Foul Play? On the Scale and Scope of Industrial Subsidies in China
www.ifw-kiel.de
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.

Study download (pdf)

Chinese leading electric car manufacturer BYD received direct state subsidies of approximately EUR 220 million in 2020, rising to EUR 2.1 billion in 2022. In terms of business revenues, direct subsidies increased from 1.1 percent in 2020 to 3.5 percent in 2022. This is the result of an investigaton by Germany’s Kiel Institute For The World Economy.

Additionally, BYD receives significantly more purchase premiums for electric cars in China compared to other domestic manufacturers like GAC or foreign companies producing locally, such as Tesla or VW’s joint ventures, the study says.

However, the figures clearly understate the true scale and scope of green technology subsidies in China, ss BYD also benefits from subsidies to battery producers through lower input prices, as well as subsidies to buyers of battery electric vehicles, thus stimulating demand.

China’s massive state subsidies are not limited to EV cars. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019.

The authors urge the European Union to engage in negotiations with the Beijing government amidst the recently initiated anti-subsidy proceeding against imports of electric vehicles from China, aiming to persuade China to withdraw subsidies particularly harmful to the EU. Given China’s current macroeconomic weakness, its relative strength in green technology sectors, and its tensions with the US, the authors see a realistic chance of successful negotiations.

Next week, German chancellor is visiting China, accompanied by an induszry delegation.

  • Match!!@pawb.socialEnglish
    0·
    3 months ago

    i don’t love china but “we must stop them from checks notes subsidizing green energy” is bizarre

    • federalreverse-old@feddit.deEnglish
      1·
      3 months ago

      China is trying to build hegemonial economic power, with Chinese products being an integral component of every future supply chain. Green technologies are an excellent vehicle for that, because they’re fairly future-proof and will see extreme growth.

      But sure, the EU needs an equivalent to the US’s IRA if it wants to have any industry or political/economic independence going forward.

      • msage@programming.devEnglish
        0·
        2 months ago

        I’m sorry, I’m afraid that has already happened?

        What exactly is being manufactured outside China? How many items in your household are not from China?

        • federalreverse-old@feddit.deEnglish
          2·
          2 months ago

          China owns a lot of manufacturing capacity for basically everything already, correct. However, in most of these industries there are alternative supply chains, often a bit more expensive and a lot lower-capacity. But if in the future, China is the only country that can produce certain goods at all because e.g. they have the only scientists who know their way around a certain technology, then that’s a different situation still.

          (Also, quite a few things here are not made in China, including recent buys. That list excludes most electronics though, I give you that.)

          • msage@programming.devEnglish
            1·
            2 months ago

            I mean the price was the only reason it all moved there. I will always support any movement that would change that.

            But I can’t help but feel that the only blame is on the capital leaders, who did that. China is just doing what they get paid to do, and we collectively give them the money.

      • hark@lemmy.worldEnglish
        01·
        2 months ago

        Why can’t our own green energy campaign be additive instead of combative with other initiatives?

  • Blackout@kbin.run
    0·
    3 months ago

    What is sad is the US also funnels billions into the auto industry but we don’t even get affordable prices for our investment, let alone prices that would crush foreign competition.

    • protist@mander.xyzEnglish
      1·
      3 months ago

      In the US, people working in the auto industry are largely unionized and getting pretty decent pay and benefits too. The US also has pretty strict safety standards that require planning and testing that cost a ton of time and money.

      • Blackout@kbin.run
        1·
        3 months ago

        Thanks to the recent strikes we all know what a small percentage of their revenue goes to the workers. They are also why banning Chinese imports has validity. But lack of competition leads to 7 year car loans.

    • hydroptic@sopuli.xyzEnglish
      02·
      3 months ago

      US companies probably use those subsidies to raise executive pay & bonuses

  • blazera@lemmy.worldEnglish
    01·
    3 months ago

    What a major embarassment for EU. China benefitting the climate by getting fossil fuels off the roads. And EU throwing a tantrum to try and stop them.

    • 0x815@feddit.deOPEnglish
      1·
      3 months ago

      There are some comments like this, suggesting that the commentators didn’t even click the link.

      • blazera@lemmy.worldEnglish
        0·
        3 months ago

        China is investing government money into electric car companies so they can produce more of them for cheaper. this gives them a competitive edge against electric car companies in EU that arent being bolstered by government subsidies. The EU has two options: one, the environmental option, they compete by subsidizing their own car companies to produce electric vehicles, which would accelerate the effort to stop relying on fossil fuels and reduce emissions by having two regional markets focused on vehicle electrification. Or two, the capitalism option, they compete by pressuring China to drop their subsidies, which would slow down efforts to stop relying on fossil fuels as neither regional market is focused on vehicle electrification.

        from your article, “The authors urge the European Union to engage in negotiations with the Beijing government amidst the recently initiated anti-subsidy proceeding against imports of electric vehicles from China, aiming to persuade China to withdraw subsidies particularly harmful to the EU.”

        ensuring we stay on track for the absolute worst timeline for humanity.

        • 0x815@feddit.deOPEnglish
          1·
          3 months ago

          @blazera@lemmy.world

          China is investing government money into electric car companies so that they can produce more if them cheaper …

          Your positive framing of China’s economic policy is completley out of touch. It really helps to read more than a few lines of a post. The negative consequences of Chinese subsidies are obvious in tbe country’s domestic market, and there’s no reason to copy that for the world.

          China’s EV price war is killing brands and infuriating consumers

          China’s EV market has slowed down as consumers cut spending in a post-pandemic economy.

          Brands are fighting a fierce price war in a crowded industry, leading to fast depreciation of electric cars.

          Some startups are on the brink of collapse, leaving software maintenance in limbo.

          And this is just one example. Read the study, find more research, tere is a lot.of it.

    • diplodocus@lemmy.sdf.orgEnglish
      01·
      2 months ago

      Best of luck: this person uses their @0x815@feddit.de and @tardigrada@beehaw.org accounts to post anti-China articles like it’s their day job. Worse, really, as they do it on the weekends, too.