A recent study in the United States shows that China’s industrial policy has evolved from “supporting a few strategic industries” to a comprehensive systemic policy covering almost all economic sectors, exerting a profound impact on global supply chains and competitive landscape.
The Rhodium Group, a U.S. research institution, released a report this week studying China’s “comprehensive industrial policy” under the Chinese Communist government. The report, commissioned by the U.S. Chamber of Commerce, reveals surprising findings.
Over the past three years, the global impact of China’s industrial and economic policies has been rapidly expanding and is likely to continue accelerating. Beijing is increasingly using policy tools to consolidate its dominance in the global value chain and to restrain foreign strategies of decoupling from China.
The report by the Rhodium Group indicates that China’s industrial strategy is evolving in two significant ways. On one hand, it is becoming more systematic and comprehensive, covering various stages of production from upstream inputs and industrial equipment to downstream applications, services, and cutting-edge technologies.
On the other hand, these domestic actions in China are accelerating its trade dominance and deepening foreign reliance on Chinese supply chains, as well as driving rapid expansion of Chinese companies in global markets.
The report warns that China is now entering the “next generation industrial policy” phase, shifting from past targeted industry interventions to a “comprehensive industrial policy,” with increased state intervention.
According to the report, China’s influence on global markets could amount to $650 billion by 2030 if the current growth trend continues, equivalent to about 12% of the G7’s total manufacturing exports.
The report highlights that China’s industrial policies have been all-encompassing, aiming at both traditional and cutting-edge industries, with a comprehensive approach that spans mature industries, key supply chain nodes, and frontier technologies.
For instance: in 2015, Beijing released the “Made in China 2025” plan, targeting 10 industries for self-sufficiency. In the updated version published in 2023, although one industry was removed, seven new ones were added, including mature industries like household appliances and textiles.
Even in mature industries facing overcapacity and significant price pressure, Beijing continues to provide support, promoting production technology upgrades for companies to gain market share and reduce production costs, rather than cutting production capacity.
The report also notes that even in sectors of the service industry less previously included in industrial policy, such as software, data processing, and drug research and development, are now receiving increased official support.
In critical areas such as artificial intelligence, quantum technology, and future energy, the Chinese government not only invests in research and development but also creates market demand on a large scale through government procurement and state-owned enterprises, promoting new products.
As China’s inputs and capital goods become more embedded in products manufactured and exported by third countries, it creates subtle and unmanageable indirect dependency relationships. According to Rhodium’s analysis, China’s expansion in relevant goods is systematically underestimated because the decrease in producers’ prices masks the actual speed of market share growth: in terms of quantity, China’s market share growth in many products is roughly double when measured by value.
While China’s market share growth in the 2020s has been most notable in areas like electric vehicles and clean energy, its current expansion is increasingly focused on upstream sectors of the global value chain traditionally led by developed countries, such as chemicals, machinery, and industrial equipment.
For example, since 2019, China’s global exports of tetrachloroethylene for dry cleaning have surged 24 times, and exports of xylene for plastics and coatings have increased 11 times.
The Rhodium Group report emphasizes that once Chinese companies catch up with competitors in technology, they rapidly capture market share. The results are evident: in 2016, China held over half of the export volumes in 163 industries (by international classification). By 2021 to 2024, this index nearly doubled, from 192 to 315 categories.
The report indicates that this period of economic expansion is taking place in a more restricted macroeconomic environment in China; Beijing is enhancing control over fiscal expenditures, bank loans, capital markets, and state investment funds. Meanwhile, the Chinese economy is facing challenges such as slowing growth, weak domestic demand, rising fiscal pressures, and declining efficiency in capital allocation.
Despite acknowledging the need to address imbalances, Chinese authorities’ policy responses have been insufficient, lacking structural reforms. In addition, the stimulus policies to boost consumption are limited, and the issue of weak potential demand remains largely unresolved.
Journalist Greg Ip from The Wall Street Journal writes that China’s industrial policy Achilles’ heel lies in its high costs and significant waste.
“China’s budget deficit as a share of the economy is higher than that of the United States. Outside the aura of advanced manufacturing, the Chinese economy appears lifeless, crushed by debt, deflation, and an aging population,” he writes.
Many critics expect, or even hope, that China’s industrial policy will eventually collapse under its own contradictions. However, the timing of such a collapse is difficult to predict.
China’s manufacturing trade surplus has rapidly expanded in recent years, and the report suggests that this will intensify pressure on industrialized countries and have a greater impact on upstream sectors such as chemicals, machinery, and industrial equipment.
The report states that many Chinese products can rival or even surpass Western counterparts in quality and price without government support. Not only has Beijing not reduced its support, but it continues to expand the coverage of its policies.
In the five-year plan released by the Chinese government in 2021, 19 key development industries were identified. The latest five-year plan issued in March 2026 increased this number to 24, adding “brain-machine interfaces” and “nuclear fusion energy.”
The report warns that global dependence on Chinese supply chains is deepening, and China is leveraging regulations and economic incentives to reinforce its position in critical value chains, undermining other countries’ efforts to “de-risk.”
China has targeted various “chokehold” technologies or sectors, aiming to reduce import reliance and avoid foreign pressure, and simultaneously increase export market share, making other countries more vulnerable to Chinese influence.
Beijing tends to weaponize the market to retaliate against other countries. Once weapons are applied to “chokehold” sectors, the impact can be devastating, potentially disrupting entire production lines. For example, rare earth and magnet resources.
If countries’ responses remain scattered and lack coordination, China’s industrial policy will continue to reshape global markets, reinforce dependency relationships, and erode competitiveness in manufacturing industries worldwide.
The Rhodium Group warns: “As foreign countries deepen their dependence on China, their ability to break free from this reliance will correspondingly weaken.”