Panel 1: State-Led Development of Strategic Digital Industries

May 8, Morning Session

Chair:

Steven Vogel, Department of Political Science, University of California, Berkeley

Discussant:

Bai Gao, Department of Sociology, Duke University

Victor Shih, School of Global Policy and Strategy, University of California, San Diego

1.1  The Silicon Valley Model and China’s Limited Development in Semiconductors

Yan Xu, School of Public Policy, The Chinese University of Hong Kong, Shenzhen

Abstract

Semiconductor is a foundational technology in the digital age. The Chinese state has long regarded semiconductors as a priority and since the 2000s tried to imitate the “Silicon Valley model” of startups and venture capital to develop this industry. Drawing from extensive fieldwork and interviews in China, this paper studies why this effort has produced some but limited achievements. I show that Chinese startups face significant latecomer disadvantages and that while the state can help address some of the challenges, its ability to overcome latecomer disadvantages is constrained by the global environment.

In the 2000s and much of the 2010s, private venture capital was not forthcoming for Chinese semiconductor startups due to the challenges facing latecomers, including foreign leaders’ control of tech ecosystem and intellectual property and customer preferences. The Chinese state has played an instrumental role in channeling capital to startups in semiconductors. Yet, its ability to create markets for local semiconductor firms remains limited, as in an open environment, downstream firms often prefer products offered by foreign leaders. Increasing entrepreneurship has helped to boost China’s semiconductor industry, by encouraging bottom-up initiatives and niche creation in global supply chains, and Chinese entrepreneurs achieved some success in the lower-end by designing semiconductors for the burgeoning local consumer electronics industry. Yet, they have struggled to break into high-end segments, where foreign leaders control key intellectual property and are favored by downstream firms.

These findings make several contributions. Whereas existing studies often see state involvement and tech entrepreneurship as antithetical, I show that the state can play an important role in supporting tech entrepreneurship. In addition, I show that the global environment conditions the state’s ability to achieve development, especially in the digital industries, which are highly global and feature power asymmetry between the incumbents and latecomers.

1.2  Competitive Developmental Venture Capitalism and the Rise of China’s Electric Vehicle Industry

Fengming Lu, Coral Bell School of Asia Pacific Affairs, Australian National University

Wei Chen, School of International and Public Affairs, Shanghai Jiaotong University

Abstract

Why did the global electric vehicle (EV) industry take off in China rather than in the United States, Germany, Japan, or South Korea, where institutional foundations and technological capabilities initially appeared more favorable? This paper addresses this puzzle by theorizing China’s EV ascent as the outcome of a distinctive political–financial regime that we term competitive developmental venture capitalism. We argue that China’s advantage lay not primarily in technological leadership, since advanced vehicle engineering technologies and lithium battery research were long concentrated in incumbent automotive powers, but in an institutional configuration that combined fierce firm-level and inter-regional competition, adaptive central industrial policy guidance over technological trajectories, and heavy reliance on venture capital and stock markets rather than bank-based finance.

Drawing on extensive qualitative materials, including multi-site fieldwork, interviews with entrepreneurs, business executives, investors, and government officials, and systematic analysis of journalistic and insider accounts, we show how a diversified venture capital ecology underpinned China’s EV takeoff. Chinese affiliates of U.S. dollar funds, indigenous private VC firms, corporate venture capital specializing in digital and green technologies, and state-backed guidance funds played complementary roles in financing early-stage EV start-ups, pooling risk, and sustaining long-horizon experimentation. This configuration differs both from liberal market economies, where venture capital operates largely without industrial guidance and manufacturing prowess, and from coordinated market economies and classic East Asian developmental states, where state-coordinated bank finance and incumbent firms dominate industrial upgrading.

The paper contributes to the literature on varieties of capitalism by identifying a new variant in which state coordination operates primarily through competitive, venture-based capital markets rather than through banks, SOEs, or top-down planning. It also advances debates on industrial policy by showing how adaptive technological guidance and decentralized public–private financing can jointly support disruptive entry in strategic emerging industries. More broadly, the paper speaks to the theme of digital development by demonstrating how venture finance inspired by the digital industry and hybrid state–market governance reshape latecomer innovation trajectories in green and platform-adjacent sectors.

1.3  Regimes of Scale and Velocity: How China’s Digital Statecraft Organizes AI Development via Lags and Fixes

Tongyu Wu, Department of Sociology, Zhejiang University

Bingqing Xia, School of Communication, East China Normal University

Abstract

Machine-learning AI is reshaping contemporary information capitalism around two imperatives: scale (ever-expanding data and compute infrastructures) and velocity (ever-faster iteration and deployment). This paper asks how scale and velocity operate as distinct regimes of AI development in China, what contradictions they generate, and how those contradictions are managed through state–capital collaboration. The analysis draws on five years of multi-sited fieldwork and 192 semi-structured interviews across China’s AI ecosystem, focusing on the data-annotation industry as a strategic site where statecraft, platform power, and labor discipline intersect.

I argue that China’s AI boom rests on two intertwined regimes—scale-driven and velocity-driven—that generate durable “lags” between the pace of machine development and the adaptive capacities of organizations and governance; these lags become a developmental engine that repeatedly produces institutional “fixes.” In the scale-driven regime, the state and tech giants convert mass data production and a mobilizable data workforce into model capability by building large-scale labeling bases, standardized pipelines, and centralized coordination. Scale, however, produces a flexibility lag: infrastructures optimized for throughput become slow to reconfigure. The state–firm alliance manages this lag by offloading flexibility onto local governments, peripheral annotation organizations, and data workers, enabling tech giants to keep scaling without internalizing volatility. In the velocity-driven regime, accelerated trial-and-error generates a validity lag (verification cannot keep pace with iteration) and a legitimacy lag (accountability and transparency cannot keep pace with deployment). China manages these contradictions through a state-saturated ensemble of fixes: licensing and compliance chokepoints, organizational restructuring, and an expanding stratum of “new quality productive forces,” including data-alignment experts who keep up the pace of testing, benchmarking, and patching models.

The paper contributes to the conference theme by theorizing China’s digital statecraft as the active organization of infrastructures, labor pools, and accountability devices that make AI-centered techno-developmentalism possible.