Executive Summary

China’s industrial strategy is evolving in two significant ways. First, it is becoming more systemic and pervasive, extending across all layers of production—from upstream inputs and industrial equipment to downstream applications, services, and frontier technologies. Second, these domestic dynamics are accelerating China’s trade dominance, deepening foreign dependencies on Chinese supply chains, and enabling the rapid global expansion of Chinese firms. Beijing is also increasingly deploying policy tools to entrench its dominant position in global value chains and deter foreign diversification strategies.

A new report by Rhodium Group, China’s Next-Generation Industrial Policy, with a preface by the U.S. Chamber of Commerce, provides a rigorous, evidence-based analysis of where China’s industrial policy stands today and where it is heading. The report concludes that a decade after Made in China 2025 (MIC25), Beijing is doubling down rather than retreating, with state intervention becoming broader and more consequential for global markets than ever.

Introduction

The past decade has witnessed a profound transformation in the global industrial landscape, driven in large part by China’s state-led industrial ambitions. When Made in China 2025 was introduced in 2015, it was seen by many as a blueprint for technological self-sufficiency and global competitiveness. Initial warnings from independent research institutions and business associations highlighted the risks of state-directed economic outcomes, market distortion, and intensified competition. Despite these early alerts, China executed much of its strategy, achieving significant progress in reducing import dependencies and building globally competitive positions in sectors ranging from new energy vehicles to information and communications equipment.

Now, China is entering a new phase. Its industrial policy is no longer confined to targeted sectors but has expanded into an “industrial policy of everything.” The current policy frameworks extend across mature sectors, foundational supply chain nodes, and frontier technologies alike. This broadening has profound implications for the global economy, international trade, and the strategic calculations of governments, multinational corporations, and investors.

Background & Context

The foundations for understanding China’s industrial trajectory were laid years ago, largely by the business community itself. In late 2015, the U.S. Chamber of Commerce identified and translated the foundational planning document—commonly referred to as the “Green Book”—that set out the localization targets and strategic roadmap underpinning MIC25. That translation was shared broadly and served as the basis for independent assessments by the Mercator Institute for China Studies (MERICS) in 2016, the European Union Chamber of Commerce in China in 2017, and the U.S. Chamber of Commerce in 2017.

These reports delivered a strikingly consistent message: China’s industrial policy posed a significant competitive threat to foreign companies and industrial economies. MERICS warned that “if China succeeds with ‘Made in China 2025,’ foreign companies and industrial countries will find themselves confronted with a powerful competitor backed by massive state support.” The EU Chamber echoed concerns about market distortion and crowding out, while the U.S. Chamber described a decisive shift away from market-oriented reform.

A decade later, an assessment commissioned by the U.S. Chamber and independently prepared by Rhodium Group, Was Made in China 2025 Successful? (May 2025), confirmed that outcomes tracked the original ambitions to a striking degree. China made substantial progress in many sectors, though vulnerabilities persist in high-end semiconductors, advanced aerospace, biomedicine, and other technologically demanding areas. The competitive dynamics and supply chain shifts forecast a decade ago have become embedded features of the global industrial landscape.

Main Analysis

The Rhodium Group report outlines two overarching conclusions. First, China’s industrial policy is becoming more systemic and pervasive, extending across all layers of production. Second, these domestic dynamics are ushering in a new phase of global impact, characterized by accelerating trade dominance, deepening foreign dependencies on Chinese supply chains, and the rapid global expansion of Chinese firms.

A More Expansive Industrial Policy

China’s next-generation industrial policy represents a shift from targeted sectoral intervention to what can be described as an “industrial policy of everything.” While MIC25 focused on a defined set of strategic emerging industries, current policy frameworks extend across mature sectors, foundational supply chain nodes, and frontier technologies alike. Chinese leadership views past policies as largely successful in building domestic capabilities and global competitiveness, even as they identify areas to improve policy execution and remain keenly aware of persistent technological dependencies in high-tech inputs.

Beijing is not abandoning mature sectors but is instead pushing them toward higher-value segments, while focusing on new products and technologies. In several upstream segments, including critical minerals, wafers, and magnets, China already holds dominant positions, and policymakers are now seeking to extend this across a broader range of industrial products.

Even in mature industries facing overcapacity and severe price pressures, Beijing is providing continued support and pushing firms to upgrade production technologies to gain market share and lower production costs, rather than cutting capacity. While authorities have acknowledged the need to address imbalances, policy responses have so far fallen short of the structural reforms required to shift China’s growth model. Efforts to boost consumption also remain limited, leaving underlying demand weaknesses largely unaddressed.

Services, relatively neglected in earlier rounds of industrial policy, are getting more attention, with visible gains in areas like software, data processing, and drug development. Policymakers also view the current moment as a window of opportunity to pull ahead in disruptive technologies like artificial intelligence, quantum, and future energy systems, mobilizing China’s entire economic system to gain a foothold in future industries. These new technologies are no longer treated solely as areas for R&D and innovation. They are now also supported with public procurement and state-owned enterprises generating demand and adoption of new products at scale. AI has emerged as a central pillar, but the broader pivot to demand creation represents a step change in the leadership’s willingness to fund commercialization of cutting-edge technologies.

Refining the Policy Playbook Under Tighter Constraints

This expansion is occurring in a more constrained macroeconomic environment. China faces slowing growth, weak domestic demand, rising fiscal pressures, and declining efficiency of capital allocation. Rather than scaling back intervention, Beijing is adapting to these constraints by recentralization and tighter coordination of financial resources. Authorities are strengthening control over fiscal spending, bank lending, capital markets, and state investment funds to ensure that scarce resources are directed toward strategic priorities. Government guidance funds are being consolidated and aligned more closely with national objectives, while bank lending is increasingly steered through targeted relending facilities and regulatory guidance, and wasteful or redundant tax and fiscal subsidies are being trimmed.

This adaptation reflects a pragmatic approach: using the levers of state power more efficiently to achieve strategic goals even as fiscal space narrows. The result is a more focused, more coordinated industrial policy that may prove more effective in the long run, despite the challenging economic environment.

International Impact

The global implications of China’s expanded industrial policy are substantial. The report highlights several key areas of concern for foreign governments and businesses.

Accelerating Trade Dominance

China’s industrial policy is accelerating its trade dominance. By supporting domestic firms across the value chain—from upstream inputs to downstream applications—China is increasing its share of global exports in strategic sectors. This dominance gives Beijing significant leverage over global supply chains and creates dependencies that can be used for economic or geopolitical purposes.

Deepening Foreign Dependencies

Foreign companies and economies are increasingly dependent on Chinese supply chains for critical inputs, including rare earths, pharmaceuticals, semiconductors, and clean energy technologies. The report notes that Beijing is increasingly deploying policy tools to entrench its dominant position and counter foreign diversification strategies. This includes export controls, investment screening, and other measures designed to maintain leverage.

Global Expansion of Chinese Firms

Chinese firms are expanding rapidly into global markets, supported by state backing and a more coordinated industrial policy. This expansion poses competitive challenges to established industries in advanced economies and emerging markets alike. In sectors such as electric vehicles, batteries, and solar panels, Chinese companies are already global leaders, and their reach is likely to grow.

Strategic Perspectives

The report offers critical strategic insights for governments, businesses, and international institutions. It argues that the window for effective action is finite and that decision-makers must respond to the shifting competitive landscape with clear-eyed analysis.

Business Implications

Multinational corporations must reassess their supply chain strategies and market assumptions. The deepening interdependence with Chinese supply chains means that vulnerabilities must be managed proactively. Companies should diversify sources where feasible and build resilience against potential disruptions. At the same time, access to China’s vast market remains important, requiring a balanced approach.

Policy Priorities

For governments, the report underscores the need for coordinated industrial strategies of their own. The challenges posed by China’s industrial policy cannot be addressed by market forces alone. Governments in advanced economies are already implementing policies to bolster domestic manufacturing and technology capabilities, such as the U.S. CHIPS Act and the EU’s Chips Act and Net-Zero Industry Act. However, the report cautions that responses must be evidence-based and avoid both overreaction and complacency.

Investment Trends

Investors should expect continued volatility and structural shifts in global markets. The expansion of Chinese firms into new sectors will create both opportunities and risks. Institutional investors need to incorporate geopolitical and industrial policy factors into their long-term strategies.

Future Outlook

Looking ahead over the next 3–10 years, several developments are likely to shape the global industrial landscape.

Artificial Intelligence and Frontier Technologies

China is positioning itself to lead in AI and other frontier technologies, using state procurement and SOE demand to accelerate commercialization. This could intensify global competition in AI, quantum computing, and future energy systems. International governance of these technologies will become increasingly important.

Global Economy and Trade

The global economy will continue to feel the effects of China’s industrial policy. Trade patterns may shift as countries seek to reduce dependencies on Chinese supply chains, but the pace of decoupling will be moderated by the high costs and complexities of diversification. Regional trade agreements and supply chain initiatives will gain prominence.

Infrastructure and Energy Transition

China’s dominance in clean energy supply chains is likely to persist, given its scale and cost advantages. However, other countries will invest heavily in domestic manufacturing to secure strategic autonomy. The energy transition will remain a key arena for industrial competition.

Governance and Cooperation

The rise of state-led industrial policy challenges the principles of open markets and fair competition. Multilateral institutions will face pressure to adapt, while strategic competition between major powers will intensify. International cooperation will be necessary to manage the risks of trade fragmentation and technological decoupling.

Conclusion

China’s next-generation industrial policy represents a pivotal development in the global economy. The report by Rhodium Group and the U.S. Chamber of Commerce provides a sobering assessment of China’s expanding state intervention and its consequences. The evidence is clear: the strategies outlined a decade ago have largely been implemented, and the world is now facing a more entrenched and expansive Chinese industrial state.

The response must be strategic and sustained. Governments, businesses, and international institutions must move beyond reactive measures and develop long-term approaches that safeguard innovation, competitiveness, and shared prosperity. The window for action is finite, but with rigorous analysis and coordinated effort, the challenges posed by China’s industrial policy can be managed.