A year ago, China's light-emitting diode industry seemed like a case study of industrial policy gone awry. Hundreds of factories built all over eastern China, often with lavish clean energy subsidies from state-owned banks and local governments, were operating at half capacity. The share prices of LED manufacturers were plunging. Now demand is surging, and the Chinese manufacturers suddenly find their factories running at full tilt, churning out LEDs faster and cheaper than global rivals.

Huawei, the Chinese telecom equipment maker that has been blocked from the U.S. market because of concerns about its alleged ties to China's government, is now pushing for global cybersecurity standards.