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Note how the percentages change over time, meaning someone in the government is paying attention and it isn't just on bureaucratic autopilot. This is an active and responsive government industrial policy to replace gasoline vehicles with electric vehicles for strategic reasons.
Right—they'd be better off complaining that "China's industrial policy is really effective at creating competitive technology-driving industry" and then noticing that for some reason Western countries no longer are, and focusing on fixing that instead.
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Dhiraj
@IndustrlPolicy
Subsidies and support exist in various forms in china,not just as direct payments. When China decided that these battery national champions need to grow the teeth,it that made it virtually impossible for non-Chinese cos to sell EV batteries in its market x.com/mmjukic/status…
Indeed. Why would anybody want to subsidize cheap energy and the manufacturing of goods?
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Live Monitor
@amlivemon
West doesnt subsidize energy and inputs to the tune of 100% like China does with its factories.
Clown x.com/mmjukic/status…
“It’s simple to compete with China, guys, just let the government control all your banks and money, completely prevent labor from getting any bargaining leverage, go 110% on manufacturing, and voila. Win.”
There’s a reason decoupling is needed to avoid race to the bottom.
Right, in the West, we famously have banks and money that are totally free of any government control or influence.
It was explained to me by a Chinese national (spy) that the competitive advantage in general is conferred primarily through non-monetary subsidies. Land use/access, free or low cost power, and so on.
Alright. What are the real numbers? What amount of subsidy do you think would be appropriate to rapidly mass-manufacture millions of electric vehicles at unprecedentedly low prices? Are you an anarchocapitalist who thinks all subsidies anywhere are illegitimate?
So what do you believe is the reason they’re considered to be winning then?
Closer to $1.2B per year and that doesn't include subsidized inputs (graphite sells for the price of needlecoke, lepidolite). Also doesn't include in-kind land and power. In an industry with single-digit margins, this is the difference between bankruptcy and profitably
We do do it! Look at how much money Ford has gotten from KY and TN! Job “incentives”.
The US stock market does "unfairly" subsidize companies before they can even make a profit (see: AMZN, TSLA, etc)
Chinese companies aren’t winning. They played a short term game and are now on an endless treadmill of loss until the inevitable apocalyptic crash.
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Michael Pettis
@michaelxpettis
1/8
Reuters: “China's biggest solar firms shed nearly one-third of their workforces last year, company filings show, as one of the industries hand-picked by Beijing to drive economic growth grapples with falling prices and steep losses.”
reuters.com/sustainability
It's not possible to know what subsidies are being paid; most are covert - low rent, land at a discount price, and infinitely more cheats; as recounted in almost nauseating detail in the book "How Asia Works."
Chinese companies are also remarkably easy to trade with these days. That plus better prices makes it hard to ignore
Also the competition is absolutely fierce. Most entrants will die out but the winners will be extremely competitive globally. See BYD in auto
I’ve noticed when people point out all the holes in your initial argument, you then just pivot to “industrial policy works”. You are forgetting that these subsidies have to happen at the expense of the general population. That doesn’t work as well in a democracy.
Other subsidies include technology theft, forced technology transfers, low environmental standards, low labour standards, barriers to imports, currency manipulation, subsidies to other parts of the supply chain, etc.
All Chinese companies are subsidized even the private ones. It’s a web of state-public support. Most large firms even private ones owned by state or local officials thru shadow corps. But that have become the most competitive in terms of output and cost.
Subsidizing an intrinsically inefficient system does not get the results desired.
Focusing on the $800M direct subsidy alone misses the POINT.
CATL’s moat comes from years of coordinated tax breaks, procurement preference, and input subsidies that locked foreign players out until locals reached scale.
By the time the door “reopened,” the market was
Do these numbers include subsidies from local governments? And indirect support, like providing cheap loans?
The 
has a problem of capital waste. "Messy eaters" comes to mind.
That's why in the 
, we manage to do with 1 million € what they do with 10 million $ in the .
Money is a precious tool and should be respected (not worshipped either).
has a problem of capital waste. "Messy eaters" comes to mind.
That's why in the , we manage to do with 1 million € what they do with 10 million $ in the .
Money is a precious tool and should be respected (not worshipped either).
Would we?
What's not shown there is the CCP also picks the winners and losers. So they know their 800M investment is going to pay out.
You honestly want the government to play VC and favorites in a "capitalist" system? Just be honest that you're a fascist.
$800 million to $52 billion is about 15%. So you mean, the Chinese government forgoes 15% sales tax to empower the private company, while the Trump is taking 15% from the companies such as Nvidia and AMD to enrich the government?
Since when does government produce economic
I won't like to used word "unfairly" but Chinese cos are heavily subsidised even if we believe CATL has produced tremendous revenue as per subsidy then I would just they turned out to be winner but it's true that China spends on subsidies the most & surely they would be some
Doesn't seem to incl subsidised credit, which on CSIS own analysis (DePippo et al 2022) is the largest component of Chinese subsidies (if hardest to measure, esp on the firm level). No idea what Catl gets, but if that isn't included I'd be wary of reading too much out of the data
Cracking down on quant funds, thereby reallocating talent to physical economy is probably more significant (no hate to quants but I wonder if making markets slightly more efficient in narrow sense is best use of that talent)
Is this perhaps a pro argument for industrial policy as done in Korea Taiwan and Japan in the past?
Quite noticeable there are more Toyota/Buick/Ford EV taxis and Didi’s, than there are private cars.
Citizenry complains the govt frequently looks out for foreign co’s, are sellouts etc.
Maybe it’s not just supply chain, PRC also wants the healthiest market.
Yeah and see how much Tesla space x and palantir are subsidized with sweetheart contracts
By certain measures, the existing system in the west is more socialist, and China's capitalist
Why don’t we take the lesson that we should subsidize our companies too? We certainly do for energy and agribusiness.
Because they don't have to worry about the next election cycle, they have the capacity to think ahead for more than 2 years.
Chinese government helping startups small or big with subsidy is any of our business why???!!!!! this system clearly works, so why stop doing it?!
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Remember that Tesla, an American company, was given green light to build a mega factory in Shanghai and it was built in 1 year. How much is that 3 years savings "subsidy" worth? Foreign companies benefited too.
If the West wants to be competitive what we need to do is raise taxes and do more green reforms. Do NOT lower taxes and encourage cheap energy.
It's the land, it's the loans, it's the almost certain guarantee the company won't go under, it's the close relationship with the government on every level. Did you just start being a China expert?
They can avoid the heavy R&D costs because they just steal it from coercing Western companies to set up manufacturing shops there.
wtf you think a near 2% subsidy of total revenue isn’t high??? This can’t be a serious post. For a low margin industry that’s an enormous difference.
Many replies below highlighting that this is a strawman, as the subsidies are rarely provided in the form of cash.
Your response to each is to introduce the red herring of whether the US ought to engage in the same strategy.
It’s not that they’re “subsidized”
It’s that they are controlled by the PRC, their books are totally phoney, their labor are slaves, and their materials are adulterated
sure, if "winning" means underperforming the S&P by 300% over the last 20 years
Party sits on every corporate board by law and most of the Chinese economy is now in the hands of state-owned entities
the subsidy is in banning their competitors and letting them pollute air/water
It’s not just that though, there’s a carrot AND a stick element. Doing business in China is extremely hard
Imagine the US gov giving millions in subsidies to Chinese global leaders in battery tech to build factories in the US?
If the US is serious in wanting to rebuild manufacturing in the US, approaching world’s manuf superpower China for help makes sense.
Didnt check. But I suspect the CSIS subsidies numbers include tax breaks. If tax breaks are considered subsidies, US just pass one of the biggest tax reduction bill. 
Hi bro, I’ve lived in China 30 years. CATL’s taxes are near zero or refunded through Party channels—basically a hidden subsidy. China’s corporate tax rate is ~40%, so you might want to recalculate your numbers.
Those crying subsidize just never look at themselves look st the banknin US on last financial crisis. Also check out the subsidies by US on its farmer.
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no we wouldn't lol
american companies won't even invest in themselves and our government has been obsessed with "austerity" for decades
In the US American companies are highly subsidized through low taxation, credits, subsidies, crazy bailouts, trillions are spent subsidizing US companies.
It’s like saying Michale Tyson only eats $100 worth of food everyday. If all that it took, you can do it too.