China’s use of industrial policies is neither new nor unique, but only in the last decade has the Chinese Communist Party (CCP) provided systematic support to frontier technologies such as artificial intelligence, robotics, and communications. President Xi Jinping announced in 2015 a “Made in China 2025” plan whose aim is Chinese global dominance in 20 key sectors including information technology, green energy technology, and semiconductors. Since then, the CCP has become increasingly involved in private-sector innovation to build Chinese self-sufficiency in cutting-edge technologies. The CCP does not reveal official data on state subsidies but estimates of expenditures range from 1.7% to 4.9% of GDP, far surpassing any other nation’s spending on industrial policy. Yet the success of these costly measures is at best uneven, especially in the crucial semiconductor sector, where China’s design and manufacturing challenges are now compounded by US-led export controls.

To discuss Chinese industrial policies and their overlap with Chinese foreign policy, host Bonnie Glaser speaks with John Lee, director of East West Futures, a political and risk consultancy that focuses on China. Lee is also a researcher with the Leiden Asia Center and has worked for the Australian Department of Defense, the Australian Department of Foreign Affairs and Trade, and the Mercator Institute for China Studies. Lee’s research focuses on China’s semiconductor-related industries, cyberspace governance, and the future of telecommunications networks.

Episode Highlights:

[02:14] China’s Implementation of Industrial Policy

[05:20] Industrial Policy to Achieve Foreign Policy Objectives

[08:02] Influence of Strategic Competition on Industrial Policy

[10:42] Efficacy of Chinese Industrial Policies

[14:17] Semiconductor Subsidies and Export Controls

[19:06] Chinese Countermeasures to Export Controls

[22:39] Assessment of U.S. Policy

[25:58] Forecast of Competition on Advanced Technologies

[29:50] Balance of Centralization and Adaptation