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Subsidies to Chinese IndustryState Capitalism, Business Strategy, and Trade Policy$
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Usha C.V. Haley and George T. Haley

Print publication date: 2013

Print ISBN-13: 9780199773749

Published to Oxford Scholarship Online: May 2013

DOI: 10.1093/acprof:oso/9780199773749.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 21 January 2022

Subsidies, Business Strategy, and Trade Policy

Subsidies, Business Strategy, and Trade Policy

(p.154) Chapter 7 Subsidies, Business Strategy, and Trade Policy
Subsidies to Chinese Industry

Usha C. V. Haley

George T. Haley

Oxford University Press

Subsidies to Chinese industry have affected and are affected by business strategy and trade policy. Implications of industrial subsidies are explored for firms, the global economy and future research. Business strategies include lobbying for subsidies, advocating for protection from subsidized foreign competitors and managing supply chains to guard against uncoordinated subsidies’ whiplash effects. Free trade may lead to sub-optimal outcomes and protectionism can increase national income by raising firms' profitability in imperfect market. Once foreign firms fall behind, strategic trade policy should become top priority. Business strategies in response to production and consumption subsidies include market or competitive and non-market or political strategies; the solar industry is examined. Trade-policy instruments regarding subsidies focus on domestic consumption (antidumping and countervailing duties) or domestic production (indigenous innovation). Implications for firms including manufacturing location and technology development. For the global economy, regular boom and bust cycles from subsidies may become normal.

Keywords:   China, business strategy, trade policy, lobbying, non-market strategies, subsidies, antidumping, countervailing duties, indigenous innovation, solar industry

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