9mo ago

China funneling billions into BYD to crush European and U.S. competitors, study says

www.ifw-kiel.de /publications/foul-play-on-the-scale-and-scope-of-industrial-subsidies-in-china-32738

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.

50 comments

What is sad is the US also funnels billions into the auto industry but we don't even get affordable prices for our investment, let alone prices that would crush foreign competition.
- US companies probably use those subsidies to raise executive pay & bonuses
  
  hydroptic@sopuli.xyz
  US companies probably use those subsidies to raise executive pay & bonuses
  In that regard the U.S. system is very much the same as China's, but that aside there are major important differences.
  [Edit typo.]
- In the US, people working in the auto industry are largely unionized and getting pretty decent pay and benefits too. The US also has pretty strict safety standards that require planning and testing that cost a ton of time and money.
  
  Thanks to the recent strikes we all know what a small percentage of their revenue goes to the workers. They are also why banning Chinese imports has validity. But lack of competition leads to 7 year car loans.
  
  And they use that to get people to think it's ok for the prices and even defend them, despite record profits across the industry.
- But a large percentage of those billions goes into billionaire pockets and much of that is then spent on campaign contributions and lobbying, thus completing the cycle of laundering our tax money.
  We are food for the rich.
- This. And the same applies to Germany where the study originates.
- Because that's not an investment, it's a donation.
- Won't anybody think of the poor shareholders?
- Why would they need to crush foreign competition? Biden already revoked the subsidies for them. And in unrelated news Ford and GM decided American EVs can just be bad.

i don't love china but "we must stop them from checks notes subsidizing green energy" is bizarre
- Yes – the answer should be our own green energy campaign.
  
  But we can't afford that. We somehow need to subsidize fossil energies after all, because of the economy!
  /s obviously
  
  Why can't our own green energy campaign be additive instead of combative with other initiatives?
- 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?
- Cars are not "green energy".

Every country subsidizes their own auto industry. Every single one of them.
- Ssssshhhhhh!!! We're having a circlejerk here!
- Most countries don't allow slave labor throughout their supply chain.
  Teslas built in China for China can't match the costs per unit of BYD. The Chinese government is playing king maker to an absurd degree.
  
  Uhm, the United States, with 13th amendment?

So isn't this similar to the US Chips act.... Funnel billions into an industry that the country sees as nationally important.
Doesn't the EU do this with its farm subsidies? Ensuring Europe can feed itself if it needs to...
- But what about times two.

What a major embarassment for EU. China benefitting the climate by getting fossil fuels off the roads. And EU throwing a tantrum to try and stop them.
- There are some comments like this, suggesting that the commentators didn't even click the link.
  
  China is investing government money into electric car companies so they can produce more of them for cheaper. this gives them a competitive edge against electric car companies in EU that arent being bolstered by government subsidies. The EU has two options: one, the environmental option, they compete by subsidizing their own car companies to produce electric vehicles, which would accelerate the effort to stop relying on fossil fuels and reduce emissions by having two regional markets focused on vehicle electrification. Or two, the capitalism option, they compete by pressuring China to drop their subsidies, which would slow down efforts to stop relying on fossil fuels as neither regional market is focused on vehicle electrification.
  from your article, "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."
  ensuring we stay on track for the absolute worst timeline for humanity.
- Best of luck: this person uses their 0x815fedditde and tardigradabeehaworg accounts to post anti-China articles like it’s their day job. Worse, really, as they do it on the weekends, too.

220M, a fraction of what we spend on “defense” or give to Israel annually

Terrible, will probably have a big impact on super yachts sales as well.

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