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Transformation of China’s Development Model after the Global Financial Crisis: The Case of the Semiconductor Industrial Policy

  • Asia Review
  • Abbr : SNUACAR
  • 2022, 12(2), pp.107~134
  • Publisher : 아시아연구소
  • Research Area : Social Science > Social Science in general
  • Received : June 5, 2022
  • Accepted : July 29, 2022
  • Published : August 31, 2022

LEE WANG HWI 1

1아주대학교

Accredited

ABSTRACT

This article evaluates the transformation of China’s development model after the Global Financial Crisis of 2008 by analyzing the semiconductor industrial policy. Before the reform and opening-up policy in 1978, the industry had developed in accordance with the socialist planned economy policy. Subsequently, the industry has adopted a strategy to actively attract US, Japanese, Taiwanese, and Korean companies. As China’s economic rise began in earnest after the Global Financial Crisis of 2008, the Xi Jinping government, which took power in 2013, promoted an import-substitution policy. The government directly supported the development of semiconductor technology by creating large-scale funds, and was involved in attracting talent and technology cooperation to acquire overseas technology. Despite these efforts, the semiconductor self-sufficiency rate did not rise significantly, and the technology gap did not narrow significantly. The failure of the semiconductor industry policy can be interpreted as a limitation of the development model introduced by the government. The state-led model, which aims to support import-substitution, focused on introducing equipments and recruiting experts that can achieve results in the short term rather than investing in research and development for long-term development. In addition, as local governments, which are not controlled by the central government, promoted industrial policies in their own capacity, side effects occurred where resources and manpower could not be efficiently utilized. Since the outbreak of the trade war, U.S. sanctions against China have halved the effectiveness of the industrial policy. The trade war acted as an obstacle to industrial policy. Due to U.S. sanctions on the semiconductor industry, Chinese companies are not allowed to purchase major equipment and software as well as mergers and acquisitions of high-tech companies. Therefore, the development model promoted by the Xi administration after the Global Financial Crisis failed due to internal limitations and external pressures. Unlike Japan, South Korea, and Taiwan, China has not achieved long-term growth in the semiconductor industry. The development model can be evaluated as more in line with state capitalism than developmental state.

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