Semiconductors, aluminium, steel, and shipbuilding finished off the top five recipients of subsidies across the 15 sectors covered in the report.
Global average subsidies as a percentage of company revenue masks significant differences across countries. For example, the average level of support globally to the production of wind turbines is only around one percent of revenue; but subsidies to wind turbine companies based in China have been consistently above two percent of firm revenue over the past 15 years, and above 5 percent in multiple years over that period, according to the OECD. Those numbers may look small, but once again it shows China is at least double the average. Beijing and provincial governments are quite simply throwing more money at their companies than China’s corporate rivals are getting from their home states.
Moreover, while global average subsidies for semiconductors are just over two percent of firm revenue, companies based in China receive subsidies equivalent to nearly 10 percent of their revenue in 2021 and 2022.
Technology-oriented sectors like semiconductors and telecommunications network equipment typically attract a greater proportion of tax concessions. This larger contribution of tax concessions reflects the sector’s reliance on research and development spending, which governments often support through dedicated tax provisions.
Subsidies in the form of tax incentives also reflect a government’s inclination toward offering advanced technology companies incentives in the hope of encouraging innovation which leads to further domestic investment, global market share growth, and technological know-how spillover effects into the broader manufacturing base.
Besides subsidy packages introduced in OECD member countries like the U.S. for semiconductors and renewable energy products, several emerging economies have opted for “tax holidays” or reduced tax rates aimed to entice foreign companies to manufacture or invest there.
The OECD report is largely agnostic on tariffs and protectionism. Instead, it focuses on how industrial subsidies affect competition and market share. The report’s central message is that subsidies, particularly in China, are materially shaping global manufacturing outcomes. Rather than arguing that trade barriers distort markets, the report argues that government support itself can distort markets and influence competitive outcomes, forcing countries that would otherwise be against government support or “picking winners” into taking a more proactive role in the private sector.
The 45-page report stems from empirical database findings using their OECD MAGIC Database. The OECD MAGIC Database – which stands for Manufacturing and Global Industrial Companies Database – is a company-level dataset tracking government support received by 525 major manufacturing companies in 15 industrial sectors in 51 countries between 2005–2024. The database covers subsidies led by direct grants, tax concessions, and below-market financing to assess how government support influences industrial competitiveness and market share.
The report reveals that subsidies appear to explain a meaningful portion of who wins and loses market share globally, with China being the clear winner.
China’s Rise As No. 2 Economic Power Has Created Worldwide Industrial Subsidies Trend
Subsidies across 15 key industrial sectors have reached their highest levels relative to revenue since the 2008-2009 global financial crisis, according to an OECD study published June 1.
According to them, total subsidies accounted for just 1.3 percent of a company’s revenue, on balance, or around $108 billion in 2024. It does not look like a high number in percentage terms, but it was the second highest level of subsidies-to-revenue since the Great Financial Recession of 2009 when countries were pumping money into manufacturing sectors like automotive to keep them afloat.
The main takeaway from the report, which the OECD does not spell out precisely, is that China’s meteoric rise as the No. 2 economic power behind the U.S. has forced other industrial powers to increase subsidies in the form of direct payment grants and tax incentives in order to maintain market share. The OECD report does say that China is the world leader in subsidies. Between 2005 and 2024, the focus years for the study, China companies received an average of three to 8 times more government support than most OECD countries. They said 22 percent of global market share gains by companies that expanded over that time frame can be linked to government support – everything from free land to major tax write-offs. But for China, 60 percent of the companies that expanded all saw an increase in government subsidies.
China’s rise as an industrial powerhouse has not only been aided by Western capital; it’s been helped even more by Beijing and provincial government funding and tax incentives. Industrial countries have to either imitate China’s policies with government backing, much to the disdain of free traders and those on Capitol Hill and K Street who simply argue for a “level playing field.” The other option is containment, a policy Washington is embarking on now.
Key Trends in Industrial Subsidies
The major subsidy instruments – government grants, corporate income tax concessions, and below-market-borrowing (BMB) – have contributed the most to the total industrial subsidies measured by the OECD over the 2005-24 time frame.
Of these three instruments, BMB appears to play a more countercyclical role, having increased in times of crisis or to rescue firms in distress. Many people can argue that this type of support is within bounds. Governments do not want to see major industries falter, as these are the industries that hire the most people at middle income and higher salaries.
On balance, the OECD also noted that many tax concessions require companies to be earning a profit, or produce domestically, for them to receive the benefit. These concessions are usually not doled out across industries, but are targeted.
From a geographical standpoint, industrial firms based in China tend to receive more subsidies relative to their revenues than their competitors based everywhere else. Between 2005 and 2024, Chinese firms received on average three to eight times more government support than firms based in the OECD. These subsidies were also considerably higher than the support received by firms based in non-OECD economies such as Brazil, India, and Indonesia, which were comparable in relative terms to the subsidies received by companies based in North America. In almost all regions, industrial subsidies were higher in 2024 than average over the time period but the main difference between subsidies received by Chinese companies and companies in other countries remained higher for China in 2024.
– OECD MAGIC Database of Industrial Subsidies, June 2026.
Companies from Japan, South Korea, and the United States tend to benefit mainly from tax breaks in relation to R&D, production incentives, and investment in fixed tangible assets. By contrast, companies based in Europe receive more of their support in the form of government grants and, to a lesser extent, BMB.
China companies tend to receive a large proportion of their support in the form of free money and BMB, with the latter being the main source of subsidized capital. China’s greater use of these below market rate loans is made possible by the structure of the country’s financial system, the OECD said, notably the fact that most corporate loans are issued by provincial lenders and policy banks like the China Development Bank or the Export Import Bank of China.
Sector Favorites
The solar industry, led by China, has been the biggest recipient of government support, either through free money or tax incentives.
Semiconductors, aluminium, steel, and shipbuilding finished off the top five recipients of subsidies across the 15 sectors covered in the report.
Global average subsidies as a percentage of company revenue masks significant differences across countries. For example, the average level of support globally to the production of wind turbines is only around one percent of revenue; but subsidies to wind turbine companies based in China have been consistently above two percent of firm revenue over the past 15 years, and above 5 percent in multiple years over that period, according to the OECD. Those numbers may look small, but once again it shows China is at least double the average. Beijing and provincial governments are quite simply throwing more money at their companies than China’s corporate rivals are getting from their home states.
Moreover, while global average subsidies for semiconductors are just over two percent of firm revenue, companies based in China receive subsidies equivalent to nearly 10 percent of their revenue in 2021 and 2022.
Technology-oriented sectors like semiconductors and telecommunications network equipment typically attract a greater proportion of tax concessions. This larger contribution of tax concessions reflects the sector’s reliance on research and development spending, which governments often support through dedicated tax provisions.
Subsidies in the form of tax incentives also reflect a government’s inclination toward offering advanced technology companies incentives in the hope of encouraging innovation which leads to further domestic investment, global market share growth, and technological know-how spillover effects into the broader manufacturing base.
Besides subsidy packages introduced in OECD member countries like the U.S. for semiconductors and renewable energy products, several emerging economies have opted for “tax holidays” or reduced tax rates aimed to entice foreign companies to manufacture or invest there.
The OECD report is largely agnostic on tariffs and protectionism. Instead, it focuses on how industrial subsidies affect competition and market share. The report’s central message is that subsidies, particularly in China, are materially shaping global manufacturing outcomes. Rather than arguing that trade barriers distort markets, the report argues that government support itself can distort markets and influence competitive outcomes, forcing countries that would otherwise be against government support or “picking winners” into taking a more proactive role in the private sector.
The 45-page report stems from empirical database findings using their OECD MAGIC Database. The OECD MAGIC Database – which stands for Manufacturing and Global Industrial Companies Database – is a company-level dataset tracking government support received by 525 major manufacturing companies in 15 industrial sectors in 51 countries between 2005–2024. The database covers subsidies led by direct grants, tax concessions, and below-market financing to assess how government support influences industrial competitiveness and market share.
The report reveals that subsidies appear to explain a meaningful portion of who wins and loses market share globally, with China being the clear winner.
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