China’s industrial growth is attributed to a competitive environment fostered among provinces, cities, and companies, with the central government overseeing as a regulator rather than a planner, as per a recent report. Described as “authoritarianism” by The Globe and Mail, China’s industrial policy is likened to a state-backed pressure cooker rather than centralized planning. The system thrives on fostering competition among firms and regions, with the central authority guiding, rewarding, and at times, curbing excesses.
Special economic zones like Shenzhen have served as controlled experiments where officials test competitive strategies, scaling successful models nationally while containing failures. The country operates a competitive race where provincial and city leaders advance or stagnate based on quantifiable outcomes such as investments, growth, and employment. Political economist Xu Chenggang termed this model as “regionally decentralized authoritarianism.”
The report cautions Western democracies against replicating China’s approach and criticizes the West’s newfound admiration for China as a benchmark. It argues that democratic nations cannot easily adopt China’s model, which is closely tied to a one-party cadre system that appoints and reshuffles local leaders based on performance targets. Instead of emulating China’s strategies, Western governments are advised to enhance competitiveness in their economies by promoting entry and competition, rather than protecting established industry players.
The report emphasizes that industrial policies favoring incumbents are likely to disappoint, whereas policies supporting challengers and subjecting them to genuine competition hold promise. It highlights that China’s advancements in electric vehicles, solar technology, and batteries are not solely due to a grand plan but also stem from political centralization combined with competition among provinces and cities. Local governments compete for manufacturing plants and offer incentives, leading to intense competition that even concerns Beijing about price wars in sectors like electric vehicles, solar, and artificial intelligence.
