OECD: Massive Chinese Subsidies Create Unfair Competitive Advantage Over Foreign Firms

Paris, June 1 (CNA) - A report released today by the Organization for Economic Cooperation and Development (OECD) shows that between 2005 and 2024, 15 key Chinese industrial sectors received state subsidies far exceeding those of their foreign competitors, creating an unfair competitive advantage. According to AFP, data from the OECD's Manufacturing Group and Industrial Enterprises (MAGIC) database indicates that these 15 Chinese industrial sectors received $108 billion in state subsidies in 2024 alone. The report states that between 2005 and 2024, "the average government support received by Chinese firms was three to eight times higher than that of firms in the same industry in OECD member countries, and this is a conservative estimate." It added, "These subsidies are also far higher than the support received by firms in non-OECD economies such as Brazil, India, and Indonesia." The OECD stated that its "conservative" estimates are based on publicly available data from 15 leading Chinese firms, each dominating important sectors of the global economy. The report notes that government support includes direct subsidies, tax breaks, and preferential loan rates from banks and state-owned financial institutions, sometimes even lower than benchmark rates. The OECD emphasized, "60% of the growth in global market share of Chinese firms is due to subsidies." The main reason Chinese firms have gained massive global market share in sectors like solar panels, shipbuilding, and steel over the past 20 years is that they received unprecedented state support, not because they outperformed their US or European competitors. Chinese firms supported by state subsidies not only have more capital to invest in new plants but also have more time to reach break-even points and greater flexibility to respond to economic headwinds. However, this has led to overcapacity in some sectors, depressing global product prices and causing losses for other international operators. OECD Secretary-General Mathias Cormann said at a press conference, "Like doping in sports, the risk of subsidies is that they allow less productive players to win unfairly at the expense of better, more innovative, and more efficient firms." He added, "While subsidies help increase market share, they do not significantly drive increases in firm productivity or profitability."