Chinese industrial firms received three to eight times more subsidies than rivals, with state support driving 60% of their global market share gains, a new OECD report shows.
Back
OECD finds Chinese subsidies drove 60% of market share gains
Chinese industrial firms received three to eight times more subsidies than rivals, with state support driving 60% of their global market share gains, a new OECD report shows.
Government subsidies fueled 60% of Chinese companies' global market share gains over the past two decades, with firms in China receiving three to eight times more state support than competitors in OECD countries, the Paris-based research body said Monday.
"Large and persistent industrial subsidies can distort global markets, creating unfair competitive advantages and contributing to excess supply capacity," Mathias Cormann, OECD secretary-general, said.
Total subsidies across 15 key industrial sectors reached 1.3% of firm revenue, or $108 billion, in 2024 — the second-highest level relative to revenue on record. The peak in 2009 resulted from a drop in sales during the global financial crisis that pushed up the subsidy-to-revenue ratio, with the spike in below-market borrowings largely explained by the financial rescue of large OECD carmakers. The OECD's new Manufacturing Groups and Industrial Corporations database tracked subsidies received by 525 of the world's largest industrial firms between 2005 and 2024, covering government grants, tax concessions and below-market finance.
The findings come as tensions between the European Union and China escalate over a widening trade deficit, with the bloc's traditional strengths in automotive manufacturing facing fierce competition from Chinese-made electric vehicles. The report will feed into discussions at the OECD Ministerial Council Meeting starting June 3 under the theme of getting industrial policies right for open markets, growth and prosperity.
The OECD's firm-level approach distinguishes its analysis from studies based on government subsidy announcements, which can be misleading. By tracking what companies actually received, the database captures support provided at subnational levels — including city, county and state governments — and in economies where public reporting is limited. The data shows that while subsidies boosted market share, they did not translate into significant gains in productivity or profitability for recipient firms.
Renewable energy equipment, semiconductors and heavy industries were among the most subsidized sectors covered by the database. Between 2005 and 2024, production of solar photovoltaic panels, semiconductors, aluminum, steel and shipbuilding received the highest levels of support relative to firms' sales revenue. Companies with significant state ownership — above 25% — received substantially more support than private competitors, especially through grants and below-market borrowings, the OECD said. This stems partly from the fact that these companies are often found in heavy industries characterized by more debt financing and below-market borrowings, and in China.
Lack of transparency remains a key challenge for understanding the full scale of industrial subsidies globally, the OECD said. Unlike approaches based on government disclosures, the MAGIC database tracks subsidies actually received by firms, allowing it to measure support provided at subnational levels and in economies where public reporting is limited.
For the EU, a key area of concern is the automotive industry, a traditional strength facing fierce competition from Chinese-made electric vehicles. The report provides evidence that subsidies — rather than pure competitive advantage — have driven a significant portion of China's export expansion, potentially strengthening the case for retaliatory trade measures from Washington and Brussels. Around 22% of global market share gains by all expanding firms over the past two decades could be linked to subsidies, rising to 60% for Chinese firms, the OECD found. The database and report will contribute to discussions at the OECD Ministerial Council Meeting, where member countries will examine how to address subsidy-driven market distortions while preserving the benefits of open markets and rules-based trade.
This article is for informational purposes only and does not constitute investment advice.
