(Ecns.cn) – As China's economic influence grows around the world, its trade practices have drawn increased scrutiny from the international community, with frequent complaints usually arising from alleged government subsidies.
Since its entry into the World Trade Organization (WTO) in 2001, China has been the subject of more than 690 anti-dumping and countervailing duty (CVD) investigations, with a trade value of some $40 billion.
In 2010 alone, there were 66 such investigations against China, with the amount of trade volume involved hitting an historic high of $7.14 billion, according to statistics released by the Ministry of Commerce.
Many claim that foreign countries are taking discriminatory measures against Chinese goods, yet the probes have been concentrated mostly on the issue of government subsidies, which warrant a closer look.
Government money for state-run enterprises
In China, there is a running joke that the success of state-owned enterprises has much to do with preferential policies and government subsidies. All kidding aside, the fact is that over 90 percent of China's listed companies get financial support from the government, and those that enjoy the most subsidies are mainly state-owned enterprises (SOEs).
According to an auditing report released by the Chinese Institute of Certified Public Accountants (CICPA), 1,454 of the 1,570 listed companies received government subsidies in 2010, bringing the subsidized rate to 92.61 percent with a total sum of 46.44 billion yuan ($7.18 billion) involved.
In recent years, the government has noticeably broadened its subsidized coverage, but SOEs still get more support than private enterprises.
On the ranking list of the amount of subsidies that listed companies received in the first three quarters of 2011, six of the top ten were SOEs, including China National Petroleum Corporation, Air China, Eastern Air Lines, China Southern Airlines, China Metallurgical Group Corporation, and Beijing Gehua Cable and Television Corporation.
The company that topped the list was not an SOE, however, but a private firm called Sanan Electronics, the largest base for UHB-LED (Ultra-High Brightness Light Emitting Diode) Wafer and LED Chip industrialization in China. In the first three quarters of 2011, Sanan Electronics received 598 million yuan ($92.5 million) in government subsidies for its technological innovations.
