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.
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.
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?
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.)
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.