al. (2024), industrial policy is defined as government intervention explicitly aimed at transforming the structure of economic activity to achieve public goals such as growth, productivity, and national security. The paper argues that since 2005 China’s industrial policy has merged into a dynamic but coherent system shaped by interlocking intellectual and institutional traditions. Seven key elements structure this system: New Structural Economics as its theoretical rationale; strategic focus on emerging and future industries; integration of new sectors with traditional manufacturing; hierarchical enterprise cultivation mechanisms; industrial zones and city clusters as enablers for industrial upgrading; the growing influence of national security since 2020; and efforts to strengthen the business environment for private firms amid crumbling business sentiment. Case studies of the new energy vehicle, semiconductor, and textile industries illustrate how theory, policy, and practice co-evolve. The analysis highlights tensions and adaptive mechanisms within this system and points to likely directions of future conceptual and institutional adjustment. Keywords: China, industrial policy, economic governance, technological upgrading, national security JEL classification: O25, O38, O53, P21, P26 O25 – Industrial Policy; Sectoral Planning Methods O38 – Technological Change: Government Policy O53 – Economywide Policy and Planning: Asia including Middle East P21 – Socialist Systems and Transitional Economies: Planning, Coordination, and Reform P26 – Political Economy; Property Right