Is China's industrial policy effective? An empirical study of the new energy vehicles industry

Abstract China's traditional automobile industry lags behind that of the developed countries, but the development of New Energy Vehicles (NEVs) is an opportunity to catch up with the global automobile industry. In China, there has been a widespread attempt to “overtake on the curve” by developing cleaner technology for NEVs. To help with this transition, the Chinese government has introduced a large number of policies to promote the development of the NEV industry. In this study, we examined whether these policies have been effective by analyzing data about policies for China's NEV industry from 2006 to 2018, as well as the NEV patents filed in the United States, Japan, Germany, France, Korea, and China from 1988 to 2018. This paper uses quantitative analysis of policies and factor analysis. The results of the policy quantification regression analysis show that China's industrial policy has a significant influence on the number of patents. For example, China's aim to promote technological progress has been effective in developing an indigenous NEV industry, but whether China will succeed in “overtaking on the curve” is still unclear. The current state of development of NEV patents does not show China have a leading edge in NEV technology. China's NEV industry policies should be further strengthened, especially the core policies on technological innovation.