Chinese Journal of European Studies

The diversified capitalism models have distinctive political structures, which restricts the path choice of knowledge economy transformation. As far as the transformation of knowledge economy is concerned, neither Sweden nor Germany copies the Silicon Valley model of American liberal capitalism. The transition trajectories of Sweden and Germany have witnessed the continuity of coordinated capitalism, which at the same time have shown significant differences due to different political coalitions. Sweden has achieved a radical industrial structure upgrading of its information and communication technology. The key to Sweden's success is the establishment of a tripartite political coalition composed of the government, employers and trade unions. The transformation of knowledge economy in Germany is comparatively conservative due to the powerful cross-class coalitions in specific industries, and both employers and employees lack the willingness to enter new industries. Therefore, the digital upgrade in Germany is only limited to defending the existing high-quality manufacturing advantages.