Title: China's industrial policy and its implications for international business

Authors: Shaomin Li; Matthew Farrell

Addresses: Department of Management, Old Dominion University, Norfolk, Virginia 23529, USA ' Department of Management, Old Dominion University, Norfolk, Virginia 23529, USA

Abstract: While it is common for countries to use industrial policies to protect domestic industries, the way China uses industrial policy is significantly different. First, unlike the industrial policies of other countries, which mostly are guidelines, China's industrial policy is more like a corporate strategy that approves/disapproves projects and mobilises the country's resources to help its firms achieve dominance. Second, due to its size, the effects of China's industrial policy have a powerful global impact. Facing the rapid success of China's industrial policy, the international community needs to both understand it and effectively deal with it. We show how China has developed its industrial policy based on the Chinese Communist Party's governing philosophy, build our case using evidence from the electric vehicle battery, solar panel, and high-speed rail industries, compare China's policy with Japan's in the 1960s, discuss concerns from other countries and China's replies, and comment on the implications of China's policy for the world.

Keywords: industrial policy; China; electric vehicle battery; solar panel; high-speed rail; protectionism; national interest; Made in China 2025; trade barriers; new trade theory; strategic trade policy; trade war.

DOI: 10.1504/EJIM.2025.143866

European Journal of International Management, 2025 Vol.25 No.2, pp.309 - 333

Received: 16 Jan 2020
Accepted: 07 Jun 2020
Published online: 12 Jan 2025 *

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