New Tasks for Industrial Policy in Germany

State aid control has led to a more rule-based use of this instrument. Subsidies related to industrial policy have been significantly reduced in the last 20 years and play only a minor role for European countries. However, transformative developments with potential disruptive effects may now require a more active approach to industrial policy, where State aid can play a greater role. Climate change and the necessity to finance low-carbon production capacities that are not competitive on international markets can justify financial assistance. At the same time, trade conflicts with China are at least partly caused by uncontrolled State aid in the State-capitalist Chinese economic system. An international agreement on State aid rules would be a better solution than continuous trade distortions or countermeasures in form of additional European subsidies. Finally, the Covid-19 crisis has triggered additional public funds for private companies. While short-term rescue measures and medium-term investment programmes are important, a return to lower pre-crisis level of State aid and government intervention into market processes cannot be taken for granted.