Western Governments Unleash 9,500 Subsidies to Counter Chinese Imports as G7 Revives Industrial Policy
Updated
Updated · Financial Times · Jun 17
Western Governments Unleash 9,500 Subsidies to Counter Chinese Imports as G7 Revives Industrial Policy
1 articles · Updated · Financial Times · Jun 17
Summary
More than 9,500 subsidy measures have been rolled out across the EU and US over the past decade as Western governments use state aid, procurement rules and trade protections against cheap Chinese imports.
Recent shocks — from Covid-19 to the wars in Ukraine and the Middle East — strengthened the case for intervention by exposing fragile supply chains and the security risks of dependence on foreign production.
An OECD report found Chinese companies receive up to eight times more state support than rich-world peers, underscoring why Western governments cannot realistically match Beijing across every industry.
EU state aid jumped during the pandemic and remains above pre-Covid levels, highlighting how temporary support can become politically hard to unwind once more sectors claim strategic importance.
The debate is shifting from whether to use industrial policy to where to draw its limits, with policymakers urged to target truly strategic sectors while preserving openness and broader competitiveness reforms.
Is securing supply chains from China worth the inevitable price hikes for Western consumers?
As the West copies China's state-led playbook, can it avoid the economic flaws it is trying to counter?
Will tariffs on Chinese green tech build Western industry or simply delay the world's urgent climate goals?
The West’s $100 Billion Industrial Policy Pivot: Responding to China, Reshaping Global Trade, and Risking Economic Fragmentation
Overview
The Western world is shifting towards active industrial policy as a direct response to China’s state-led economic model, which is seen as causing global economic distortions and vulnerabilities in critical supply chains. Governments are now using subsidies, new laws, and trade defense tools to strengthen domestic industries and secure strategic autonomy. This trend began with the United States’ Inflation Reduction Act in 2022, showing a renewed commitment to industrial support. The move marks a significant change from previous market-neutral approaches, reflecting growing concerns about economic security and the need for resilient supply chains.