Are You in the Loop? China’s Co-Evolution Dynamics

Abstract This paper presents a coevolutionary framework to analyze China’s industrial ascent, focusing on sectors like telecommunications (5G), electric vehicles (EVs), and semiconductors. Challenging linear models of technological upgrading, the study examines how state-market interactions, asymmetric feedback loops, and strategic policy interventions generate diverse developmental paths. Empirical analysis using patent authorization data (2000–2023) reveals distinct outcomes: telecommunications exemplify adaptive growth through state-backed innovation; EVs show initial success but risk stagnation due to market saturation and overcapacity; semiconductors highlight structural vulnerabilities amid geopolitical sanctions. Simulations validate the model, demonstrating sector-specific responses to external shocks. This research advances evolutionary economics by integrating endogenous state-market feedback into industrial strategy, emphasizing managed disequilibrium and resilience. JEL Classification: L5 L62 L63 O3