Decoding China's Industrial Policies

Hanming Fang, Ming Li and Guangli Lu

No 33814, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We decode China’s industrial policies from 2000 to 2022 by employing large language models (LLMs) to extract and analyze rich information from a comprehensive dataset of 3.3 million documents issued by central, provincial, and city-level governments. Through careful prompt engineering, multistage extraction and refinement, and rigorous verification, we use LLMs to classify the industrial policy documents and extract structured information on targeted industries, policy tones (supportive or regulatory/suppressive), implementation tools, etc. Combining these newly constructed industrial policy data with micro-level firm data, we explore the political economy of industrial policy, focusing on the economic and political foundations of sector choice and its evolution over time. We find 2013 as a turning point for policy recentralization, both in the central policies’ coverage and strength and in the local governments’ compliance. We document spatial inefficiencies and industry-wide overcapacity as potential downsides of industrial policies.

JEL-codes: C55 L52 O25 (search for similar items in EconPapers)
Date: 2025-05
New Economics Papers: this item is included in nep-bec, nep-big, nep-cmp, nep-cna and nep-ind
Note: DEV PE POL PR
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Citations: View citations in EconPapers (2)

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