G/SCM/Q2/CHN/115  
 
25 October  2022 
(22-7968) Page: 1/6 
Committee on Subsidies and Countervailing Measures  Original: English  
 
 
SUBSIDIES  
REPLIES TO QUESTIONS POSED BY AUSTRALIA1 REGARDING THE NEW AND FULL  
NOTIFICATION OF CHINA2 
The following communication, dated and received on 2 4 October 2022, is being circulated at the 
request of the delegation of China . 
 
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I. Subsidies at the Central Government Level  
 
Question 1  
 
There are several programs which provide preferential tax treatment, for example, 
Programs 2, 4, 5, 6, 8 and 3 5, and where government revenue is therefore foregone.  
Noting the difficulties China has flagged with providing the level of subsidies under these 
programs, could China clarify whether it is able to provide data on total amounts budgeted 
for these programs ? 
 
Reply : 
 
There is no total amount budgeted for relevant preferential tax treatments to which taxpayers who 
meet the policy requirements are entitled. There is no specific data on tax relief amounts.  
 
Program 15 Preferential tax treatment for energy -saving and new energy vehicles and 
vessels  
 
Question 2 
 
What types of "vessels " are eligible under this program?   
 
Reply : 
 
According to the Notice on the Preferential Vehicle and Vessel Tax Policy for Energy -Saving New 
Energy Vehicles and Vessels (C . Sh. [2018] No.74), new energy vessels exempt from the vehicle 
and vessel tax shall meet the following criteria: the main propulsion power unit of the vessel is a 
pure natural gas engine; when the ignition mode of trace diesel is used and the calorific va lue of 
pilot oil accounts for no more than 5% of the total calorific value of all fuels, the engine is regarded 
as a pure natural gas engine.  
 
 
1 G/SCM/Q2/CHN/107.  
2 G/SCM/N/372/CHN . G/SCM/Q2/CHN/115  
 
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  Question 3 
 
Is the fishing sector eligible?  
 
Reply : 
 
The preferential vehicle and vessel tax policy applies to el igible energy -saving and new energy 
vehicles and ships, with no limit to industry sector.  
 
Program 27 Preferential tax policies for farming, forest, animal husbandry and fishery 
product projects  
 
Question 4 
 
Could China please elaborate which type of fishery product projects are eligible for 
preferential tax treatment? is this for aquaculture and/or marine capture fishing?  
 
Reply : 
 
Fishery product projects eligible for preferential tax treatment are as the followings: First, the income 
of marine capture fishing is exempt from enterprise income tax. Second, the primary processing of 
aquatic animals and aquatic plants is exempt from enterprise income tax. Third, for enterprises 
engaged in the agricultural, forestry, animal husbandry, and fishery pro jects eligible for tax 
incentives as stipulated in Article 86 of Implementation Regulations of the Law of the Enterprise 
income tax , the standards of the Industrial Classification for National Economic Activities 
(GB/T4754 —2002) shall apply unless otherwi se specified. But the agricultural, forestry, animal 
husbandry, and fishery projects to be restricted and phased out according to the Industrial Structure 
Adjustment Guidance Catalogue (2011) (National Development and Reform Commission Order No.9) 
are not eligible for tax incentives stipulated in the abovementioned Article 86. Fourth, the enterprise 
income tax on mariculture and inland aquaculture shall be halved.  
 
Question 5 
 
Are there performance requirements for preferential tax treatment?  
 
Reply : 
 
The income in compliance with Para. 1 of Article 27 of The Enterprise Income Tax Law of the People's 
Republic of China, Article 86 of the Implementation Regulations of the Enterprise Income Tax Law, 
Notice of the Ministry of Finance and the State Administration  of Taxation on Issuing the Scope of 
Primary Processing of Agricultural Products Eligible for Preferential Enterprise Income Tax Treatment 
(for Trial Implementation) (C.SH. [2008] No.149), and The Supplementary Notice on Primary 
Processing of Agricultural Products Eligible for Preferential Enterprise Income Tax Treatment (C.SH. 
[2011] No.26) is entitled to preferential enterprise income tax treatment applicable to enterprises 
engaged in agricultural, forestry, animal husbandry and fishery projects.  
 
Questio n 6 
 
The notification notes that the enterprise 's income tax may be exempted or reduced.  How 
is it determined whether the income tax is exempted or reduced?  Is the tax exempted or 
reduced for the fisheries sector?  
 
Reply : 
 
The corporate income generated fr om fishery projects stipulated in Item. 1 of Article 27 of The 
Enterprise Income Tax Law of the People's Republic of China, Article 86 of the Implementation 
Regulations of the Enterprise Income Tax Law, Notice of the Ministry of Finance and the State 
Admin istration of Taxation on Issuing the Scope of Primary Processing of Agricultural Products 
Eligible for Preferential Enterprise Income Tax Treatment (for Trial Implementation) (C.SH. [2008] 
No.149), and The Supplementary Notice on Primary Processing of Agri cultural Products Eligible for 
Preferential Enterprise Income Tax Treatment (C.SH. [2011] No. 26) is entitled to relevant 
preferential income tax treatment.  G/SCM/Q2/CHN/115  
 
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  Question 7 
 
Noting that the legislation reference is identical, how does this program relate to Pro gram 
66 "Preferential tax policies for enterprises engaged in projects of agricultural, forestry, 
animal husbandry and fishery "? 
 
Reply : 
 
Program 66 is part of the chapter dedicated to fishery subsidies, and enjoys the same preferential 
tax policy as stipulated in Program 27. The style is consistent with Item 33 of the Circular of the 
Chinese Government on Subsidies at the Central Government Level 2017 -2018 and Item 1 of the 
Oil Sector.  
 
Program 67 Fishery stocks enhancement and fish fries releasing  
 
Question 8 
 
Could China please clarify whether this subsidy program is administered via local 
governments.  
 
Reply : 
 
Yes. The subsidy program is implemented by local governments.  
 
Question 9 
 
Could China please clarify the form of subsidy provided to fisherm en via local 
governments.  
 
Reply : 
 
The subsidy program is implemented by local governments, and fishermen are not directly 
subsidized.  
 
Question 10 
 
Is this fund conditioned on fishing in certain areas or performance requirements?  
 
Reply : 
 
The subsidy program is implemented by local governments, and the fund does not go directly to 
fishermen, so it is not conditioned on fishing in certain areas or performance requirements for the 
fishermen to obtain subsidies.  
 
Program 71 Subsidy for reform in t ax and fee on refined oil (for fishery)  
 
Question 11 
 
Could China clarify how the purpose of the subsidy, inter alia, "to reduce the fishing 
intensity " etc and that the fuel subsidy is provided to those fishers that no longer engage 
in fishing and whose ve ssels are scrapped.  
 
Reply : 
 
Since 2021, China has implemented a new batch of policies supporting fishery development. The 
fishery subsidy fund is mainly spent on the conservation of fishery resources and the upgrading of 
facilities and equipment to ensure  workplace safety. Other general transfer payments for fishery 
development mainly support local governments to promote local high -quality fishery development, 
including the reduction in offshore fishing vessels, green development of aquaculture, and 
conser vation of fishery resources.  
 G/SCM/Q2/CHN/115  
 
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  Question 12 
 
Could China please provide the total amount budgeted for this program.  
 
Reply : 
 
There is no such data.  
 
Question 13 
 
What is the rate (reduced tax level) of the fuel subsidy provided?  
 
Reply : 
 
There is no fuel-related subsidy policy.  
 
Question 14 
 
Could China confirm whether this subsidy is ongoing.  
 
Reply : 
 
There is no fuel -related subsidy policy.  
 
II. Subsidies at the Sub-Central Government Level  
 
1. Beijing Municipality:  
 
Program 2 Fund for Resolving of Overcapacity in Coal Sector and Resettlement and 
Relocation of Employees  
 
Question 15 
 
Could China please elaborate on what conditions are attached to the provision of grants 
under this program to eligible enterprises.  
 
Reply : 
 
The conditions are specified  in the Opinions of the State Council on Reducing Excess Capacity and 
Achieving Development in the Coal Industry (G. F. [2016] No.7). In Beijing, the coal mines that fail 
to meet relevant requirements for safety, quality, environmental protection, technolo gy and 
resource scale are classified as overcapacity, and the city government will guide them to exit in line 
with the functional positioning of the capital city.  
 
Pursuant to the Notice of the Ministry of Finance on Printing and Distributing the Administr ative 
Measures for Special Reward/Subsidy Funds for Structural Adjustment of Industrial Enterprises (C.  J. 
[2018] No.462), the central reward/subsidy fund amount is calculated and determined based on the 
total budget size and the overall objective of exces s capacity reduction. In addition to the 
reward/subsidy fund from the central government, the government and enterprises in question shall 
bear the expenses for the transfer or settlement of workers in these coal mines, by means of internal 
job transfer, i nternal early retirement for eligible workers, and termination of labour contracts 
through consultation.  
 
3. Hebei Province:  
 
Program 2 Reward and Subsidy to Resolve Overcapacity in Coal Industry  
 
Question 16 
 
Could China please elaborate on what conditions are attached to the provision of grants 
under this program to eligible coal mines.  
 G/SCM/Q2/CHN/115  
 
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  Reply : 
 
First, the coal mines must be properly closed down and have passed the annual provincial acceptance 
inspection. Second, the closed -down coal mines must p articipate in the open trading organized by 
the provincial government at a price lower than RMB 1.5 million/10,000 tons.  
 
4. Shanxi Province  
 
Program 1 Fund for Fishery Resources Conservation  
 
Question 17 
 
What conditionalities are attached to the receipt of grants under this program, in 
particular for fishers?   
 
Reply : 
 
The expenditure of the fishery resources conservation program is to replenish fishery resources to 
natural waters with the fry procured. Subsidies are paid to fry and fingerling producers s elected 
through bidding according to law, which must be an independent legal -person entity, able to 
independently bear civil liability and perform the contract, have a good financial status, be qualified 
as a state -level aquatic breeding farm or a provinci al aquatic breeding farm, hold the Use Certificate 
for Water Area and Tidal Flat Culture and the Aquatic Offspring Production License, and have the 
corresponding parent stock of released offspring, and the breeding farm that can meet the 
production needs a s the offspring supply unit. This subsidy does not apply to individual fishermen.  
 
15. Shandong Province  
 
Program 2 Special Fund to Support the Development of Distant Water Fishing  
 
Question 18 
 
What are the conditionalities for 'eligible enterprises ' receiving grants? For example, does 
this program increase the construction or increased tonnage of distant -water fishing 
vessels?  
 
Reply : 
 
The "eligible enterprises" are distant -water fishing enterprises which are registered in Rizhao, 
employ local crew m embers and transport  the harvest back. The program does not require additional 
construction or increased tonnage for distant -water fishing vessels.  
 
35. Xiamen City of Fujian Province  
 
Program 2 Special fund for Marine and Fishery Development  
 
Reply : 
 
Question 19 
 
Could China please elaborate on the conditionalities or performance requirements 
attached to the grants under this program, particularly as they relate to distant water 
fishing.  
 
Reply : 
 
The grants for distant -water fishing are for enterprises th at are registered and incorporated in 
Xiamen after September 17, 2012, whose projects undertaken are in normal operations, and which 
have no major workplace safety incidents or major violations of laws and regulations in the past 
three years, as well as di stant-water fishing vessels included in the plan issued by the Ministry of 
Agriculture and Rural Affairs for fishing vessel renewal and transformation, and distant -water fishing G/SCM/Q2/CHN/115  
 
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  vessels (including auxiliary vessels) approved by the Ministry of Agriculture and Rural Affairs prior 
to December 31, 2015.  
 
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