To circumvent a state-controlled banking system that favored SOEs, private Chinese automakers sought capital abroad. Brilliance Auto's 1992 IPO on the NYSE, which raised $70 million, occurred five years before even tech giant TSMC went public overseas.

Contrary to common belief, China's EV dominance wasn't a top-down mandate. It grew from a mix of entrepreneurs and local officials using personal connections (guanxi) to circumvent regulations and state-owned enterprises, leveraging private and foreign capital.

Unlike the U.S. government's recent strategy of backing single "champions" like Intel, China's successful industrial policy in sectors like EVs involves funding numerous competing companies. This state-fostered domestic competition is a key driver of their rapid innovation and market dominance.

The city of Wuhu, frustrated by the arrogance of state-owned auto giant FAW, used windfall funds to independently buy an engine assembly line from the UK. This allowed them to launch their own car company, Chery, completely bypassing the established SOE system.

China's government designates strategic industries, and provinces subsidize local firms to become national champions. This hyper-competition, while creating overcapacity and unprofitability, forces surviving companies to become technologically superior and globally competitive. The state then helps the winners consolidate and scale.

China's 'Big Fund' was managed regionally, sparking competition between provinces to build their own chemical supply chains for materials like NF3. This parallel development, driven by local ambition rather than central planning, resulted in massive overcapacity that is now reshaping the global market.

China's government sets top-down priorities like dominating EVs. This directive then cascades to provinces and prefectures, which act as hundreds of competing, state-backed venture capital funds, allocating capital and talent to achieve the national strategic goal in a decentralized but aligned way.

Contrary to the view of a monolithic state, China's economic strength comes from intense competition between its provinces. This hyper-local market forces companies to become incredibly resilient, and only the strongest, like BYD, survive to dominate globally.

China uses a systematic four-step process to dominate industries. First, it subsidizes over 100 entrants. Second, it allows intense domestic competition to find the strongest. Third, it consolidates all subsidized manufacturing capacity under the few winners for free. Finally, it unleashes these champions to conquer global markets.