ABSTRACT
One of Hu Qili’s development approaches at the enterprise level was the big business strategy. It was believed that a ‘pillar’ industry must be supported by a number of large ‘backbone’ enterprises. This strategy in fact was not totally new, but appears to be a resumption and extension of the enterprise reform of the 1980s. This policy prescription was largely based on the East Asian development models of the 1960s-1980s, in which government intervention was used to promote industrial and economic development. Has China successfully emulated the East Asian model, given that it has very different economic and historical conditions as compared with the East Asian countries? Nevertheless, after China had formally joined the WTO in 2001, Chinese officials attempted to maintain the ‘national champion’ strategy while promoting ‘small giants’ (small and mediumsized firms) in chosen sectors. The policy implementation faces many challenges because China is prevented under the WTO rules from fostering nationally controlled industries through the various governmental support mechanisms utilized extensively by East Asian latecomer countries such as Korea and Taiwan to catch up during the 1960s to 1980s. Can China still implement a large-firm strategy to improve its technological capabilities and to ‘catch up’ with leading countries in high-tech industries while complying with the new WTO requirements? Could this mixed policy or the shift towards promoting SMEs represent a more satisfactory alternative for China? What will be the new role for the government as markets open up?
