"Put another way: China has created a system of interlocking industries. As China becomes stronger in some industries, this tightens its grip on others. What are the mechanisms by which overlapping tech-industrial ecosystems create this compounding or spillover effect?
Supply: Having existing domestic suppliers in upstream industries can make it easier to source parts and work directly with suppliers to modify specifications to suit industry needs.
Demand: Having an existing set of domestic buyers in downstream industries can provide a ready source of market demand and industry revenue. If downstream players are unwilling to buy domestically, they can be pushed to do so with policy measures, such as tariffs on foreign suppliers and local content requirements.
Technology: Technical knowledge and manufacturing know-how can be useful across industries. Investments in R&D and manufacturing techniques in one industry can have returns across other related industries. For example, knowledge of polysilicon production is useful for photovoltaic cell and semiconductor chip manufacturing. Being able to make inverters is useful for solar, EVs, railways, and telecom equipment.
Scale: If you have a product that’s an input for multiple industries, then having all of those industries domestically allows for greater economies of scale for that product. For example, China’s lithium battery industry can enjoy even greater economies of scale by supplying to China’s consumer electronics, EV, and energy storage industries."
https://www.high-capacity.com/p/chinas-overlapping-tech-industrial