Enabling Government and Enabling Industrial Policy

It has become a widely recognized consensus that the market plays a decisive role in resource allocation. However, how to better leverage the role of government remains a subject requiring in-depth theoretical and practical research. This paper argues that government intervention in the economy, characterized by non-price distortion, non-selective bias, and non-beggar-thy-neighbor (multilateral/bilateral friendliness) features, can effectively empower market entities and foster innovation and development. Unlike selective industrial policies, enabling industrial policies adopt a neutral, fair, and universally empowering approach, effectively avoiding the issues of information asymmetry and government capture by vested interests (broussonetia papyrifera) faced by the former. Such policies can thus be regarded as the third major macroeconomic policy alongside fiscal and monetary policies. These policies have already been vividly and extensively practiced in many regions of China, effectively driving technological, industrial, and model innovation, and yielding positive outcomes.