Two Decades of Chinese Industry Subsidies

Shuhui Xiang (), Xinran Yin () and Yuan Zi ()
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Shuhui Xiang: Graduate Institute of International and Development Studies (IHEID), https://www.graduateinstitute.ch/international-economics-presentation
Xinran Yin: Graduate Institute of International and Development Studies (IHEID), https://www.graduateinstitute.ch/international-economics-presentation
Yuan Zi: Graduate Institute of International and Development Studies (IHEID) and CEPR, https://www.graduateinstitute.ch/international-economics-presentation

No 18-2025, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

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 percent 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; Industrial Subsidies; Chinese Economy (search for similar items in EconPapers)
JEL-codes: F13 H2 O25 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2025-12-11
New Economics Papers: this item is included in nep-cna, nep-his, nep-int and nep-tid
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