What do Chinese Biotech Subsidies Cover?

I looked through the plans of two local governments

Key points

• Heilongjiang and Beijing governments publicly announced subsidy programs for biotech (list of subsidies at end of doc).

• Subsidies span the entire commercialisation pipeline: commercial-scale facilities, pilot plants, technology transfer, innovation centres, industrial parks, public procurement, and R&D initiatives.

• The subsidies at each stage are not huge, but factoring in the lower cost of contruction, the ability to stack the subsidies at each stage, and opportunity for suppliers to also be subsidised means they add up.

• This is more coordinated and deeper than elsewhere. While many countries subsidise R&D and commercialisation, few present coherent integrated roadmaps that sets out the subsidy pathway across the entire stack.

The dichotomous views on Chinese subsidies in biotechnology

There is a dichotomy on the views of Chinese subsidies of its biomanufacturing sector. Members of the startup industry in China contend the country has more profitable industrial bio startups than anywhere else on earth because at the startup level, the funding is genuinely limited. The other side of the argument is that Chinese firms writ large are subsidized to the hilt, so it is naturally assumed that bio firms are subsidized too. Perhaps this is not contradictory, merely different parts of the ecosystem receiving different treatment.

Our investigations so far have been dissatisfying. Most biotech companies are not publicly listed. As such it is hard to gather information about their profitability and subsidization. Of the public companies we investigated, they basically all received subsidies but as a percentage of revenue it was still relatively small. Even this has caveats. The companies tend to be diversified across mature industries with cutting-edge biotech a small part of their work. So, we do not get a sense of their bio subsidies. Finally, there is also the possibility of hidden subsidies not included in reporting.

In meetings with foreign firms weighing investment in China, we repeatedly hear the same message: local governments are prepared to offer massive support and low-cost financing to secure manufacturing projects. Much of it, however, is negotiated quietly—behind closed doors rather than in public filings.

Beijing and Heilongjiang publish subsidy plans

While the central government sets technology directions - and has the power of revenue to enforce its dictates - it is local governments that actually implement most industrial policy. They themselves are in search of high-quality tech projects that employ people. Often local governments are in competition. A manufacturing firm in Zhejiang competes with a factory in Guangdong. This fuels provincial subsidy races.

Heilongjiang and Beijing have publicly available information on their biotechnology subsidy programs.

Depending on your viewpoint, the subsidies are either big or not. Beijing’s $7 million for a pilot plant is pretty significant (capped at 30% of total investment). In China, it is possible to build a sizeable pilot for $10-20 million. Having one third of that covered would be helpful. The rest of the world has struggled to build that kind of facility.

The subsidy for construction of new biomanufacturing plants (covered in the high tech industrialisation projects) is between $4.2-$7 million (capped at various percentages of total investment). The cost of a new biomanufacturing could be between low tens of millions up into the hundreds of millions. The usefulness depends on the size of the project. For bigger projects the standalone construction subsidy will not be so significant.

There is the potential to stack these subsidies. If a company wants to build a plant. They could get the subsidy fot that. They may want to add a pilot facility as part of the plant (subsidised). They will probably conduct R&D onsite (subsidised). They may purchase locally produced technology licences (also subsidised). They may need financing (subsidised). They also get a subsidy for commercial sales of their product. There are also subsidies if the government buys their product. Beyond this, industrial parks and tech innovation centres that house them also receive subsidies.

The difference between China subsidy programs and other countries

Most governments provide subsidies at different stages of the innovation cycle. In Australia (my home country), for example, the R&D Tax Incentive is a major subsidy at the research stage. Companies can also apply for a range of state and federal industry growth grants. For large-scale manufacturing, institutions such as the National Reconstruction Fund and the Northern Australia Infrastructure Facility (NAIF) provide capital support.

But these mechanisms are largely project-based and competitive. They do not pre-commit funding to specific technologies or prescribe subsidy levels in advance. Instead, they assess proposals from across sectors, weigh their commercial and strategic merits, and select those judged most viable.

China’s approach is different. Authorities identify the specific infrastructure or technology they want to build and then commit funding to it directly. If you build this designated capacity, you receive a defined level of support. There are subsidies the whole way to sale of product which is further than most other governments. Even government procurement folds into this program.

The subsidies

1. Pilot & Platform Construction

2. Industrialization & Fixed Asset Investment

3. R&D & Technology Transfer

4. Product Commercialization & Market Entry

5. Finance & Tax