HMM: China graft probes stem from anger over failed chip plans.

The investigations have sent shockwaves through a semiconductor industry long accustomed to top-level support. Xi Jinping’s government had allocated more than $100 billion to build up a domestic semiconductor sector so the country could break its dependence on the West. A key area of scrutiny is the National Integrated Circuit Industry Investment Fund — known within the industry as Big Fund — which had become Beijing’s primary vehicle for doling out capital to the country’s chipmakers.

The nation’s top anti-graft agency announced investigations into three more executives who helped manage the Big Fund’s assets on Tuesday, adding it was dispatching a team to the Ministry of Industry and Information Technology. The same regulator was already investigating the minister, Xiao Yaqing — making him the most senior sitting cabinet member to face a disciplinary probe in almost four years.

“If you’re going to be putting tens of billions of dollars in an industry, regardless of whether it’s a high technology one or just like building trains and airports, you’re going to have illicit dealings going on,” said Jordan Schneider, a senior analyst at Rhodium Group and host of the China Talk podcast.

Previously: ‘Japan Inc.’ and Other Tales of Industrial Policy Apocalypse. “Perhaps most notable in this regard was the Japanese government’s own admission that the MITI model had not worked as well as planned. A 2000 report by the Policy Research Institute within Japan’s Ministry of Finance concluded that ‘the Japanese model was not the source of Japanese competitiveness but the cause of our failure.’ MITI was renamed the Ministry of Economy, Trade and Industry at about the same time, and its mission shifted more toward market-oriented reforms.”

Yesterday: Biden Signs CHIPS Act Into Law, Sending $53B to US Chipmakers.

But this time it’ll work for sure.