Executive Summary
This RAND report analyzes the evolution of China's techno-industrial policy under Xi Jinping, detailing its shift towards a centralized, security-linked, and finance-driven system. The strategy prioritizes national security, technological self-reliance, and frontier leadership, using fiscal, financial, and Party-state mechanisms to direct resources. It examines how fiscal constraints are reshaping policy tools, the deepening of Party control over firms, and the projection of this strategy abroad, creating global economic friction.
Why It Matters
This document is crucial for defense and geopolitical analysts as it details China's evolving techno-industrial strategy, which directly impacts its military modernization, technological competition with the West, and global economic influence. Understanding these mechanisms is key to assessing China's strategic capabilities and potential vulnerabilities.
Key Takeaways
- China's techno-industrial policy under Xi Jinping prioritizes national security and technological self-reliance, shifting from growth-centric goals.
- The Party-state increasingly uses mandates, guidance funds, and corporate control (including 'golden shares' in private firms) to direct resources, spreading costs beyond public budgets.
- This strategy generates significant global friction due to China's unprecedented manufacturing trade surplus and its implications for international economic competition.
- Fiscal constraints are reshaping China's policy toolkit, leading to a shift from direct spending to market-based instruments under tighter political direction.
- The 15th Five-Year Plan codifies deeper intervention and 'extraordinary measures' for key core technologies, aiming to standardize rules and curb local subsidy races.
Strategic Relevance
This report provides a deep dive into the institutional design and implementation mechanisms of China's techno-industrial strategy, which is fundamental to its long-term strategic competition with the US and its allies. It highlights how China mobilizes resources for technological advancement, impacting military capabilities, supply chain resilience, and global economic power dynamics. Understanding these internal workings is critical for anticipating China's future actions and developing effective counter-strategies.