Lhe return of economic dirigisme in China, under the rule of Xi Jinping, is no longer debated. On the other hand, it would be misleading to see it as a return to a Soviet model. Beijing’s ambition to build a new relationship between public authorities and market forces hopes to benefit from the virtues of the latter. Policies aimed at innovative SMEs provide a rich illustration of this.
For about five years, these SMEs have become an essential component of Beijing’s discourses and policies in pursuit of its new objective of independence in strategic technologies. To this end, the Chinese authorities have built an imposing pyramid system of labeling.
It is up to local authorities to select a wide range of “innovative” small and medium-sized businesses according to specifications established by Beijing, for which the ability to replace foreign technologies figures prominently, alongside commercial considerations. Provincial governments then make their own selection, notably from this first list, to identify the “Specialized SMEs”then national authorities do the same to identify the “little giants”. Once mature, they can obtain the status of “industrial champion”.
These lists are subject to regular reviews. The significant number of non-renewals speaks for the seriousness of these exercises. In addition, the interest of each level in seeing its foals selected at the higher level offers a certain guarantee on the quality of the selections. The system therefore seems able to remove the obstacles of rigidity and collusion, two of the usual weaknesses of industrial policies.
“Encouragement”
Once selected, SMEs benefit from a myriad of advantages that increase with the level of the label. Traditional subsidies (i.e. the direct transfer of financial resources from public authorities) are obviously there. Mainly provided by local authorities, therefore more difficult to count exhaustively, they ultimately seem relatively modest.
In Xi’s China, all economic players are called upon to mobilize for the industrial objectives set by Beijing. University research and development (R&D) centers are requested to partner with these SMEs for the development and commercialization of technologies. Large groups, particularly those belonging to the State, are “encouraged” to support their development, whether as a supplier, customer or partner. Even more original, the administrations responsible for registering patents and respecting intellectual property were ordered to treat these companies favorably in their procedures.
You have 49.74% of this article left to read. The rest is reserved for subscribers.