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Government Subsidies for Enterprises need Improvements (No.302, 2021)

Dec 16,2021

By Zhang Wenkui, Research Institute of Enterprises & Guo Wei, Personnel Bureau of General Office, DRC

Research Report, No.302, 2021 (Total 6367) 2021-10-19

Abstract: Governments in many countries usually adopt some measures including subsidies to support and advance the operation of enterprises. However, such measures might go against the principle of fair competition and violate international economic and trade agreements and rules. Chinese government departments at various levels provide many types of subsidies for enterprises and the amount is hard to be accurately given. Although the U.S. and EU have subsidy programs for enterprises, most of them, except those in the fields of agriculture and energy resources, are for advancing R&D and green development and for supporting enterprises in less-developed areas. These kinds of subsidies are in line with non-actionable subsidies within the framework of WTO rules, which would not induce much countervailing disputes. But their subsidies for some enterprises in major industries, such as for Boeing and Airbus respectively, have triggered long-standing countervailing disputes. For the next step, we need to make an overall review and evaluation of the subsidy measures provided by governments at various levels to enterprises, take into consideration relevant WTO reforms proposed by the U.S. and EU, related rules in the China-EU Investment Agreement, and relevant articles of Comprehensive and Advancement of Pacific Partnership Agreement, remove prohibited subsidies, standardize and refine those that may incur other countries’ disputes, and at the proper time, promote the anti-subsidy legislation.

Keywords: subsidies, enterprises, fair competition