Industrial Policies and the Changing Patterns of Investment in the Chinese Economy

Forthcoming in The China Journal

55 Pages Posted: 14 Aug 2018

See all articles by Carsten A. Holz

Carsten A. Holz

Hong Kong University of Science & Technology (HKUST) - Division of Social Science

Date Written: July 27, 2018

Abstract

Investment has always played an important role in the economic development strategies of the People’s Republic of China. A major reform of the investment system in 2004 shifted the state’s focus from direct investment control to industrial policies designed to promote investment in specific economic sectors. But in reality, the industrial policies’ preferences have had little effect. The data suggest that investment patterns in China are largely divorced from the industrial policies, and, if anything, predate them. The significant shifts in investment across sectors and ownership forms that have taken place since the early 2000s appear driven far more by profitability considerations and private entrepreneurship than by government policies. The finding negates foreign concerns that the Chinese state via industrial policies such as “Made in China 2025” is creating national state-owned technological leaders.

Keywords: People’s Republic of China, Investment Rate, Investment Policy, National Investment Strategy, Sector Distribution of Investment, Ownership Distribution of Investment, Causes of Investment, Economic Growth

JEL Classification: E22, E6, L52, O11, O25, O53

Suggested Citation

Holz, Carsten A., Industrial Policies and the Changing Patterns of Investment in the Chinese Economy (July 27, 2018). Forthcoming in The China Journal , Available at SSRN: https://ssrn.com/abstract=3221717

Carsten A. Holz (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Division of Social Science ( email )

Division of Social Science
Clear Water Bay
Clear Water Bay, Kowloon
Hong Kong

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