Selective industrial policies in China: investigating the choice of pillar industries

China’s experience of industrial growth is noteworthy for several reasons, not least because it has made a massive use of selective industrial policies. The industrial development guidelines set by the Five-Year Plans are extensively based on the choice of “strategic” or “pillar” industries to be promoted and supported. What remains unclear is the way in which such industries are identified among many. The purpose of this paper is to propose a debate on how to improve the government choice of strategic sectors and suggests a methodology to make this choice more transparent and rigorous.

The methodology allows ranking the different industries according to their strategic importance in the Chinese economy. The authors employ an uncertainty analysis methodology to verify the robustness of the ranking.

The results point to a list of strategic sectors for China. Comparing the ranking of the strategic sectors to the list of strategic priorities described in the Twelfth Five-Year Plan, we find that, by and large, the ranking coincides with the list of strategic sectors of the Chinese government.

The authors argue that improving the transparency and the rigor of the choice of pillar industries can be crucial for the Chinese government to maintain social legitimization in the transition to a “market” economy.

Very little is known about the choice of strategic sectors in China in the international literature. By addressing the debate on the choice of pillar industries in China, the paper discusses a topic scarcely studied offering a unique and original contribute.