G/SCM/Q2/CHN/79  
 
9 April 2019  
(19-2298) Page: 1/10 
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES  
QUESTIONS F ROM THE EUROPEAN UNION  REGARDING  THE 
NEW AND FULL NOTIFIC ATION OF CHINA1 
The following communication, dated 5 April 2019, is being ci rculated at the request of the delegation 
of the European Union . 
 
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General questions  
Question 1 
With regard to  the programs granted or maintained at sub -central government level, there appears 
to be significant difference in the number of schemes reported for some provinces over others. Can 
China confirm if this notification covers all provinces/municipalities and  all schemes administered by 
the various sub -central regions.   
Question 2 
According to Bank of China, at the end of 2016 the number of governmental guidance funds 
exceeded 1,000 (1.9 trillion RMB paid in at that date), up 30% in number and 144% in volume 
compared to 2015 – see information in link. Can China explain why no such guidance fund is included 
in this notification to the WTO?  
http://pic.bankofchina.com/boc appd/rareport/201709/P020170929497812585464.pdf  
Question  3 
In order to facilitate the review process of China 's subsidy notification, would it be possible for China 
to provide the Chinese titles of the schemes listed in Annex attached.  
Question  4 
Could China please explain which of the schemes included in the notification are relevant for the 
steel industry – apart from the one notified which relates to dissolving overcapacity in that industry.  
Question  5 
According to the Competitiveness Reports to the U S Congress by the US Exim Bank, China' s two 
official export credit agencies CEXIM and Sinosure are globally the biggest providers of medium - 
and long -term export credit support (their combined annual support in recent years has been in 
excess of  USD 30 billion). These are only conservative estimates given the lack of transparency 
regarding Chinese data. Export credit support, unless provided in accordance with an international 
undertaking on official export credits specified in the WTO SCM Agreem ent constitutes prohibited 
export subsidy within the meaning of the SCM Agreement. Can China explain why it did not notify 
                                                
1 G/SCM/N/ 315/CHN . G/SCM/Q2/CHN/79  
 
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  to the WTO any measures constituting official export credit support given the above -mentioned 
information about the scale of its offi cial export credit programmes?  
Questions regarding 2015:  
Question 6 
On the basis of the PRC 's 2015 budget heading "capital injections to SOEs ", could you explain how 
enterprises were selected as eligible to the following capital injections: (executed budg et data)  
• Capital injections related to the economic structural adjustment: RMB 26 billion  
• Capital injections related to the development of forward -looking strategic industries: 6 
billion   
• Capital injections related to the support to scientific and technol ogical progress: 
RMB 1.9 billion?  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2016czys/201603/t20160325_1924189.html  
Question 7 
On the basis of the PRC 's 2015 budget heading "policy subsidies to SOEs ", could you explain how 
enterprises have been selected as eligible to these subsidies totalling RMB 9.5 billion?  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2016czys/201603/t20160325_1924189.html  
Question  8 
On the basis of the PRC 's 2015 budget heading "other expenditures related to SOE 's operational 
budget ", could you explain what kind of expenditures this heading (RMB 12. 8 billion) covers and to 
what extent they are related to MIC 2025?  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2016czys/201603/t20160325_1924189.html  
Question 9 
On the basis of the PRC 's 2015 budget allocations (central -to-local transfers), could you explain what 
progra mmes were eligible under the following insurance subsidy scheme:  
V.2– Central financial budget allocation guiding the local science and technology development  
Essentially used for the insurance subsidy scheme in support of newly -built large technology 
equipment (sets): total RMB 1.4.   
Where in the notification is this scheme listed?  
Data source : http://yss.mof.gov.cn/2015czys/201503/t20150324_1206251.html  
Question 10 
On the basis of the PRC 's 2015 budget allocations (central -to-local transfers), could you explain what 
programmes were eligible for the following allocations:  G/SCM/Q2/CHN/79  
 
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  XII.3-Budget allocation for the dismantling of old ships and standardisation of ships: RMB 4 billion  
XIII. 1 B udget allocation for the development of strategic and emerging industries: RMB 8 billion  
XIII.2 Budget allocation for the industry transformation and upgrade: RMB 1 billion  
XIII.4 –Budget allocation for SME 's development: RMB 10.1 billion  
XIII.5 - Budget al location for capital construction: RMB 15.7 billion  
Where in the notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2015czys/ 201503/t20150324_1206251.html  
Questions regarding 2016  
Question 11 
On the basis of the PRC 's 2016 budget heading "capital injections to SOEs ", could you explain how 
enterprises have been selected as eligible to the following capital injections: (executed budget data)  
• Capital injections related to the economic structural adjustment: RMB 20 billion  
• Capital injections related to the development of forward -looking strategic industries:  
10 billion.  
• Capital injections related to the support to scientific and te chnological progress: 
RMB 1.2 billion  
Where in the notification are any of these schemes listed?  
Data source: http://yss.mof.gov.cn/2017zyys/201703/t20170324_2565527.html  
Questio n 12 
On the basis of the PRC 's 2016 budget heading "policy subsidies to SOEs ", could you explain how 
enterprises have been selected as eligible to these subsidies totalling RMB 9.3 billion? Where in the 
notification are any of these schemes listed?  
Data source : http://yss.mof.gov.cn/2017zyys/201703/t20170324_2565527.html  
Question 13 
On the basis of the PRC 's 2016 budget heading "other expenditures related to SOE 's operational 
budget", could you explain what kind of expenditures this heading (RMB 10.1 billion) covers and to 
what extent they can be related to MIC 2025?  Where in the notification is the scheme listed?  
Data source : http://yss.mof.gov.cn/2017zyys/201703/t20170324_2565527.html  
Question 14 
On the basis of the PRC 's 2016 budget allocations (central -to-local transfers), could you explain what 
progr ammes were eligible to the following allocations:  
• I.4-Institutional settlement subsidy budget allocation of RMB 140,5 billion, up 35.9% 
compared to 2014.  G/SCM/Q2/CHN/79  
 
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  Essentially used to expand strategic support to the setting up of One Belt, One Road, to the 
coordinated development of the BEIJING -TIANJIN -HEBEI area, and to the setting up of the 
Yangtze River economic belt .  
• II.13- Budget allocation to build capacities for the national science and technology innovation 
bases (system): RMB 1.6 billion  
• II.14 - Central financial budget allocation guiding the local science and technology 
development RMB 1.4 billion  
• II.42 - Budget allocation for the industry enterprise transf ormation and upgrade : 
RMB 20 billion (+10 billion at central level for capital construction)  
• II.66 - Budget allocation for the dismantling of old ships and standardisation of ships: 
RMB 5.6 billion  
• II.68 – Budget allocation for the development of strategic  and emerging industries 
RMB 3.5 billion  
• II.69 –Budget allocation for industry transformation and upgrade RMB 11 billion  
• II.71- Budget allocation for SMEs development: RMB 8.5 billion  
• II.74- Budget allocation for the foreign economic and trade development:  RMB 11 billion  
Where in the notification are the schemes listed?  
Data source: http://yss.mof.gov.cn/2016czys/201603/t20160325_1924488.html  
Questions on notified schemes :  
 Question 15 
Could China please explain why the following 33 schemes have been notified to the WTO in the 
context of this subsidy notification exercise - Schemes 1.2, 1.11, 1.37,1.48, 1.57, 1.58, 1.60, 1.61, 
1.62, 1.66, 1.67, 1.74, 1.75, 1.76, 2.4, 2.12, 2. 14, 2.15, 2.16, 2.23, 2.43, 2.44, 2.51, 2.59, 2.60, 
2.66, 2.74, 2.79, 2.80, 2.87, 2.91, 2.100, 2.108. These do not appear to be concerned with the 
production of goods but rather to provision of services or other policies including poverty alleviation, 
environmental conservation, infrastructure development, disease and pest control etc.  Therefore, 
could China please explain the reasons for including these in the notification?  
Scheme 1.2 - Preferential tax policies for enterprises with foreign investment est ablished in Special 
Economic Zones (excluding Shanghai Pudong area).  
Question 16 
This tax scheme appears  to relate, in the main, to infrastructure projects. However, agriculture 
operations are also mentioned. Could China please provide information on the type of agriculture 
projects/products that are covered under this scheme?  What are the criteria for agriculture projects 
to benefit under this tax scheme?  
Scheme 1.5 - Preferential tax policies for high or new technology enterprises.  
Question 17 
Can China  please list what are the "high or new technology enterprises " covered by this tax policy 
and in what legislation/guidelines are they defined?  G/SCM/Q2/CHN/79  
 
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  Schemes 1.13 to 1.17 - Various preferential tax treatments for production with integrated utilization 
of resourc es.  
Question 18 
What is meant by integrated utilization of resources? Could China please provide information on 
whether manufacturing companies in the steel and aluminium sectors are covered by any of these 
tax schemes?  What are the criteria for such companies to qualify for these preferential tax schemes?  
Can China please provide information on the specific legislation that applies to these sectors?  
Scheme 1.18 - Preferential VAT on photovoltaic generated electricity  
Question 19 
The notification states under "To whom is the subsidy provided " - The electricity produced by solar 
energy . Could China please clarify who is the actual recipient of the subsidy under this scheme?  
Scheme 1.20  - Preferential tax treatment for energy saving and new energy vehicles and vessels.   
Question 20 
Can China please clarify if this tax treatment is applicable to the users of these vehicles and/or the 
manufacturers of the vehicles?  What is meant by vessels?  
Schemes 1.25, 1.26 and 1.27 - Various prefere ntial policies for small enterprises making little profits  
Question 21 
Can China please provide the detailed criteria for each of the schemes in question as to what 
constitutes little profits?  What safeguards exist to ensure that these schemes do not enabl e the 
continuation of otherwise unprofitable/unsustainable industries?  
Schemes 1.29 and 1.30 - Preferential tax policies for companies employing disabled people  
Question 22 
For both schemes the subsidy is provided to "The eligible enterprises that employ d isabled people ". 
Could China please clarify what is meant by "eligible "? What enterprises are eligible?  
Scheme 1.35 - Preferential tax policies for enterprises engaged in projects of preliminary processing 
of agricultural, forest, animal and fishery produ cts.  
Question 23 
Can China please explain what are projects of preliminary processing  in each of the four sectors 
mentioned, agriculture, forest, animal and fishery products? Where are these defined in legislation?  
The notification mentions that the prefe rential tax is applicable to income derived by an enterprise 
from stipulated projects. Could China please explain what are the stipulated projects and where are 
they mentioned in the legislation?  
Scheme 1.39  - Preferential tax policies on filling mining a nd mining resources in exhaustion stage  
Question 24 
What are the eligible mineral resources covered by this scheme?  Where are the products listed?  G/SCM/Q2/CHN/79  
 
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  Scheme 1.49 - Fund for development of modern agriculture  
Question 25 
What is the amount allocated under this fund?  Which provincial governments receive this funding?  
Do they in turn forward the funds to farmers, producers?  
Scheme 1.51 - Subsidy for purchasing agricultural machinery  
Question 26 
Are the subsidies under this scheme available for the purchase of imp orted agricultural equipment 
also? Where is this specified in the legislation?  
Scheme 1.52 - Subsidy for fine crop seeds  
Question 27 
Are the subsidies under this scheme available for the purchase of imported crop seeds?  Where is 
this specified in the legislation?  
Scheme 1.53 - Comprehensive subsidies for agricultural inputs  
Question 28 
What inputs qualify for subsidies under this scheme? What determines which inputs qualify? How is 
the fund divided among the provincial governments? What provinces are c oncerned?  Is this scheme 
still in operation?  
Scheme 1.59 - Fund for agricultural resources and ecological protection  
Question 29 
What is meant by "strengthen fishery resources protection " and how much of this fund is allocated 
to fishery projects? What pro vinces are covered by this fund? How are the funds allocated between 
provinces?  
Scheme 1.63 - Subsidy for scrapping and dismantling vessels and for ship type standardization  
Question 30 
Does this scheme relate to fishing ve ssels?  If so, can China please provide details about the number 
of fishing vessels which have been scrapped under this scheme?  
Scheme 1.65 - Aquatic improved breed subsidy  
Question 31 
What are the eligible aquafarms? What breeds are involved?  Is the subsid y payable in the form of a 
grant and, if so, how is the amount determined?  
Scheme 1.66 - Subsidy for scrapping old vehicles  
Question 32 
Is the subsidy conditional on the purchase of a new vehicle? How much is payable per vehicle?  G/SCM/Q2/CHN/79  
 
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  Scheme 1.69  - Support fo r new energy vehicle promotion and utilization  
Question 33 
Can China please provide the amount budgeted for this scheme? If not available will China please 
ensure it is notified to the WTO as soon as possible?  
Schem e 1.77 - Fund for development of strategic emerging industries  
Question 34 
What are the eligibility criteria for this program? What is the approval process for investment 
decisions? Are SOE eligible for this Fund? If yes, what is the share of SOEs among beneficiaries? To 
what extent is th e Fund related to MIC2025? How are the subsidies channelled to the beneficiaries? 
Are the given directly or via cooperation agreements with Banks? If the latter, which banks? In what 
form are the funds disbursed (loans, subsidies interest rates, subsidised  insurance premia, grants, 
equity)?  
Scheme 1.79  - Reward for public -private partnership (PPP) projects  
Question 35 
Could China please explain further the purpose of this scheme. What are the criteria to qualify for 
support under this fund ? What industries are covered by this scheme?  
Scheme 1.80 - Industrial transformation and upgrading fund  
Question 36 
What are the eligibility criteria for this programme?  What industries are covered? Are SOEs eligible 
for support under this Fund? If yes wha t is the share of SOEs among beneficiaries? To what extent 
is the Fund related to MIC2025? How are the subsidies paid to the beneficiaries? In what form is the 
support provided (loan, subsidies interest rates, subsidised insurance premia, grants, equity?) What 
is the amount available under this fund? How long is the fund in place and is the legislative framework 
listed correct and up to date - if not can China please provide the details of the current framework?  
Scheme 1.81 - Reward and support fund for re structuring of industrial enterprises  
Question 37 
What are the eligibility criteria for this programme?  What is the approval process for investment 
decisions? Are SOE eligible to this Fund? If yes what is the share of SOEs among beneficiaries? To 
what exte nt is the Fund related to MIC2025? How are the subsidies channelled to the beneficiaries? 
directly?  via cooperation agreements with Banks? if yes which banks? In what form? (Loan, subsidies 
interest rates, subsidised insurance premia, grants, equity?)  
Scheme 2.13 - Fund for research and development of applicative technologies  
Question 38 
What are the eligibility criteria for this programme?  What is the approval process for investment 
decisions? Are SOE eligible to this Fund? If yes what is the share of SOEs  among beneficiaries? To 
what extent is the Fund related to MIC2025? How are the subsidies channelled to the beneficiaries? 
Directly?  Via cooperation agreements with Banks? If yes which banks? In what form? (Loan, 
subsidies interest rates, subsidised insur ance premia, grants, equity?)  G/SCM/Q2/CHN/79  
 
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  Scheme 2.17 - Fund for development of emerging industries  
Question 39 
Can China explain which banks administer this scheme? Can support from this fund be cumulated 
with support from the national Fund for development of strateg ic emerging industries (1.77)? 
Can China explain why only one sub -central fund for strategic emerging industries is notified? Is it 
China 's understanding that there is only one sub -central fund of this kind? How does China explain 
that funds such as the Sh andong Guidance Fund for strategic emerging industries and set up in 2015 
(Lu Caiqi 2015/51, 28 sept 2015) or Shandong Province 's New and Emerging Industries and Business 
Creation Guidance Fund (ref: http://www.gov.cn/zhengce/2015 -09/25/content_5044504.htm ) are 
not notified?  
Scheme 2.3 - Fund for renovation of boilers and industrial furnaces  
Question 40 
Can China please provide information on the companies that benefit from this progr am? Are there 
steel and aluminium manufacturing companies included? If so, which companies are they?  
Scheme 2.5 - Fund for development of low -carbon manufacturing industry  
Question 41 
What companies in what sectors benefit from these interest subsidies? Wh ich banks administer this 
scheme?  
Scheme 2.25 - Subsidy for purchase of pure electric passenger vehicles  
Question 42 
Who are the subsidies paid to – car manufacturers or purchasers?  Is this scheme still in operation? 
What is the amount paid in 2016?  
Schem e 2.27 - Fund for research and development of enterprises  
Scheme 2.28  - Fund for technical renovation of industrial enterprises  
Scheme 2.29 - Fund for development of industrial enterprises  
Scheme 2.57 - Fund for promotion of industrial restructuring  
Question 43 
What industries/sectors are covered by these schemes? What are the criteria to qualify for support? 
How are the funds paid?  
Schemes 2.31 and 2.63 - Funds supporting public listing of companies  
Question 44 
It is noted that China has notified two schemes supporting the public listing of companies.  We note 
that there may be other such schemes in existence such as the "ZHUHAI City Fund for public listing 
of enterprises ". Can China explain why it has not notified this scheme and if there are other s which 
should have been notified?  G/SCM/Q2/CHN/79  
 
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  Scheme 2.55 - Fund for product quality improvement  
Question 45 
What are the criteria to qualify for this fund? What industries/sectors are covered?  
Scheme 2.34 - Fund for the industrialization of high and new technologie s 
What type of projects are covered by this scheme? What industries qualify for support?  
Scheme 2.38 - Fund in support of leading fishery enterprises  
What are the criteria applicable for this fund? What are the enterprises that have benefitted from 
suppor t under the fund?  
Schemes 2.40, 2.45 and 2.67 - Funds for dissolving overcapacity  
While these three schemes relate to overcapacity reduction in coal, only one (2.40) concerns 
reduction in overcapacity in the steel industry - for Yunnan province.  In the 13 th FYP for Steel, China 
seeks to reduce China's steel overcapacity by 100 -150 mmt by the year 2020.  In this context can 
China explain why only one scheme for reducing overcapacity in steel is notified.  In this context 
were other schemes put in place to red uce overcapacity in steel and, if so, why were these not 
notified?  
Scheme 2.53 - Fund to foster start -up science and technology enterprises  
Question 46 
What are the criteria applicable to this fund? Which banks are the loans channelled through?  
Schemes 1 .20, 1.22, 1.23, 1.69, 2.1, 2.25, 2.68, 2.93 - Schemes relating to new energy vehicles  
Can China confirm that these schemes emanate from the Made in China 2025 priorities, to support 
the NEV sector? Are the funds governed centrally?  In a notice on its web site on 19 March 2019, The 
Ministry of Industry and Information Technology (MIIT) announce the preliminary review of 
new energy vehicles (NEV) subsidies from 2016 and previous years until 25 Mar 2019, in line 
with 'Notice on settling 2015 and 2016 NEV subs idies. Can China please explain which of the 
subsidies in the lists provided in MIIT website are notified in the current Subsidy notification. For 
those schemes in the lists, which were not notified, can China please explain why this is the case 
and if the y intend to make a supplementary notification.   
  G/SCM/Q2/CHN/79  
 
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  ANNEX - SCHEMES FOR WHICH EU WOULD LIKE TO RECEIVE THE CHINE SE NAME  
CENTRAL LEVEL  
1.76 Fund for development of strategic emerging industries  
1.77 Fund for the development of international economic relations  and trade  
1.78 Reward for public -private PPP projects  
1.79 Industrial transformation and upgrading fund  
1.80 Reward and support fund for restructuring of industrial enterprises  
1.81 Fund for promotion of energy -saving products  
SUBCENTRAL LEVEL  
2.13 Luoyang Fund for research and development of applicative technologies  
2.17  Nanjing City (Jiangsu) Fund for development of emerging industries  
2.18 Yancheng city (Jiangsu) Fund for transformation and upgrading of industry and IT  
2.27  Shandong Fund for res earch and development of enterprises  
2.28  Tianjin Fund for technical renovation of industrial enterprises  
2.29 Tianjin Fund for development of industrial enterprises  
2.31  Tianjin Fund supporting public listing of enterprises  
2.34  Tianjin Fund for the in dustrialisation of high and new technologies  
2.48  Hebei Fund in support of scientific and technology innovation  
2.49  Hebei Fund rewarding public listing of enterprises  
2.52  Hangzhou Fund for science and technology innovation projects  
2.55  Wenzhou Fund for product quality improvement  
2.56  Ningbo Fund in support of engineering (technology) centers of enterprises  
2.57  Ningbo Fund for promotion of industrial restructuring  
2.61  Shaanxi Reward for public private partnership projects PPP  
2.63  Ningxia Hui  Fund supporting public listing of enterprises  
2.64  Ningxia Hui Fund for projects of new type industrialisation development  
2.65  Ningxia Hui Fund for the development of SMEs and non -public economy  
2.72  Guangxi Fund for the transformation of scientific a nd technology achievements purchased 
by enterprises  
2.83  Shanghai Fund for industrial transformation and development  
2.86  Shanghai Fund for scientific and technology innovation  
2.88  Shanghai Fund for development through structural adjustment and change in growth pattern  
2.89  Shanghai Fund for development of emerging industries  
2.90  Shanghai Fund for industry and information technology projects  
2.106  Chaozhou Fund for high and new technology enterprises  
 
 
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