The OECD MAGIC Database of Industrial Subsidies assesses the actual support received by firms (as opposed to government disclosures), focusing on 525 of the largest global manufacturers across 15 key sectors during 2005-2024, utilizing three methods: grants, income-tax concessions, and below-market borrowings (affordable loans from state banks).
“During the period from 2005 to 2024, Chinese firms received, on average, three to eight times more in government support than firms in OECD countries, a conservative estimate. These subsidies were also significantly higher than those received by firms in non-OECD countries like Brazil, India, and Indonesia,” the report indicated.
This disparity is a crucial factor contributing to China’s manufacturing competitiveness.
The OECD is an intergovernmental organization composed of 38 mostly advanced economies that aims to foster economic growth, trade, investment, and policy alignment among its member states. Notable members include the US, the UK, Canada, Germany, France, Italy, Japan, South Korea, and Australia.
The report further noted that approximately 22% of the global market share increases observed in firms that expanded between 2005 and 2023 can be attributed to the subsidies they received.
For Chinese firms, nearly 60% of their global market share growth can be explained by these subsidies, it stated.
Additionally, the number of World Trade Organization members failing to report subsidies increased from 26 in 1995 to 117 by 2025, rising from 23% to 70%, thereby undermining trust in global markets, it mentioned.
India also plays a significant role in several key sectors, including steel, cement, fertilizers, heavy machinery, and glass/ceramics.
(Edited by : Priyanka Deshpande)
