China’s Industrial Policy

China's current industrial policy has been pursuing long term objectives and can be traced back to the late 1970s. The new CCP leadership under General Secretary Xi Jinping has not altered in any fundamental way these objectives. These are part of a long-term policy defined in the framework of the 11th and 12th Five-Year Plans and other long-term programmes for scientific and technological development. Foreign investors have recently expressed concern due to negative media campaigns and government crackdowns on foreign multinational enterprises (MNEs) operating in China: the prosecution for bribery of GSK executives, fines imposed on Danone and five other MNEs under China's anti-monopoly regulations1 and shaming campaigns against GSK, VW, Samsung or Apple. At the same time, blatant privileged access to key PRC public procurements is granted to Chinese national champions, notably in the development of hundreds of thousands of 4G base stations.2 Moreover, Xi Jinping is explicitly rehabilitating Mao’s legacy and CCP propaganda is encouraging virtuous and altruist behaviour, putting forward ideological icons from the 1960s.3 There has been a lot of speculation over whether this represents a change in policy on the part of the Chinese leadership that will restrict the room for manoeuvre of foreign investors in order to give more space for the development of Chinese national champions (as countries like Japan or South Korea once did) or simply a temporary leftist turn to strengthen Xi Jinping's hold on the CCP before he can actually proceed with an agenda of further liberalisation of the economy, as previously forecast by some analysts