China’s Industrial Growth Driven by Provincial Rivalry, Not Central Planning
New Delhi, March 30 – China’s industrial growth is primarily fueled by institutionalized competition among provinces, cities, and firms, with the central government acting as a referee and disciplinarian rather than a direct planner, according to a new report.The Globe and Mail described China’s industrial policy as “authoritarianism,” characterizing it as “behaves less like central planning than a state-enabled pressure cooker.” The report highlighted a system where the central government steers, rewards, and occasionally reining in excesses.
Special economic zones (SEZs) like Shenzhen served as experimental grounds for these competitive models. Successful strategies were then scaled nationally, while unsuccessful ones were contained. China operates a promotion race, with provincial and city leaders rising or stagnating based on measurable outcomes such as investment, growth, and job creation.
Political economist Xu Chenggang characterized the model as “regionally decentralized authoritarianism.” The report cautioned Western democracies – including the United States, Canada, and Europe – against emulating China’s approach, criticizing the West’s recent tendency to view China as a benchmark.
The report argued that democratic countries cannot easily replicate China’s system, which is intrinsically linked to a one-party cadre system allowing for the appointment and reshuffling of local leaders, tying their careers to achieving targets. Western governments should prioritize making their economies more contestable, fostering rivalry and competition rather than sheltering established industry leaders.
The report noted that China’s advancements in electric vehicles (EVs), solar energy, and batteries are largely attributed to political centralization combined with competition across provinces and cities. Specifically, local governments engage in bidding wars for manufacturing plants, leading to concerns about “irrational” price competition, a pattern observed in the solar and artificial intelligence (AI) sectors.
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