Search

Begin New Search Topic Industrial Policy Political Geography China

1. Will China’s economy follow the same path as Japan’s?

Author:
Alicia Garcia-Herrero and Jianwei Xu
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Since the bursting of China’s real-estate bubble in mid-2021, there has been a growing concern that the Chinese economy could end up like that of Japan in the early 1990s. Some structural patterns are strikingly similar: low private consumption over a long period, especially when compared to the rest of the world, and an excessively high savings ratio, though China’s imbalances now are even larger that Japan’s were then. Initial policy responses to the bursting of their respective bubbles have also been similar. Both China now and Japan then were initially hesitant to ease monetary and fiscal policies, and opted to expand manufacturing, with an eye on external demand, supported by more research and development expenditure. In both cases, the outcomes were stubborn trade surpluses and a mercantilist attitude to their growth problems, leading to the United States taking protectionist measures. China also seems to be following Japan’s offshoring of production to mitigate the impact of protectionism. The main difference, though, is that China now is a poorer country than Japan was then, with still more convergence opportunities ahead. China is also a much bigger military and geopolitical contender than Japan ever was. China’s geopolitical weight is behind the US technological containment of China, but also gives China more room for manoeuvre globally, especially in the Global South. It remains unclear – though globally significant – whether China will be able to deviate from the path followed by Japan in the 1980s and 1990s.
Topic:
Industrial Policy, Geopolitics, Economy, Economic Growth, Innovation, and Real Estate
Political Geography:
Japan, China, and Asia

2. Decoding China’s Technology and Industrial Policy: Seven Terms You Need to Know

Author:
Barry Naughton, Siwen Xiao, and Yaosheng Xu
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
China’s technology and industrial policy programs have grown in scope and intensity since 2020, but the vocabulary used to describe them is vague and often misleading. This policy brief decodes seven essential terms and shows that they have concrete and complementary meanings. When understood in concert, they reveal the establishment of a large-scale, government-directed program of mission-oriented research, development, and application. Together these terms outline a substantial expansion of the Chinese government’s direct role in organizing economic activity, and hint at some of the limits of that expansion.
Topic:
Economics, Industrial Policy, Science and Technology, Research and Development, and Terminology
Political Geography:
China and Asia

3. The Quantum Race: U.S.-Chinese Competition for Leadership in Quantum Technologies

Author:
Juljan Krause
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
Quantum computing is poised to unleash innovation across various sectors, from materials science to pharmaceutical and medical research, finance, logistics, and even climate change management. Quantum computing also has the potential to provide the backbone for future artificial intelligence and autonomous systems that cannot be realized with digital hardware alone, while quantum communication can strengthen security in cyberspace. For these reasons, quantum technologies feature prominently in the emerging technologies race between the United States and China. In this policy brief, IGCC postdoctoral fellow Juljan Krause analyzes China’s advances in quantum communication, which aim to signal China’s technological leadership while protecting Chinese communications from foreign surveillance. He argues that Chinese leadership in quantum communication will have strategic repercussions, particularly as it is likely to give China’s efforts to shape global industry standards additional momentum. Even if quantum communication has no immediate military implications, policymakers should consider how the technology could embolden China further.
Topic:
Industrial Policy, Science and Technology, Innovation, and Quantum Computers
Political Geography:
China, Asia, and Indo-Pacific

4. Unpacking China’s industrial policy and its implications for Europe

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
China is often credited with a successful application of industrial policy. One important particularity of China’s industrial policy is that it aims at levelling the playing field between the state economy and the private economy in access to finance, yet within a framework of strategic goals. This aim is not relevant for market economies, such as those of the European Union, but only for those where state enterprises are clearly privileged. Notwithstanding the difficulties in making valid comparisons, our analysis of how China conducts industrial policy in a variety of sectors points to success in some sectors but not all. More importantly, productivity growth in China has already been declining for two decades. Given the very large resources that China has put into industrial policy, with subsidies being only one part, it is surprising that success is not more evident. This relates partly to factors including cronyism and regional protectionism. While the former might be less relevant for the EU given the different institutional background, the latter certainly is relevant since the EU faces the potential consequences of member country-level industrial policy for its single market. A lesson from China seems to come from the sectoral focus, with a long-term and economic-security mindset. The EU is far from this, but it is in the process of linking economic security to industrial policy. Finally, responding to China’s industrial policy involves diverse investigations and challenges in measuring subsidies accurately. Understanding China’s very diverse and complex approach to helping companies achieve the government’s industrial policy goals is crucial for anticipating the consequences of China’s actions. These could be positive, such as cheaper imports of green technology, or negative, such as Chinese overcapacity spilling over to the EU single market.
Topic:
Industrial Policy, Markets, European Union, and Economy
Political Geography:
China, Europe, and Asia

5. Rise of Economic Nationalism in Emerging Economies and the Influence of Elections

Author:
Michio Ueda
Publication Date:
08-2024
Content Type:
Special Report
Institution:
East-West Center
Abstract:
Mr. Michio Ueda, President of Geopolitics & Strategy and Visiting Lecturer University of Tokyo, examines "the intersection between economic nationalism and recent elections in Indonesia and India" and finds that "industrial policy is not a significant point of political contention" and elections "serve as an opportunity to gain legitimacy for policies supporting economic nationalism."
Topic:
Economics, Industrial Policy, Nationalism, and Elections
Political Geography:
China, Indonesia, India, Asia, and United States of America

6. Revitalizing U.S. Trade Remedy Tools for an Era of Industrial Policy in an Interconnected World

Author:
Ryan Mulholland
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Center for American Progress - CAP
Abstract:
To implement an effective industrial policy, the United States needs to update its trade enforcement toolkit to meet the challenges of the modern world and utilize its existing trade authorities differently.
Topic:
Industrial Policy, International Trade and Finance, Economy, and Economic Development
Political Geography:
China and United States of America

7. Green Industrial Policy: A Holistic Approach

Author:
Ilaria Mazzocco
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
In the United States, the rise of the economic-climate agenda and green industrial policy has coincided with growing attention to supply chain resilience, economic security, and a deteriorating U.S.-China relationship. As a consequence, the interaction between trade, geopolitics, domestic economic policy, and climate policy demands a new holistic approach from policymakers and civil society to find more politically sustainable and effective policy solutions. More consideration should be given to the specifics of U.S. climate strategy when it comes to trade and international relations and how to integrate climate strategy with the Inflation Reduction Act and green industrial policy efforts.
Topic:
Economics, Industrial Policy, Geopolitics, Trade, Sustainability, and Green Economy
Political Geography:
China and Asia

8. China’s quest for innovation: progress and bottlenecks

Author:
Alicia Garcia-Herrero and Robin Schindowski
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
As the Chinese economy continues to decelerate, the central government is investing heavily in innovation, doubling down on research and development (R&D) spending and STEM-oriented human capital. In this paper, we assess China’s progress so far, looking at the inputs to innovation (R&D and human capital) as well as intermediate targets, such as scientific research and patents. We then evaluate how China has fared with respect to the ultimate goal of commercialising this progress, by looking at the value-added of Chinese exports and the overall productivity of the economy. We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.
Topic:
Industrial Policy, European Union, Economic Growth, Innovation, and COVID-19
Political Geography:
China, Europe, and Asia

9. Can Chinese growth defy gravity?

Author:
Alicia Garcia-Herrero
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
Chinese growth, astounding since the beginning of the reform era, has slowed in the last decade. We offer a baseline estimate (based on the current trend) of China’s medium-term growth rate, which we project to fall to 2.4 percent by 2035. Several factors create uncertainty around this baseline. China’s rapid aging is already incorporated into our long-term growth scenario, but its impact on growth will depend on how China’s remaining urbanisation process spreads over time, how the shrinking labour supply affects labour productivity and whether the decline in total factor productivity growth, reflecting the lack of reform during the last decade and possibly the rising role of the state, can be reversed. Investment in China, for decades the largest factor in China’s growth, is expected to contribute less to growth given the increasingly low return on assets, particularly on state-led investment. The rapid piling up of public debt is also becoming a heavy burden for the Chinese economy. Finally, the COVID-19 pandemic may have left significant scarring effects, such as structurally high youth unemployment and low investment confidence. On the upside for China, the rise in human capital and research and development expenditure may support innovation and growth, but the magnitude of this effect is uncertain, because it is unclear if higher innovation will translate into higher total factor productivity, and because of the United States’s push to contain China technologically.
Topic:
Industrial Policy, European Union, Economic Growth, and COVID-19
Political Geography:
China, Europe, and Asia

10. How Indonesia Used Chinese Industrial Investments to Turn Nickel into the New Gold

Author:
Angela Tritto
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
China has become a global power, but there is too little debate about how this has happened and what it means. Many argue that China exports its developmental model and imposes it on other countries. But Chinese players also extend their influence by working through local actors and institutions while adapting and assimilating local and traditional forms, norms, and practices. With a generous multiyear grant from the Ford Foundation, Carnegie has launched an innovative body of research on Chinese engagement strategies in seven regions of the world—Africa, Central Asia, Latin America, the Middle East and North Africa, the Pacific, South Asia, and Southeast Asia. Through a mix of research and strategic convening, this project explores these complex dynamics, including the ways Chinese firms are adapting to local labor laws in Latin America, Chinese banks and funds are exploring traditional Islamic financial and credit products in Southeast Asia and the Middle East, and Chinese actors are helping local workers upgrade their skills in Central Asia. These adaptive Chinese strategies that accommodate and work within local realities are mostly ignored by Western policymakers in particular. Ultimately, the project aims to significantly broaden understanding and debate about China’s role in the world and to generate innovative policy ideas. These could enable local players to better channel Chinese energies to support their societies and economies; provide lessons for Western engagement around the world, especially in developing countries; help China’s own policy community learn from the diversity of Chinese experience; and potentially reduce frictions.
Topic:
Development, Industrial Policy, Belt and Road Initiative (BRI), Investment, and Innovation
Political Geography:
China, Indonesia, and Asia