China’s Race to the Top: Regional and Global Implications of China’s Industrial Policy

Document Type



Final Published Version

Publication Title

World Trade Review

Publication Date



The paper examines the global and regional implications of China’s revitalized state capitalism model through the sectoral lens of the Chinese automotive industry, which stands at the intersection of both traditional and green industrial policy. At the multinational level, China skillfully facilitates local policy implementation that creates excess capacity by propping up local and national champions through con- venient compliance with the WTO. At the bilateral level, China closely links purchasing and coercive dip- lomacy with protections for Chinese players both at home and abroad. Key endeavors like the Belt and Road Initiative open up overseas markets to develop global champions and secure foreign footholds for Chinese champions. Additionally, China’s increasing reliance on exclusionary diplomacy provides polit- ical justifications to discriminate against foreign competitors within the Chinese market while moving for- ward with industrial upgrading of domestic players. When linked together, these factors – all byproducts of China’s approach to state-led capitalism – combine to explain China’s efforts to create a race to the top.