Bavarian Industry Association (vbw—Vereinigung der Bayerischen Wirtschaft e. V.)
2022
Available data suggest that Chinese companies enjoy an unfair competitive advantage abroad due to its government’s subsidies. The Vereinigung der Bayerischen Wirtschaft (Bavarian Business Association, vbw) asked Prognos to find out how Chinese companies are currently doing on the world market, how they will do so in the future, and how Chinese subsidies affect German companies.
The Chinese government has been supporting domestic companies for years with subsidies such as direct financial aid, tax breaks, favorable loans or state funds. The amount of these subsidies distort global competition. As a result, Chinese companies enjoy a competitive advantage on the world market.
This is particularly problematic for German companies who rely to a great extent on exports. Their products become less competitive, Germany as a business location is weakened.
To illustrate this, we examined three sectors: medical equipment, transformation and transmission equipment and integrated circuits . For each sector, we examined the potential effects of China’s so-called Made in China 2025 strategy (MIC 2025) on Germany.
Our data show that China subsidizes its companies significantly more than its international competitors – especially in comparison to Germany and Europe. As a result, the companies do not compete on a level playing field. We see the following policy options on a European level:
On the website of the vbw you will find:
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Project team: Jakob Ambros, Dr Michael Böhmer, Philipp Kreuzer, Hannah Staab, Johann Weiß, Eva Willer
Last update: 12.1.2023
Managing Partner | Chief Economist
Senior Project Manager
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