Industrial Policy and Technology Innovation under the US Trade War against China

Industrial policy (IP) toward technology innovation (TI) is a focus of the US trade war against China. The US is forcing China to stop IP uses in promoting TI that directly threaten the US technology leaders, like its reaction to China's plan of "Made in China 2025". Does China have t...

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Bibliographic Details
Published in:The Chinese economy 2020-09, Vol.53 (5), p.363-373
Main Author: Zhang, Kevin Honglin
Format: Article
Language:English
Subjects:
catch up
Catching
Economic development
Entrepreneurship
imitating innovation (II)
Imitation
Industrial policy
Industrial policy (IP)
Innovations
original innovation (OI)
Political institutions
Technology
technology innovation (TI)
trade deficits
Trade disputes
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Summary:Industrial policy (IP) toward technology innovation (TI) is a focus of the US trade war against China. The US is forcing China to stop IP uses in promoting TI that directly threaten the US technology leaders, like its reaction to China's plan of "Made in China 2025". Does China have too many IP? Does the US use IP? What TI patterns affect IP? This paper develops the following points as conclusions: (a) Due to market failures, all countries implement IP in their economic development; (b) original innovation (OI) involves a lot of risks and uncertainties such that entrepreneurship rather than government plays a key role, while imitation innovation (II) is much less risky and uncertain so that more rooms are left for IP; (c) technology-leading countries like the US has to conduct OI to maintain their advantages, and catching-up countries like China do more II, thus more IP are adopted in China than the US; and (d) the US engaged substantially IP in the history and is deploying various IP to meet challenges from China; and (e) economic and political institutions matter.
ISSN:1097-1475
1558-0954
DOI:10.1080/10971475.2020.1730553