Abstract: Premised upon the contents of the National“Tenth Five-Year Plan”and the information related to the industrial development in the “Eleventh Five-Year Plan”, together with the data of China’s industrial enterprises during the period of 2001-2010 and the custom’s trade data, this paper conducts an empirical analysis of the micro-level effects of China’s industrial policy on the upgrading of enterprise value chain. The findings show that there exists a significant positive correlation between the industrial policy support and the upgrading of enterprise value chain. In addition, the grouping regression based on the characteristics of enterprises indicates that the above positive correlation can be more evident among the samples of private enterprises. This positive effect, however, mainly derives from the hard-constrained areas which have strictly implemented the industrial policies, whereas at the soft-constrained areas of policy implementation, the actual level of enterprise value chain has not improved considerably. The promotion effect of industrial policy on the upgrading of enterprise value chain is generally realized through the credit mechanism and the market competition mechanism, especially the latter. On the other hand, the promotion effect of financial subsidies and tax relief mechanism on the upgrading of enterprise value chain is not significant.

Key words: industrial policy, enterprise value chain positioning, credit mechanism, fiscal means, market competition