China’s Industrial Development Strategies and Policies

Abstract

China has adopted a transition strategy and industrial policies pragmatically according to its economic reality since the reform and opening up started in 1979. The organic combination of an effective market with a facilitating state was the main reason for the success of China’s economy in the past four decades. In the process of China’s economic development, industrial policies have played a crucial role in both industrial upgrading and technological progress. Relying on the comparative advantage—following strategy, China has fully utilized its latecomer advantage. Chinese enterprises learn advanced technologies from developed countries when the opportunities exist and do indigenous innovation when needed. Pragmatism and learning capacity has been the most important endowments and comparative advantages of the Chinese government and enterprises. With learning capacity, the government and enterprises can pragmatically explore the comparative advantage of the existing factor endowments and convert latent comparative advantages into competitive advantages to promote continuous transformation, upgrading, and sustainable development.