New Book Announcement: Description, Features, Review from US Solar Industry

Subsidies to Chinese Industry:  State Capitalism, Business Strategy and Trade Policy by Usha C. V. Haley and George T. Haley, forthcoming Oxford University Press, USA, February 2013.

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How did China move so swiftly in capital-intensive industries without labor-cost or scale advantage from bit player to the largest manufacturer and exporter in the world? This book argues that subsidies contributed significantly to China's success. Industrial subsidies in key Chinese manufacturing industries may exceed thirty percent of industrial output. Economic theories have mostly portrayed subsidies as distortive, inefficiently reallocating resources according to non-market criteria. However, China's state-capitalist regime uses subsidies to promote the governments' and the Communist Party of China's interests. Rather than aberrations, subsidies help Chinese businesses and governments produce, stabilize and create common understandings of markets; the flows of capital reflect struggles between critical Chinese actors including central and provincial governments. Concepts of state capitalism including market-transition theory, the multi-organizational Chinese state, and state as paramount shareholder, create complex and relevant understandings of Chinese subsidies. The authors develop independent measures of industrial subsidies using publicly-reported data at firm and industry levels from governmental and private sources. Subsidies include free to low-cost loans, subsidies to energy (coal, electricity, natural gas, heavy oil) and to key inputs, land and technology. Four sequential studies identify the growth of subsidies to Chinese manufacturing over time and effects on world industry: steel (2000-2007), glass (2004-2008), paper (2002-2009) and auto parts (2001-2011). Subsidies to Chinese industry affect and are affected by business strategy and trade policy. Business strategies include lobbying for subsidies and for protection from subsidized foreign competitors and managing supply chains to guard against whiplash effects of uncoordinated subsidies. The subsidized solar industry highlights how global business strategies and decisions on production location and technology development respond to production or consumption subsidies and include market (competitive) and non-market (political) strategies. The book also covers government policies and regulation on subsidies broadly focusing on domestic consumption (antidumping and countervailing duties) and domestic production (indigenous innovation).


·        We use our understandings of state capitalism and imperfect markets to provide a theoretically complex and relevant explanation for industrial subsidies that in key Chinese manufacturing industries appear in dollar terms to exceed over thirty percent of industrial output.

·        We develop independent measures of industrial subsidies using publicly-reported data at company and industrial levels and from diverse sources

·        We extend other theories on business and strategic groups' responses to trade policy, including subsidies, by examining generic market (competitive) and non-market (political) strategies that businesses may undertake.

·        Over the last five years, research in this book on several industries including steel, glass, paper, auto parts and solar has supported regulation and business strategy both in the United States and the European Union


From Gordon Brinser, President, SolarWorld Industries America Inc., Hillsboro, Ore:

“This richly researched book provides a much-needed foundation for grasping the serious and growing threat posed by China’s massive subsidization of its export-intensive strategic industries, which is harming industrial growth in the West.  Upending conventional wisdom, the book shows that China’s success does not stem from cost advantages as much as from subsidies calibrated for world-market dominance. Cutting-edge manufacturers and workers in the United States and Europe are paying a heavy toll.  As an executive of the largest solar-technology manufacturer in the Americas, which concluded one of the biggest trade cases ever brought against China, I can attest that traditional trade law and policy approaches, on their own, may not be enough to combat China’s state-engineered export juggernaut.  In light of the massive scale of subsidies supporting Chinese export manufacturers, China’s growing reliance on state-owned enterprises, its disregard for intellectual property protections and its lack of transparency, Usha and George Haley have provided important recommendations to ensure fair and robust competition across the oceans as well as a bright economic future for our peoples.” 

Product Details

240 pages; 6-1/8 x 9-1/4; ISBN13: 978-0-19-977374-9ISBN10: 0-19-977374-2

About the Author(s)

Usha Haley is Professor of International Business at Massey University, Auckland, New Zealand and Research Associate at the Economic Policy Institute, Washington, DC.

George Haley is Professor of Marketing & International Business, and Director of the Center for International Industry Competitiveness at the University of New Haven


Usha C. V. Haley, PhD

Professor of International Business, Massey University, Auckland, NZ


Research Associate, Economic Policy Institute, Washington, DC, USA


Office Address: School of Management, Massey University, Private Bag 102904,

North Shore City 0745, Auckland, New Zealand

E-mail: [log in to unmask] & [log in to unmask]

NZ Phone: +64 9 4140800 ext 43406   US Phone: 1-860-322-0701   US Fax: 1-212-208-2468

WWW: Usha Haley - Massey profile



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