Companies in these sectors receiving subsidies exceeding 30% of their net profit are required, when going public (IPO), to present a plan for phasing out government support and to demonstrate their ability to compete effectively without it.
A top antitrust advisor to China's State Council, the country's cabinet, is recommending semiconductor and pharmaceutical companies be required to disclose how they plan to reduce reliance on government subsidies before going public.
Companies in these sectors whose subsidies exceed 30 percent of net profits should detail their "subsidy exit paths" and demonstrate "market competition sustainability" during the IPO process, Huang Yong, a veteran expert advisor to the cabinet's Antimonopoly and Anti-Unfair Competition Commission, wrote in a bylined article today.
Investment banks underwriting such IPOs should issue special competition-compliance reports, Huang wrote in the Securities Times.
These recommendations are part of Huang’s broader proposal for China’s next economic blueprint for 2026-2030. He called on policymakers to place competition policy at the heart of economic governance under the upcoming 15th Five-Year Plan, aiming to shift China’s economy from "scale expansion" to "quality competition."
"Only by placing competition policy at the core of macroeconomic governance can we nurture world-class enterprises through sufficient domestic market competition, and align with high-standard international rules to shape new advantages in an open economy,"
the advisor said.
"Good competition policies ensure that it is innovators who win the market, not subsidies that win the orders,"
he added.
Huang’s commentary underscores growing concerns over subsidy-driven resource misallocation, particularly as local governments engage in costly rivalry to attract investment.
He pointed to the artificial intelligence sector as an example, where regions have competed with "computing power vouchers" and "landing bonuses" to lure projects. These practices, Huang said, have led to redundant infrastructure and inefficiencies, including high-end GPU vacancy rates of 40 percent.
"We must establish rigid constraints for handling the relationship between the government and the market,"
the advisor said, calling for measures to keep government-led industrial planning targeted and well-regulated.
Huang’s proposal also comes as Chinese officials grapple with what they term "involution competition" — destructive price wars in sectors such as electric vehicles and solar power that risk undermining economic stability. Simultaneously, China faces mounting international scrutiny over its subsidy practices.
In addition, Huang advocated for a "competitive neutrality" framework for data markets, urging that government-held public data be made accessible in a "fair and non-discriminatory" manner. This would prevent state-owned platforms from exploiting data advantages to crowd out private-sector innovation, he said.
In recent years, China has intensified efforts to address government-driven distortions in competition. Since the Fair Competition Review System was introduced in 2016, authorities have reviewed nearly 2 million policy measures, amending or scrapping about 100,000 deemed anticompetitive.
Source: MLex
