When people think of industrial policy, they often imagine massive factories, state programs, and cash subsidies. But in China it works differently. Industrial policy isn’t just about spending. It’s a coordinated system where both central and local governments play distinct roles. It’s not a rigid top-down directive – it’s a flexible strategy where Beijing sets the direction, and provinces and cities choose how to get there.
China has built a model where the center gives the compass, but local governments decide on the speed and the road. This article explains how the system works, why it delivers results, and how Kazakhstan can draw lessons from it.
We often assume all decisions in China come from the top. But analysis of nearly 3 million policy documents from 2000 to 2022 tells a different story. Only 13% of industrial policy initiatives were issued by central authorities. The rest – 87% – came from provinces, cities, and local governments.
Cities are especially active, accounting for nearly 40% of all industrial policies. They decide which sectors to support, which tools to apply, and how to adapt national strategies to local realities.
In this system:
• The center defines the national priorities – tech innovation, import substitution, digital transformation.
• Local governments implement these in ways that fit their own infrastructure, business landscape, and workforce.
Why it works:
• It meets real economic needs on the ground;
• Encourages policy experimentation and innovation;
• Allows faster adjustments as conditions change.
What Kazakhstan can learn: More decision-making power and tools should be given to local governments. Right now, too much is centralized in Astana, making it harder to adapt policies to regional needs.
In China industrial policy is a living system. It evolves constantly through updates, adjustments, and iterations. From 2000 to 2022 more than 770,000 new documents on industrial policy were issued across different levels of government.
A region may start by funding startups, then shift to R&D support, and later focus on building supplier networks. If something doesn’t work, it changes course. It’s a continuous learning process.
Kazakhstan’s opportunity: Current strategies are often locked into 5–10-year cycles with limited flexibility. Kazakhstan needs a more agile approach – one that allows quick course corrections and real-time learning from results.
Subsidies are just one piece of China’s industrial policy. Only 41% of measures involve direct financial support. The rest come in many forms:
• Preferential land use policies;
• Infrastructure investment (roads, energy);
• Workforce training and re-skilling;
• Supplier and industrial cluster development;
• Standards, certifications, and procurement support.
Each tool is matched to the sector’s stage of development:
• Entry-level: lower market barriers;
• Growth phase: boost R&D and skills;
• Mature phase: promote exports and modernize operations.
Kazakhstan should broaden its toolbox: Right now, industrial support is mostly about money. Regions need access to a wider range of tools – from land policies to public procurement mechanisms.
Even with strong local roles, central government in China still plays a key role:
• Setting national priorities and benchmarks;
• Issuing common frameworks;
• Evaluating local progress and promoting best practices.
What’s unique is that ideas often flow from the bottom up. Local experiments in places like Guangdong or Hangzhou often scale up into national policy within a few years.
For Kazakhstan: Central ministries should work as learning platforms – collecting regional successes, spreading good practices, and supporting experimentation.
In China, local leaders aren’t just administrators – they’re policy entrepreneurs. When a mayor moves to a new city, they often bring their successful strategies with them. This leads to a “personalized diffusion” of policy innovations.
Moreover, officials are evaluated by results. If they deliver growth and effective industrial development, they move up.
Kazakhstan can apply this too: Performance indicators for regional governors should include tangible industrial outcomes. There should also be a structured system for sharing knowledge across regions so each one doesn’t start from scratch.
China’s model is not about full centralization or laissez-faire decentralization. It’s about coordinated autonomy:
• The center sets direction;
• Local governments design implementation.
It works because:
• It allows policy learning and adjustment;
• Empowers local decision-making;
• Offers a diverse set of tools;
• Focuses on outcomes rather than paperwork.
Kazakhstan’s five takeaways:
1. Give local authorities real tools and authority;
2. Enable pilot programs with clear metrics;
3. Create platforms for sharing and scaling best practices;
4. Make officials accountable for results, not just reports;
5. Build a flexible, learning-centered policy environment.
Industrial policy isn’t a static plan. It’s a dynamic field where government and economy learn from each other – constantly.
