A new study challenges the story of Beijing-led industrial policy, tracing how local governments and private firms reshaped the auto industry from below.
This is an excellent article, and I strongly agree with its central conclusion: China’s EV boom cannot be understood as a simple story of top-down industrial planning from Beijing. It was built through a much more complex system: central direction, local government competition, private-sector experimentation, supply-chain clustering, and ruthless market selection. The article is especially valuable because it shows that the real engine of China’s EV rise was not only national policy, but the institutional capacity of local China.
This is exactly the framework I discussed in my earlier essay on China’s “local government entrepreneurs.” In China, local governments are not merely regulators or passive implementers of central policy. They often behave like developmental entrepreneurs: mobilizing land, credit, infrastructure, industrial parks, suppliers, talent, and political attention around emerging sectors. The EV industry is one of the clearest examples of this mechanism. Beijing created the strategic direction, but local governments turned that direction into industrial ecosystems — sometimes successfully, sometimes wastefully, but always with extraordinary intensity. That is why China’s EV boom is best understood not as a subsidy story, but as a state-capital-local competition system.
Like it or not decentralization has been a theme in Chinese development:
1. Mao: Let a hundred flowers blossom.
2. Before China’s accession to the WTO in 2001, the country’s automotive sector was characterized by three defining features: high import tariffs on vehicles, an industrial policy favoring large SOEs, and a fragmented production landscape. The first two were embedded in the automobile industrial policies of 1987 and 1994.
3. While most cities were formally excluded from large-scale passenger vehicle manufacturing, many already hosted small-scale producers, a legacy of Mao’s intentional economic fragmentation that accelerated through the early decades of the reform. Three waves of decentralization, the Great Leap Forward, the Cultural Revolution, and the fiscal decentralization of the 1980s, had encouraged provinces and prefectures to establish their own modest automotive works. Although often economically inefficient, these facilities alleviated chronic vehicle shortages under the planned economy, and many survived into the 1990s.
Apart from this there is the Chinese desire to produce, the ability to ' make do' and to innovate.
"The study highlights the enduring adaptability of Chinese local governments and private capital in navigating central constraints, offering new insights into industrial policies, industrial upgrading, and local developmental states."
Yes, government is more likely to be effective when its local.
The Chinese state is politically centralized but administratively and fiscally decentralized. I do agree that governments are often more effective when decision making occurs closer to the problems being addressed. Though it can be overstated when its being presented from an anti centralized state position. Historically Successful states did not survive by accommodating every regional challenge.
China's local governments do enjoy high levels of administrative and fiscal autonomy in policy implementation, but you gotta remember that, said autonomy exists within a political system where the central govt ultimately retains the ability to discipline regional authorities and align them with national objectives.
Considering the disaffection as a 'regional challenge' and insisting on compliance can be disadvantageous when one is limiting the ability to support an 'infant industry' that is the product of a worthy entrepreneurial effort. In diversity there is strength and the possibility of competition that creates a market that safeguards consumer interests.
Aligning with national objectives that one finds oppressive, as occurred during the covid epidemic when people were losing their jobs because they refused to be vaccinated creates a situation where citizens can feel powerless, especially when politicians and bureaucrats are shielding behind 'advisors' that are plainly acting in the interests of Big Pharma.
Le Qiang once commented that when he was in the office the world seemed to be full of problems but when he got out in the real world he saw solutions.
This is an excellent article, and I strongly agree with its central conclusion: China’s EV boom cannot be understood as a simple story of top-down industrial planning from Beijing. It was built through a much more complex system: central direction, local government competition, private-sector experimentation, supply-chain clustering, and ruthless market selection. The article is especially valuable because it shows that the real engine of China’s EV rise was not only national policy, but the institutional capacity of local China.
This is exactly the framework I discussed in my earlier essay on China’s “local government entrepreneurs.” In China, local governments are not merely regulators or passive implementers of central policy. They often behave like developmental entrepreneurs: mobilizing land, credit, infrastructure, industrial parks, suppliers, talent, and political attention around emerging sectors. The EV industry is one of the clearest examples of this mechanism. Beijing created the strategic direction, but local governments turned that direction into industrial ecosystems — sometimes successfully, sometimes wastefully, but always with extraordinary intensity. That is why China’s EV boom is best understood not as a subsidy story, but as a state-capital-local competition system.
Like it or not decentralization has been a theme in Chinese development:
1. Mao: Let a hundred flowers blossom.
2. Before China’s accession to the WTO in 2001, the country’s automotive sector was characterized by three defining features: high import tariffs on vehicles, an industrial policy favoring large SOEs, and a fragmented production landscape. The first two were embedded in the automobile industrial policies of 1987 and 1994.
3. While most cities were formally excluded from large-scale passenger vehicle manufacturing, many already hosted small-scale producers, a legacy of Mao’s intentional economic fragmentation that accelerated through the early decades of the reform. Three waves of decentralization, the Great Leap Forward, the Cultural Revolution, and the fiscal decentralization of the 1980s, had encouraged provinces and prefectures to establish their own modest automotive works. Although often economically inefficient, these facilities alleviated chronic vehicle shortages under the planned economy, and many survived into the 1990s.
Apart from this there is the Chinese desire to produce, the ability to ' make do' and to innovate.
"The study highlights the enduring adaptability of Chinese local governments and private capital in navigating central constraints, offering new insights into industrial policies, industrial upgrading, and local developmental states."
Yes, government is more likely to be effective when its local.
When the centre takes charge, ideology can prevail and the result can be dysfunction: https://www.powerlines.au/p/the-great-energy-gamble
Excessive central control leads to rebellion: https://ianbrighthope.substack.com/p/the-great-state-rebellion
The Chinese state is politically centralized but administratively and fiscally decentralized. I do agree that governments are often more effective when decision making occurs closer to the problems being addressed. Though it can be overstated when its being presented from an anti centralized state position. Historically Successful states did not survive by accommodating every regional challenge.
China's local governments do enjoy high levels of administrative and fiscal autonomy in policy implementation, but you gotta remember that, said autonomy exists within a political system where the central govt ultimately retains the ability to discipline regional authorities and align them with national objectives.
Considering the disaffection as a 'regional challenge' and insisting on compliance can be disadvantageous when one is limiting the ability to support an 'infant industry' that is the product of a worthy entrepreneurial effort. In diversity there is strength and the possibility of competition that creates a market that safeguards consumer interests.
Aligning with national objectives that one finds oppressive, as occurred during the covid epidemic when people were losing their jobs because they refused to be vaccinated creates a situation where citizens can feel powerless, especially when politicians and bureaucrats are shielding behind 'advisors' that are plainly acting in the interests of Big Pharma.
Le Qiang once commented that when he was in the office the world seemed to be full of problems but when he got out in the real world he saw solutions.
Think ZXMOTO.