According to some sources, China has charted out a $300 billion plan to become nearly self-sufficient by 2025 in a range of important industries, from planes to computer chips to electric cars as it looks to kick-start its next stage of economic development.
This so-called “Made in China 2025” program would provide large, low-interest loans from state-owned investment funds and development banks; assistance in buying foreign competitors; and extensive research subsidies, all with the goal of making China largely self-sufficient in the targeted industries.
This reminds me of the “industrial policy” used by South Korea and Japan four or five decades ago where there were no WTO nor SCM Agreements. I wonder how China intends to reconcile all the tools it intends to use in its implementation of the “Made in China 2025” program with its SCM obligations, especially that it now claims that it is a market economy.
Let us recall that Under Section 15 of its WTO Accession Protocol, China agreed to notify to the WTO any subsidy within the meaning of Article 1 of the SCM Agreement, granted or maintained in its territory, organised by specific product, including prohibited subsidies defined in Article 3 of the SCM Agreement.
Does China intend only to avoid granting flagrant prohibited subsidies, namely export and import substitution subsidies?Then hoping to buy time for actionable subsidies until they produce their adverse effects?