The Explosive Rise of Subsidies to Chinese Industry

The Explosive Rise of Subsidies to Chinese Industry
How China's Mercantilism Hurts the Global Economy

In their book Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy, authors Usha and George Haley argue that a vast system of subsidies to Chinese industries plays a more important role in their mercantilist policy than currency manipulation. The authors argue that this strategy largely results from a particular view of success: technology acquisition provides a key goal in operations, even at the expense of profits. But another possible explanation is China’s “shift strategy,” where growth is said to occur by shifting from low-productivity industries to high-productivity ones. Why does it matter? Chinese mercantilism has not only cost the US a significant share of manufacturing job loss, but also has distorted the global location of and nature of production systems. The only real solution to the problem of Chinese mercantilism and massive industrial subsidies in particular, is for the world trading community to say enough is enough.
by Robert Atkinsonhttp://thebreakthrough.org/index.php/programs/economic-growth/the-explosive-rise-of-subsidies-to-chinese-industry/