Yesterday, CCTV’s *Focus Interview* struck hard.

The headline consisted of just four characters: "Investment Promotion—or 'Injury'?"

The camera pans across Yichun, Jiangxi, to the Neta Auto manufacturing plant.

This factory was once a flagship project for attracting investment.

Now, the production lines are covered in dust, and 18.3 billion yuan has been burned through in three years—who will foot the bill?

A local state-owned investment platform poured nearly 2 billion yuan into acquiring equity.

They spent 300 million yuan to construct the factory on the company’s behalf and offered rent exemptions for a full decade.

In fact, for every car sold locally, the government subsidizes 20,000 yuan.

These preferential terms violate or effectively circumvent relevant policies and regulations.

This incident directly exposes the chaotic practices of local governments offering "subsidized" investment incentives.

01 Massive Capital Injections: Who Will Foot the Bill?

From “best-selling new-energy vehicle brand” to bankruptcy reorganization, Neta Auto has completely collapsed.

But in this case, the accountability extends far beyond a single automaker.

How does a company with annual losses exceeding 6 billion yuan stay afloat?

Local governments have continuously provided financial support, with state-owned capital pouring in substantial funds.

To secure this “new energy vehicle” project, three cities pulled out all the stops.

In Yichun, a state-owned enterprise invested a cumulative total of 1.42 billion yuan, with at least 800 million yuan now unrecoverable. To expedite the project’s launch, the city invested in equity, constructed factory buildings on behalf of the company, and offered a ten-year rent waiver.

In Nanning, the land and factory buildings used for the Neta Auto production base were purchased and constructed with local government funds. The Nanning State-owned Assets Holding Company holds approximately 35.65% of the equity inHozon Auto, making it the largest shareholder.

In Tongxiang, a state-owned capital investment and operation company wholly owned by the municipal finance bureau is also a key investor.

One region after another is vying to host new energy projects. While the surface appears bustling, behind the scenes there is redundant construction and homogenized expansion, with production capacity piling up. Then, in 2023 and 2024, a full-scale price war erupted—the question is, who can hold out the longest?

The financials of Neta Auto’s parent company,Hozon New Energy, are even more stark: from 2021 to 2023, it recorded a cumulative net loss of 18.3 billion yuan, averaging a loss of over 80,000 yuan per vehicle sold.

Can these subsidies make up for the losses? The market’s answer is straightforward.

What’s even more problematic is that much of this investment was funded through loans and debt. Once these companies go bankrupt, the massive debt hole will ultimately have to be bailed out by local governments, inadvertently increasing the government’s debt risk.

As a relevant official from the National Development and Reform Commission (NDRC) stated in an interview with CCTV: “Essentially, this constitutes the illegal provision of differentiated support, excluding and restricting market competition… It has drained local finances and crossed the red line of financial discipline.”

Ultimately, the fault lies not with a single enterprise, but with the distorted understanding some localities have of their role in attracting investment. Treating investment promotion as “buying growth with money” naturally evolves into “trading debt for projects.”

But the question that must be asked above all is this:

How was the decision made to invest this money in the first place? Who gave the final approval? Is anyone being held accountable for this?

02 Why Is This Being Exposed Now? A Wake-Up Call

HiPhi, Byton, Bojun… These once-promising new energy vehicle brands have followed almost identical trajectories:

Local government investment, heavy asset expansion, persistent losses, and eventual liquidation.

At its peak, the number of Chinese new energy vehicle brands once exceeded 300, yet today a large number of companies have already exited the market.

This round of consolidation is essentially the market’s correction of oversupply, but the resources consumed in the process do not entirely belong to the market.

More accurately, this is “inefficient expansion backed by government guarantees.”

On the corporate side, business decisions that should have borne the risks were distorted by continuous “financial infusions”; on the government side, fiscal risks were deferred through measures such as platform companies and debt swaps.

On paper, these are corporate investments; in reality, they are backed by fiscal guarantees.

The core of the problem lies not in whether local governments should develop industries, but in “how” they develop them.

A major project often carries multiple expected benefits—including GDP growth, job creation, and tax revenue. Under such an incentive system, “getting the project off the ground first” becomes the top priority.

Whether a project is viable in the long term or can withstand market scrutiny, however, is relegated to a secondary position.

The broadcast of this episode of CCTV’s *Focus Interview* was not intended to single out Nezha; its true value lies in highlighting a deeper-rooted problem: the “internal competition” among local governments to attract investment.

From an institutional perspective, constraints are not lacking.

On August 1, 2024, the "Regulations on Fair Competition Review" officially took effect. They explicitly stipulate that policy measures must not include tax incentives, selective or differentiated fiscal rewards, or subsidies granted to specific operators.

This provision directly rejects the “one policy per enterprise” and “case-by-case negotiation” approaches to preferential treatment that were once common in local investment promotion efforts.

On January 7, 2025, the State Council’s Document No. 1 was issued. It set the tone in three key points: government investment funds shall not be established for the purpose of attracting investment; restrictions on registered locations should be encouraged to be abolished; and requirements for reinvestment ratios should be encouraged to be reduced or eliminated.

In the same month, the "Guidelines for Building a Unified National Market" were published, explicitly requiring special campaigns to address local protectionism, market segmentation, and unfair competition in investment promotion.

On April 8, 2026, the State Council’s “Document No. 13” was issued. It strictly prohibits the use of state-owned enterprises to circumvent approval procedures for government investment projects, establishes a lifetime accountability system for investment project decisions, and mandates the central government to assume authority if local governments fail to manage such matters effectively.

The National Audit Office has also been taking action for some time. One of its key priorities for 2024 is to thoroughly expose issues such as the illegal introduction of policies and the creation of tax havens in local investment promotion activities.

In theory, the scope for non-compliant investment promotion has been significantly reduced.

However, the real issue lies in enforcement: Are these reviews truly being implemented? Are those responsible for violations being held accountable?

If the cost of non-compliance remains merely a matter of public opinion, without substantive constraints, then even the most well-designed system will struggle to alter the underlying logic of behavior.

From policy to audit to exposure by CCTV, the logic behind this “combination of measures” is crystal clear. Anyone can dream of building cars, but those footing the bill should not remain silent.

Where does the funding come from? When platform companies raise capital or issue bonds, and the signal is sent that the government will ultimately foot the bill, the burden falls on the public. As the National Development and Reform Commission (NDRC) put it bluntly, this kind of differentiated support eliminates competition and crosses the red line of financial discipline.

Consequently, the market has been forced into distortion. With government backing, companies no longer hold investment in awe and are not accountable for efficiency. Low-quality projects are sprouting everywhere, bad money is driving out good, and the industry’s foundations are being hollowed out—this is not high-quality development.

This is not mere exposure; it is yet another warning.

03: Investment Promotion Turns into Self-Inflicted Wounds—Where Does the Root Cause Lie?

Why has the same script been repeatedly played out in different cities over the years?

The first root cause is the distortion of the performance evaluation system.

Investment targets are pushed down through the ranks: contract values, number of projects launched, and GDP growth rates are reported monthly and ranked annually.

Under this pressure, a “no-refusal” policy becomes inevitable. To secure projects, local governments previously resorted to “side agreements” and hidden subsidies, undermining the very foundation of a fair business environment.

The second root cause is the reversal of investment attraction logic.

Ideally, one should first assess the local industrial foundation and then attract compatible enterprises. “Subsidized” investment promotion, however, involves offering incentives first—zero land prices, factory construction on the government’s dime, ten years of rent-free space, and government equity stakes—and then finding ways to get the project off the ground.

This is a classic expansion path characterized by “scale first, profitability later.” The problem is that while this path should be naturally weeded out by market forces, in reality, administrative intervention continuously prolongs its lifecycle.

The third root cause is the absence of an exit mechanism.

Once a project is introduced, local governments act as both shareholders and regulators. If a company runs into trouble, publicly admitting failure would amount to self-negation, so they opt to pour more money into it.

It is not that they fail to see the risks; rather, they dare not cut their losses. This reflects the passive position of state-owned capital in corporate governance: having invested funds, they cannot fully exercise control; when they wish to cut losses, they find it is already too late.

The fourth root cause is the lack of accountability and enforcement.

Successful investment attraction brings political achievements and rewards; failed investment attraction incurs no accountability or consequences. When preferential policies violate regulations, no one investigates; when state-owned assets are lost, no one asks questions.

This marks the collapse of the final line of defense against “subsidy-driven” investment.

This explains why funds continue to flow in even when a company is already showing clear signs of losses. Once a project fails, it means not only economic losses but also risks to political achievements.

Consequently, continuing the project itself becomes a “rational choice.”

In Closing

Is it investment attraction, or is it inviting disaster?

This headline from CCTV is worth repeated consideration by cities still “fighting tooth and nail” to attract investment.

Behind this lies a deeper question: What exactly does local economic development depend on?

When the tide goes out, it’s not just the enterprises that are left exposed—it’s also the local state-owned assets swept up in the frenzy for political achievements.