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1. Foul Play? On the Scale and Scope of Industrial Subsidies in China

Author:
Frank Bickenbach, Dirk Dohse, Rolf Langhammer, and Wan-Hsin Liu
Publication Date:
04-2024
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
China makes extensive use of subsidies in order to take a leading role on the global markets in the green technology sectors of electric vehicles, wind turbines and railway rolling stock. According to DiPippo et al. (2022) and recent OECD studies, the industrial subsidies in China are at least three to four times or even up to nine times higher than in the major EU and OECD countries. According to a very conservative estimate, industrial subsidies in China amounted to around EUR 221 billion or 1.73% of Chinese GDP in 2019. According to recent data of 2022, direct government subsidies for some of the dominant Chinese manufacturers of green technology products had also increased significantly - the electric car manufacturer BYD alone received EUR 2.1 billion. The authors point out that Chinese companies are benefiting from further support measures, including subsidized inputs, preferential access to critical raw materials, forced technology transfers, the strategic use of public procurement and the preferential treatment of domestic firms in administrative procedures. The authors recommend the EU to use its anti-subsidy proceeding against BEV imports from China to enter into negotiations with the Chinese government and persuade it to abolish public support measures that are particularly harmful to the EU.
Topic:
Globalization, International Trade and Finance, Foreign Direct Investment, European Union, Business, Renewable Energy, Industry, Subsidies, and Electric Vehicles
Political Geography:
China and Europe

2. Doing things differently? Policy after Brexit

Author:
UK in a Changing Europe
Publication Date:
01-2022
Content Type:
Special Report
Institution:
UK in a Changing Europe, King's College London
Abstract:
Brexit is done, but what does it mean? Doing things differently? Policy after Brexit brings together a number experts in their respective fields to investigate how policy and policymaking have changed in a range of sectors. We asked them to consider how changes so far compare to what was promised before Brexit, and to analyse what changes lie ahead and what their impact might be. Their contributions are divided into three sections: first, those policy areas (trade, immigration, agriculture, fisheries and subsidies) where Brexit compelled the UK to put in place alternative policies. Second, those retaining significant amounts of EU law where the government could think seriously about divergence (financial services, procurement, taxation, consumer protection, environmental policy, energy policy and aviation). A final section considers new or emergent sectors in which both the UK and EU are looking to dip their regulatory toes (climate change and net zero, data and digital, autonomous vehicles and bioscience).
Topic:
Agriculture, Immigration, European Union, Regulation, Brexit, Trade, Fishing, Subsidies, and Policymaking
Political Geography:
United Kingdom and Europe

3. Welfare Implications of Electric Bike Subsidies: Evidence from Sweden

Author:
Anders Anderson and Harrison Hong
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Greenhouse gas emissions from U.S. transportation account for about 29 percent of total U.S. greenhouse gas emissions, making it the largest contributor by sector to global warming in the United States. Within the U.S. transportation sector, cars are responsible for 58 percent of all transportation emissions according to the Environmental Protection Agency. Along with electric cars, electric bikes (also known as pedelecs or e‑bikes) are a potentially important tool to address global warming. With rechargeable batteries, they are capable of long distances and hence can replace car trips for work in dense and growing urban areas around the world.
Topic:
Climate Change, Welfare, Transportation, and Subsidies
Political Geography:
Europe and Sweden

4. To Regulate, or Not to Regulate? Subsidies for Foreign Enterprises, Climate Change, and Currency Undervaluation

Author:
Cheon-Kee Lee, Min Ji Kang, and Minjoo Kim
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In response to today’s rapidly changing global trade environment, countries have continued to make changes to their policy objectives and instruments to address new and emerging issues such as supply chain restructuring and reshoring, climate change, and currency undervaluation. To this end subsidies have been playing a particularly important role, and are expected to be used more broadly across different sectors in the coming years. While controversies over government subsidization are likely to continue at the international level, the United States and the European Union have proposed at the domestic level to expand the scope of subsidy regulation and to tighten regulation on newly emerging subsidy types beyond the traditional boundaries set by international trade rules. Among a number of the latest developments on subsidy regulation, this Brief intends to primarily focus on (i) transnational subsidies granted by a government to enterprises active in other foreign countries (“foreign subsidies”); (ii) green subsidies for climate change mitigation; and (iii) subsidies related to currency undervaluation.
Topic:
Climate Change, Business, Currency, Trade, and Subsidies
Political Geography:
Europe, North America, United States of America, and European Union

5. Will industrial and agricultural subsidies ever be reformed?

Author:
Gary Clyde Hufbauer
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Open Sub-navigation BackOpen Sub-navigation Publications Back Policy Briefs Working Papers Books PIIE Briefings Open Sub-navigation Commentary Back Op-Eds Testimonies Speeches and Papers Topics & Regions PIIE Charts What Is Globalization? Educational Resources Open Sub-navigation Back Senior Research Staff Research Analysts Trade Talks Open Sub-navigation Back RealTime Economic Issues Watch Trade & Investment Policy Watch China Economic Watch North Korea: Witness to Transformation 中文 Open Sub-navigation Back All Events Financial Statements Global Connections Global Economic Prospects Stavros Niarchos Foundation Lectures Trade Winds Open Sub-navigation Back News Releases Multimedia Media Center Open Sub-navigation Back Board of Directors Staff Employment Contact Annual Report Transparency Policy POLICY BRIEF VIEW SHARING OPTIONS Will industrial and agricultural subsidies ever be reformed? Gary Clyde Hufbauer (PIIE) Policy Brief21-5 March 2021 Photo Credit: REUTERS/Denis Balibouse One economic argument for government subsidies is that they are necessary to compensate firms and industries for benefits they provide to society at large but cannot capture in the prices they charge for goods or services. For example, subsidies to renewable energy are defended because renewable energy limits carbon emissions. When a major economy subsidizes extensively, however, its trading partners are drawn into the game, with losses all around. As the prisoner’s dilemma suggests, a better outcome would entail mutual restraint. But the goal of mutual restraint is no less difficult in international trade than it is in international arms control. Both the European Union and the US federal system try, in different ways, to regulate industrial subsidies. Hufbauer examines efforts to contain unjustifiable subsidies and proposes modest improvements, bearing in mind that as countries struggle to overcome the global economic downturn resulting from the COVID-19 pandemic, there is little appetite for restoring a free market economy—one in which firms compete with minimum government assistance or regulation. Selective upgrading of the rulebook may nevertheless be possible.
Topic:
Agriculture, Government, Reform, European Union, Regulation, Manufacturing, Industry, COVID-19, and Subsidies
Political Geography:
Europe, North America, and United States of America