Drawing on the arguments of The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market (Naomi Oreskes and Erik M. Conway, 2023), the contrast between China and the United States in implementing industrial policy reflects deeply divergent historical, political, and cultural foundations. In the United States, decades of ideological conditioning have fostered enduring suspicion toward government intervention, producing what might be called “parallel resistance” from business interests, political actors, and public opinion that constrains sustained industrial planning. By contrast, China’s political economy is rooted in a long-standing acceptance of state-led development, where centralized coordination and strategic planning are viewed as legitimate and necessary tools of national advancement. This asymmetry helps explain why industrial policy remains difficult and contested in the U.S., while in China it operates as a normalized and largely uncontested feature of governance.
Ideological and Historical Roots of Divergent Industrial Policy Traditions
The contrasting trajectories of industrial policy in the United States and China are best understood through their distinct ideological and historical foundations. These foundations shape not only policy choices but also the range of ideas considered legitimate in public debate. What appears technically feasible in one system may be ideologically untenable in another, even when facing similar economic or strategic challenges.
In the United States, Naomi Oreskes and Erik M. Conway argue in The Big Myth that hostility toward government intervention is not an organic feature of American political culture but the result of a sustained ideological project. Over the twentieth century, business interests and allied institutions worked systematically to portray markets as naturally efficient and self-correcting, while depicting government action as intrusive, inefficient, or morally suspect. This effort reshaped public common sense rather than merely influencing policy preferences.
Think tanks, academic economists, and cultural media played complementary roles in this transformation. Scholarly theories elevated market self-regulation to near-scientific status, while regulation and planning were associated with authoritarianism or failure. Media, education, and advertising reinforced the message that economic freedom and moral virtue flow from minimal government. As a result, contemporary industrial policies—such as the CHIPS Act or the Inflation Reduction Act—are often framed reflexively as “picking winners,” distorting markets, or enabling corporate welfare, even when they are designed to serve long-term national or security interests.
China’s ideological inheritance points in the opposite direction. Its modern history, particularly the Century of Humiliation from the mid-nineteenth to the mid-twentieth century, produced a powerful lesson: a weak state and disorganized economy invite foreign domination and internal collapse. State capacity and coordinated development thus became associated not with repression, but with survival, sovereignty, and national dignity.
This historical memory has been reinforced through official narratives of economic development. From Mao-era industrialization to Deng Xiaoping’s market reforms, the Chinese state has consistently presented itself as the central architect of modernization. Markets are accepted, but primarily as instruments deployed in service of state-defined goals. Consequently, industrial policy in China is widely regarded as pragmatic, strategic, and patriotic, rather than as an ideological violation. Unlike in the United States, there is no entrenched counter-narrative portraying state-led economic coordination as unnatural or morally illegitimate, allowing industrial policy to operate with far less resistance.
Political Institutions and Power Structures Shaping Industrial Policy
Beyond ideology, the political systems of the United States and China generate fundamentally different capacities for designing and executing industrial policy. Institutional architecture determines how power is distributed, how decisions are contested, and how easily coordinated economic strategies can be sustained over time. These structural features strongly condition the effectiveness of state-led industrial initiatives.
In the United States, a pluralistic democratic system deliberately disperses authority across multiple branches and levels of government. The separation of powers, federalism, and an independent judiciary create numerous veto points through which policies can be delayed, diluted, or blocked altogether. While these mechanisms are designed to prevent abuses of power, they also make coherent and long-term industrial strategy difficult to maintain.
This fragmentation is reinforced by an open lobbying environment and adversarial political culture. Businesses and interest groups actively challenge policies that threaten profits or established market norms, while partisan competition encourages policymakers to frame industrial intervention as ideologically suspect. Media scrutiny and public debate often amplify concerns about inefficiency, favoritism, or fiscal waste. As a result, even strategically significant programs such as the Inflation Reduction Act or the CHIPS and Science Act encounter prolonged political battles, uneven implementation, and shifting commitments across administrations.
China’s political system, by contrast, concentrates authority within a centralized one-party framework. The Chinese Communist Party exercises decisive control over policy formulation and execution, enabling industrial strategies to be set at the national level with limited formal opposition. Once priorities are defined, coordination across ministries, state-owned enterprises, and private firms proceeds with relative speed and consistency.
This centralization is reinforced through administrative incentives and organizational discipline. Local officials are evaluated according to performance metrics tied to growth, technological upgrading, and compliance with national objectives, aligning local action with central strategy. Mechanisms for dissent are largely internal and managed within party structures, while regulatory and informational controls limit public contestation. Together, these features minimize the political and interest-group resistance characteristic of the U.S. system, allowing China to pursue industrial policy in a more rapid, unified, and sustained manner.
Institutional Design and Incentive Structures in Comparative Industrial Policy
Differences in industrial policy outcomes between the United States and China are also rooted in their contrasting institutional architectures and incentive systems. How the state is positioned relative to markets, and how economic actors are rewarded or constrained, shapes whether industrial policy is experienced as an external imposition or as an embedded feature of economic life.
In the United States, a firm boundary separates the public and private spheres. Government intervention in the economy is often framed as exceptional and intrusive, rather than routine or cooperative. This rigid division reinforces adversarial relations between policymakers and firms, particularly when industrial policy threatens established business models or market hierarchies.
The presence of a large, independent lobbying ecosystem further complicates implementation. Corporations and trade associations possess extensive capacity to resist, reshape, or delay industrial initiatives through legal challenges, regulatory capture, and political pressure. Oversight is fragmented across agencies and levels of government, creating implementation frictions that require programs to navigate complex regulatory, budgetary, and partisan obstacles long after formal legislation has passed.
China’s institutional framework operates on a different logic. Under its “socialist market economy,” the boundary between state and enterprise is intentionally blurred. Major firms—both state-owned and private—often maintain internal Party committees, rely on state-directed credit, and operate within strategic guidance issued by central authorities. Market participation is thus embedded within a broader political and developmental framework.
This structure produces largely cooperative rather than adversarial dynamics. Firms gain preferential access to financing, subsidies, and regulatory support by aligning with national priorities, while bureaucratic incentives encourage local officials, state-owned enterprises, and private companies to pursue shared policy goals. Industrial policy faces minimal resistance not because dissent is merely suppressed, but because it is institutionally integrated into the financial, administrative, and organizational architecture of the economy itself.
Cultural Narratives and Social Legitimacy of State Intervention
Cultural and social narratives play a decisive role in shaping how industrial policy is perceived and contested in the United States and China. Beyond formal institutions, shared beliefs about the moral role of the state influence whether government intervention is treated as a problem to be resisted or as a solution to be refined. These narratives condition public consent and define the boundaries of legitimate economic action.
In the United States, government involvement in industry is frequently framed in negative moral and ideological terms. Industrial policy is often associated with waste, inefficiency, or “socialism,” labels that carry strong normative weight in public discourse. Media commentary, public opinion, and influential think tanks reinforce this skepticism, creating a reflexive cultural opposition that precedes empirical evaluation of policy outcomes. As a result, debates over industrial policy tend to focus less on effectiveness and more on perceived violations of market principles.
China’s social narratives move in the opposite direction. State intervention is culturally legitimized through visible and widely publicized successes, such as high-speed rail networks, leadership in electric vehicle production, and advances in telecommunications infrastructure. These achievements are framed as collective national accomplishments, reinforcing the belief that industrial policy is both necessary and effective.
Nationalistic narratives further anchor industrial policy to broader goals of sovereignty, modernization, and global competitiveness. Strategic industries are portrayed as essential to national strength rather than as distortions of market logic. Unlike the United States, China lacks a powerful ideological ecosystem dedicated to questioning the legitimacy of state intervention itself; critiques tend to focus on efficiency or execution rather than on whether industrial policy should exist at all.
Divergent Outcomes: Ideological Resistance and Operational Friction
The cumulative effect of ideological traditions, political structures, institutional incentives, and cultural narratives is reflected most clearly in how industrial policy encounters opposition in practice. In the United States and China, the challenge is not merely whether policies succeed or fail, but the form that obstacles take and the arenas in which they arise.
In the United States, industrial policy confronts both principled resistance and practical impediments. Initiatives such as the Inflation Reduction Act and the CHIPS and Science Act illustrate how decades of free-market mythmaking, cultural skepticism toward government, and intense political polarization complicate policy adoption and execution. Even after passage, programs are vulnerable to legal challenges, administrative delays, and partisan reversal, making long-term commitment uncertain.
As a result, American industrial policy must constantly justify its own legitimacy. Policymakers often reframe interventions in terms of national security, supply-chain resilience, or technological leadership rather than economic planning per se. Success depends not only on effective implementation but also on producing visible, near-term results capable of countering entrenched public and ideological skepticism.
In China, by contrast, opposition to industrial policy is largely operational rather than ideological. While problems such as overcapacity, redundant investment, or inefficiency are common, they are treated as technical issues to be corrected through better coordination or regulation. The legitimacy of industrial policy itself is rarely questioned. Debate centers on execution and optimization, not on whether the state should play a guiding role in economic development.
Why China Lacks Systemic Opposition to Industrial Policy
The absence of what might be called “parallel resistance” to industrial policy in China is not accidental, nor is it merely the product of authoritarian control. Rather, it reflects a coherent alignment of history, ideology, institutions, and narratives that collectively normalize state-led economic development. When contrasted with the United States, this alignment helps explain why industrial policy in China proceeds with relatively little contestation.
First, China’s historical experience confers deep legitimacy on state intervention. Modern Chinese history associates economic weakness with national vulnerability and foreign domination, making state-led development the default rather than an exception. In the United States, by contrast, government intervention is treated as an extraordinary measure that must be narrowly justified and constantly defended against charges of overreach.
Second, ideological assumptions differ fundamentally. Chinese political culture tends to equate stability, modernization, and national progress with active government guidance of the economy. American political culture, shaped by decades of market-centered ideology, more often equates freedom and efficiency with minimal government involvement. These opposing value systems define whether industrial policy appears natural or suspect before any empirical evaluation takes place.
Third, institutional design reinforces these ideological divides. China’s centralized authority, performance-based bureaucratic incentives, and close integration between the state and major firms reduce internal friction and align actors around national priorities. The U.S. system, built on pluralism, checks and balances, and federalism, multiplies veto points and empowers interest groups to resist, delay, or reshape industrial initiatives.
Fourth, narrative control plays a critical role. In China, industrial policy is framed as patriotic, strategic, and essential to sovereignty and technological leadership. Policy successes are celebrated as collective national achievements. In the United States, dominant narratives often portray similar interventions as distortions of market order, inefficient spending, or political favoritism, reinforcing public skepticism.
Finally, China lacks the structural mechanisms that generate sustained opposition in the U.S. There is no independent judiciary capable of halting policy on constitutional grounds, no fragmented regulatory system that diffuses authority, and no institutionalized partisan competition that incentivizes obstruction. As a result, industrial policy in China encounters friction mainly at the level of execution rather than legitimacy. Together, these factors explain why China faces coordination challenges but not the kind of parallel ideological, political, and cultural resistance that constrains industrial policy in the United States.
Key Takeaways
The contrast between the United States and China ultimately reflects a deeper civilizational divergence in how economic governance is understood and legitimized. In the United States, industrial policy must overcome layers of ideologically constructed skepticism—cultural, psychological, and political—that render government intervention inherently suspect. Measures such as the Inflation Reduction Act and the CHIPS Act therefore represent not merely policy choices, but deliberate departures from deeply entrenched free-market beliefs, requiring substantial political capital simply to justify their existence.
China, by contrast, treats state-led industrial development as culturally, politically, and institutionally normal. Industrial policy is implemented with minimal ideological friction, and debate centers on execution rather than legitimacy, even as operational challenges such as overcapacity or inefficiency persist. This asymmetry explains why China can pursue long-term, strategic industrial planning with relatively few internal obstacles, while the United States must first contest the very idea of state intervention before it can address questions of effective implementation.
References
- The Big Myth: How American Business Taught Us to Loathe Government and Love the Free Market. Naomi Oreskes and Erik M. Conway. 2023.