The global economy is increasingly faced with unfair subsidies

Unfair subsidies: How China and the USA challenge Europe's competition

The global economy is increasingly faced with unfair subsidies, especially through state support programs in China ("Made in China 2025") and the USA (Inflation Reduction Act, Chips and Science Act). These measures distort competition and endanger the technology leadership of European companies. In response, the EU and Germany develop a multi -stage system of regulatory, financial and strategic instruments.

Regulatory countermeasures of the EU

1. New aid checks

In 2023, the EU Commission introduced the regulation on third-country subsidies in order to prohibit or sanction financial aids from non-EU countries. This closes gaps in previous competition law, which only regulated internal subsidies.

2.

Modernized anti-dumping methods and the international procurement instrument (IPI) make it possible to disadvantage foreign bidders in EU tenders if their home countries do not grant fair market access.

Direct promotion of local innovations

Germany relies on a combination of funding programs and strategic focus:

• ZIM (central innovation program SME): up to 50 % grants for FUE projects, especially for SMEs and start-ups. The program was reformed in 2025 to make it easier for first applicants to access.
• High-tech strategy 2025: The aim is to invest 3.5 % of GDP in research, with a focus on AI, quantum technologies and green hydrogen.
• Tax research funding: The Research Authorization Act has been enabling tax breaks of up to € 4 million per year for private sector FUE activities since 2020.

European coordination against subsidy races

In order to avoid internal market distortions, the EU is putting on:

• Strict aid rules: loosening in EU aid law are viewed critically because they could lead to inefficient subsidy competitions.
• Common industrial projects: Initiatives such as the European battery alliance or hydrogen IPCEIS bundle resources and prevent double funding.

International strategies and technology partnerships

• Multilateral WTO reforms: Germany urges stricter subsidy rules and more transparent reporting procedures to address Chinese practices such as special tax deductions for FUE.
• Climate partnerships: The EU limit compensation mechanism (CBAM) is expected to burden CO₂-intensive imports from 2026 and thus indirectly compensate for the competition from third countries.

Support for market entry and scaling

• Young Innovators program: Funded community states at trade fairs such as the ISH 2025 reduce the costs for start-ups by 60 %.
• ERP digitization and innovation loan: low-interest loans up to € 25 million for digital transformation projects, especially for medium-sized companies.

Challenges and critical points

• Migration pressure: US subsidies of 1.2 bio. $ (IRA) and $ 280 billion (Chips Act) tempted companies such as Northvolt to relocate production facilities.
• A lack of scaling: Despite programs like ZIM, only 15 % of SMEs achieve an international market penetration, especially because of bureaucratic hurdles.

The balance between protectionist measures and open markets remains central: While defensive instruments such as the Foreign Subsidies regulation offer protection at short notice, long-term innovative strength decides-based on targeted FUE funding and European technology alliances.

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The global economic landscape in change

The global economic landscape is in a profound change that is characterized by an increasing competition for technological dominance. A decisive factor in this measurement is state subsidies that have achieved an unprecedented extent in recent years. In particular, the funding programs "Made in China 2025" and the US initiatives such as "Inflation Reduction Act" and the "Chips and Science Act" have led to a significant distortion of global competition. These measures, which targeted the support of local industries, are a serious threat to the technology leadership of European companies. The resulting distortion of competition not only endangers jobs, but also undermines the long -term innovative ability of the European Economic Area.

Reaction of the European Union and Germany

The European Union and Germany have recognized this development and react with a multi -layered approach that includes regulatory, financial and strategic instruments. It is not about getting into an unproductive subsidy race, but rather about creating fair competitive conditions and strengthening the innovative strength of the European economy.

Regulatory measures

At the regulatory level, the EU has taken important steps to contain the influence of unfair subsidies from third countries. The regulation on third -country subsidies, which came into force in 2023, is a decisive component in this structure. It closes a significant gap in previous competition law, which primarily focused on subsidies within the EU. This regulation now allows the EU Commission to prohibit or sanction-controlling financial aid from non-EU countries. The EU's trade policy has also modernized important protective mechanisms. Anti-dumping methods and the international procurement instrument (IPI) make it possible to disadvantage foreign bidders in public tenders if their home countries do not allow fair market access. These instruments are intended to ensure that European companies act in an environment in which competitive conditions are fair and transparent.

Direct funding and investments in future technologies

In addition to these regulatory measures, Germany relies on a combination of direct promotion of innovations and strategic investments in promising technologies. The central innovation program Mittelstand (ZIM) is an important pillar of this strategy. In particular, it offers small and medium-sized companies (SMEs) and start-ups grants of up to 50 % for research and development projects. The reform of the ZIM in 2025 made access to first applicants and is intended to ensure that innovative ideas do not fail because of financial hurdles. The high-tech strategy 2025 is another example of Germany's commitment to research and development. It pursues the goal of investing 3.5 % of the gross domestic product (GDP) in research. These investments focus on key technologies such as artificial intelligence (AI), quantum technologies and green hydrogen. In addition, the Research Authority Act supports private companies for their research and development activities through tax breaks of up to 4 million euros per year.

Strengthening a fair competition in the EU

In order to avoid internal market distortions, the EU relies on strict aid rules and common industrial projects. Loosening in EU granting law are seen critically because they could lead to inefficient subsidy competitions within the Union. Instead, the EU relies on initiatives such as the European battery alliance or hydrogen IPCEIS (Important Projects of Common European Interest). These projects bundle resources and prevent double and incorrect funding.

Germany's goals at an international level

At the international level, Germany pursues the goal of establishing fair competitive conditions outside the EU. As part of the World Trade Organization (WTO), Germany is committed to stricter subsidy rules and more transparent reporting procedures to address practices such as Chinese special tax deductions for research and development. The EU limit compensation mechanism (CBAM), which is due to come into force from 2026, is another measure to adopt indirectly subsidized competition from third countries. Due to the burden of CO₂-intensive imports, CBAM is intended to ensure a fair competition for companies that strive for sustainable production methods.

Promotion of market entry and scaling

In addition to promoting research and development, support for market entry and scaling is of crucial importance. The "Young Innovators" program offers start-ups funded community stands at trade fairs in order to reduce the costs for the presentation of your products and services. The ERP digitalization and innovation loan provides interest-bearing loans for digital transformation projects, especially for medium-sized companies.

Challenges for EU and Germany

Despite all these efforts, the EU and Germany face considerable challenges. Companies' emigration pressure to the USA due to generous subsidies is a growing problem. The US subsidies of $ 1.2 trillion (IRA) and $ 280 billion (Chips Act) tempt companies to move production facilities. The lack of scaling of innovations is another obstacle. Despite the funding programs such as ZIM, only 15 % of SMEs achieve international market penetration, often due to bureaucratic hurdles. It is important to recognize these challenges and develop measures that not only offer short -term protection, but also strengthen the innovative strength of the European economy in the long term. The balance between protectionist measures and open markets is of central importance. Politicians must ensure that protection against unfair competition does not lead to a foreclosure, but that the development of one's own strengths and capacities comes to the fore.

Future of European competitiveness

Ultimately, the long -term competitiveness of the European economy will depend on its innovative strength. This innovative strength must be strengthened by targeted promoting research and development, by strong European cooperation and by creating a company -friendly environment. It is a complex interplay of regulatory measures, financial incentives and strategic partnerships that will enable Europe to successfully counter the challenges of global economic landscape.

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