G/SCM/Q2/CHN/111  
25 April 2022 
(22-3251) Page: 1/4 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
 SUBSIDIES   
REPLIES TO QUESTIONS POSED BY THE UNITED KINGDOM1 REGARDING  
THE NEW AND FULL NOTIFICATION OF CHINA2 
The following communication, dated and received on 2 5 April 2022, is being circulated at the request 
of the delegation of China . 
 
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Preferential tax policies for high -tech enterprises  
1. What sectors are eligible for this subsidy?  
Reply : 
According to current policies, there are no restrictions on the sector of enterprises for the 
identification of high -tech enterprises. In another words, any eligible enterprise, regardless of the 
sector , could be identified as a high -tech enterprise and en joy the  relevant  tax preferences.  
2. Is this subsidy available to foreign -invested enterprises or only to Chinese -owned 
enterprises?  
Reply : 
According to current Enterprise Income Tax Law, the preferential policies on enterprise income tax 
apply to both domes tic and foreign -invested enterprises. The foreign -invested enterprises meeting 
the criteria for high -tech enterprises can also enjoy the tax preferences.  
Preferential tax treatment for energy -saving and new energy vehicles and vessels  
3. Which types of energy -saving and new energy vehicles and vessels are eligible 
for this subsidy?  
Reply : 
Please refer to Notice of the Ministry of Finance, the State Taxation Administration, the Ministry of 
Industry and Information Technology, and the Ministry of Transport on Pr eferential Vehicle and 
Vessel Tax Policies for Energy -saving and New -energy Vehicles and Vessels (No. 74 [2018] of the 
Ministry of Finance ) 
 
1 G/SCM/Q2/CHN/105  
2 G/SCM/N/372/CHN  G/SCM/Q2/CHN/111  
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  4. Are vehicles and vessels manufactured outside China eligible for this subsidy?  
Reply : 
Vehicles and vessels manufactu red outside China are also eligible for this subsidy if they meet the 
requirements prescribed in No. 74 [2018] of the Ministry of Finance.  
Preferential tax policies for Clean Development Mechanism  
5. Which sectors are eligible for this subsidy?  
Reply : 
The preferential tax polic ies for Clean Development Mechanism apply to eligible enterprises engaging 
in projects of Clean Development Mechanism. These policies have no restrictions on the sector of 
the enterprise.  
Preferential tax policies for integrated circu it industry  
6. What are "projects encouraged by the state" in the integrated circuit industry?  
Reply : 
Please refer to No.35 "Preferential tax policies for integrated circuit industry " of the subsidy 
notification submitted by China.  
7. How many enterprises are designated as "key integrated circuit designing 
enterprises encouraged by the State"?  
Reply : 
The total number of enterprises is adjusted dynamically according to the situation of th e applications 
and whether these enterprises meet relevant criteria.  
Preferential VAT for large passenger aircraft and new regional aircraft  
8. Are foreign -owned businesses eligible for this subsidy?  
Reply : 
According to the Announcement No.88 (2019) of the Mi nistry of Finance and the State Taxation 
Administration, the capital composition of an enterprise is not a criterion for identifying the 
beneficiaries of the subsidy. Foreign -invested enterprises meeting the criteria and producing relevant 
products can enj oy this subsidy.  
9. What was the total number of businesses that received this subsidy during this 
notification period?  
Reply : 
Not available.  
10. How many aircraft have been produced with the support of this subsidy?  
Reply : 
Not available.  G/SCM/Q2/CHN/111  
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  Preferential tax treatme nt on the house property tax and urban land use tax of enterprises 
engaged in capacity reduction and structural adjustment  
11. Which sectors are targeted for capacity reduction and structural adjustment 
through this subsidy?  
Reply : 
According to the Notice by the Ministry of Finance and the State Taxation Administration of Policies 
Concerning House Property Tax and Urban Land Use Tax for Capacity Reduction and Structural 
Adjustment (No. 107 [2018] of the Ministry of Finance) issued on 30 September 201 8, the 
implementation period of these policies is from 1 October 2018 to 31 December 2020 and the objects 
are enterprises that suspend production or operation or close down according to the requirements 
of capacity reduction and structural adjustment, incl uding iron and steel industry.  
12. How were target enterprises for suspension of production identified?  
Reply : 
In the process of identifying target enterprises for suspending production, enterprises play the major 
role and their right of independen t decision -making is safeguarded.  
13. How was capacity reduction and structural adjustment monitored?  
Reply : 
In the process of identifying target enterprises for suspending production, enterprises play the major 
role and their right of independent decision -making is safeguarded.  
14. What was the total capacity reduction achieved through this scheme in each of 
the el igible industries?  
Reply : 
During the 13th Five-year Period, 150 million tons of steel and iron production capacity has been 
reduced.  
General questions  
15. Could China please provide any available data on subsidy amounts for the 
preferential tax policies includ ed in the notification?  
Reply : 
There are no statistics on tax revenue expenditure.  
16. Is China's position that: (a) state -owned banks did not provide any preferential 
lending to state -owned enterprises during the notification period; or (b) all lending 
by state -owned banks is outside the scope of this notification? If (b), why?  
Reply : 
The Chinese government attaches great importance to the fair and equitable participation of SOEs 
in market competition. SOEs have been integrated with the ma rket economy and become the main 
entity independently engaging in market competition. SOEs purchase and sell according to 
commercial considerations. SOEs are subject to the same laws and rules as other enterprises in 
terms of access to funds, bankruptcy an d competition legislation and do not enjoy privileges.  G/SCM/Q2/CHN/111  
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  17. Does China consider all activities of government guidance funds to be outside the 
scope of this notification? If so, could China please explain the reasons for its 
assessment that these funds do not co nstitute any of the following under 
Article  1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures:  
a. A public body which provides financial contributions; or  
b. A funding mechanism which receives contributions from the government; 
or  
c. A private body entrusted or directed by government to carry out one or 
more of the types of functions illustrated in Article 1.1(a)(i -iii). 
Reply : 
The governmental guidance fund is a corporate equity investment fund owned by the 
Fund Company ，which is a joint  stock enterprise established in accordance with the Company Law. 
The fund 's investment management and decision -making are completely market -oriented. The 
governmental departments do not intervene or participate in any decision -making of the programs 
of th e fund. As the fund adopts the form of equity investment, its shareholders have clear 
requirements on financial returns of the fund. Therefore, there is no subsidy in any form for the 
enterprises invested by governmental guidance fund.  
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