China’s rise as the world’s leading electric vehicle producer offers an interesting case study in industrial policy. Its experience shows how competition between government agencies, local governments and private capital can drive experimentation and innovation, while also creating challenges for governments seeking to support emerging industries.

China’s rise as the world’s leading electric vehicle producer is not the product of a unified interventionist state but of competition among rival central ministries, development-oriented local governments acting as venture capitalists and capital markets that financed private start-ups excluded from state banking. The institutional model faces mounting pressure from local government fiscal constraints and tighter geopolitical restrictions on US investment in Chinese technology. But its core lessons – technological inclusiveness, subnational development capacity and patient risk-tolerant capital – offer wider applicability beyond China’s unique political economy.

China’s emergence as the world’s leading producer of electric vehicles (EVs) is often attributed to a powerful, interventionist state. But this explanation treats the Chinese government as a single actor and understates the importance of competition, private finance and institutional experimentation.

China’s EV success is better understood as the outcome of interactions among three forces – competing central government agencies, development-oriented local governments and capital markets. This configuration encouraged technological experimentation and enabled private companies to challenge established state-owned and multinational automakers. But it also produced overinvestment, duplicated capacity and increasingly intense competition.

At the national level, industrial policy was neither entirely unified nor consistently directed towards a predetermined technological winner. Ministries competed over regulatory authority, policy resources and preferred technological pathways. This fragmentation sometimes created openings for peripheral businesses such as........

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