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Foul play? On the scale and scope of industrial subsidies in China

Author

Listed:
  • Bickenbach, Frank
  • Dohse, Dirk
  • Langhammer, Rolf J.
  • Liu, Wan-hsin

Abstract

China makes extensive use of subsidies in order to take a leading role on the global markets in the green technology sectors of electric vehicles, wind turbines and railway rolling stock. According to DiPippo et al. (2022) and recent OECD studies, the industrial subsidies in China are at least three to four times or even up to nine times higher than in the major EU and OECD countries. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019. According to recent data of 2022, direct government subsidies for some of the dominant Chinese manufacturers of green technology products had also increased significantly - the electric car manufacturer BYD alone received EUR 2.1 billion. The authors point out that Chinese companies are benefiting from further support measures, including subsidized inputs, preferential access to critical raw materials, forced technology transfers, the strategic use of public procurement and the preferential treatment of domestic firms in administrative procedures. The authors recommend the EU to use its anti-subsidy proceeding against BEV imports from China to enter into negotiations with the Chinese government and persuade it to abolish public support measures that are particularly harmful to the EU.

Suggested Citation

  • Bickenbach, Frank & Dohse, Dirk & Langhammer, Rolf J. & Liu, Wan-hsin, 2024. "Foul play? On the scale and scope of industrial subsidies in China," Kiel Policy Brief 173, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkpb:289609
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    References listed on IDEAS

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    1. François Chimits, 2023. "What Do We Know About Chinese Industrial Subsidies?," CEPII Policy Brief 2023-42, CEPII research center.
    2. Zhang, Tong & Burke, Paul J. & Wang, Qi, 2024. "Effectiveness of electric vehicle subsidies in China: A three-dimensional panel study," Resource and Energy Economics, Elsevier, vol. 76(C).
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    Cited by:

    1. Wolf André, 2024. "Resilienzauktionen für Nullemissionstechnologien," Wirtschaftsdienst, Sciendo, vol. 104(12), pages 843-848.
    2. Demertzis Maria, 2024. "Trade at the Heart of the EU’s Economic Security," Intereconomics: Review of European Economic Policy, Sciendo, vol. 59(6), pages 313-318.
    3. Marek Dabrowski, 2024. "The Risk of Protectionism: What Can Be Lost?," JRFM, MDPI, vol. 17(8), pages 1-24, August.

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