Are you in the loop? China’s co-evolution dynamics

Abstract This paper presents a co-evolutionary framework for analyzing China’s industrial ascent, focusing on sectors such as 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.