Fertilization Before Weed Control: The Counterintuitive Political Economy of China’s Industrial Policy

Abstract China’s industrial policy, exemplified by the rapid expansion of its semiconductor industry, has maintained momentum despite escalating challenges from the US-China tech race and rising geopolitical tensions. These pressures—characterized by declining foreign direct investment and tighter controls on technology transfer and exports—underscore the complexity of technological competition and national strategic planning. This paper examines China’s unconventional “fertilization before weed control” approach to industrial development, which initially lowers barriers to entry and encourages broad participation before shifting toward a process of industry consolidation through an artificial selection mechanism that combines state guidance with market competition. Using a mixed-methods analysis that integrates quantitative data with qualitative insights from industry reports and expert interviews, the study reveals how China’s strategy fosters innovation, self-reliance, and competitiveness under geopolitical strain. However, this approach also incurs significant costs, such as overcapacity in the domestic market and the dumping of surplus products internationally. The findings provide crucial insights into the intricate dynamics of industrial policy in high-tech sectors as a strategic response to shifting global political landscapes, highlighting the associated challenges and trade-offs.