SHANGHAI: The chairman of pharmaceutical company Roche has slammed a recent surge in industry subsidies by US and European governments, describing it as a “waste of money”.
During a visit to Shanghai for a business forum, Roche’s Severin Schwan criticized aid being given by Western countries to boost manufacturing to counter competition from China and other countries.
Schwan said the reinstatement of subsidies in the United States and Europe “distorts the values of competition and fair play” and “I really see the danger of people jumping on board.”
Schwan is chairman of the Council of International Business Leaders, which advises Shanghai’s mayor. Speaking at the council’s annual meeting on Sunday after a visit to Beijing, he told China’s vice premier that Switzerland-based Roche has great confidence in China’s economic prospects, state media said.
The United States and the European Union have long accused China of giving its companies an unfair advantage through subsidies, easy access to credit and other government support. The Washington think tank Center for Strategic and International Studies estimates that government support for Chinese industries, broadly defined, amounts to almost 5 percent of annual national income.
The EU is planning tariffs on Chinese-made electric cars, which the bloc says are necessary to level the playing field.
The U.S. is supporting U.S. manufacturing to compete with China with tens of billions of dollars in subsidies, including funds for makers of batteries and solar panels. The $53 billion “Chip Science Act” helps companies like Intel and Taiwan’s TSMC build advanced semiconductor factories, a sector China also wants to grow in.
Without giving examples, Schwan said such Western policies are ultimately counterproductive because they encourage companies to seek government favors.
He said the government should “put money into basic research.” Even if companies ask for support, he said, “Let’s not do that because it’s a waste of money.”
He did not comment on China’s subsidy policies, but suggested China should not follow the lead of the U.S. and Europe. “In China, there is an opportunity to do the right thing,” Schwan said.
One Western executive at the conference offered a different take on Western subsidies, saying they help stimulate emerging technologies such as renewable energy. He said global companies welcome U.S. efforts to improve infrastructure.
Write to Peter Landers at Peter.Landers@wsj.com.