ABSTRACT
The growing power of Chinese industrial innovation has been broadly highlighted globally since 2018 due to the trade conflicts between China and the United States. The heated debate around the trade conflict creates an interesting context for analyzing China’s growth in her industrial capability that occurred over the past two decades. The current Chinese scenario is in sharp contrast with that of 20 years ago. Back in the late 1990s, many international observers, such as Peter Nolan and Xiaoqiang Wang (1999), considered Chinese domestic industry to be highly vulnerable due to low-level competitiveness of large Chinese firms in comparison to their international rivals. In practice, China did meet a huge challenge at that moment, with the unemployment of about 25.5 million SOE (state-owned enterprise) workers, a big shock during the second half of the 1990s (Zhu, 2013; Shi, 2017). However, less than 20 years later, China has become the second largest economy in the world since 2010 and begun to show strong innovation capacity in a series of industries. When Donald Trump declared his trade tariff actions in 2016, he described China as a highly competitive actor in industry and technology, particularly pinpointing the “Made in China 2025” program as an ambitious plan aiming at overtaking the technological advantage of the United States.
