Three Strategies of State Economic Engagement

China's economic policymaking features three competing strategies regarding the state's role in the economy. The first is the directive strategy, rooted in the Maoist planned economy, where the state allocates resources with specific production targets, such as quantity goals for industries. The second is the developmental strategy, which focuses on incentivizing firms to excel in specific sectors through mechanisms like tax incentives, inspired by successful models from Japan and Korea. The third is the regulatory strategy, where the state functions as a referee, establishing rules and standards to ensure fair competition among firms, emphasizing market efficiency and interoperability.