r/china
OECD's Subsidy-Centric Narrative of China’s Emerging Industries Is Increasingly Flawed and Outdated
A CF40 study refutes the OECD's claim, showing China's emerging industries rely less on state subsidies and debt than critics argue.
- China's emerging industries are not especially debt-dependent or reliant on long-term bank credit.
- These sectors receive only a minority share of total government subsidies.
- The majority of new borrowing is actually directed toward old-economy sectors like construction and utilities.
On June 1, 2026, the OECD released a report titled OECD MAGIC Database of Industrial Subsidies. Its central argument is that Chinese firms receive far larger industrial subsidies than those in other economies, concentrated in emerging strategic industries such as solar, semiconductors and wind power.
The report enters an already charged debate. In Europe, the U.S., and other advanced economies, China’s industrial rise is often explained less by efficiency than by state support: subsidies and cheap credit, the argument goes, have allowed less productive Chinese firms to undercut more innovative competitors on price.
But a new study by Zhu He and Guo Kai of the China Finance 40 Forum (CF40) challenges that premise. Based on annual reports from more than 5,300 non-financial A-share listed companies between 2018 and 2025, it finds that China’s emerging industries are not especially debt-dependent, do not rely mainly on long-term bank credit, and receive only a minority share of government subsidies. Much of the new borrowing, instead, has flowed to old-economy sectors such as construction, utilities, and transport.
70% of the companies in China are state owned enterprises, that leaves a rather small chunk left that these men argue don't receive support as the OECD argues. They might be very right, but that doesn't change how a huge chunk does get incentives.
That begs the question as well what sort support are you looking at, only long term bank credit or governmnet subsidie? OECD argues support towards companies goes far beyond cheap credit. Namely tax breaks, cheaper staff, staff support, free IP, market support etc.
(That's if bank credit/government subsidies indeed aren't happening. What about short term but ever rolling credit, credit that isn't called as is happening, local entities that local controlled providing credits etc.)
那么间接补贴呢？ 如何计算中国把各个厂子挨着这么近，物流运输快的隐形补贴。
Most surprising thing is all of OECD calculations on below market borrowing, which makes up the bulk of the alleged subsidies is based on the Loan Prime Rate as a risk-free rate benchmark. The LPR sits well above gov bond yields, compared to US SOFR benchmark, which is roughly in line with gov bond yields as you'd expect with a risk free benchmark.
But a new study by Zhu He and Guo Kai of the China Finance 40 Forum (CF40)
Hmmmmmmmmmmm
Also subsidies are just the tip of the iceberg of market distortion. The complete lack of labor protection for instance allows things to move much, much faster. And the lack of environmental regulations. And also some discriminative policies the China always accuses of Western countries of using.
At some point you'll have to explain how China keeps making more and more high quality, advanced technology products that they export to a global market that they increasingly dominate.
It's already virtually certain that whatever device you're using to read and comment on Reddit, it was either made in China or requires components that were made in China.
If China's market distortions are eventually going to hurt them somehow, when does it kick in, and when do they feel it?
"Hmmmmmmmmmmm"
But people named things like John Smith and Joe Goldberg saying the US doesn't do this is totally fine?
"The complete lack of labor protection for instance allows things to move much, much faster. And the lack of environmental regulations."
However the US rolling back labor protection and environmental regulations doesn't seem to be making our economy go faster.
If you're trying to play the race card then I don't think it's possible for me to convince you.
Sure, China can do nothing wrong, and they're coming to deindustrialize the world and also probably take up quite a few service jobs, and since America bad I think perhaps you can prepare to enjoy unemployment.
This type of whataboutism is regressing to shit slinging.
NOTICE: See below for a copy of the original post by ravenhawk10 in case it is edited or deleted.
On June 1, 2026, the OECD released a report titled OECD MAGIC Database of Industrial Subsidies. Its central argument is that Chinese firms receive far larger industrial subsidies than those in other economies, concentrated in emerging strategic industries such as solar, semiconductors and wind power.
The report enters an already charged debate. In Europe, the U.S., and other advanced economies, China’s industrial rise is often explained less by efficiency than by state support: subsidies and cheap credit, the argument goes, have allowed less productive Chinese firms to undercut more innovative competitors on price.
But a new study by Zhu He and Guo Kai of the China Finance 40 Forum (CF40) challenges that premise. Based on annual reports from more than 5,300 non-financial A-share listed companies between 2018 and 2025, it finds that China’s emerging industries are not especially debt-dependent, do not rely mainly on long-term bank credit, and receive only a minority share of government subsidies. Much of the new borrowing, instead, has flowed to old-economy sectors such as construction, utilities, and transport.
===== ===== =====
WARNING: Users posting and/or commenting on politically charged topics are required to show their post and comment history at all times. Failure to comply will be considered a violation of Rule 2 and result in a permaban.
If you notice someone in violation, please report them by messaging the mods with a link to the post/comment.
I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/China) if you have any questions or concerns.