Local Governments Drive Most Industrial Policymaking

The data show that roughly 80 percent of industrial policies originate from local governments, including provinces, cities, and counties, while only about 13 percent come from the central government. This pattern highlights the importance of local initiative in shaping China’s industrial landscape.

Over time, however, the researchers find that central influence has grown, with greater policy coordination across different levels of government, especially since the early 2010s.

Policy Tools Evolve as Industries Mature

The study finds that China uses a wide range of tools to carry out its industrial policies, including fiscal subsidies, market access and regulation policies, support technology R&D and adoption, labor policy, and tax incentives, among others. 

The composition of these tools shifts systematically as industries develop.

• Emerging industries tend to receive entry-oriented support such as subsidies and land incentives.
• Mature-industry policies more often target R&D, labor and skills development, supply chain coordination, and consumer-side demand stimulation.

This evolution shows a clear pattern in how governments adjust policy instruments over time.

Imitation is Widespread — and Linked to Weaker Results

Many local governments replicate industrial policies from other regions, particularly from cities within the same province. This imitation contributes to policy duplication, inefficient competition, and industrial overcapacity when multiple localities pursue the same sectors or strategies.

Empirically, the study shows that “follower cities” — those that copy policy language or design from others and upper level governments without nuanced local adaptations — experience smaller gains in firm sales, profits, and productivity compared with cities that create original policies. The findings highlight how widespread imitation can dilute the effectiveness of local policy initiatives.

Different Tools Yield Different Firm Outcomes

By linking policy activity to firm-level data, researchers identify how industrial support affects businesses:

• Industries targeted with supportive policies are more likely to receive subsidies, higher tax deduction rates, and long-term loans.
• Fiscal and land subsidies are associated with higher rates of firm entry and investment.
• R&D support, cluster development, and equity investment show stronger correlations with productivity growth.

These findings highlight the diversity of policy instruments and their varied associations with firm performance.

A Comprehensive View of China’s Policy Landscape

Together, the results provide an unprecedented data-driven map of China’s industrial policymaking from 2000 to 2022.

The dataset—covering millions of documents and thousands of firms—offers a new empirical foundation for understanding how industrial policies are designed, implemented, and adapted over time.
 

Professor Hanming Fang is an applied microeconomist with broad theoretical and empirical interests focusing on public economics. His research integrates rigorous modeling with careful data analysis and has focused on the economic analysis of discrimination; insurance markets, particularly life insurance and health insurance; and health care, including Medicare. 

Hanming Fang is Norman C. Grosman Professor of Economics at the University of Pennsylvania. In early 2026, Professor Fang will join the Stanford Center on China’s Economy and Institutions as a Skyline Scholar. During his appointment he will participate in a rich spectrum of activities including expert talks and collaborative research efforts.
 

We are pleased to share the publication of a new volume, Cold War Refugees: Connected Histories of Displacement and Migration across Postcolonial Asia, edited by the Korea Program's Yumi Moon, associate professor in Stanford's Department of History.

The book, now available from Stanford University Press, revisits Cold War history by examining the identities, cultures, and agendas of the many refugees forced to flee their homes across East, Southeast, and South Asia due to the great power conflict between the US and the USSR. Moon's book draws on multilingual archival sources and presents these displaced peoples as historical actors in their own right, not mere subjects of government actions. Exploring the local, regional, and global contexts of displacement through five cases —Taiwan, Vietnam, Korea, Afghanistan, and Pakistan — this volume sheds new light on understudied aspects of Cold War history.

The book's chapters — written by Phi-Vân Nguyen, Dominic Meng-Hsuan Yang, Yumi Moon, Ijlal Muzaffar, Robert D. Crews, Sabauon Nasseri, and Aishwary Kumar — explore Vietnam's 1954 partition, refugees displaced from Zhejiang to Taiwan, North Korean refugees in South Korea from 1945–50, the Cold War legacy in Karachi, and Afghan refugees.

Purchase Cold War Refugees at www.sup.org and receive 20% off with the code MOON20.

As the U.S.-China competition unfolds in areas ranging from trade to technology to the military, the rival-making discourse surrounding this great power competition was the focus of the conference Beyond a New Cold War, organized and hosted by the Stanford Next Asia Policy Lab (SNAPL).

Held on August 14, 2025, the event showcased SNAPL research illuminating how U.S. political leaders and the media shape narratives concerning China and how citizens in young democracies perceive these narratives. Serving as discussants were experts from Columbia University, the University of California, Berkeley, the Hoover Institution (represented by a former National Security Affairs Fellow), and the U.S. Congressional-Executive Commission on China.

The studies presented and discussed at the conference are part of SNAPL’s U.S.-Asia Relations research track, one of four research streams the lab pursues. Housed at the Shorenstein Asia-Pacific Research Center (APARC) and founded by sociologist Gi-Wook Shin, the lab aims to generate evidence-based policy recommendations and promote transnational collaboration with academic and policy institutions to advance the future prosperity of Asia and U.S.-Asia relations.

“This conference provided an excellent opportunity to engage the policy community with our research findings,” says Shin, the William J. Perry Professor of Contemporary Korea, a senior fellow at the Freeman Spogli Institute for International Studies (FSI), and the director of APARC and the Korea Program. “The lab will continue to foster ongoing dialogue between academic and policy circles.” 

The conference builds on previous SNAPL forums and meetings with policy and academic communities in Washington, D.C., held in September 2024. These policy engagement activities are made possible thanks to a grant from FSI. 

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Dynamics of American Elite Discourse on China

At the first conference panel, Research Fellow Xinru Ma shared a study that unravels who leads elite discourse on U.S.-China relations – whether Congress, the White House, or the media. While prior research suggests that each of these actors could have distinct agenda-setting capacities, their relative influence and its directionality in foreign policy discourse remain empirically underexamined.

The study addresses this question by investigating China-focused discourse and framing by the U.S. legislative and executive branches as well as the media. Using computational and causal inference methods, the study analyzes social media data from the legislative and executive branches alongside major U.S. media outlets across two periods: the 116th Congress (January 3, 2019 – January 3, 2021) and the 118th Congress (January 3, 2023 – January 3, 2025).

The analysis reveals that, both in terms of issue attention and framing, the media tends to follow the lead of Congress and the President. The findings also indicate that Republican lawmakers exert greater influence on setting the China agenda in the media. In contrast, Democratic lawmakers are stronger predictors of how the media frames the issues at stake. Moreover, the findings suggest that presidential influence on China discourse weakened sharply in the 118th Congress, and that there is an overall shift toward party-driven, rather than institutionally mediated, communication among elites. 

Policy Implications
 

• Media Weakness: The reliance of media outlets on partisan cues from political elites on foreign policy issues increases the risk of incomplete or skewed public understanding of China and U.S.-China relations. The risk is especially disconcerting as U.S. reporters face limited access to China.
• Partisan Echo Chambers: Communication flows primarily within partisan networks rather than across institutions, with the separation of powers becoming less effective as a system of checks and balances. The splintering of political discourse into parallel echo chambers risks eroding opportunities for cross-party dialogue and democratic deliberation on complex foreign policy issues.
• Fragmented Messaging: Divergent partisan messaging on China signals inconsistency to both domestic and international audiences who might draw contradictory conclusions about U.S. intentions. This dynamic gives rise to strategic miscalculations abroad and a fragmented public understanding of China policy at home.
• Declining  Institutional Voices: The decline of institutional power over shaping U.S. discourse on China has created a growing vulnerability. As individual political figures gain sway, personalized narratives often prioritize short-term visibility over a coherent, long-term strategy.

Democracy vs. Autocracy: A View from Young Democracies

Despite their deep divisions on most issues, there is one topic Republicans and Democrats converge on: China. Both parties increasingly frame the intensifying U.S.-China tensions as a strategic competition between democracy and autocracy. But is the value diplomacy this approach begets effective in promoting liberal values in young democracies?

At the second conference panel, Visiting Scholar Gidong Kim presented a study that addresses this question. “This study challenges the effectiveness of the value-laden U.S. diplomacy in young democracies and presents a more nuanced explanation of democracy's role in forming public opinion on foreign policy,” says Kim, formerly a postdoctoral fellow with SNAPL and currently an assistant professor of political science at Hankuk University of Foreign Studies (HUFS).

The study hypothesizes that in young democracies, where democratic histories are relatively short and legacies of authoritarian rule endure, citizens tend to understand democracy in terms of electoral institutions rather than liberal values. Similarly, in the context of the U.S.-China competition, citizens in these countries tend to perceive China’s threats to electoral institutions more seriously than its threats to liberal values.

To test this proposition, the study uses a country-level, cross-national analysis and an original survey experiment in South Korea. The findings support the hypothesis.

Policy Implications
 

• Context Matters: U.S. policymakers must acknowledge the limits of value-driven diplomacy. Washington should diversify its foreign policy toolkit and adapt it to regional contexts: in Western Europe, liberal values rhetoric can reinforce alliances, but in young democracies, the design and strength of electoral institutions carry greater weight.
• A Crisis of Credibility: For China, there is an equally clear lesson about the need to rethink its approach to diplomacy. Without addressing suspicions of election interference in democratic countries, Beijing will struggle to gain traction with the publics in young Asian democracies and dissipate anti-China sentiments in those countries, even if it increases its soft power through liberalization policies.

SNAPL’s studies presented at the conference underscore the crucial role that narratives and public perceptions play in international relations. They suggest that great power competition is not just about power. Rather, it is also about persuasion, which, in turn, depends on how different audiences — at home and abroad — perceive the story.