Competition-compatiblity,Comparative Advantage-Conformity And China’s Industrial Poicies Design

China has been persuing quantities of industrial policies actively for a long time.Since the recent financial crisis,a tide of industrial policies aiming at reforming traditional industries and fo-stering strategic emerging industries has been going on worldwide. Although industrial policies has been widely adopted.we lack systematic theories to guide policy practices.This study tried to answer how to "Choose target industries"and"Design policy mode" con-cerning industrial policies. We firstly modified and developed Aghions model to study how market competition and the feature of "competition-compatiblity"of industrial policies would influence p-olicy effect.We also refined theories of New Structural Economics.aiming at clarifying the relati-onship between industrial policies and comparative advantage.In empirical part,we choose China’s industrial enterprises in2007as sample,took subsidy as example to test our hypotheses.The main conclusions were as follows:(1)The relationship between market competition and productivity was an inverted-U model, not linear as other researches argued.This relationship could be explained by the relative strength of Promot innovation"effect and"Escape competition"effect of market competition.So modest co-mpetition should be a criterion when choosing target industries.The suggestion here was different from Aghion’s.(2) The relationship between industrial policies and comparative advantage was li-ke this.If industrial policies conformed to comparative advantage.the effectwas the most desirable; As industrial policies went against comparative advantage.the effect weekended.(3) The feature of "competition-compatiblity"of industrial policies included two aspects:"Improving the degree of e-veness of subsidy" and "Expanding the cover of subsidy", which could both improve policy effect significantly as an Pareto improvement.The latter aspect was our development based on Aghion’s research and the strong conclusion here was of much guiding significance for policymakers.Based on all the conclusions above.we proposed new ideas and measures for China’s industrial policies design.