Governments often have plans that fail abjectly. China’s track record in spurring production of cutting-edge chips was far from impressive. Yet the tools China could bring to bear—vast government subsidies, state-backed theft of trade secrets, and the ability to use access to the world’s second-largest consumer market to force foreign firms to follow its writ—gave Beijing unparalleled power to shape the future of the chip industry. If any country could pull off such an ambitious transformation of trade flows, it was China. Many countries in the region thought Beijing might succeed.
