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CATL tops China’s corporate subsidies list, outranking oil majors

Written by Nikkei Asia Published on   4 mins read

The emergence of EV-related recipients stands out as European tariffs loom.

Leading Chinese electric vehicle battery manufacturer Contemporary Amperex Technology (CATL) has become the top recipient of state subsidies among all mainland listed companies, highlighting a sharper strategic focus just as such government support draws scrutiny in the West.

Last year marked the first time CATL has ranked first in subsidy receipts among more than 5,000 mainland businesses, according to data compiled by Chinese information provider Wind and surveyed by Nikkei Asia.

The list had long been dominated by state oil companies, but the latest edition shows an emphasis on EVs and other high-priority tech sectors, such as panels and semiconductors.

CATL received RMB 5.72 billion (USD 790 million) in 2023, more than double its figure the year before. The annual subsidies are disclosed under nonrecurring items that count toward a given year’s net profit, under Chinese accounting standards.

For CATL, the 2023 support amounted to 13% of its net profit. The Shenzhen-listed company did not disclose what it used the money for in its latest annual report, and it did not respond to queries from Nikkei Asia.

But CATL is not the only example that signals a shift in how the Chinese state is doling out subsidies: Four of the top 10 recipients were EV-related.

The ranking comes shortly before the expected conclusion of a European Commission investigation into Chinese state backing of its EV industry. Upon launching the probe last September, the commission’s president, Ursula von der Leyen, said China is keeping the prices of its EVs “artificially low” with “huge state subsidies,” allowing the global market to be “flooded” with cheap cars. “This is distorting our market,” she said.

Last month, US President Joe Biden announced a tariff hike on Chinese EVs to 100%, based on the same reasoning. Meanwhile, CATL’s heavy state support could intensify scrutiny of its own battery partnership with US automaker Ford, which has already drawn fire from lawmakers.

Of course, China is not alone in handing out state money to companies. As the Sino-American rivalry intensifies over cutting-edge tech, Washington has also been granting government subsidies to companies and sectors that it deems strategic. Japan, too, is giving generous state aid to Taiwanese chipmaker TSMC and domestic player Rapidus, even under heavy financial strain.

Back in China, SAIC Motor, one of the country’s largest automakers, received over RMB 4 billion (USD 552 million) in subsidies in 2023, or 11% more than a year earlier. The Shanghai-based state-owned enterprise did not disclose details of the subsidies and, like CATL, did not reply to Nikkei’s request for comment.

But after decades of relying on two separate, lucrative joint venture arrangements with Volkswagen and General Motors—largely focused on gasoline-powered cars—SAIC has been promoting its own EV brands lately. The company is “now under the process of transformation,” president Wang Xiaoqiu told investors after SAIC’s annual earnings report.

SAIC has been China’s biggest auto exporter as well, powered by MG, a century-old British brand it acquired in 2007. The company sold 1.208 million units abroad in 2023, up 18.8% on the year, with MG cars accounting for 840,000 of the total exports—mainly to Europe.

Another big subsidy recipient is BYD, a private EV maker backed by Warren Buffett’s Berkshire Hathaway. It received RMB 2.18 billion (USD 300 million) in 2023, or 28% more than the year before.

The Guangdong-based BYD is the country’s leading EV maker and a key export engine, selling in over 50 overseas markets. Its peer, Great Wall Motor, also received over RMB 2 billion (USD 276 million) in subsidies last year.

Shinichi Seki, a senior economist at the Japan Research Institute who specializes in the Chinese economy, told Nikkei Asia that CATL’s rise to the top of the government aid list indicates that Beijing is “flexibly adjusting which sectors should receive state funding.”

Looking back to 2022, the largest recipient that year was initially display panel maker BOE Technology Group, which took in RMB 5.45 billion (USD 752 million) according to the Wind database.

But China Mobile, the largest wireless carrier by subscribers, surpassed that figure after it restated its 2022 subsidy intake in its latest annual report, almost tripling the total to RMB 6.65 billion (USD 917 million). It did not elaborate on the change.

China Mobile has not replied to Nikkei Asia’s request for an explanation. But chairman Yang Jie repeatedly said in public that the “peak period” for its 5G investment—key wireless infrastructure for various tech industries—would be between 2020 and 2022. Its annual capital expenditure indeed topped out in 2022.

Now, Seki views CATL’s top ranking as a reflection of Chinese authorities “trying to support an industry which they deem to have higher growth potential.”

Without a viable, comprehensive database for tracking government subsidies in China, compiling corporate disclosures is one of the few ways to gauge how the state is allocating support to companies.

Using the same method and digging back to 2012, when Xi Jinping took the helm as secretary general of the Chinese Communist Party, the top recipients were for years either Sinopec or PetroChina—the core listed units of the respective state-owned oil conglomerates China Petroleum and Chemical Corporation and China National Petroleum Corporation (CNPC). Politically, the so-called oil clan, led by former Politburo Standing Committee member Zhou Yongkang, was swept out soon after Xi took power under the premise of fighting corruption, but the continuous state financial support demonstrates the significance of those companies.

It was only in 2021 that SAIC Motor took the top position, overtaking Sinopec for the first time in five years. China Mobile’s revision of its figures would also place it ahead of SAIC for 2021, however.

Even now, Sinopec and PetroChina are major recipients of subsidies, as the oil and gas industry remains a vital part of the Chinese economy. The data, however, suggests the government is increasingly prioritizing strategic tech sectors.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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