Two Decades of Chinese Industry Subsidies

Shuhui Xiang, Xinran Yin and Yuan Zi

No 20878, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper constructs a new database based on China's WTO subsidy notifications (2001–2022) and provides the first systematic overview of China's industrial subsidies over the past two decades. Five findings emerge. First, subsidies expanded rapidly, but direct fiscal support stabilized around 0.8% of GDP after 2008. Second, China has employed more subsidies than its income level would suggest, with striking policy persistence. Third, subsidies and tax incentives for FDI have declined, while those targeting specific industries and promoting innovation have grown. Fourth, wealthier and more trade-oriented provinces provide more local subsidies. Finally, subsidies are concentrated in a few sectors, and measures based on counts versus values reveal different patterns. These patterns reveal how China’s subsidy strategy has evolved, offering insights to state-led development in the 21st century.

Keywords: Industrial policy; Chinese economy (search for similar items in EconPapers)
JEL-codes: F13 H2 O25 (search for similar items in EconPapers)
Date: 2025-12
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