Chinese economy

Journal article

published: 27.04.2024

How does China conduct industrial policy: analyzing words versus deeds

Alicia Garcia Herrero

Michal Krystyanczuk

Bruegel Senior Fellow Alicia García-Herrero and Data Scientist Michal Krystyanczuk have produced this article for the Journal of Industry, Competition and Trade. The article is open access and sheds light on the objectives of Chinese industrial policy – not least in terms of objectives and implementation.


"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 signifcant 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".

About authors

Alicia Garcia Herrero

Chief Economist for Asia Pacific at Natixis, Senior Fellow at Bruegel, Non-resident Senior Follow at the East Asian Institute, Adjunct Professor at the Hong Kong University of Science and Technology

Economist specialized in monetary and financial issues in emerging markets, banking crises and resolution strategies, financial development

Michal Krystyanczuk

Data Scientist at Bruegel

Specialist in Deep Learning and Big Data techniques for various AI tasks