G/STR/Q1/CHN/7  
 
2 August 2016  
(16-4145)  Page: 1/2  
Working Party on State Trading Enterprises  Original: English  
 
 STATE TRADING 
REPLIES TO QUESTIONS1 POSED BY AUSTRALIA REGARDING THE NOTIFICATIONS OF CHINA2 
 
 
The following communication, dated 2 August 2016, is being circulated at the request of the Delegation of China. 
 
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 Question 1 
 
AGRICULTURE  
a) On page 9, under Reply A-C, China states  that for a number of commodities, that a 
portion of the respective tariff-rate quota (TRQ) may be allocated to entities other than STEs. Can China please identify spec ifically what are the current conditions 
non-STEs must follow to maintain importer access to the TRQs for wheat, cotton 
and sugar?  
 Reply: 
 Any enterprise with the right to trade is allowe d to engage in the import of the agricultural 
products under import TRQs subject to state trading, except for the shares exclusively allocated to 
state trading enterprises. Annual announcements are released by the National Development and 
Reform Commission and the Ministry of Commerce at their websites about the application conditions (including that for non-state trading enterprises) and allocation principle for the import 
tariff-rate quotas of grains, cotton and sugar. 
 Question 2  
b) On page 9, under Reply D, China stat es that "State trading enterprises are 
operated following market mechanism, wi th no government interference. State 
trading enterprises determine by themselv es the import level of wheat, maize, 
rice, sugar, cotton and chemical fertilizer according to the quantity of TRQ that 
they have obtained, and taking into account the domestic supply and the prices of both domestic and international markets among other factors." Can China please 
explain how the allocation is determined between STEs, when more than one STE 
is awarded an importation TRQ allocation in any given year? 
 
Reply: 
 
In that case, the import TRQs of agricultural products for state trading will be allocated among the 
STEs, taking into account of the factors such as historical performance, operational situation and 
amount of application, etc. The import TRQs for fertilizer will be allocated in the first-come-first-
served manner.  
 
                                               
1 G/STR/Q1/CHN/4. 
2 G/STR/N/10/CHN, G/STR/N/11/CHN, G/STR/N/ 12/CHN, G/STR/N/13/CHN, G/STR/N/14/CHN, 
G/STR/N/15/CHN. G/STR/Q1/CHN/7 
 
- 2 - 
 
  Question 3 
 c) Regarding Table I: Statistical Information Imports , can China please clarify why 
the data relating to "Import Quantity of State Trading Enterprises", "Average 
representative domestic sales price", "A verage representative domestic sales 
price" and "Mark-up" is not available? Will China be in a position to provide this 
data in future notifications? 
 
Reply: 
 
Besides the import TRQs for state trading, the STEs can also act as agents for the import and 
export businesses for various types of other enterpri ses. It is therefore difficult to differentiate 
transactions conducted on their own and on behalf of other enterprises. 
 
Question 4 
 INDUSTRIAL PRODUCTS 
 
a) China's notification advises that just fi ve STEs can export coal, and that no annual 
review of qualification is required. Furthe r, quota license administration applies to 
the export of coal, with exports determ ined by quota size, market supply and 
demand, prices and other factors." On nu merous occasions, the notification also 
states "State trading enterprises are oper ated following market mechanism, with 
no government interference." 
 
b) Can China please explain wh y it restricts the export of coal via a system of STEs 
and quota licenses? Given that it does have export quotas, can China provide 
details on how it determines the size of quota for each of the five existing STEs? 
Can China also advise why, under this syst em, the total quantity of coal exported 
from China has fallen in every year of data provided between 2003 and 2014 - from 93.9 million tons to just 5.6 million tons – a period in which domestic 
production more than doubled? Does China have any plans to review how the 
system for coal exports operates? 
 
Reply: 
 
The coal exports are subject to state trading and qu ota administration in China. The export quotas 
are determined according to the production and op eration, the export performance, the amount of 
application of the enterprises and other factors. Over the recent years, the total amount of coal 
export quotas allocated by China has not been reduced, and the decline of exports has been 
mainly due to the falling prices in the international market and no profits for the export 
enterprises. 
 Question 5 
 
c) With regard to Table II, can China please  advise why it is unable to provide any 
information on coal pricing - whether proc urement prices, domest ic sales prices or 
export prices? Will China be able to pr ovide such information in the future? 
 Reply: 
 
The coal prices are determined by the market. Th e procurement prices, domestic sales prices or 
export prices of coal are determined independ ently by enterprises. They are the internal 
information of enterprises and considered as bu siness secrets, therefore there is no relevant 
information available. 
 
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