FY2021 SSU-Working Paper No.4/ Jaehwan Lim (Aoyama Gakuin University)


Can “China Model” Compete? Evolving State Capitalism and Military-Civil Fusion Strategy

This article seeks to understand the development of US-China competition over technological innovation by focusing on the Military-Civil Fusion (MCF) strategy strongly pushed by the Chinese Communist Party. Based on an examination of China’s evolving political economy, this article posits that the MCF strategy should be understood as a new type of industrial policy which has the primary aim of enhancing overall competitiveness in high-tech sectors and argues that the current administration’s approach differs substantially from prior attempts in such critical aspects as the underlying motivation, range of policy measures, and institutional arrangements for policy implementation. Regarding policy effects, this study draws on an original dataset of policy documents to demonstrate that despite wide-ranging efforts to mobilize political, administrative, and economic resources, the MCF strategy at its current stage has fallen far short of the hopes of promoting competition and cooperation between defense and commercial sectors, and the prospects for technological upgrading and innovation remain uncertain.