WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 24 
  
  III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures, valuation, and rules of origin 
(a) Customs procedures  
1. China's main legislation and procedures on cu stoms clearance has remained unchanged since 
its previous Review in 2010.1  Customs is in charge of administering and enforcing customs 
legislation.  Under the Foreign Trade Law and the Rules for the Registration of Foreign Trade 
Operators, individuals as well as legal persons and other organizations need to be registered as 
"foreign trade operators" with the Ministry of Co mmerce (MOFCOM) or its authorized bodies as well 
as with Customs before filing customs declarations. 
2. Import (and export) declarations may be made in  paper or electronic form, and may be made 
either by consignors and consignees of import cargo es who are registered with Customs or by customs 
brokers.  At the time of customs declaration, impor ters must meet the requirements of Customs and 
the General Administration of Quality Supervis ion, Inspection, and Quarantine (AQSIQ).   
3. Customs duty must be paid at a designated bank within 15 days of the memorandum of duty 
payment being issued by Customs.2  Customs collects the following administrative charges:  handling 
charges for customs supervision, registration fees of customs intellectual property protection3, charges 
for ATA (Admission Temporaire/Temporary Admissi on) document adjustment, and storage charges 
for goods and luggage, in accordance with relevant regulations.  
4. Consultations with the private sector (domestic  or foreign) on matters related to customs 
procedures are conducted through direct communi cations with private enterprises and various 
chambers of commerce, and through public hear ings;  information on customs procedures are 
available through notices, publications, offi cial websites, and enquiry points.   
5. Importers may request advance written rulings fro m Customs;  the rulings are binding.  The 
legal basis of the advance written rulings from Cust oms is the Customs Law and the Interim Measures 
on the Administration of the Administrative Rulings of Customs.4   
                                                      
1 The main laws, regulations, and rules on customs procedures include:  the Customs Law;  the Interim 
Measures for Administration of the Administrative Rulings of the Customs;  the Rules of the Customs on 
Administration of the Levying of Duties on Imports and Exports (GAC Decree No. 124);  the Regulations on 
Origin of Imported and Exported Goods (State Council Decree No. 416);  and the Provisions of the Customs on Administration of the Commodity Classification of Import and Export Goods (GAC Decree No.158).  During 
the period under review, administrative Customs announcements entered into force on, inter alia,  customs 
procedures regarding certain solid wast e, parcels, and classified clearance. 
2 In case of a delay in payment, a fine of 0.05% of the total amount of duty payable is charged.  If the 
duty is not paid within three months, Customs may take measures under Article 60 of the Customs Law, 
including notification to the importer's bank to deduct the amount due directly from the account, and to sell the 
dutiable goods and/or other goods belonging to the importer in order to raise the amount due.  The time-limit for 
payment of duty may be extended by Customs to a maximum of six months if duty cannot be paid due to, for 
example, force majeure or adjustments to the taxation policy. 
3 Registration fees are intended to bear customs costs related to the protection of relevant specific 
intellectual property. 
4 Order of the General Administration of Customs, No. 92. China WT/TPR/S/264/Rev.1 
 Page 25 
 
 
  6. In 2010, the average time required for custom s clearance was 1.7 hours for exports (2.4 hours 
in 2008) and 15.5 hours for imports (14.1 hours in 2008).  
7. China has adopted a "single window" project, whic h is intended to realize data sharing for 
customs clearance, including data exchange c oncerning cross-border RMB settlement, and online 
audit.  Currently, 13 departments under the State C ouncil, the Trade and Industry Department of the 
Hong Kong SAR, the Economic Services of the M acao SAR, and 15 commercial banks are connected 
by an electronic platform.  Customs has also pr omoted cooperation with the customs authorities in 
China's FTA partners, mainly in electronic networki ng with regard to preferential certificates of 
origin, and customs data exchange system, with the European and the Russian Customs, respectively.  
8. Under the "regional customs transit system ", goods authorized by Customs may be 
transported within China as bonded goods;  importers  submit customs declara tions only at the place 
where they are registered, and not at the port of entry.   
9. Under the Administrative Reconsideration Law,  administrative decisions made by Customs 
may be appealed, either to a higher authority within  Customs, or to a People's Court.  The Provisional 
Regulations on Processing Customs Appeals stipulate that Customs must give its decision within 
60 days after the appeal for administrative review is filed (with a possible extension of 30 days).  
Customs accepted 393 appeals for administrative review in 2009 and 289 in 2010;  and the courts 
accepted 25 administrative lawsuits disagreeing with the Customs' specific administrative acts in 2009 
and 27 in 2010.  
(b) Preshipment inspection   
10. China's preshipment inspection (PSI) requireme nts have remained unchanged since 2010.  
The requirements, which are defined in the revi sed Implementing Regulations of the Law on Import 
and Export Commodity Inspection, are intended to:  protect public health;  improve the phytosanitary 
situation;  protect the environment;  and prevent counterfeit goods from entering the country.5  PSI 
requirements have not been notified to the WTO.   
11. Under Article 22 of the Regulations, PSI is re quired on imports of waste raw materials and 
used machinery and electrical products.6  China has designated some foreign institutions to conduct 
PSI and to issue certificates in this regard7;  the current list of designated foreign institutions was not 
made available to the Secretariat.  Preshipment insp ection of waste raw materials and of used material 
and electronic products is carried out mainly by inspection bodies abroad;  for large-scale sets of equipment where technical support is deemed  necessary, the Chinese Government may send 
inspection and quarantine personnel abroad, upon the re quest of foreign inspection bodies, to provide 
technical guidance and consultancy.
8  PSI is also required for imports of certain commodities related 
to national security, with high value or complicat ed technology;  and equipment exceeding certain 
height, length or volume.   
                                                      
5 The Regulations entered into force on 1 December 2005. 
6 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 184.  Relevant provisions also include:  
Article 29 of the Rules on Administration and Supe rvision of Inspection and Quarantine on Solid Waste 
Imported as Usable Raw Materials (AQSIQ Decree No. 119), Rules on Administration of Inspection and 
Supervision of Import of Used Machinery and Electri cal Products (AQSIQ Decree No. 37), and Rules on the 
Inspection and Supervision Procedures for Import of Used machinery and Electrical Products (AQSIQ Decree No. 53).  WTO document G/TBT/N/CHN/649, 19 June 2009. 
7 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 168. 
8 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 208. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 26 
  
  (c) Customs valuation  
12. China's customs valuation regime is regulat ed by provisions in the Rules Regarding 
Determination on Customs Value of Imported and Exported Goods  (General Administration of 
Customs, Decree No. 148, 2006).  Customs value is  determined on the basis of transaction value, 
which includes the costs of transport (freight ch arges) and insurance and other related charges.9  
Where it is not possible to determine the trans action value, the customs value is based on (in 
sequential order):  the transaction value of identical  goods;  the transaction value of similar goods;  the 
deductive value;  the computed value; and the va lue determined on a "reasonable" basis.  Data 
provided by the authorities indicate that in 2011, cu stoms value for more than 99% of China's imports 
was determined on the basis of transaction value.   
(d) Rules of origin 
13. China applies non-preferential and preferential ru les of origin.  Non-preferential rules of 
origin are applied in accordance with the Regula tions on Rules of Origin of Import and Export 
Commodities10;  they are intended to serve as a basis for applying MFN rates.  Under Article 3 of the 
Regulations, for goods produced or manufactured whol ly within one country or region, origin is 
defined as that country or region;  for goods produ ced in two or more countries or regions, the place 
of origin is the country or region where substa ntial transformation has been made and finalized.11  
14. On 2 June 2011, China revised the rules of or igin for products under HS 8412 (certain engines 
and motors) and HS 9026 (e.g. instruments and a pparatus for measuring the flow level liquids) from 
"change of tariff classification" to "change of tariff classification or ad valorem  percentage of 30%".   
15. Preferential rules of origin are applied in acco rdance with the various regional and bilateral 
trade agreements currently in force between Ch ina and its trading partners (Table AIII.1),  and to 
certain imports from LDCs.  Since its previous Re view in 2010, a free-trade agreement between China 
and Costa Rica has entered into force (1 August 2011).  Preferential rules of origin tend to vary from 
agreement to agreement, and so metimes across product groups, whic h add to the complexity of 
China's import regime.   
16. In 2010, China conducted overseas checks on 1,229 certificates of origin under free-trade 
arrangements.  Feedback so far showed that 8 of th ose certificates were false;  they involved mainly 
fish products.  
                                                      
9 Customs online information (in Chinese).  Vi ewed at:  http://www.customs.gov.cn/publish/ 
portal0/tab38320/info22193.htm.  See also WTO document G/VAL/N/1/CHN/5, 11 April 2008.  When freight 
charges cannot be determined, they are calculated by Customs on the basis of actual transportation costs of the 
imports or the freight rate or amount published by the transport industry at the time of import.  Insurance premiums that cannot be determined are calculated by Customs on the basis of 3% of the sum of the import 
price and freight charges. 
10 State Council Decr ee No. 416, 2004. 
11 Substantial transformation is defined either as a ch ange in the tariff headin g of the good according to 
China's tariff classification, or where the value added is no less than 30% of the total value of the product.  
WTO document G/RO/53, 1 August 2002. China WT/TPR/S/264/Rev.1 
 Page 27 
 
 
  (ii) Tariffs12 
(a) Overview 
17. According to China's national budget, in 2011, tariff revenue accounted for 2.7% of total tax 
revenue, down from 2.8% in 2010.  
18. The Customs Tariff Commission of the State Council is empowered by the Regulations on 
Import and Export Tariff to set "interim" tariff rates,  which are implemented on specific products for a 
specified period (usually for one year).13   
19. China provides at least MFN treatment for all WTO Members except El Salvador and some 
territories of EU Member states.14   
20. While the authorities state that they do not collect  data on the share of China's imports subject 
to different tariff rates (i.e. MFN rates a nd non-MFN rates), according to the UN COMTRADE 
database, most of China's imports appear to be subject to MFN or more favourable rates.15  
21. China is a party to the Information Technology  Agreement (ITA).  In accordance with the 
ITA, China eliminated tariffs on all ITA products on 1 January 2005. 
(b) MFN tariff rates 
Bound MFN tariff rates 
22. All of China's tariff lines are bound at ad valorem  rates.  The applied MFN tariff rates are 
close to the bound rates, imparting a high degree of predictability to China's MFN tariff (Table III.1 and Chart III.1).  Bound rates varied from zero to 65%  for agricultural products, and from zero to 50% 
for non-agricultural products in 2011.   
Applied MFN tariff rates 
23. China's applied MFN tariff rates consist of "standard" applied MFN rates as well as "interim" 
MFN rates for certain products.  The interim tariff effectively replaces the applied MFN tariff;  interim rates are not higher than the correspondi ng standard applied MFN tariff rates.   
                                                      
12 China's import tariff rates comprise MFN tariff rates,  non-MFN tariff rates ("agreement" tariff rates, 
"special preferential" tariff rates, "general" tariff rates), an d tariff-quota rates.  For all these rates (apart from the 
"general" tariff rates), China's tariff is set by the Customs Tariff Commission of the State Council, an inter-
ministerial body composed of, inter alia , the Ministry of Finance, Customs, MOFCOM, NDRC, and the State 
Council General Office in accordance with the Customs Law and the Regulations on Import and Export Tariff. 
The Customs Tariff Commission may set interim rate s whenever it considers such rates necessary.   
13 Interim tariffs may be applied to imports for a sp ecified period, in accordance  with Article 3 of the 
Regulations on Import and Export Duties. The Customs Tariff Commission of the State Council is responsible for setting and adjusting interim tariffs;  rates need to be approved by the State Council before their 
implementation.  Where there are interim tariff rates on imported goods that are subject to applied MFN tariff 
rates, and rates are no higher than applied MFN tariff ra tes, the interim tariff rates apply;  on imported goods 
subject to agreement tariff rates or special preferential tariff rates, the lower tariff rates apply;  on imported 
goods subject to tariff-quota rates, the interim tariff rates apply. 
14 El Salvador notified that it does not apply the multi lateral trade agreements between El Salvador and 
the People's Republic of China, in accordance with the Article XIII of the Marrakesh Agreement (WTO 
document WT/L/429, 7 November 2001).   
15 Exceptions are "general" rates (section (c) below).   WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 28 
  
  Table III.1 
Tariff structure, 2007, 2009 and 2011 
(%) 
MFN applied rate 
Final bound ratea   2007 2009 2011 
Bound tariff lines (% of all tariff lines) 100 100 100 100 
Simple average rateb 9.7 9.5 9.5 9.9 
   Agricultural products (HS01-24) 14.5 14.5 14.5 14.6 
   Industrial products (HS25-97) 8.9 8.6 8.6 9.0 
   WTO agricultural products 15.2 15.2 15.1 15.3 
   WTO non-agricultural products 8.8 8.6 8.6 9.0 
Duty-free tariff lines (% of all tariff lines) 8.7 9.4 9.4 7.5 
Simple average rate of dutiable lines only 10.7 10.5 10.5 10.7 
Tariff quotas (% of all tariff lines) 0.6 0.6 0.6 0.6 
Non- ad valorem  tariffs (% of all tariff lines) 0.7 0.7 0.7 0.0 
Domestic tariff "peaks" (% of all tariff lines)c 2.4 2.1 2.2 2.4 
International tariff "peaks" (% of all tariff lines)d 15.6 14.9 14.8 15.7 
Overall standard deviation of  tariff rates 7.5 7.5 7.5 7.5 
Coefficient of variation of tariff rates 0.8 0.8 0.8 0.8 
Nuisance applied rates (% of all tariff lines)e 2.7 2.7 2.7 2.6 
a Final bound rates are based on the 2011 ta riff schedule in HS07 nomenclature. 
b The simple average not including interim rates is 9.8% for all three years. 
c Domestic tariff peaks are defined as those exceed ing three times the overall average applied rate. 
d International tariff peaks are defined as those exceeding 15%. e Nuisance rates are those greater than zero, but less than or equal to 2%. 
Note: All three tariff schedules are based on HS07 nomenclature, consisting of 7,646, 7,868 and 7,977 tariff lines, respectivel y.  
Calculations are based on national tariff line level (8-dig it);  excluding in-quota rates and including AVEs for non- ad valorem  
rates provided by the aut horities, as available.  Interim duty rates are used  for the calculations when fully applied at the 8- digit 
level. 
Source:  WTO Secretariat calculations, based on data provided by the authorities of China. 
24. In 2010, duty rates (including interim rates) were reduced on, inter alia,  fresh strawberries, 
fermented beverages, woven fabrics of synthetic st aple fibres, hides and skins, and ethyl alcohol.  
Between 2010 and 2011, specific duty rates for phot ographic and cinematographic goods rose, while 
their ad valorem  equivalents remained unchanged;  import duty rates for, inter alia,  aviation kerosene 
increased, as its interim duty rates increased.   
25. In 2011, China's applied MFN tariff (including in terim rates) consisted of 7,977 lines at the 
HS 2007 8-digit level (up from 7,868 lines in 2009)16;  7,925 lines (99.3%) were ad valorem  rates.  
Unchanged since 2009, the 2011 applied MFN tariff contained 57 different ad valorem  rates, ranging 
from zero to 65% (Chart III.2).  Non- ad valorem  rates applied to 52 tariff lines:  44 at specific rates;  
5 at rates involving either an ad valorem  rate, if the price was below or equal to a certain amount, or a 
compound rate, if the price was higher; and 3 alternate rates ( ad valorem  rate or specific rate, 
whichever was lower).17  The authorities provided ad valorem  equivalents (AVEs) for all but 
                                                      
16 As at 1 January 2011, 399 tariff lines were fully su bject to interim tariffs at the HS 8-digit level.  
Including "ex-" lines, interim tariffs applied to another 193 tariff lines.  However, the analysis here includes only the 399 lines that were fully subject to interim rates, which also include lines with non- ad valorem rates. 
17 The 3 lines (HS 4001.10.00, 4001.21.00 and 4001.22. 00) are subject to interim tariff rates, which are 
lower or equal to standard applied MFN rates. China WT/TPR/S/264/Rev.1 
 Page 29 
 
 
  three non- ad valorem  tariff lines.18  The AVEs were calculated based on the average import prices for 
the four previous years, as provided by Customs;  for a few tariff lines, certain factors such as no importation or drastic price fluctu ations were taken into account.  The authorities maintain that 
applied non- ad valorem  duty rates are adjusted annually so that their AVEs do not exceed their 
corresponding bound rates, which are all ad valorem  rates in accordance with China's accession 
commitments.  As bound rates are ad valorem  and applied rates are non- ad valorem , there is a 
possibility that AVEs might exceed the bound ra tes, reflecting fluctuating import prices.
19  Including 
AVEs does not change the simple average applied MFN duty rate for 2011.  
02468101214161820
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
Calculations exclude in-quota tariff rates and include AVEs for non- ad valorem rates.   
WTO Secretariat calculations, based on data provided by the Chinese authorities.Per centChart III.1                       
Average applied MFN and bound tariff rates, by HS section, 2011
Note:
Source :01   Live animals & products        
02   Vegetable products03   Fats & oils      
04   Prepared food, etc.05   Mineral products
06   Chemicals & products07   Plastic & rubber
08   Hides & skins09   Wood & articles
10   Pulp, paper, etc.11   Textiles & articles
12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.15   Base metals & products
16   Machinery17   Transport equipment
18   Precision instrument19   Arms & ammunition
20   Miscellaneous manufacturing21   Works of art, etc.Average applied rate
(9.5%)Average bound rate
(9.9%)
MFN 2011 
Bound 2011
 
26. The simple average applied MFN duty rate was 9.5% in 2011 (the same as in 2009).20  The 
simple average applied MFN rate s for agricultural products (WTO definition) and non-agricultural 
products were 15.1% (slightly lower than in 2009) and 8.6% (unchanged), respectively.   
27. The dispersion in applied MFN rates, indicated by  the coefficient of variation, was 0.8% in 
2011 (unchanged since 2009)21;  the standard deviation of tari ff rates was 7.5% (also unchanged).  
                                                      
18 The 3 lines are those mentioned in the previous footnote.  Their applied MNF tariffs are ad valorem  
rates, but their interim tariffs are alternate rates.   
19 For the 52 non- ad valorem  lines, the AVEs were the same as the bound rates for 46 lines;  and the 
AVEs of interim rates were lower than the bound rates fo r 3 lines (HS 3701.30.24, 3702.55.20, and 8521.10.11).  
AVEs were not provided for HS 4001.10.00, 4001.21.00 and 4001.22.00. 
20 Excluding interim rates, the simple average applied MFN tariff rate was 9.8% in 2011 (same as in 
2009). WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 30 
  
  China's applied MFN tariffs show positive escalat ion between semi-processe d and fully processed 
products for, inter alia,  textiles and leather, wood and furniture , and chemicals, and in some cases 
negative escalation between unprocessed a nd semi-processed products (Chart III.3). 
(9.4%)(17.6%)(43.3%)
(14.9%)
(8.7%) 
(3.9%)
(0.9%) (0.4%) (0.3%) (0.1%) (0.2%) (0.3%)
05001,0001,5002,0002,5003,0003,5004,000
Duty free >0-5 >5-10 >10-15 >15-20 >20-25 >25-30 >30-35 >35-40 >40-45 >45-50 >50
Figures in parentheses indicate the share of total lines.   Calculations exclude in-quota rates, include AVEs for non-ad 
valorem rates and include interim duty rates.
WTO Secretariat calculations, based on data provided by the Chinese authorities.Number of tariff linesChart III.2
Distribution of MFN tariff rates, 2011
Tariff rates (%)
Note:
Source :
 
 
(c) Non-MFN rates 
28. China accords preferential tariff rates (agreement  rates) under various bilateral/regional trade 
agreements or arrangements (Table III.2).  In additi on, China applies special preferential tariffs (zero 
rated) unilaterally to imports of a number of go ods from 36 least developed countries (LDCs) with 
which it has diplomatic relations (Chapter II(3)(iii)).  China intends to eliminate tariffs on 97% of its 
tariff lines (at the HS 8-digit level) on imports from these LDCs;  in 2011, tariffs were eliminated on 
60.5% of tariff lines.   
29. "General" tariff rates are applied to imports whose origin cannot be determined, or that 
originate in countries and regions to which China doe s not apply MFN tariff rates, agreement rates, or 
special preferential rates (i.e. El Salvador and some territories of EU member states, as well as WTO non-members).  In 2011, the simple average of  the general rates was 56.8%, much higher than the 
applied MFN rate (9.5%) (the simple average of the general rates for agricultural products (WTO 
definition) and non-agricultural products  were 68.4% and 55.0%, respectively). 
                                                                                                                                                                     
21 Trade distortions may be caused not only by a high level of tariff protection, but also high disparity 
of protection across different product categories.  The greater the tariff dispersion across products, especially 
closely related products, the more opportunity there is for tariff evasion. China WT/TPR/S/264/Rev.1 
 Page 31 
 
 
  
n.a.n.a.
0.02.55.07.510.012.515.017.520.022.525.0
Food,
beverages and
tobaccoTextiles and
leatherWood and
furniturePaper printing
and publishingChemicals Non-metallic
mineral
productsBasic metals Fabricated
metal productsand machineryOther
manufacturingPer centChart III.3
Tariff escalation by 2-digit ISIC industry, 2011
n.a.
Note:
Source :Not applicable.
Calculations exclude in-quota rates, include AVEs for non-ad valorem rates and include interim duty rates.
WTO Secretariat calculations, based on data provided by the Chinese authorities.Average applied rate in manufacturing
(9.5%)First stage of processing
Semi-processed
Fully processed
 
Table III.2 
Summary analysis of preferential tariff, 2011 
(%) 
Total WTO agriculture WTO non-agriculture 
Average 
(%) Duty-free 
ratesa (%) Average 
(%) Duty-free 
ratesa (%) Average 
(%) Duty-free 
ratesa (%) 
MFN 9.5 9.4 15.1 7.0 8.6 9.8 
Agreement tariff rates 
   APTAb 8.9 9.6 14.1 8.0 8.1 9.9 
   ASEAN 
      Brunei Darussalam 1.0 91.7 2.5 89.7 0.7 92.0 
      Cambodia 1.1 90.8 2.6 88.7 0.9 91.1 
      Indonesia 1.0 91.7 2.5 89.8 0.8 92.0 
      Laos 1.1 90.9 2.6 89.1 0.9 91.1 
      Malaysia 1.0 91.7 2.5 89.8 0.8 92.0 
      Myanmar 1.0 91.7 2.5 89.6 0.8 92.0 
      Philippines 1.0 91.7 2.5 89.4 0.7 92.0 
      Singapore 1.0 91.7 2.5 89.8 0.7 92.0 
      Thailand 1.0 91.7 2.5 89.4 0.8 92.0 
      Viet Nam 1.0 91.7 2.5 89.4 0.8 92.0 
   Hong Kong, China CEPAc 7.3 29.4 13.0 19.7 6.4 31.0 
   Macao, China CEPAc 7.5 24.6 10.6 32.5 7.0 23.3 
   Chinese Taipei ECFAd 9.2 10.3 15.0 7.0 8.3 10.9 
Table III.2 (cont'd) WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 32 
  
  Total WTO agriculture WTO non-agriculture 
Average 
(%) Duty-free 
ratesa (%) Average 
(%) Duty-free 
ratesa (%) Average 
(%) Duty-free 
ratesa (%) 
   Pakistan FTA 6.2 35.8 12.1 21.9 5.3 38.1 
   Chile FTA 1.4 75.1 3.9 67.2 1.0 76.4 
   New Zealand FTA 2.4 24.9 5.1 13.9 1.9 26.6 
   Singapore FTA 9.0 12.2 14.1 10.6 8.2 12.5 
   Peru FTA 4.8 61.2 10.8 30.4 3.8 66.1 
   Costa Rica FTA 4.7 65.5 11.1 34.1 3.7 70.5 
Least developed preferential rates 
   Special preferential tariff agreement for: 
      Bangladesh and Laos unde r APTA 9.3 10.4 15.0 7.0 8.4 11.0 
      Cambodia 8.8 14.6 12.2 28.2 8.3 12.5 
      Laos 9.0 13.1 13.1 21.4 8.4 11.8 
      Myanmar 9.1 12.2 14.0 13.5 8.4 12.0 
      36 LDCs 5.1 60.6 9.3 55.5 4.4 61.4 
      Niger and Somalia under LDC 8.9 15.3 14.6 10.7 8.0 16.1 
a Duty-free lines as a percen tage of total tariff lines. 
b Preferential rates under APTA are app licable to the Republic of Korea, Sri Lanka, Bangladesh, India, and Laos. 
c Closer Economic Partnership Agreement.  
d Cross-straits Economic Co-opera tion Framework Agreement.  According to the Chinese authorities, tari ff reductions under the 
ECFA have not yet been fully implemented. 
Note:  Calculations are based on the nati onal tariff line level (8-digit);  excluding  in-quota rates and including AVEs for non -ad valorem 
rates provided by the author ities, as available.   Interim duty rates are used  for the calculations when  fully applied at the 8 -digit 
level. 
Source:  WTO Secretariat calculations, based on data provided by the authorities of China. 
(d) Tariff-rate quotas (TRQs) 
30. China's rules regarding TRQ administration ar e the Interim Measures on the Administration 
of Tariff Rate Quota for Importation of Agricultural Products22, and the Interim Measures on the 
Administration of Tariff Rate Quota for Importation of Fertilizers.23  Based on these rules, MOFCOM 
and National Development and Reform Commissi on (NDRC) issue product-specific implementing 
rules each year.  
31. In 2011, TRQs were applied to 8 categories of  imported goods, involving 45 tariff lines at the 
HS 8-digit level:  wheat (6 lines), maize (5), rice (14) , sugar (6), wool (6), wool tops (3), cotton (2), 
and chemical fertilizers (3) (same as in 2009).  A sliding duty is applied to  out-of-quota imports of 
cotton.  In 2011, this duty was applied so that, fo r cotton valued above a certain threshold, a specific 
duty of ¥0.57/kg applied;  for cotton valued below th e threshold, the rate was calculated based on an 
equation, but was no higher than 40%, taking into cons ideration the c.i.f. price of cotton (in Chinese 
yuan).  The threshold for 2011 was ¥11.397/kg.  The average applied in-quota rate was 4.8%, while 
the out-of-quota rate was around 50.4%.  These TRQs are applied to imports from all countries.  The 
process of quota allocation and re-allocation is  managed by the NDRC and MOFCOM.    
                                                      
22 MOFCOM and National Development and Reform Commission Decree No. 4 in 2003, WTO 
documents G/LIC/N/1/CHN/4 and G/AG/N/CHN/2. 
23 Former State Economic and Trade Commission and GAC Decree No. 27 in 2002, and MOFCOM 
Announcement No. 59 in 2004 (WTO document G/LIC/N/1/CHN/4). China WT/TPR/S/264/Rev.1 
 Page 33 
 
 
  (e) Tariff exemptions and reductions 
32. China's schedule of tariff exemp tions remains unchanged since 2010.24   
33. Raw materials and spare parts may be imported in bond under processing trade, in accordance 
with relevant provisions;  this policy also appli es to processing trade within Customs controlled areas 
such as export processing zones.25  Processing trade accounted for 41.2% and 38.9% of total trade in 
2009 and 2010 (the latest years for which data we re made available by the authorities), respectively.26  
With a view to reducing energy consumption and protecting the environment, the Government may 
not grant preferential treatment under processing trade to certain goods (section (2)(v)).   
(iii) Indirect taxes affecting imports 
34. VAT and excise taxes, where applicable, are coll ected at the border on imports.  The rates for 
imports and domestically produced goods are generally the same.27  The current VAT rates are 17% 
or 13% for most goods (section (4)(b)).  Some impor ts, such as those destined for export processing 
zones, may be granted VAT reductions or exemptio ns, in accordance with relevant provisions.    
(iv) Import prohibitions and licensing   
35. The authorities state that China has no WTO-inconsistent quantitative restrictions on imports.  
(a) Import prohibitions 
36. Under the Foreign Trade Law28, China maintains import prohibitions on grounds of public 
interest, environmental protection, or in accordance  with international commitments.  In general, 
prohibited products are listed in the Catalogu es of Commodities subject to Import Prohibitions29, 
issued by the MOFCOM and other relevant minist ries, such as the General Customs Administration, 
AQSIQ or the Ministry of Environmental Protec tion.  Changes in China's import prohibitions 
included those concerning incandescent lamps, with a view to improving energy efficiency, protecting the environment, and responding to global c limate change, in accordance with the Energy 
Conservation Law;  the prohibitions are to be implemented between 1 November 2011 and 
1 October 2016.
30   
37. The Foreign Trade Law (Article 18) permits the State Council's competent Foreign Trade 
Authority, which is MOFCOM eith er independently or with other relevant State Council authorities, 
                                                      
24 Tariff exemptions apply to:  goods of a single consignment on which the applicable duties are 
estimated to be no more than ¥50;  advertising materials and samples of no commercial value;  goods and 
materials provided free by international organizations or foreign governments;  goods damaged prior to Customs release;  and fuels, stores, beverages, and provisions for use en route, loaded on any means of transport in transit 
across the frontier.
24  Tariff exemptions and reductions also apply to goods imported by designated enterprises 
as specified in certain  policies (WTO, 2010). 
25 If the goods are not exported w ithin the specified period, import duties are collected by Customs. 
26 Exports and imports under processing trade account ed for 48.8% and 32.0% of  China's total exports 
and imports, respectively, in 2009 and 46.9% and 29.9% in 2010. 
27 Primary agricultural products sold by farmers directly to consumers are exempt from VAT.  
According to the authorities, this exemption is implemented on grounds of, inter alia , administrative simplicity. 
28 WTO document G/ADP/N/1/CHN/ 2/Suppl.4, 1 December 2004. 
29 MOFCOM online information (in Chinese).  Viewed at:  http://www.mofcom.gov.cn/aarticle/ 
b/c/200602/20060201575919.html [12.10.2011]. 
30 NDRC/MOFCOM/Customs/SAIC/AQSIQ Announcement 2011/28, 1 November 2011. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 34 
  
  upon the approval of the State council, to issue tem porary prohibitions or rest rictions on imports of 
certain products.  These temporary prohibitions appe ar to reflect mainly SPS concerns and decisions 
by international organizations.   
38. Import prohibitions have been no tified under Article XX at the HS eight-digit level;  the latest 
notification submitted was for 2009.31  In 2011, import prohibitions covered, inter alia :  waste (e.g. 
products of animal origin, mineral products, rubber, skins and leather, paper, glass, lead, toys and 
sport equipment, copper, cement),  second-hand/used items or scraps  (e.g. clothes, precious metals, 
machinery and electronic equipment, aluminium cont ainers for compound or liquefied gas, transport 
equipment), opium, chemicals, and incandescent light bulbs. 
39. Imports may also be prohibited on grounds of an imal, plant, or human health and safety, in 
accordance with Article 16 of the Foreign Trade Law and Article 4 of the Regulations for the 
Implementation of the Law on the Entry and Exit Animal and Plant Quarantine. 
(b) Licensing 
40. China's import licensing regime is regulated by the Foreign Trade Law32, the Regulations on 
Administration of Import and Export of Goods  (State Council Decree No. 332 in 2001)33, the 
Administrative Permission Law, as well as the Measures on Administration of Import Licence for 
Goods34, and the Measures on Administration of Automatic Import Licensing for Goods.35  
41. Based on these rules, MOFCOM together with the General Administration of Customs (GAC) 
and other relevant authorities issue the annual Ca talogue of Goods Subject to Automatic Import 
Licensing Administration, and the Catalogue of Goods Subject to Import License Administration in 
the second half of every year in the form of a MOFCOM Announcement, which is to be implemented 
the following year.36  These two catalogues list all the products  subject to import licensing procedures 
except for those under Tariff Rate Quota (TRQ) admini stration.  The authorities state that the regime 
applies equally to goods from all WTO Members a nd non-members.  Licences are not transferable.  
No fees, charges, deposits or advance paymen ts are required for the issuance of licences. 
Non-automatic import licences 
42. In 2010, 87 tariff lines (at the HS 8-digit level) were subject to non-automatic import 
licensing (down from 95 in 2009)37;  the lines cover ozone-depleting substances (with a view to 
meeting requirements of the Montreal Protocol on Substances that Deplete the Ozone Layer), and specific old mechanical and electronic products (aimed  at protecting public interests, the environment, 
and consumer health and safety).
38  Second-hand/used mechanical and electrical products 
                                                      
31 Notified to the WTO Market Access Division. 
32 WTO document G/LIC/N/1/CHN/4. 
33 WTO document G/LIC/N/1/CHN/4. 
34 MOFCOM Decree No. 27, 2004;  and WTO document G/LIC/N/1/CHN/5. 
35 MOFCOM and GAC Decree No. 26, 2004. 
36 The latest Catalogue of Goods Subject to Automatic Import Licensing Administration (for 2012) was 
issued on 10 Decembe r 2011.  MOFCOM onlin e information (in Chinese).  Viewed at:  
http://www.mofcom.gov.cn/aarticle/b/e/201112/20111207908966 .html.  The latest Catalogue of Goods Subject 
to Import License Administration (for 2012) was issued on 5 January 2012.  MOFCOM online information (in 
Chinese).  Viewed at:  http://www.mofcom. gov.cn/aarticle/b/c/201201/20120107914675.html. 
37 WTO document G/LIC/N/3/CHN/9, 11 November 2010. 
38 Non-automatic licences are also re quired for imports of chemicals used for military purposes, toxic 
materials, and radioactive isotopes and their compounds. China WT/TPR/S/264/Rev.1 
 Page 35 
 
 
  (HS 84194010 and 84194020) were removed from the lis t on 1 January 2011.  Applicants must apply 
for an import permit prior to applying for an im port licence.  The criteria for approving the import 
permit are contained in Measures on Administration of Import License for Goods (MOFCOM Decree No. 27 of 2004, G/LIC/N/1/CHN/5), Administrative Measures for the Import of Key Used 
Electromechanical Products (MOFCOM, GAC and AQSIQ Decree No. 5 of 2008, 
G/LIC/N/1/CHN/6), and Working Rules on Issuance of Import License (MOFCOM Circular Shang Pei Fa 360/2007).  Import permits are issued by the Ministry of Environmental Protection or MOFCOM, depending on the product.
39  Once the permit is obtained, a licence will be granted 
automatically by MOFCOM to the importer.  The licence is valid throughout the calendar year, and 
may be extended once, for a maximum of three months.40  
Automatic import licences 
43. The authorities state that automatic import licen ces are applied in China to monitor certain 
imports for statistical purposes;  automatic import lic ensing entails no quantitative  import restrictions.  
In 2010, 592 lines at the HS 8-digit level (7.4% of  total lines) were subject to automatic import 
licensing, up from 560 tariff lines (7.1% of total lines) in 200941;  32 tariff lines were added to the list 
on 1 January 2010, and 21 lines on 1 January 2011.  These concerned ma inly poultry, vegetable oil, 
tobacco, chemical fertilizers, coal, natural rubber, iron ore, crude and processed oil, steel, machinery 
products, automobile components, and ships.  
(v) State trading 
44. Under the Foreign Trade Law, the State may subj ect certain goods to state trading, with a 
view, inter alia , to ensuring stable domestic supply, stab ilizing prices, food safety, and protecting the 
environment and exhaustible resources.42  Products subject to state-trading (on imports) comprise:  
grain (including wheat, maize, and rice), sugar, co tton, chemical fertilizer, tobacco, crude oil, and 
processed oil (Table AIII.2).  Imports of vegetable o il (rapeseed oil, palm oil, and soybean oil) were 
removed from the state trading requirement in 2006 , although the Government reserves the right to 
conduct state trading in respect of these products in  accordance with China's Accession Protocol.   
45. Only the China National Tobacco Import & Export Group Corporation, a state-trading 
corporation, is allowed to import tobacco.  All ot her products subject to state trading may be imported 
by both STEs and non-STEs meeting certain require ments;  no data on import and export quantities 
for products subject to state-trading arrangements fo r the review period were made available to the 
Secretariat.43 
                                                      
39 Import permits for ozone-depleting substances are issued by the Ministry of Environmental 
Protection.  For old mechanical a nd electronic products and other materials, permits are issued by the 
MOFCOM. 
40 Measures on Administration of Import Licence for Goods (MOFCOM Decree No. 27 of 2004, WTO 
document G/LIC/N/1/CHN/5) and Working Rules on Issuance of Import Licence (MOFCOM Circular Shang 
Pei Fa 360/2007).   
41 WTO document G/LIC/N/3/CHN/9, 11 November 2011. 
42 China's latest notification to the WTO concerni ng the list of STEs was made in 2003 (WTO 
document G/STR/N/9/CHN/Add.1, 14 July 2003). 
43 For wheat, maize, rice, sugar, cotto n, and chemical fertilizers, these requirements are specified in the 
annual announcement of the quota volume and allocation methods issued by MOFCOM;  for crude and 
processed oil, the requirements are set out in MOFTEC (now MOFCOM) Decree No. 27 of 2002 and MOFTEC 
Announcement No. 19 of 2002. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 36 
  
  46. Most state-trading products are also subject  to tariff-rate quotas.  Data provided by the 
authorities show that the shares of tariff-rate quotas a llocated to STEs remain high and unchanged.  In 
2011, STEs accounted for 90%, 70%, 60%, 50%, and 33% of total tariff quotas allocated for wheat, 
sugar, maize, rice, and cotton, respectively.  
(vi) Contingency trade measures 
47. There have been no major changes in China's institutional and procedural framework and 
legislation on contingency trade measures since its previous Review.    
Anti-dumping measures 
48. Anti-dumping measures may be taken under the Foreign Trade Law44, the Regulations on 
Anti-Dumping (the AD Regulations)45, and a number of published Rules, some of them provisional.46  
49. MOFCOM is responsible for investigating and determining dumping, injury, and causal link.  
Within MOFCOM, the Bureau of Fair Trade for Imports and Exports (BO FT) is in charge of 
investigating and determining whether dumping has occurred, while the Investigation Bureau of 
Industry Injury (IBII) investigates and determines injury caused to industry.  These two bureaux in 
MOFCOM are jointly responsible for determini ng whether there is a causal link between dumped 
imports and injury.  When the anti-dumping investig ation involves agricultural products, the injury 
investigation is conducted jointly by MOFCOM  and the Ministry of Agriculture.    
50. Anti-dumping complaints may be brought to MOFCOM in writing by any domestic 
enterprise, natural or legal pers ons, or relevant organization, on behalf of the domestic industry.47  
MOFCOM must decide whether to initiate an investiga tion within 60 days of receipt of a complaint.   
51. MOFCOM may also self-initiate an anti-dumping in vestigation, if it has sufficient evidence of 
the existence of dumping, injury, and causal link48;  it did not self-initiate any investigations in 2010 
and 2011.  Implementing rules regarding the initiati on of anti-dumping investigations are set out in 
Provisional Rules of the Ministry of Foreign Tr ade and Economic Co-operation on Initiation of Anti-
dumping Investigations.49  
52. China's anti-dumping system includes a range of mechanisms to provide interested parties 
access to information, and rights of participati on.  For example, MOFCOM maintains a "public 
reading room" containing all public (i.e. non-confidentia l) information in an investigation; interested 
parties in the investigation have access to the reading room to search, read, and copy all the 
information (not just information on injury).50  Interested parties may also apply for a public hearing 
                                                      
44 WTO document G/ADP/N/1/CHN/ 2/Suppl.4, 1 December 2004. 
45 WTO document G/ADP/N/1/CHN/2/Suppl.3, 20 October 2004. 
46 WTO documents G/ADP/N/1/CHN2/Suppl.1, 2, 4, 5, and 6. 
47 The application must contain details of, inter alia , the product, source of imports, identity of known 
exporters, price, and volume and value of domestic production of the like product, and must have supporting 
evidence on the existence of dumping, injury caused to the domestic industry, and of a causal link between 
dumping and injury.  Articles 13-15, the AD Regulations. 
48 Article 18, the AD Regulations. 
49 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003, p. 3. 
50 Rules on Information Access and Information Disclosure in Industry Injury Investigation", 
MOFCOM decree No. 19 2006, Article 5, WTO document G/ADP/N/1/CHN/2/Suppl.6, 19 October 2007;  
Provisional Rules on Access to Non-Confidential Inform ation in Anti-Dumping Investigations, WTO document 
ADP/N/1/CHN/2/Suppl.1, 18 February 2003, p. 25. China WT/TPR/S/264/Rev.1 
 Page 37 
 
 
  regarding dumping or injury.  BOFT or IBII deci de whether an open hearing is warranted in a 
particular case;  BOFT rules specify that where confidential information is involved, BOFT "upon 
request of interested parties may decide to ta ke other ways to hold the said public meeting".51  Before 
a final determination is made, MOFCOM must in form all known interested parties of the essential 
facts on which the final determination is based.  Further details are stipulated in the Provisional Rules 
on Disclosure of Information in Anti-dumping Investigations52 and the Rules on Information Access 
and Disclosure in Industry Injury Investigations53, both issued by MOFCOM.54  
53. Article 24 of the AD Regulations provides that MOFCOM must make a preliminary 
determination of dumping, injury and causation.55  According to the authorities, MOFCOM has made 
preliminary determinations in all cases resulting in final determinati ons during the review period.  If 
MOFCOM's determination is affirmative, provisi onal anti-dumping measures may be applied;  these 
include imposition of provisional duties, or pr ovision of deposits, bonds, or other forms of 
guarantees.56  Provisional measures may not exceed four months, but, in "special circumstances", may 
be extended to nine months;  the authorities repor t that during the review period some provisional 
measures were extended to nine months pursuant to th is article.  According to the authorities, "special 
circumstances" refer to cases wher e the authorities examine whether a duty lower than the margin of 
dumping would be sufficient to remove the injury to the domestic industry.57 Following the 
preliminary decision, MOFCOM continues the inv estigation, which must be completed within 
12 months of the date on which the decision to initiate is announced, or 18 months under special 
circumstances.58 
54. During the investigation, the exporter may offer price undertakings to MOFCOM and 
MOFCOM may suggest price undertakings to an exporter.  In assessing whether to accept an 
undertaking, MOFCOM must examine, inter alia,  whether the injury caused by dumping can be 
eliminated, whether the undertaking can be monitore d effectively, whether the undertaking is in the 
public interest, and whether there is any possibilit y of circumvention.  If the price undertaking is 
acceptable, MOFCOM may suspend or term inate the anti-dumping investigation.59  If MOFCOM 
does not accept the price undertaking, it must provide the reasons to the exporter.  Price undertakings 
may not be sought or accepted unless MOFCOM has ma de a preliminary affirmative determination of 
dumping injury and causation.  A suspended/terminat ed investigation may be resumed if the exporter 
violates the price undertaking, or if MOFCOM considers it necessary for other reasons.60  
                                                      
51 The Provisional Rules provide for hearings on dumping (see WTO document 
G/ADP/N/1/CHN/2/Suppl.1, dated 18 February 2003 (the quoted language is from Article 4)), and on injury 
(WTO document G/ADP/N/1/CHN/2/Suppl.2, 14 April 2003).   
52 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. 
53 WTO document G/ADP/N/1/CHN/2/Suppl.6, 19 October 2007. 
54 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 388. 
55 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003, p. 3. 
56 Article 28.1 of the AD Regulations.  The decision to levy provisional anti-dumping duties is made by 
the Tariff Commission of the State Council on the recommendation of the MOFCOM.  The decision on the 
provision of deposits and bonds is made by MOFCOM (Article 29).  Provisional measures may not be applied within 60 days of the date of publication of the d ecision to initiate the investigation (Article 30.2). 
57 WTO document G/ADP/Q1/CHN/54/Suppl.1, 2 May 2005. 
58 Article 26 of the AD Regulations. 
59 Article 33.1 of the AD Regulations.   
60 Articles 31-36 of the AD Regulations.  For th e Provisional Rules implementing these Regulations, 
see WTO document G/ADP/N/2/Suppl.2. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 38 
  
  55. Under the AD Regulations and provisional Rules on sampling61, anti-dumping duties must be 
determined separately on the basis of the marg in of dumping established for each responding exporter 
or producer.  However, MOFCOM will engage in sampling when the number of exporters, producers, 
types of products or transactions is so large that it would be unduly burdensome and prevent timely 
completion of the investigation.  In the case of num erous producers, the authorities will select samples 
for investigation and a reserve list from among the e xporters and producers that have registered to 
participate in the investigation; interested par ties are notified and may comment on the list within 
seven days.62  The methodology for determining the duty for the responding exporters and producers 
not included in the sample is set out in the Provisional Rules;  an "all others rate" for non-responding 
exporters and producers is established based on facts available.63  
56. Articles 4-6 of the AD Regulations govern the calculation of dumping margins;  there are no 
additional published Rules governing such calculati ons.  While Article 6 envisions the use of a 
weighted-average to weighted-average or transac tion-to-transaction comparison, it also allows a 
comparison between a weighted-average normal valu e and prices of individual export transactions 
where export prices differ significantly among purchasers, regions or time periods, and therefore it is 
difficult to make a comparison based on the other comparison methodologies.  In practice, China has 
used the weighted-average to weighted-average comparison methodology in all investigations since 
entry into force of the WTO Agreement.  
57. Article 42 of the AD Regulations specifies that no anti-dumping must be levied in excess of 
the margin of dumping established in a final determ ination.  Article 42 does not explicitly preclude 
the imposition of a duty less than the margin of dumping.  In practice, however, China does not 
presently examine the question whether a duty less than  the margin of dumping would be sufficient to 
eliminate the injury caused by dumped imports.     
58. Although MOFCOM is responsible for inves tigating and determining the existence of 
dumping, injury, and causation, the Tariff Co mmission of the State Council, an interagency 
coordination body chaired by the Ministry of Fina nce, makes the final decision whether to impose 
anti-dumping duties, based upon a proposal by MOFCOM.64 
59. MOFCOM's proposal to the Tariff Commission is  not a public document;  a determination is 
published by MOFCOM only after the Tariff Commission has made its decision.65  According to the 
authorities, to date the Tariff Commission has neith er rejected nor modified any proposals by 
MOFCOM.  
60. Article 37 of the AD Regulations provides that  the imposition and collection of anti-dumping 
duties shall be in the public interest.  China in formed the Committee on Anti-dumping Practices in 
2005 that it was still studying how to address public interest considerations, but that in an investigation it would take into account all comments on the issue of public interest.
66  There are no 
published rules specifying how this c onsideration must be implemented.  According to the authorities, 
the investigating authorities would properly take into account all comments on the issue of public 
                                                      
61 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. 
62 Under MOFCOM's Provisional Rules on Questionnaires in Anti-dumping Investigations, the public 
notice calls upon exporters and producers to register to participate in an investigation within 20 days (WTO 
document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003, p. 10). 
63 WTO document G/ADP/Q2/CHN/4, 14 October 2010, reply to question 1. 
64 Articles 37 and 38 of the AD Regulations. 
65 Xiaochen Wu (2009), p. 202. 
66 WTO document G/ADP/Q1/CHN/54, 8 April 2005, response to question 19. China WT/TPR/S/264/Rev.1 
 Page 39 
 
 
  interest in individual cases.  Except in the context of price undertakings, however, final 
determinations on the imposition of anti-dumping meas ures have not explicitly addressed the issue of 
public interest as a consideration underlying the decision whether to impose a measure.  
61. If any party is not satisfied with a MOFCOM decision, the case may be reviewed under the 
Administrative Reconsideration Law.67 Within MOFCOM, requests for administrative reconsideration 
are heard by the Department of Treaty and Law.68  If the applicant considers the result of the 
administrative reconsideration unsatisfactory, it may appeal the decision to the courts;  an applicant 
may also proceed directly to the courts without seeking administrative reconsideration.69  Procedures 
for appeals to the courts are specified under the Ru les of the Supreme People's Court on Certain Issues 
Related to Application of Law in Hear ings of Antidumping Administrative Cases.70  In 2009 and 
2011, there were no administrative or judicial appeal s in respect to anti-dumping measures;  in 2010 
there were two administrative appeals71, one of which was subsequently appealed to the courts.  The 
latter represents the first judicial review  of an anti-dumping measure in China.  
62. Article 56 of the AD Regulations indicates that China may take ''corresponding'' measures 
when a trading partner ''discriminatorily'' imposes AD measures on exports from China.  This article 
provoked questions and c oncerns from Members in the October 2002 meeting of the WTO Committee 
on Anti-Dumping Practices.72  China answered that China had not applied Article 56, and that before 
taking ''corresponding measures'' in respect of a WT O Member China would resort to the relevant 
WTO dispute settlement provisions.  Recently, the EU  submitted a request for consultations regarding 
China's AD measure on Certain Iron and Steel Fastener s;  issues that the EU  wishes to raise in the 
course of the consultations include  Article 56 of the Regulations.73   
63. Article 47 of the AD Regulations provides that  China will conduct a new shipper review and 
determine a separate margin of dumping for a new e xporter that can show it is not related to any of 
the exporters subject to the anti-dumping duty.  Pr ovisional rules governing new shipper reviews were 
                                                      
67 Article 53 of the AD Regulations. 
68 Xiaochen Wu (2008). 
69 WTO document G/ADP/Q1/CHN/54/Suppl.1, reply to question 24. 
70 WTO document G/ADP/N/1/CHN/2/Suppl.5, 11 January 2007. 
71 These were:  (1) Administrative review cases  on Honeywell Resins & Chemicals LLC:  on 
21 June 2010, Honeywell Resins & Chemicals LLC was not satisfied with the Final Antidumping Determination 
on Nylon 6 Originating in the United States, European Union, Russia and Chinese Taipei (MOFCOM Gazette  
No. 15, 2010, issued on 22 April 2010), and appealed to MOFCOM for administrative review.  On 12 July, 
MOFCOM accepted the appeal for administrative review  after the re-submission of administrative review 
appeal materials by the applicant, who submitted an application for withdrawal of Administrative Reviews to 
MOFCOM on 27 August.  Since it accorded with withdraw conditions upon examination, MOFCOM produced 
the Decision on Administrative Review Termination (Shang Fu Zi 6/2010) on 6 September 2010 to terminate administrative review.  (2) Administrative review cases  on Russia NLMK Group (collective name for OJSC 
Novolipetsk Steel and VIZ-Stal Ltd.):   Russia NLMK Group was not satisfied with the Final Determination on 
the Anti-dumping Investigation Concerning Imported Grain Oriented Flat-rolled Electrical Steel Originating in, inter alia , Russia, released by MOFCOM on 10 April 2010, and appealed to MOFCOM for administrative 
review on 6 September 2010.  After the re-submission of administrative review materials by the applicant, 
MOFCOM accepted the appeal for admi nistrative review in August and pr oduced the decision on administrative 
review on 8 October 2010 to maintain the original determination.  (3) Administrative litigation cases on Russia 
NLMK Group:  Russia NLMK Group was not satisfied with MOFCOM's decision to maintain the original 
administrative review determination and filed an administ rative lawsuit to Beijing Second Intermediate People's 
Court in October 2010.  The case is currently being processed. 
72 WTO document G/ADP/M/22, 21 March 2003. 
73 WTO document WT/DS407/1, 12 May 2010. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 40 
  
  notified to the WTO in 2002 and remain in effect.74  In 2009, China made draft rules on new shipper 
reviews available for public comment.   Under these rules, the applicant may apply for a review within 
30 days of an "actual export"; the exports must be in sufficient quantities as to  constitute the basis for 
the determination of the ordinary export price.  MOFCOM will decide whether to initiate a new 
shipper review within 30 days from receipt of the application, and will complete the review within 
9 months of initiation.  Between 2008 and 2010,  one new shipper review was initiated. 
64. Under Article 46 of the AD Regulations, if an  importer can provide evidence that the anti-
dumping duty paid is higher than the margin of dumping, he may apply for a duty refund.  The application will be examined and verified by MO FCOM, which will make a proposal for decision by 
the Tariff Commission of the State Council.  Implementing rules regarding refund requests were 
notified to the WTO in 2003.
75  Under these rules, an importer must file an application for refund 
within three months of payment of the duty.  MOFCOM will calculate an updated dumping margin 
for the product for the six-month period prior to th e application, and the amount of the refund will be 
the difference between the updated dumping margin  and the dumping margin determined in the 
original investigation.  China does not pa y interest on moneys refunded under Article 46.76  According 
to the authorities, China has received no requests for refund pursuant to this article.   
65. Articles 48-52 of the AD Regulations provide for "expiry" and "interim" reviews.77  Under 
these provisions, final measures are imposed for five years, but may be extended following a review.78  
In practice, MOFCOM publishes a notice six months before the measure is scheduled to expire, and 
initiates a review only if the domestic industry s ubmits an application including sufficient evidence 
that expiry would likely lead to a cont inuation or recurrence of dumping and injury.79  M O F C O M  
may also initiate a review of the continued need  for an anti-dumping measure on its own initiative or 
upon request of an interested party, provided that a reasonable period of time has elapsed.80  A n y  
review conducted by MOFCOM must be concluded within 12 months from the date of the decision to 
initiate the review.  From 2008 to 2010, 42 sunset re views and 5 interim reviews were initiated.  Of 
the 37 reviews initiated in 2008 and 2009, 28 orders  (76%) were extended, 7 (19%) were modified, 
and 2 (5%) were terminated.  In addition, 9 orde rs expired without review and 1 was terminated 
because the application was withdrawn.   
66. Initiations of AD investigations by China increased from 14 in 2008 to 17 in 2009, then 
decreased to 8 in 2010.  According to the authoriti es, of the 25 investigations initiated in 2009 and 
2010, around 80% resulted in provisional measures, compared with 94% in 2007-08.  On the other 
hand, final AD duty orders rose from 4 in 2008 to 12 in 2009, and to 15 in 2010.  In 2008-09, 87% of 
investigations resulted in fina l AD duty orders (Chart III.4).81  China had 117 AD duty orders in effect 
as of December 2010, up from 97 in 2009.  Imports from 18 countries or territories were affected.  
                                                      
74 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. 
75 Provisional Rules of Ministry of Foreign Trade and Economic Co-operation on Refund of 
Anti-dumping Duty (WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003, p. 36). 
76 WTO document G/ADP/Q1/CHN/54/Supp.1, 5 May 2005, response to question 22. 
77 While there are no published implementing rules regarding such reviews, China informed the 
Committee on Anti-dumping Practices in 2009 that it was wo rking on preliminary draft rules on expiry reviews 
(WTO document G/ADP/18, 28 October 2009).   
78 Article 48 of the AD Regulations. 
79 China also requires that domes tic producers requesting an expiry  review demonstrate that their 
request has the support of producers representing a major proportion of domestic production (Xiaochen Wu, 2009). 
80 Article 49 of the AD Regulations.   
81 All of the 8 cases initiated in 2010 were s till under investigation as of 29 April 2011. China WT/TPR/S/264/Rev.1 
 Page 41 
 
 
  Imports from Japan are subject to the largest numb er of China's AD duty orders, accounting for about 
20% of the total, followed by the Republic of Ko rea (17%), and Chinese Taipei (10%).  Chemical 
products account for 58% of these orders, while 26% involve resins, plastics, and rubbers.  Other 
categories subject to AD duty orders are base metals , minerals, and papers, each of which accounts for 
less than 5% of all orders (Table III.3);  43% of  AD duty orders had been in place for more than 
5 years.  
05101520253035
2006 2007 2008 2009 2010 2011Number of casesChart III.4
Anti-dumping initiations and final measures, 2006-11
Source :  Data provided by the Chinese authorities.Initiations
Final measures
 
67. During the period under review (2010-11), the EU and the United States requested 
consultations with China under the WTO Dispute Settlement Mechanism concerning three of its 
anti-dumping measures:  the provisional AD duties on Certain Iron and Steel Fasteners from the European Union
82, the final AD duties on Grain Oriented Flat-rolled Electrical Steel from the 
United States83, and the final AD duties on Broiler Products from the United States.  A panel was 
established on the final AD duties on Grain Orie nted Flat-Rolled Electrical Steel from the 
United States on 25 March 2011;  this is the first time a panel has been established in respect of a 
Chinese AD measure.84 
Table III.3 
Anti-dumping measures by product and by  country (in force as of 31 December 2010) 
Country Products 
(a) (b) (c) (d) (e) (f) (g) (h) (i) 
Japan 13 5 1 1 2 1 
South Korea 12 4 1 1 1 1 
United States 10 5 1 1 1 1 
Chinese Taipei 6 5 1 
EU 4 2 1 1 1 
Table III.3 (cont'd) 
                                                      
82 WTO document WT/DS407/1, 12 May 2010. 
83 WTO document WT/DS414/1, 20 September 2010. 
84 WTO document WT/DS414/3, 16 May 2011. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 42 
  
  Country Products 
(a) (b) (c) (d) (e) (f) (g) (h) (i) 
Russia 2 3 1 
Singapore 3 2 
India 3 
Indonesia 2 1 
Malaysia 2 1 
Thailand 3 
United Kingdom 2 1 
France 1 1 
Germany 2 
Italy 1 
Netherlands 1 
New Zealand 1 
Saudi Arabia 1 
Total 68 31 5 4 3 2 2 1 1 
Products:  (a) Products of the ch emical and allied industries. 
 (b) Resins, plastics, and articles;  rubber and articles.  (c) Base metals and articles. 
 (d) Mineral products. 
 (e) Paper, paperboard, and articles.  (f) Machinery and electrical equipment. 
 (g) Textiles and articles. 
 (h) Live animals and products.  (i) Prepared foodstuff;  bevera ges, spirits, vinegar;  tobacco. 
Source:   WTO document G/ADP/N/209/CHN, China's Semi-a nnual Report under Article 16.4 of the Anti-Dumping 
Agreement. 
Countervailing measures 
68. Countervailing measures may be taken under the provisions of China's Foreign Trade Law,  
the Regulations on Countervailing Measures (CV Regulations), promulgated in 2001 (latest 
amendment 31 March 2004)85, and a number of published rules, some of them provisional. 
69. As in most countries, the investigation process in countervailing investigations in China is 
similar to that in anti-dumping investigations.  However, a significant additional element is the 
provision for consultations with the government of the exporting country or territory.  Under Articles 
35-37 of MOCOM's provisional rules relating to initia tions, before making a de termination to initiate 
an investigation MOFCOM will invite the government to consultations to clarify the matter and seek a 
mutually agreeable solution;  if a solution is foun d it may decide not to initiate an investigation.  
MOFCOM may extend its 60-day decision period fo r deciding initiations, in order to accommodate 
the consultations, but the time for c onsultations must not exceed 60 days. 
70. There are some differences between AD and CV procedures.  For example, the CV 
Regulation does not specifically provide for proceed ings to refund final duties, and there are no 
implementing rules on these matters;  while the CV Regulation provides for sepa rate determination of 
countervailing duties based on the amount of subs idy each exporter has received (Article 42), and 
Article 20 mentions sampling, there are no publishe d rules regarding sampling;  and while the CV 
Regulation does envision an "expedited review" for an exporter who has not actually been 
investigated, there are no further details in the CV Regulations nor any published procedures 
                                                      
85 WTO document G/SCM/N/1/CHN/ 1/Suppl.3, 20 October 2004. China WT/TPR/S/264/Rev.1 
 Page 43 
 
 
  regarding "new shipper" reviews.  There are no counterparts to AD implementing rules regarding, 
inter alia , interim reviews, price undertakings or judicial review.  
71. China initiated its first countervailing investiga tion on 1 June 2009.  By end-August 2011, it 
had initiated four investigations, involving grain-oriented flat-rolled electrical steel, broiler products, 
saloon and cross-country cars, all originating in the United States, and potato starch originating in the 
EU.  The three investigations initiate d in 2009 all concluded that there existed a subsidy, an injury and 
a causal link between the subsidy and the injury.  Of the three investigations, two resulted in 
countervailing duty orders while the other has not as yet resulted in a CVD.  The case initiated in 
2010 is currently under investigation.  The averag e duration of countervailing investigations is around 
13 months (Table III.4).     
72. Most of the RTAs that China has notified to the WTO contain provisions regarding the use of 
anti-dumping and countervailing measures between the parties.86  However, only two (with 
Hong Kong, China and Macao, China) preclude the use of such measures between the parties.  Under 
RTAs the parties maintain their rights under the Anti-Dumping and Subsidies and Countervailing Measures Agreements
87, or will abide by their obligations under those agreements88, and/or will not 
apply the Anti-Dumping Agreement in an arbitrary or  protectionist manner.  Beyond this, three RTAs 
contain requirements to notify the other party of the receipt of a properly documented complaint.89 
Table III.4 
Countervailing investigations and measures, 2011 
Country Product Initiation Provisional measures Final measures Import volume as 
% of total imports 
U.S. Grain-oriented flat- 01.06.2009 10.12.2009 10.04.2010 16.80% 
  rolled electrical steel  11.7%-12% 11.7%-12% 
    All others 12% All others  44.6% 
  Broiler products 27.09.2009 28.04.2010 29.08.2010 73% 
    3.8%-11.2% 4%-12.5% 
    All others 31.4% All others 30.3% 
  Saloon cars and cross- 06.11.2009 02.04.2011 14.12.2011 14% 
  country cars  0%-12.9% 0%-12.9% 
      All others 12.9% All others 12.9% 
EU Potato starch 30.08.2010 19.05.2011 16.09.2011 90.27% 
    770%-11.19% 7.5%-12.4% 
All others 12.4% 
      All others 11.19%   
Source:  WTO documents G/SCM/N/219/CHN, 29 April 2011;  G/SCM/N/212/CHN, 6 Se ptember 2010.  MOFCOM 
Announcement Nos. 13 and 20 (saloon cars and cross-country cars), and Nos. 19 and 54 (potato starch), 2011.  
Viewed at:  http://english.mo fcom.gov.cn/static/column/polic yrelease/domesticpolicy.html/1. 
                                                      
86 China has notified RTAs with ASEAN;  Chile;  Hong Kong, China;  Macao , China;  New Zealand; 
Pakistan;  Peru;  and Singapore. 
87 Chile, New Zealand, Pakistan. 
88 ASEAN, Peru. 
89 New Zealand, Peru, Singapore. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 44 
  
  Safeguards 
73. China has not initiated any safeguard investig ations pursuant to the WTO Agreement on 
Safeguard since its previous Review.90 
74. Safeguard actions may be taken under the Foreign Trade Law and the Regulations on 
Safeguards (SG Regulations).91  MOFCOM is responsible for i nvestigating and determining an 
increase in imports and injury caused;  for agri cultural goods, investigati on and determination of 
injury takes place jointly with the Ministry of Agriculture.  Under the SG Regulations, any natural or 
legal person, or other organizati on related to a domestic industry, may make a written application to 
MOFCOM to take safeguard action against imports.  MOFCOM may also initiate an investigation on 
its own initiative if it has sufficient evidence of inju ry.  Articles 3-5 of the SG Regulations stipulate 
that the decision to initiate an investigation mu st be published and notified promptly to the WTO 
Committee on Safeguards.   
75. MOFCOM may levy a provisional safeguard measure under the conditions stipulated in 
Article 16 of the SG Regulations.  The duration of a provisional measure must not exceed 200 days 
from the effective date of the public notice of the decision on the provisional measure.92 
76. Final measures take the form of, inter alia,  tariff increases or quantitative restrictions.  They 
may be applied when the State Council Tariff Co mmission or MOFCOM makes a final determination 
that there exists an increase in quantity of an import and it caused an injury to the domestic industry.93  
The decision is published by way of Minist erial Decree on the MOFCOM website.  
77. Final safeguard measures may not remain in place for more than four years, except under 
special circumstances.94  When a safeguard measure exceeds three years, MOFCOM must conduct a 
mid-term review of the measure.   
78. There is no appeal against decisions taken by the authorities. 
79. Regarding "global safeguards" (i.e. safeguard s imposed pursuant to Article XIX GATT and 
the WTO Agreement on Safeguards)95, two of China's RTAs provide that a party "may exclude" 
imports of an originating good from another part y from the safeguard action "if such imports are 
non-injurious".96  By contrast, four RTAs provide that the parties "maintain their rights" under 
Article XIX and the WTO Agreement on Safeguards97, and two do not address the matter.98  Six of 
                                                      
90 Since its accession to the WTO in 2001, China has notified one initiation of a safeguard investigation 
on certain steel products.  The investigation was initia ted on 20 May 2002, and definitive safeguard measures 
were imposed between 20 November 2002 and 26 December 2003.  Since then, China has not notified any 
safeguard measures. 
91 WTO document G/SG/N/1/CHN/2/Suppl.3, 20 October 2004. 
92 Article 18 of the SG Regulations. 
93 A decision to take a final measure in the form of tariff increases is made by the State Council Tariff 
Commission on the basis of the MOFCOM's proposal;  a decision to take a final measure in the form of quantitative restrictions is made by the MOFCOM (Article 20 of the SG Regulations). 
94 Article 26 of the SG Regulations. 
95 As opposed to bilateral safeguards to addr ess the consequences of the RTAs themselves. 
96 New Zealand and Singapore. 
97 ASEAN, Chile, Pakistan, and Peru. 
98 Hong Kong, China;  and Macao, China. China WT/TPR/S/264/Rev.1 
 Page 45 
 
 
  the RTAs preclude the simultaneous imposition of a global safeguard and a bilateral safeguard under 
the relevant RTA.99 
(vii) Standards and other technical requirements 
(a) Standards and technical regulations 
80. The legislative basis for the formulation of standards and technical regulations is the 
Standardization Law of 1988 and the Regulations fo r the Implementation of the Standardization Law 
(Decree No. 53 of the State Council of 1990) promulga ted in 1990.  The mandatory national technical 
standards are set out in:  the Law on Import a nd Export Commodity Inspection (amended in 2002);  
the Regulations on the Implementation of the Law on Import and Export Commodity Inspection 
(amended in 2005);  the Food Safety Law and the Regulations on the Implementation of the Food 
Safety Law promulgated in 2009;  as well as other re levant laws, administrativ e regulations, rules and 
public announcements. 
81. The WTO enquiry point for technical barriers to trade is the International Inspection and 
Quarantine Standards and Technical Regulati ons Research Center under the State General 
Administration for Quality Supervision and In spection and Quarantine (AQSIQ).  The WTO 
Notification and Enquiry Center of MOFCOM is r esponsible for China's notifications to the WTO 
TBT Committee.  A number of government agenci es are involved in formulating and developing 
technical standards (including mandatory standard s);  these include AQSIQ, the NDRC, the Ministry 
of Agriculture, the Ministry of Health, the Standa rdization Administration of the People's Republic of 
China (SAC), the China National Institute of Standa rdization, the General Administration of Customs, 
the State Food and Drug Administration, as well as the ministries responsible for policy and its 
implementation in areas such as trade, constr uction, railways, communications, information 
technology, and environmental protection.100 
82. China continues to be an active member of  the WTO Committee on Technical Barriers to 
Trade.  According to the authorities, in the period 1 January 2009 to end-October 2011, China made a total of 350 notifications to the Committee on Te chnical Barriers to Trade (including revisions, 
addenda, supplements, and corrigenda).  In the sa me period, through 37 supplementary notifications, 
unofficial English translations were provided by the EU for some of the documents referred to in the 
notification.
101  China's notifications cover a wide variety of products and concerns, with particular 
emphasis on human health and safety.  China ha s used the Committee to raise concerns about 
measures or proposed measures in its export mark ets on products ranging from toys to herbal 
medicines.  Other Members have also expressed c oncerns about TBT measures taken and proposed by 
China on products ranging from cotton and textil es to lighting and light signalling devices for 
motorbikes.    
83. The Standardization Administration of China (SAC) was established in April 2001.  It is the 
competent department authorized by the State Council to implement administrative functions and to 
exercise unified administration over the standardization work throughout the country. Its main 
responsibilities include:  
- taking part in drafting and amending laws a nd regulations on nationa l standardization;  
drafting and implementing policies c oncerning national standardization; 
                                                      
99 ASEAN, Chile, New Zealand, Pakistan, Peru, and Singapore. 
100 WTO document G/TBT/2/Add.65, 29 January 2002. 
101 These translations are available on the WTO Members' website. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 46 
  
  - drafting administrative rules and formula ting related systems on standardization 
administration throughout the country;  
- organizing the implementation of the Stat e's standardization laws, regulations, 
policies and systems;  
- formulating development programmes fo r national standardization work;  
- organizing, coordinating, and drafting pl ans on formulating and revising national 
standards; 
- examining, approving, numbering, and issuing national standards;  
- administration of funds used to formulate a nd revise national standards as well as the 
special funds used in the research of standards and in standardization;  and  
- representing China in the International Or ganization for Standardization (ISO), the 
International Electrotechnical Commission (IE C), and other intern ational or regional 
standardization organizations.  
84. China is a member of the International Organization for Standardization (ISO), the 
International Electrotechnical Commission (IEC), and the International Telecommunication Union 
(ITU), the World Health Organization of the United Nations (WHO), and Codex Alimentarius 
Commission, as well as several regional standards organizations such as the Pacific Area Standards Congress.    
85. There are four levels of standards in China:  national, trade, local and enterprise standards.  
Under the Regulations for the Implementation of th e Standardization Law, in formulating national 
standards, the competent standa rdization administration department under the State Council is 
responsible for making plans, organizing drafting,  examining and approving, numbering and issuing 
national standards.  If there are no national standa rds for technical requirements that need to be 
standardized for certain trades throughout the coun try, trade standards may be formulated.  Trade 
standards become null and void automatically afte r the corresponding national standards enter into 
effect.  In the absence of national standards or tr ade standards, local standards may be formulated on 
safety and sanitation requirements for industrial goods that need to be unified in the provinces, 
autonomous regions, and municipalities directly un der the Central Government.  Local standards 
become null and void automatically after the corres ponding national standards or trade standards enter 
into effect.  In the absence of national standards,  trade standards or local standards for certain 
products, the enterprises producing such products may formulate their own standards as the basis for 
organizing production.  Where there are already nati onal, trade or local standards, enterprises are 
encouraged to formulate and apply enterprise sta ndards that are stricter than the corresponding 
standards.  
86. According to the Regulations for the Implementa tion of the Standardization Law, national and 
trade standards may be compulsory or recommendato ry.  Mandatory standards fall into the following 
categories:  
- standards for pharmaceuticals, food hygi ene and veterinary medicine;   
- safety and hygiene standards for products and the production, storage and 
transportation, and utilization of products; China WT/TPR/S/264/Rev.1 
 Page 47 
 
 
  - standards for the safety of labour, hygien e standards, and safety standards for 
transportation;   
- quality, safety, and sanitation standards for construction projects and other standards 
for construction projects that must be controlled by the State;   
- standards for the discharge of pollutants concerning environmental protection, and 
standards for environmental quality;   
- important technical terms, symbols, codes,  and drafting methods in common use;   
- standards for commonly used methods of  experimentation and examination;  
- standards for conversion and coordination;  and  
- quality standards for important products that need to be controlled by the State. 
87. Local standards for safety and hygiene for industrial products are mandatory in the 
administrative region in which they were developed.   Standards in other categories are voluntary.  
88. The process of developing or revising nationa l standards has not changed over the past few 
years.  National standards are formulated in accordance with the following steps:  
- a technical committee solicits comments on proposals for standards, and the 
responses are subject to an initial examin ation to determine the need for, and 
feasibility of developing a standard;  
- the SAC examines, summarizes, coordinates,  and determines the proposals and then 
issues a Plan of Developing or Revising National Standards; 
- a draft of the national standard is prepared by the technical committee, based on the 
proposal and the need for such a standa rd, the comments received and the current 
corresponding international standards;  
- the draft standard is circulated to solicit  comments.  For standards of public concern 
or other important standards, the drafts are posted on the SAC website for comment.  
Comments are considered by the technical  committee when it examines the draft (as 
of end-October 2011, there were 489 tec hnical committees, 15% of which included 
representative of foreign companies).  Technical experts and other interested parties 
are invited to examine draft standards by means of meetings or correspondence, and 
their opinions are taken into account in the redrafting; 
- the final draft is subject to approval by the SAC;  
- information about the issuance of a standa rd is published on SAC's website, and the 
standard is published by the China Standard Press.  
89. The relevant technical committees are responsib le for periodic reviews of standards.  
Standards should be reviewed no longer than five years after they are issued.  Following the review, 
the technical committee may propose that a standard be repealed, if necessary. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 48 
  
  90. In cases where a technology is still under development and it is not yet feasible to formulate a 
standard, a national technical document to guide  standardization may be formulated.  The 
development process for these documents is that sa me as for standards, but the review period is 
three years.  
91. The number of standards developed by the SAC each year peaked in 2008, at nearly 
6,000 national standards, of which nearly 600 were mandatory.  A similar peak was seen for 
professional standards.  Since then, the number has declined somewhat, although the proportion of 
mandatory national standards increased from 10% in 2008 to 18% in 2010 (Table III.5). 
Table III.5 
China's standards, 2006-10 
 2006 2007 2008 2009 2010 
National standards 1,889  1,385  5,911  3,121  2,796  
of which: mandatory 276  157  594  283  493  
 voluntary  1,613  1,228  5,317  2,838  2,303  
Professional standards 2,178  3,029  3,087  1,428  3,015  
of which: mandatory 335  245  216  255  183  
 voluntary  1,843  2,784  2,871  1,173  2,832  
Local standards 2,377  2,805  2,809  3,110  .. 
of which: mandatory 220  277  300  252  .. 
 voluntary  2,157  2,528  2,509  2,858  .. 
.. Not available. 
Note: Data on enterprise standards are not available. 
Source:  Data provided by the Chinese authorities. 
92. As of end 2006, 46% of the 21,410 national sta ndards had been adopted from international 
standards and advanced foreign standards.  Of th ese, 5,064 were from the ISO, 2,075 from the IEC, 
314 from ISO/IEC, 50 from ITU, and 2,428 from other international standard organizations.  There 
are no data on the number of trade or local standa rds that include the contents of the standards 
formulated by international standard organizations. 
(b) Product certification 
93. Under the Regulations on Certification a nd Accreditation and the Measures for the 
Administration of Compulsory Product Certifi cation, the China National Certification and 
Accreditation Commission (CNCA) under AQSIQ is res ponsible for the administration, organization, 
and implementation of compulsory product certificat ion in China.  The AQSIQ and CNCA work with 
relevant departments of the State Council to formul ate and adjust the product catalogue.  In addition, 
the CNCA is responsible for formulating and publishing regulations on the implementation of 
compulsory product certification.   
94. Under the Regulations on Certification and Accr editation, products listed in the Compulsory 
Product Certification Catalogue may not be sold or imported into China unless they have China 
Compulsory Certificates (CCCs) and carry CCC ma rks.  The Catalogue lists 22 groups and 
163 categories of products, including electrical wires and cables, circuit switches, low-voltage electrical apparatus, small power motors, electric tools, electric welding machines, 
telecommunications equipment, motor vehicles, ty res, agricultural machinery, household electronic 
appliances, audio/video equipment, information te chnology, lighting appliances, safety glass, latex China WT/TPR/S/264/Rev.1 
 Page 49 
 
 
  products, medical apparatus and instruments, fire  safety and prevention products, decoration and 
ornament products, and toys. 
95. As an exception to the requirement to carry the CCC certification, products in the Catalogue 
may be produced or imported if they are being u sed for testing, for research and development, for 
incorporation into other manufactured products, or for processing and re-export in accordance with 
Article 42 of the Measures for the Administration of Compulsory Product Certification (Order 
No. 117 of the AQSIQ) promulgated in 2009.  In th ese cases, approval is required from AQSIQ along 
with testing reports and any other documents required by the CNCA. 
96. Applications for CCC certification must be made  to a designated accredited certification body 
(ACB).  If the product is in conformity with the rele vant standard, the applicant must send samples to 
a laboratory designated by the CNCA for type testing.  The results of the tests are sent to the relevant 
ACB, which implements a factory examination and, if the results meet requi rements, issues a CCC to 
the manufacturer.  The manufacturer may then purch ase the CCC mark labels from the Issuance & 
Management Centre for CCC Mark.  In order to ensu re that products meet certification requirements, 
ACBs conduct follow-up inspections of CCC qualifie d manufacturing facilities every 12 months.  
Decisions taken by the ACB may be appealed by ap plicants either to the ACB or to the CNCA, under 
the provisions of the Regulations of Certification and Accreditation.   
97. Ten certification organizations were designate d by the CNCA to process applications for 
CCC marks.102  The China Quality Certification Centre  (CQC) has established 11 branches (branch 
centres) and has more than 200 designated laboratories, both in China and abroad. 
98. The China National Accreditation Service for C onformity Assessment (CNAS) is the national 
accreditation body of China authorized by the CNCA  to provide accreditation for certification bodies, 
laboratories, and inspection centres.  The CNAS was created in March 2006 by merging the China 
National Accreditation Board for Certifiers an d the China National Accreditation Board for 
Laboratories.  The Board of the CNAS is made  up of representatives of government, conformity 
assessment bodies, clients of conformity assessment services, users of conformity assessment, and 
technical experts.  By end-March 2011, the CNAS had issued 324 accreditations to 124 certification 
bodies in various areas, and had accredited 4,43 1 laboratories and 244 inspection bodies.  
(c) Sanitary and phytosanitary measures 
99. Responsibility for policy, legislation, regula tions and their implementation on sanitary and 
phytosanitary issues in China is divide d among a number of Government agencies: 
- the State Food and Drug Administration (SFDA) is responsible for:   
- policy on, planning, and supervising the implementation of security and 
management of pharmaceutical products, medical equipment, cosmetics and 
consumer foods, and participates in dr afting related laws, regulations, and 
department rules; 
                                                      
102 China Quality Certification Centre (CQC), China Certification Centre for Security and Protection 
(CSP), China Certification Center for Agricultural M achinery (CAM), China Building Material Test and 
Certification Center (CTC), Beijing Zhonghua Lianhe Qu ality Certification Center, China Certification Center 
for Fire Products under the Ministry of Public Security, China Certification Center for Automobile Products 
(CAP), Guojian Lianxin Certification Center, China Qua lity Mark Certification Group  (CQM), and Certification 
Center of Light Industry Council. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 50 
  
  - formulating and supervising the im plementation of quality management 
regulations on research and development,  production, distribution, and use of 
pharmaceutical products and medical equipment; 
- registering, supervising and managi ng pharmaceutical products and medical 
equipment; 
- formulating national standards on ph armaceutical products and medical 
equipment, supervising the implementation of these standards;  
- formulating supervision and manageme nt regulations on traditional Chinese 
medicines and ethnic medicines, as well as organizing the implementation of 
the regulations, and formula ting quality standards on these medicines.  It is 
also responsible for formulati ng production and quality management 
regulations on Chinese herbal medicines and regulations on their preparation, 
supervising the implementation of the regulations, and organizing and 
implementing the "protection system" for traditional Chinese medicine. 
- the Ministry of Health is responsible for food safety risk assessment and the 
formulation of food safety standards.  In  January 2010, under the Food Safety Law 
and its implementing regulations, the Minist ry established the National Food Safety 
Standards Review Committee which is res ponsible for reviewing national food safety 
standards.  The Committee is made up of e xperts in hygiene, agriculture, food, and 
nutrition.  As of end-2011, the Comm ittee has passed 307 national food safety 
standards; 
- the Ministry of Agriculture is responsible for food safety and animal health policies 
and regulations on farms, including the u se of veterinary products, herbicides, 
pesticides, and other chemicals used in food production.  Under the Ministry, the 
Institute for the Control of Agrochemicals, is responsible for the specific management 
of pesticide registration, including the designation of standards for the maximum residue of pesticides.  The China Institute of Veterinary Drug Control is responsible 
for the management of veterinary products and biological products for veterinarians;  
- MOFCOM is responsible for legislation a nd policy concerning trade, including trade 
in agriculture products and agrochemical s.  MOFCOM is also responsible for 
notifications to the WTO;  
- other relevant agencies include the State Administration for Industry and Commerce 
and AQSIQ.  The AQSIQ oversees food impor ts and exports, including legislation, 
and is responsible for quara ntine and is the WTO Enquiry Point for SPS measures in 
China.     
100. The current legislation on SPS issues in China is found in many different laws, including:  the 
Law on the Entry and Exit Animal and Plant Quar antine of 1992, Law on Animal Disease Prevention 
of 1997, the Law on Agricultural Product Quality Sa fety, the Animal Husbandry Law, Regulations on 
Plant Quarantine, the Law on Import and Export Commodity Inspection, the Law on Frontier Health and Quarantine, and the Food Safety Law of 2009 as well as accompanying implementing regulations 
and rules.  The Food Safety Law, which was pr omulgated and implemente d in 2009, covers all 
aspects of food safety, including food safety risk  monitoring and assessment, food safety standards, China WT/TPR/S/264/Rev.1 
 Page 51 
 
 
  food production and operation, food inspection, food import and export, as well as handling, 
supervision, management, and legal responsibilities of food safety events. 
101. China is a member of the Codex Alimentarius and the World Organisation for Animal Health 
and a contracting party to the International Plant Protection Convention.  In each case, the contact 
point is the relevant department of the Ministry of Agriculture.103   
102. China is an active participant in meetings of  the WTO SPS Committee.  In the period between 
1 January 2009 and 31 October 2011, China made  376 notifications to the WTO SPS Committee 
(including revisions, corrigenda, addenda, and supplemental notifi cations).  The supplemental 
notifications are unofficial translations into Englis h of documents referred to in some notifications.104  
On several occasions, other Members have used th e Committee to raise concerns about SPS measures 
taken or proposed by China, including hygiene st andards for distilled spirits, import restrictions on 
products, and quarantine testing, as well as about SPS notification practices.  The concerns about SPS 
notification practices followed the adoption of the Food Safety Law of 2009 with nearly 
100 notifications made with a 15-day comment period.   China has also used the Committee to raise a 
number of issues with other Members, including:  measures taken by the United States on imports of food products containing meat, poultry or processed  egg products, imports of  wooden handicrafts, 
imports of catfish, and new legislation on food safety;   measures taken by Canada on exporters of pet 
foods;  and measures taken by the EU on testing cont rols for imports on certain types of kitchenware 
from China and Hong Kong, China.
105 
103. Under the various administrative measures for inspection, quarantine and supervision of 
imports of different products, a country or region that wishes to export a food product to China for the 
first time must first be assessed by AQSIQ.  The assess ment examines factors relevant to the safety of 
the product concerned.  For example, for raw m ilk and raw processed dairy products, the factors 
include the veterinary service system, safety and h ealth control system, the system for monitoring 
food residues, the record for animal epidemics, etc.106  After both parties have signed a protocol for 
inspection and quarantine, exports from the country or region by food producers that are registered 
with AQSIQ can start.  The exporting company must be registered with AQSIQ, through its online 
e-Cert System (see below). 
104. AQSIQ and the General Administration of Customs maintain a Catalogue of Entry-Exit 
Commodities Inspected and Quarantined by Entry-Exit Inspection and Quarantine Organs .  The 
catalogue covers goods subject to inspection and quarantine.  It includes processed food and 
beverages as well as semi-processed products a nd raw materials and foods, such as meat and 
vegetables.  Since 2008, AQSIQ has made five ad justments to the catalogue based on consultations 
with the Customs and commercial authorities, in accordance with relevant requirements and the 
                                                      
103 Codex Alimentarius online information.  Viewed at:  http://www.codexalimentarius.net/ 
web/member_info.jsp?iso3=CHN;  OIE online information.   Viewed at:  http://www.oie.int/index.php?id=101;  
and IPPC online information.  Viewed at:  https://www.ippc.int/?id=1110520&no_cache=1&type= 
contactpoints&L=0 [November 2011]. 
104 Unofficial translations into English of a number of China's laws, regulations, administrative 
measures and other rules relating to food safety and other standards are also available online from the 
United States Department of Agriculture Foreign Agricultural Service at: http://www.usdachina.org/ 
en_index.asp [November 2011]. 
105 WTO SPS Information Management System.  Viewed  at:  http://spsims.wto. org/ [November 2011]. 
106 USDA FAS (2011d). WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 52 
  
  quality of import and export commodities, and issued the adjustment s with the General 
Administration of Customs via public announcement.107 
105. In order to implement the Law on the Entry and Exit Animal and Plant Quarantine (1991) and 
the accompanying regulations of 1997, AQSIQ ha s developed rules covering imports of various 
products, such as the Measures for the Administrati on of Inspection, Quarantine, and Supervision on 
the Fruit Entering China (AQSIQ Order No. 68), Measures for Supervising and Administering the 
Quarantine of Wooden Packages of Goods Entering China (AQSIQ Order No. 84) and others.   
106. In order to address problems relating to fo rging and altering sanitary and phytosanitary 
certificates and to facilitate trad e in agricultural and food products, AQSIQ introduced the China 
Inspection and Quarantine E-cert System (China E-cert ) in 2010.  Under the system, all exporters are 
required to register on-line with AQSIQ and to obtain approval from AQSIQ through their embassy in 
China.  Sanitary and phytosanitary import certificat es for each consignment must then be registered 
with the system.108 
107. Under the Implementing Rules for the Frontier Health and Quarantine Law, the Implementing 
Rules for the Law on Import and Export Commodity  Inspection and the Implementing Rules for the 
Law on the Entry and Exit Animal and Plant Quaran tine, goods subject to inspection for SPS reasons 
may be examined in various ways:   
- the goods may be released after documents  are examined with full examination 
(possibly including sampling and laboratory  assessment) at the final destination;   
- the goods may be subjected to a physical insp ection at the point of entry into China 
with full examination at the final destination;  or  
- a complete examination of the goods may be performed at the point of entry.   The 
choice of method depends on the exporting firm's history of compliance with 
standards and its international reputation.   
108. Exports of animal and plant products listed in the Catalogue are subject to quarantine 
requirements similar to those on imports and the qua rantine requirements of importers.  Enterprises 
exporting some specific products may go through qu arantine procedures in the production area instead 
of at the port.  A total of 2,201 10-digit HS codes have been adopted for the exit quarantine of animal 
and plant products, in the Statutory Inspection Catalogue . 
(d) Labelling 
109. Labelling requirements are maintained under th e Standardization Law, the Law on Product 
Quality of 1993 (as amended), and the Food Safety Law of 2009.  Under these laws, all products sold 
in China must have Chinese language  labels.  The label must state, inter alia , name, specification, net 
weight, date of manufacture, component or ingred ient list of the product, the manufacturer's name, 
                                                      
107 Public Announcement No. 203 in 2011: www.aqsiq.gov.cn/zwgk/jlgg/lhgg/201112/ 
t20111230_206071.htm; Public Announcement No. 158 in 2010:  www.aqsiq.gov.cn/zwgk/jlgg/ 
zjgg/2010/201012/t20101227_174159.htm;  Public Announcement No. 137 in 2009:  www.aqsiq.gov.cn/zwgk/ 
jlgg/lhgg/200912/t200912331_133945.htm;  Public Announcement No. 144 in 2008:  www.aqsiq.gov.cn/zwgk/ jlgg/zjgg/2008/200812/t20081231_102584.htm;  Public Announcement No. 5 in 2008:  www.aqsiq.gov.cn/ 
zwgkjlgg/zjgg/2008/200801/t20080131_63224.htm.  
108 AQSIQ online information.  Viewed at:  http://english.aqsiq.gov.cn/ [November 2011]. China WT/TPR/S/264/Rev.1 
 Page 53 
 
 
  address and contact information, country of orig in, quality guarantee period, product standard code 
and storage conditions, common name, a nd production licence of food additives. 
110. The National Food Safety Standa rd on General Rules for the Labelling of Prepackaged Foods, 
published by the Ministry of Health in 2011, is to be adopted in 2012.  A draft of the Rules was 
notified to the WTO TBT Committee in April 2010.109  Under the Rules all prepackaged foods must 
carry a label that includes the name of the food(s), a list of ingredients, net weight and configuration, 
address and contact information of manufacturers and/or  distributors, date of manufacture and date of 
minimum durability, conditions for storage, f ood production licence number, code of the product 
standard, and other contents that need to be labelled.110 
(viii) Government procurement 
111. Since its previous Review, there have been no major changes to China's legislative and 
regulatory regime for government procurement.  Ho wever, China is now well- engaged in the process 
of acceding to the WTO Agreement on Government Procurement (GPA), and preparatory work is 
under way on eventual changes to the legislative fra mework to bring it in conformity with the GPA.111  
Related institutional adaptations, including traini ng of central and local government personnel to 
implement the Agreement, are also in progress.  When completed, China's accession to the GPA is 
expected not only to substantially facilitate trade, but also to facilitate a modernization of China's 
procurement system that will yield substantial benefits for China.   
112. The Government's objectives in procurement incl ude:  improving efficiency in the use of 
public funds;  protecting the rights and interest s of the parties participating in government 
procurement;  and promoting better governance.112  In addition, there is growing recognition of the 
significance of the government procurement system for both trade and FDI in China.113   
113. According to data provided by the authorities,  the total value of government procurement 
increased to ¥842.2 billion in 2010,  up from ¥599.1 billion in 2008 (Table III.6);  it accounted for 
about 2.1% of GDP (2% in 2008).  However,  on average, sources indicate that government 
procurement in develope d and developing countries accounts for 10-15% of GDP.114  The authorities 
maintain that this small percentage is mainly because the data cover only procurement by government 
departments, institutions, and pub lic organizations using fiscal funds , for goods, construction, and 
services listed in the Centralized Procurement Catalogue .115   
                                                      
109 WTO document G/TBT/N/CHN/733, 21 April 2010.  The EU provided a link to an unofficial 
translation of the draft Rules in G/TBT/N/CHN/733/Suppl.1, 25 May 2010. 
110 USDA FAS (2011a). 
111 See, for example, State Council online information (in Chinese).  Viewed at:  http://www.chinalaw. 
gov.cn/article/cazjgg/201001/ 20100100193904.shtml.   
112 Law on Government Procurement, Article 1. 
113 Measures to ensure transparency, fair procedur es and non-discriminatory access to markets in the 
government procurement sector, for foreign as well as domestic firms, are an important incentive for related 
investments by multinational enterprises in relation to host economies.  See, Anderson et al. (2011). 
114 See Anderson et al. (2011).   
115 Article 8 of the Government Procurement Law specifies that the thresholds for government 
procurement items under the central budget are prescribed and published by the State Council, and the 
thresholds for items under local budget are prescribed and published by local governments (of provinces, autonomous regions, municipalities), or the department authorized by them.  For example, the threshold for 
procurement under the central budget in 2011 was ¥500,000 for goods and services, and ¥600,000 for 
construction projects. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 54 
  
  114. Local governments account for a major part of government procurement in China;  they 
accounted for about 93% of the total va lue of government procurement in 2010.116  According to the 
authorities, there are no data on how much of the ¥4 trillion economic stimulus package was allocated 
to government procurement. 
115. The Government Procurement Law applies to procurement of goods, projects, and services 
listed in the Centralized Procurement Catalogue .  The catalogue is issued by the Ministry of Finance, 
or provincial bureau of finance, and is revised from time to time.  Purchases of items listed in the 
catalogue must be carried out by centralized procurement agencies, which are non-profit legal persons.  This "centralized" procurement as well as procurement by centralized agencies accounted 
for more than 85% of government procurement in 2010.  "Decentralized" procurement is procurement 
of items not listed in the catalogue, but with a valu e above a certain procurement threshold, which is 
specified by governments at various levels.  De centralized purchasing may be carried out by the 
procuring agency itself, or through some centralized procurement agencies.  
116. The Government does not consider procuremen t by SOEs as government procurement;  the 
authorities state that China has no plan to include  procurement by SOEs, whose daily operations are 
not controlled by the Government, into the scope of its definition of government procurement.     
Table III.6  
Government procurement by proc urement of goods, construction projects, and services, 2008-10 
(¥ billion)  
 2008 2009 2010 
TOTAL  599.09 741.32 842.2 
Goods    255.92 301.06 317.63 
Central government entities  32.36 30.23 30.82 
Local government entities   223.56 270.83 286.81 
Construction and engineering services 297.84 385.84 453.66 
Central government entities  19.25 23.41 17.59 
Local government entities  278.58 362.43 436.07 
Other services  45.33 54.42 70.91 
Central government entities  7.36 8.42 8.28 
Local government entities  37.97 46.00 62.63 
Source: Information provided by the Chinese authorities. 
117. The main laws regulating China's governme nt procurement procedures include the 
Government Procurement Law of 2002, and the La w on Bid Invitation and Bidding or Tendering of 
1999.  Other laws, such as the Budget Law, the C ontract Law, the Product Quality Law, the Price 
Law, and the Anti-Unfair Competition Law may also  have a bearing on government procurement. 
118. Under the Government Procurement Law, the Gove rnment is, in principle, required to procure 
domestic goods, projects, and services.117  Exceptions can be and are routinely made when the goods, 
projects, or services required are unavailable in Ch ina or unavailable on reasonable commercial terms, 
or when the goods, projects, and services are proc ured for use outside China.  Nonetheless, the 
statutory requirement for procurement from domes tic sources will have to be addressed in the 
framework of China's GPA accession, at least in re lation to procurement that will be subject to 
China's GPA commitments.   
                                                      
116 WTO (2008). 
117 Article 10 of the Government Procurement Law. China WT/TPR/S/264/Rev.1 
 Page 55 
 
 
  119. Furthermore, there are no provisions on local content, or rules of origin, to determine whether 
a product is produced domestically.  In practice, procurement of foreign products appears to occur routinely.  The authorities state th at the statistical system for Chin a's government procurement has no 
data on the procurement of foreign products.   
120. Goods and services may be procured using:  publ ic invitation or tendering, invited bidding, 
competitive negotiation, single-source procuremen t, request for quotations, and other methods 
confirmed by the Ministry of Finance.  Public inv itation (a form of open tendering) is required for 
procurement of items exceeding the prescribed proc urement thresholds.  The thresholds for central 
government procurement for 2011-12 are ¥1.2 mill ion for goods and services, and ¥2 million for 
construction projects.  For procurement exceeding th ese thresholds by any other method, Ministry of 
Finance approval is required.  The method of proc urement for procurement below these thresholds is 
decided by the procuring entity, in accordance with the Law.
118   
121. In addition to the Government Procuremen t Law, procurement of construction and 
engineering projects is also regulated by the Law on Bid Invitation and Bidding or Tendering, as stipulated by Article 4 of the Government Procurement Law.
119   
122. According to the most recent information provi ded by the authorities, procurement by public 
tendering was the most common method in 2010, accounting for about 77% of total procurement 
value (75% in 2009).   
123. Procuring entities must announce government pr ocurement and bidding information in media 
designated by the Ministry of Finance in "a timely and standard manner" to ensure transparency and 
fair competition.120  Suppliers, if unfairly excluded from procurement processes or treated in a 
discriminatory way, may complain to the procuri ng agency, appeal to the Government Procurement 
Division of the Ministry of Finance, or subsequen tly file a complaint with a court.  The authorities 
state that the Government collects no data regarding the number of complaints. 
124. China has not signed any bilateral or regional ag reement on government procurement to date.   
125. Imports used for procurement purposes require approval from the Ministry of Finance, or its 
corresponding departments at the local level.   
126. China continues to face challeng es in implementing a consistent and transparent approach to 
procurement across all levels of government, such  as circumvention of the government procurement 
system;  preferences given to specific suppliers ;  and lack of budget constraints for government 
procurement programmes.  To meet  these challenges, department budge ts have been required to be 
classified in terms of projects, products and service s since 2010.  The authorities also state that China 
has been examining procurement contracts to ensure  that all contracts are actually implemented;  
                                                      
118 See WTO (2010) for details. 
119 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 99. 
120 The official government procurement website is www.ccgp.gov.cn.  The Measures for the 
Administration of Tenders and Invitations to Bid in Government Procurement of Goods and Services (Order of 
the Ministry of Finance No. 18) set out the contents an d procedures for announcing procurement information, as 
well as the deadlines for the Tender Pre-Qualification No tice, date of the closing of tender, submission, and 
announcement of bidding results.  The Administrative Measures for Government Procurement Information 
(Order of the Ministry of Finance No. 19) define the scope and content of procurement information to be 
announced and the designated media. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 56 
  
  enhanced supervision and inspection of purchaser s and procurement agencies;  and strengthened 
punishment in the case of violation.  
127. The authorities maintain that there is no longer any condition attached to government 
procurement regarding "i ndigenous innovation".121  They state that at the national level, preferential 
government measures for "indigenous  innovation" have not been impl emented.  While the authorities 
indicate that such measures were introduced in some  regions but have already been eliminated, details 
of these measures were not made available to the Secretariat. 
128. Concerning the state of play regarding Chin a's accession to the GPA, it is currently an 
observer to the GPA and applied for accession to th e Agreement in December 2007.  Since then, the 
terms of its accession have been the subject of intensive discussion in the Committee on Government 
Procurement, on numerous occasions.  Overall, th e Committee has consistently expressed its strong 
appreciation for the commitment that China has show n to its accession process, while also calling for 
further improvements to China's coverage offer a nd making clear that significant further work remains 
to be done before the conclusion of China's acce ssion can be foreseen, including with respect to 
China's legislative framework.122   
129. Carrying this process forward, toward the end of 2011, China submitted the GPA Parties its 
"second revised coverage offer".  While the offer has not yet met all of the expectations of the existing 
Parties, it must nonetheless be said that it responde d importantly to requests made to China by the 
Parties by offering, for the first time, significan t proposed coverage of procuring entities at the 
sub-central (provincial/municipal) government level,  in addition to the central government level.  
Across the membership of the GPA, Parties are now pressing for further movement by China to 
include greater coverage of entities at the central and sub-central government level, coverage, for the 
first time, of state-owned enterprises (SOEs) and other improvements.   
130. China's accession to the GPA has b een estimated as likely to yield market access gains for the 
existing Parties to the Agreement in the range of US$113-289 billion.123  It will eventually give 
China's suppliers legally-guaranteed access to GPA- covered procurements.  Ho wever, it should not be 
forgotten that, in addition to its significance for market access, accession to the GPA can bring other 
very important benefits, notably with respect to improvements in transparen cy and related internal 
procedures, and enhanced value for money in purc hases made by central local and other government 
entities of the acceding WTO Member.124  For these reasons, China's accession to the GPA, when it is 
completed, is likely to be a "win-win" outcome for all concerned.  
(ix) Import-related financing   
131. The state-owned Export-Import Bank of China (E XIM Bank) offers import credit to importers 
in China.  This is intended to satisfy the medi um- and long-term capital needs of importers of, 
inter alia , capital goods, resources, energy sources, raw materials.  Any enterprise approved and 
registered by China's authorities for the administration of industry and commerce, or by competent 
                                                      
121 Ministry of Finance Circular (Cai Ku 85/2011, promulgated on 23 June 2011) stated that 
three procurement policies associated to indigenous innovation products, i.e. Cai Ku 29/2007, 30/2007, 31/2007, 
ceased to be in effect. 
122 See WTO document GPA/110, 16 November 2011, paragraphs 10-13.  
123 Anderson et al . (2011).  
124 Anderson et al. (2011). China WT/TPR/S/264/Rev.1 
 Page 57 
 
 
  authorities, may file an application for import cr edit to EXIM Bank.  In 2010, EXIM Bank facilitated 
imports of products to a value of US$53.1 billion.125  
(2) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Procedures 
132. The main changes in China's customs procedures on exports since 2010 include the adoption 
of "classified customs clearance", under which cu stoms clearance of export goods is categorized 
according to "risk levels" of enterprises based on, inter alia,  law-abiding records.  Under the classified 
customs clearance, enterprises with good law-abidi ng records may benefit from facilitated customs 
clearance, as stipulated in the Public Announcem ent of the General Administration of Customs 
Concerning Deepening the Classified Customs Clearance (GAC Public Announcement (2010) 
No. 56).   
133. Exporters must register with Customs before  making customs declarations, which must be 
made by the consigner or an entrusted agent (decl aration enterprise) after the goods arrive at the 
customs surveillance zone, and 24 hours before loading, unless otherwise approved by Customs.  
China's customs transit procedures for exports  have remained largely unchanged since 2009.126  
134. Exports of animals and plants and their produc ts are subject to SPS requirements similar to 
those on imports, and to the requirements of the importing country.  Enterprises exporting certain products may go through inspection at their producti on areas, rather than at ports;  AQSIQ has a 
positive list of these products, comprising 2, 623 tariff lines at the HS 10-digit level.
127  However, 
these exports need to be inspected at the port if they  are transported in bulk, are for foreign assistance, 
need to be repacked at ports, or are subject to bilateral or regional agreements requiring SPS 
inspection at the border.  Goods that do not meet the SPS requirements are not allowed to leave the country.  
135. The Public Notice on Requirements of Rare-Earth Product Export Declaration (General 
Administration of Customs Public Notice (2011) No . 37) entered into force on 1 June 2011.  China 
explained that this implem ents its policy related, inter alia,  to the conservation of resources and 
protection of environment.  Under the Notice, en terprises exporting rare ear th and related products 
must, inter alia,  declare the weight percentage of rare- earth components contained in export goods in 
accordance with the Catalogue for Specification Declaration of Customs Import and Export Goods 
2011.  
                                                      
125 EXIM Bank (2010). 
126 Under the customs transit procedures, transit in China of goods from any country that has signed 
agreements with China on transit goods, or those transit goods received or shipped by any country that has 
signed the Agreement on International Railroad-Through Transport of Goods with China, must be permitted to 
pass through the territory of China in  accordance with relevant agreements.  Transit in China of goods from any 
country that has not signed such an agreement requi res approval from China' s trade and transportation 
authorities, and registration with Customs. 
127 AQSIQ online information.  Vi ewed at:  http://www.aqsiq.gov.cn/zwgk/jlgg/zjgg/2008/200807/ 
t20080721_82622.htm [13.10.2011]. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 58 
  
  (ii) Export subsidies 
136. The authorities state that China does not provide  any export subsidies.  In October 2011, 
China notified to the WTO its subsidy programmes during 2004-08 (section (3)(ii) below).128  
(iii) Export taxes 
137. As from January 2010, China eliminated export duties on 17 tariff lines129 including products 
such as clays, aluminium ores, chemicals, ferro-a lloys;  it also reduced interim export duty rates on 
21 tariff lines including products such as chemicals and fertilizers.130 
138. China reduced the off-season export  tax rate on some fertilizer products to 7% (from 10%) in 
2010131;  it also prolonged the period of application of  the off-season export tax rate on urea by half a 
month.  Export tariffs were eliminated on anhydrous aluminium fluoride, NdFeB alloy 
quick-hardening permanent magnet, small and medium -sized profile steel, alumina and brown fused 
alumina made of alumina.  On the other hand, in 20 11, China raised export tariffs on certain rare-earth 
minerals, including neodymium and lanthanum chloride (from 15% to 25%), and ferroalloy 
containing more than 10% rare earth elements (from 20% to 25%).132  
139. China's export taxes, in the form of statutor y rates and interim rates (applied for a specific 
period), are levied on an MFN basis.133  The customs value of export goods is based on the transaction 
value of the goods, together with its transportation, insurance, and other relevant costs for the goods to 
arrive at the departing point but before loading.   Interim export duty rates may be higher than 
statutory export tax rates;  where there are interim export du ties on export goods to which the 
statutory export taxes are applicable, the interim rates apply.   
140. In 2011, statutory export taxes were applied to  99 tariff lines (at the HS 8-digit level, except 
for 1 tariff line where the rate is applied only pa rtially) up from 95 in 2009.  The 99 tariff lines 
involved 70 lines subject to lower and 3 to higher in terim export taxes;  the remaining 26 lines had no 
corresponding interim duties.134  Interim export taxes also applie d to 237 tariff lines that were not 
subject to statutory export taxes;  out of the 237 lines, 4 lines involve interim rates that are applied  only partially.  Most export duties involve ad valorem  rates ranging from 0 to 40% (unchanged since 
2009).  
141. China revises its export tax rates from time to ti me, or adjusts the list of commodities subject 
to export taxes, or levies special export taxes.  In 2011, 8 lines (at the HS 8-digit level) were subject to 
special export duties.
135  Special export duties currently app lied include seasonal duties for chemical 
fertilizers and their raw materials, aimed at curbing exports of these products during the time they are 
                                                      
128 WTO document G/SCM/N/155/CHN (G/SCM/N/186/CHN), 21 October 2011. 
129 These concern tariff lines under HS 2508; 2606; 2620; 2818; 2826; 2827; 2834; 7202; and 7216. 
130 These concern tariff lines under HS 2809; 2814; 2834; 3102; 3103; 3105. 
131 The off-seasons for phosphate fertilizer are Janu ary, June, July, August, and September.  The 
off-season for urea is from July to October. 
132 WTO document WT/TPR/OV/W5/Rev.1, 7 September 2011. 
133 In Annex 6 of its Protocol of Accession, China listed 84 lines at the HS 8-digit level at statutory 
export tax rates, and confirmed these would be the maximum export tax levels (WTO document 
WT/ACC/CHN/49, 1 October 2001). 
134 HS 720110, 720120, 720150 had interim rates at 25%, higher than the corresponding statutory 
export duty rate of 20%. 
135 China Tariff Schedule 2011.  No lines are subject  to special export dutie s only.  According to 
China's 2011 Tariff Schedule, these speci al export duties were levied at 75%. China WT/TPR/S/264/Rev.1 
 Page 59 
 
 
  in high demand domestically.  Including special expor t duties, the simple average export tax rate on 
dutiable items (i.e. the simple average based onl y on lines that have export duties) was around 14.5% 
in 2011.  Including all HS-8 digit tariff lines, the average was 0.6%.  
(iv) Tax rebates on exports 
142. Excise tax is fully rebated on exports. 
143. VAT may be rebated on exports, although the reba te rates are, by and large, lower than the 
VAT rates actually paid.  The difference between th e two rates constitutes a levy on exports, which 
may in turn constitute assistance to downstream pro cessing of the products affected, and could affect 
China's terms of trade.  China adjusts VAT rebate ra tes as part of its industrial policies, to control, 
restrict, or otherwise "manage" the export of certain  products.  In particular, on 15 July 2010, China 
eliminated VAT rebates on exports of steel, starch, ethanol, and semi-finished copper products, covering 406 tariff lines.
136  VAT rebates on exports reached ¥920. 5 billion in 2011, some 7.7% of 
total merchandise exports (up from ¥648.7 billion and 7.9% in 2009).137  
144. China does not have any duty drawback schem es other than those under "processing trade".  
(v) Tax concessions under processing trade 
145. Under the mode of "processing trade", goods ar e imported in bond (therefore not subject to 
import tariffs and related tax) if they are expor ted within a certain period after processing and 
assembly.  However, materials and parts listed in the Catalogue of Goods Subject to Import 
Prohibition Under Processing Trade  may not be imported in bond and thus are still subject to import 
tariffs and related tax.138  On 28 September 2010, Public Notice No. 63 (2010), issued jointly by the 
MOFCOM and Customs, revised this Catalogue.139  As a result, in 2011, 1,286 tariff lines at the 
HS 8-digit level were subject to these "export prohibitions under processing trade" (up from 1,016 lines in 2009), 317 lines were subject to im port prohibitions (up from 279 in 2009), and another 
181 lines (up from 139 lines in 2009) were subjec t to both import and export prohibitions under 
processing trade.  Criteria for deciding which pr oducts are prohibited under processing trade were not 
made available to the Secretariat.  
(vi) Export prohibitions, restrictions, and licensing 
(a) Export prohibitions 
146. Products listed in the catalogues of products subj ect to export prohibitions are prohibited from 
being exported under normal trade, mainly because of  China's international obligations and domestic 
considerations regarding envir onmental and human health protec tion, and preservation of natural 
                                                      
136 WTO document WT/TPR/OV/W/5/Rev.1, 7 September 2011. 
137 These figures include rebated excise tax on exports.   
138 A list of products subject to import and export "prohibitions under processing trade" is published 
online (in Chinese).  Viewed at:  http://www.mofcom.gov.cn/aarticle/b/c/200906/20090606300331.html and http://cys.mofcom.gov.cn/accessory/201009/1285748122466.x ls [11.11.2011].  If these products are not 
prohibited from export under normal trade (see below), their export is allowed;  however, when exported under 
normal trade, like other products, import tariffs must be paid on their imported inputs.  As China does not have tariff drawbacks, these tariffs may constitute taxes on exports. 
139 The Notice concerned 44 items (under HS 10-digit classification) that were deemed "high emission 
and energy consuming products". WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 60 
  
  resources.  China has released five batches of e xport prohibition catalogues since its accession to the 
WTO;  the last took effect on 1 January 2009.  Ch ina maintained general export prohibitions on a total 
of 45 items at the HS 8-digit level in 2011 (no change since 2009).   
(b) Export quotas and licensing 
147. Rare earth has been subject to export quot a and licence since 1999.  Annual quotas are 
allocated twice a year.  The quota allocations are made  in December of the preced ing year and in July.  
MOFCOM Circulars allocating the quota are publishe d on the MOFCOM official website.  Quotas for 
coal exports were set at 38 million tonnes for 2011.140  China also introduced export quotas (together 
with licensing requirement) on rare earth fe rroalloy (ex HS 7202.99.91) on 20 May 2011.   The 
authorities believe that these export restrictions c ould help conserve natural resources or protect the 
environment.  The Secretariat questioned the econom ic effectiveness of these measures in its report 
for the last trade policy review of China.141  
Export quotas 
148. China applies global quotas as well as destin ation-specific quotas.  Destination-specific 
quotas apply to live cattle, live swine, and fowl to  be exported to the Hong Kong and Macao SARs.  
After exporters obtain a quota, an export licence is issued by MOFCOM.  In 2011, global export 
quotas applied to 181 lines at the HS 8-digit leve l, up from 173 lines in 2009;  the increase reflects, 
inter alia,  the addition in May 2011 of rare earth ferroalloy (ex HS 7202.99.91).  
149. The method of allocating export quotas has remain ed unchanged since the previous Review of 
China.   Some quotas are allocated by the NDRC or MOFCOM, some through a bidding process.  
When allocating quotas, the Government considers an enterprise's export performance, its previous 
quota usage, business performance, and production volume  in the previous three years.  For products 
subject to state trading (section (vii) below), MO FCOM or NDRC allocates export quotas directly to 
the state trading enterprises.  For other products, MOFCOM allocates quotas either directly to enterprises, or to departments at the prov incial level, which allocate the quotas.   
Export licences 
150. China's export licensing requirements are implemen ted mainly to fulfil its obligations under 
international agreements.
142  In 2011, 246 lines at the HS 8-digit level were subject to export licensing 
(242 lines in 2009);  these do not cover lines subject to global export quotas.143  Exporters of products 
under some tariff lines may obtain a licence from MOFCOM or its authorized agencies if they have the relevant export contracts.  For the remaini ng tariff lines (covering mainly substances depleting 
ozone, and some metals and their products), exporters must obtain a permit prior to applying for a 
licence.  Export permits are granted by the Minist ry of Environmental Protection (for ozone-depleting 
substances) and MOFCOM (for others).  After th e exporter obtains the permit, an export licence 
should be issued automatically by MOFCOM or its authorized agencies.   
                                                      
140 WTO document WT/TPR/OV/W/5/Rev.1, 7 September 2011. 
141 WTO document WT/TPR/S/230/Rev.1, 5 July 2010, Box III.1. 
142 Including:  the Montreal Protocol on Substances that Deplete the Ozone Layer;  the Convention on 
the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their 
Destruction;  the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances;  and the 
Basel Convention on the Control of  Transboundary Movement of H azardous Waste and Their Disposal. 
143 In addition, exporters of chemicals that may be us ed for military purposes, and toxic materials, must 
obtain export licences from MOFCOM before exporting. China WT/TPR/S/264/Rev.1 
 Page 61 
 
 
  (vii) State trading on exports 
151. China maintains state trading on some exports with a view to:  ensuring stable domestic 
supply;  avoiding drastic price fluctuations in in ternational markets;  safeguarding food safety; and 
protecting exhaustible and non-recyclable natural res ources and the environment.  State trading is not 
used to fulfil the Government's contractual obliga tions, except in certain ci rcumstances, such as food 
aid to foreign countries.144 
152. Exports that are subject to state trading (the same as at the time of the previous Review) 
include maize, rice, coal, crude and processed o il, cotton, antimony and antimony products, tungsten 
and tungsten products, silver, and tobacco (Table AIII.3).   
153. While imports subject to state trading may be imported by non-state-trading enterprises 
(STEs), exports subject to state trading must al ways be exported by STEs.  Some STEs, however, are 
not state-owned enterprises (SOEs) (for example, for the exports of tungsten, antimony, and silver).    
The authorities maintain that export prices charge d by STEs are determined by the enterprises 
themselves, based on, inter alia , domestic prices plus transportation and storage costs, interest rates, 
inspection fees, and international market prices. 
(viii) Export finance, insurance, and guarantees   
154. China provides export credit financing mainly through its official export credit agency, the 
Export-Import Bank of China (EXIM Bank)145;  it also provides export credit insurance, by the China 
Export & Credit Insurance Corporation (SINOSURE) .  According to the authorities, both domestic 
and foreign firms receive export finance or export credit insurance from the EXIM Bank or 
SINOSURE under the same terms and conditions, and there is no local-content requirement to obtain 
export finance.    
155. An estimate provided by the Chinese authorities indicates that in 2008 the total value of new 
medium- and long-term (i.e. more than one year) official export credit by the EXIM Bank amounted 
to US$6.3 billion.146   
156. The EXIM Bank, the only policy bank providing export credit in China, is wholly owned by 
the Central Government.  The EXIM Bank raises funds, inter alia, through the sale of bonds in the 
domestic and Hong Kong China capital markets;  according to the Bank, its credit ratings are 
compatible with China's sovereign ratings.  The Ba nk's main mandate is to facilitate the export and 
import of Chinese mechanical and electronic produc ts, complete sets of equipment, and new- and 
high-tech products;  assist Chinese companies with comparative advantages in their offshore contract 
projects and outbound investment;  and promote its foreign relationship and international economic 
and trade cooperation.147   
                                                      
144 WTO document G/STR/N/9/CHN/Add.1, 14 July 2003. 
145 The EXIM Bank has 18 branches in China and 3 overseas representative offices (in Johannesburg, 
Paris, and St. Petersburg) (EXIM Bank, 2010, p. 118.   Viewed at:  http://english.eximbank.gov.cn/annual/ 
2010fm.shtml). 
146 According to another estimate, in 2008, the total value (including loans, guarantees, and insurance 
by the EXIM Bank and SINOSURE) amounted to US $59.6 billion, compared  with, for example, 
US$11.0 billion in the United States and US$1 0.8 billion in Germany (US EXIM Bank, 2010). 
147 EXIM Bank (2010), p. 18.   WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 62 
  
  157. Borrowers of export buyer credit must be importe rs or financial institutions identified by the 
EXIM Bank or the institutions authorized by th e importing country's government;  and exporters  
must be independent legal corporations that ar e qualified to implement export projects as recognized 
by the agencies authorized by th e Government. An application for export buyer credit must meet 
conditions including:  the country of the borro wer enjoys economic and political stability;  the 
borrower has a good credit status and is able to re pay credit principal and interest;  the borrower 
provides the repayment guarantee identified by the EXIM Bank;  and the borrower buys export credit 
insurance when necessary.  
158. Borrowers of export seller credit must be enterpri ses with independent legal status, registered 
in China, and qualified and capable of operating in re lated sectors.  An application for export seller 
credit must meet conditions including:  the borrower has corresponding production capacity, manufacturing capacity and capacity to perform export contracts, or have experience in 
foreign-related operation;  the borrower has a sound operation and manageme nt situation, sound 
financial situation and credit status , and is able to repay credit prin cipal and interest; the relevant 
contract/agreement has already been signed; the importer and project owner has corresponding 
capability and has good credit status;  the project can generate good economic and social benefits;  the 
country where the project is located enjoys ec onomic and political stability and good investment 
environment;  the borrower purchases export credit  insurance against large risks involved in the 
project;  and the borrower provides the repayment guarantee identified by the EXIM Bank.  
159. When granting export credit, the EXIM Bank s tipulates the percentage of self-owned capital 
or advance payment for some loan bus inesses in order to prevent risk.    
160. With respect to exports, the EXIM Bank provides mainly direct financing, including seller's 
credit and buyer's credit for exports.  Export selle rs' credits signed by the EXIM Bank in 2010 
amounted to ¥155.6 billion (¥224.2 billion in 2009) .  Of this amount, ¥144 .22 billion were actually 
provided (¥173.1 billion in 2009):  33.2% were for overseas investme nt projects; 30.4% for new-and 
high tech products;  9.0% for ship exports;  8.6% for general mechanical and electronic products;  and 
3.6% for exports of agricultural products.  In 2010,  newly signed export buyer's credits by the EXIM 
Bank amounted to ¥35.6 billion, while actua l disbursements totalled ¥32.6 billion.
148  The amount of 
the disbursements more than doubled compared w ith the ¥14.9 billion the Bank disbursed in 2006.   
161. The authorities have indicated that, although China is not a participant in the OECD 
Arrangement on Officially Supported Export Credits,  the EXIM Bank in practice "refers to the 
Arrangement  for key conditions of issuing export credit a nd is generally consistent with the basic 
framework of the Arrangement ", and that "its lending interest rate is either a fixed one taking 
reference from OECD-released CIRRs or a floating rate which is a rec onciled London Inter Bank 
Offered Rate (LIBOR)" .149  As of the end of 2010, 55.35% of EXIM Bank on-balance lending was in 
renminbi, and the remaining 44.65% in foreign curre ncies.  The authorities indicate that financial 
institutions set their own renminbi lending rates subj ect to a lower limit, which is 0.9 times the PBC 
benchmark rate.150  
162. SINOSURE is China's only policy-oriented insurance company specializing in export credit 
insurance.  As a wholly state-owned company, SINOSURE was set up to facilitate Chinese exports 
and investments, especially exports of high-tech or high value-added capital goods, by offering export 
                                                      
148 Export buyer's credit refers to credit provided to foreign borrowers with a view to supporting the 
export of Chinese goods, services, and overseas co nstruction projects (EXIM Bank, 2010, p. 25).   
149 WTO document WT/TPR/M/230/Add.1, 22 February 2011, pp. 355 and 174. 
150 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 106. China WT/TPR/S/264/Rev.1 
 Page 63 
 
 
  credit insurance against non-payment risks, and pr oviding services in financing, information, and 
receivables management. 
163. In 2010, the total insured/guaranteed by SINOSURE amounted to US$196 billion, a 68.5% 
increase from 2009 (and more than 9 times the amount  insured/guaranteed in 2005).  The share of 
total exports with SINOSURE credit insurance was 10.4% in 2010 (3% in 2006), while the share of 
"general trade" with the insurance was 22.8%.151  Most of SINOSURE's export credit insurance is 
short term, but it also provides a significant vo lume of medium- and long-term export credit 
insurance, principally in the form  of insurance for buyer's credits.152  In 2010, machinery and 
electronic products were among the largest items insured/guaranteed (US$88.1 billion), followed by 
high- and new-technology products  (US$43.0 billion), and textile products (US$21.9 billion). 
Insurance for products related to the shipping industry rose by 147% in 2010.153  
164. According to the authorities, SINOSURE calculates its premiums based on a designed 
premium model that takes into account country a nd commercial risk ratings, credit terms, risks 
covered, conditions of the insurance po licy, and operating and financial costs.154  
165. China is an observer in the OECD;  the EXIM Bank and SINOSURE attended conferences of 
the OECD and Paris Club in recent years.  The EXIM Bank takes the OECD's Arrangement on 
Officially Supported Export Credits and the practi ces of official export credit institutions of other 
countries as reference for its business operations.155 
(ix) Promotion and marketing assistance 
166. Apart from export financing and insurance, other export assistance includes:  online 
information provided by MOFCOM to facilitate ex ports, such as information on goods and markets 
(e.g. list of importers and exporters);  support for sm all and medium-sized enterprises to participate in 
overseas exhibitions and to acquire internationa l certifications;  building overseas labour service 
platforms to assist the Chinese people working abro ad;  export fairs held by China Foreign Trade 
Centre under MOFCOM;  consultation services offe red by the China Council for the Promotion of 
International Trade (CCPIT), and the Internationa l Market Exploration Fund managed by MOFCOM 
and MOF, to promote SMEs' participation in overseas exhibitions.  
(3) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax incentives 
(a) Overview 
167. China's tax revenue increased steadily during th e review period (Table III.7).  China applies 
the same taxation to domestic and foreign-f unded enterprises (FIEs), except for transitional 
                                                      
151 Export & Credit Insurance Corporation (2010), p.11.   
152 Total short-term credit insu red in 2010 amounted to US$154 .33 billion, compared with 
US$9.65 billion in medium- and long-term credit insured (Export & Credit Insurance Corporation, 2010, pp. 15 
and 18).   
153 Export & Credit Insurance Corporation (2010), p. 13.   
154 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 355. 
155 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 105. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 64 
  
  arrangements for preferential policies to FIEs under the previous Law on Income Tax of Enterprises 
with Foreign Investment and Foreign Enterprises.156   
Table III.7 
Tax revenue, 2007-11 
(¥ billion and %) 
  2007 2008 2009 2010 2011 
Total government rev enue (¥ billion) 5,132.2 6,133.0 6,851.8 8,310.2 8,972.0 
Central government (%) 54.1 53.3 52.4 51.1 51.1 
Local government (%) 45.9 46.7 47.6 48.9 48.9 
Tax revenue (¥ billion) 4,562.2 5,422.4 5,952.2 7,321.1 7,929.1 
Central government (%) 57.8 57.1 56.1 55.3 55.2 
Local government (%) 42.2 42.9 43.9 44.7 44.8 
Indirect taxes (% of total tax revenue)a 73.8 72.5 74.0 75.8 76.0 
Consumption (excise) taxb (% of total tax revenue) 4.8 4.7 8.0 8.3 8.2 
Value-added taxc (% of total tax revenue) 33.9 33.2 31.0 28.8 29.5 
Consumption tax and VAT collected at the border (% of total tax 
revenue) 13.5 13.6 13.0 14.3 14.2 
VAT and consumption tax rebates for exports (% of  total tax revenue) -12.4 -10.8 -9.8 -9.1 -9.2 
Tariffs (% of total tax revenue) 3.1 3.3 2.5 2.8 2.7 
Business tax (% of total tax revenue) 14.4 14.1 15.1 15.2 15.1 
Agriculture-related taxes (% of total tax revenue) 3.2 3.1 .. .. .. 
Direct taxes (% of total tax revenue)d 26.2 27.5 26.0 24.2 24.0 
Enterprise income tax (% of total tax revenue) 19.2 20.6 19.4 17.5 17.4 
Individual income tax (% of tota l tax revenue) 7.0 6.9 6.6 6.6 6.6 
Total government expe nditure (¥ billion) 4,978.1 6,259.3 7,630.0 8,987.4 10,022.0 
Central government (%) 23.0 21.3 20.0 17.8 17.0 
Local government (%) 77.1 78.7 80.0 82.2 83.0 
.. Not available. 
a Indirect taxes are defined as all taxes except direct taxes. 
b Not including the excise tax collected at the border on imports. 
c Not including the VAT collected at the border on imports. d Direct taxes are defined as enterprise  income tax and individual income tax. 
Source:  National Bureau of Statistics of China (2010), China Statistical Yearbook 2010;  Ministry of Finance online 
information.  Viewed at:  http://szs.mof.gov. cn/zhengwuxinxi/gongzuodongtai/201102/t20110201_436195.html 
(in Chinese) and http://gks.mof.gov.cn/guokus i/zhengfuxinxi/tongjishuju/ 201002/t20100205_269099.html (in 
Chinese);  and WTO Secretariat calculations. 
168. During the period under review, China has continued to adopt various tax reforms, with a 
view to lowering tax burdens (and thereby enco urage consumption), broadening the tax base, 
simplifying its tax system, enhancing tax collec tion, and making it more neutral between domestic 
and foreign enterprises.  For example, from 1 Dece mber 2010, foreign-invested enterprises, overseas 
enterprises, and foreign individuals must pay city maintenance and constructi on tax, and educational 
surcharges (the same as domestic businesses and individuals)157, which they used to be exempt from.  
Data provided by the authorities indicate that in  2011, revenue from the city maintenance and 
                                                      
156 For details of the transitional arrangements, see the Notice of the State Council on the 
Implementation of the Transitional Pref erential Policies Concerning Enterprise Income Tax (Guo Fa 2007/39). 
157 See the Interim Provisions on the Collection of Education Surcharges (Guo Fa 50/1986) and the 
Decision of the State Council on Amending the Interim Provisions on the Collection of Educational Surcharges 
(Order of the State Council No. 448) for the details of education surcharges. China WT/TPR/S/264/Rev.1 
 Page 65 
 
 
  construction tax increased by ¥59 billion and reve nue from educational surcharges increased by 
¥25 billion;  the amount paid by foreign-funde d enterprises totalled ¥85 billion in 2011.   
169. On 1 January 2012, the Vehicle and V essel Tax Law and the Regulations on the 
Implementation of the Vehicle and Vessel Tax Law en tered into force, and the Interim Regulations on 
Vehicle and Vessel Tax were abolished.  The presen t reform of the vehicle and vessel tax legislation 
involves mainly that the tax on passenger vehicles will be levied at seven rates, according to different 
engine displacement.  These tax rates range from ¥60 to ¥5,400 per vehicle, and preferential tax rates 
are in place for vehicles and vessels that conserve en ergy or use new energy;  the reform stipulates 
that administrative departments of, inter alia,  vehicle and vessel registration and ship inspection 
organizations must assist tax authorities in the administration of vehicle and vessel tax collection by 
providing relevant information of vehicles and vessels (Table AIII.4).   
170. Since 2011, preferential taxes have been grante d on energy-management contract projects for 
eligible energy services companies,  in accordance with the Notice of the Ministry of Finance and the 
State Administration of Taxation on Issues Concerning the Value-added Tax, Business Tax and 
Enterprise Income Tax Policies for Promoting th e Development of the Energy Services Sector 
(Cai Shui 110/2010).  Energy services companies th at meet prescribed conditions on contract-based 
energy management projects are exempted from th e business tax and the value-added tax.      
171. China introduced a reform of the resource tax, charged on crude oil and natural gas, as a pilot 
programme in Xinjiang on 1 June 2010, followed by western China on 1 December 2010.  The main 
content of the resource tax reform is to impose ad valorem  taxes on petroleum instead of specific 
taxes (applied previously);  the new tax rate is 5% of the sales price;  preferential rates are provided to 
thickened oil, high pour point oil, high-sulphu r gas, and other oil and gas products.  Based on 
experience in the pilot reform, the State Council re vised and promulgated the Interim Regulations of 
the People's Republic of China on Resource Tax on 30 September 2011, to implement the reform at 
the national level.  The revised Interim Regulati ons of the People's Republic of China on Resource 
Tax entered into force on 1 November 2011. 
172. Since 28 January 2011, real estate tax has b een imposed, as a pilot programme, in Shanghai 
and Chongqing on sales of residential houses within five  years after purchase.  In Shanghai, the real 
estate tax is imposed on houses newly purchased (a nd on second or subsequent houses) by local 
resident households and houses newly purchased by non-lo cal resident households at the rate of 0.4% 
or 0.6%, on the basis of the transaction prices.  Th e real estate tax in Chongqing is imposed on single 
commercial buildings (including stock houses) and newly purchased high-end houses owned by 
individuals at the rate of 0.5%, 1% or 1.2%, on the basis of the transaction prices.   
(b) Indirect taxes 
173. Indirect taxes, including import duties, VAT, consumption tax, business tax, city maintenance 
tax, tonnage tax (for ships), resource tax, and t obacco leaf tax, account for most of China's tax 
revenues (76% in 2011, up from 74% in 2009).158   
Value-added tax 
174. China's main indirect tax is its value-added ta x (VAT) (which, excluding tax collected at the 
border, accounted for 29.5% of tax revenue in 2011, down from 31% in 2009);  the revenue is shared 
                                                      
158 Indirect taxes are defined here as all taxes but the enterprise income tax and the individual income 
tax. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 66 
  
  75:25 between the Central and local governments (e xcept the revenue collected from imports, which 
is received by the Central government).  VAT is levied  at a standard rate of 17% and a lower rate of 
13% on certain items.  For small-scale tax payers159, VAT is charged on 3% of their gross sales.  
Farmers selling their produce directly are exempt from VAT provided their operations are small scale;  
the authorities state that the purpose of the exempti on is to ease administration.  Exporters are entitled 
to VAT rebates, but the VAT is often not fully re bated (section (2)(iv)).  VAT paid on fixed assets 
(including machines, means of transport, tools a nd appliances related to production, and operation 
with a service life of more than 12 months) is credited against VAT on the final product.160  
Consumption tax 
175. China's "consumption tax", which is essentially an excise, is levied on certain domestically 
produced products as well as imports thereof.  C onsumption tax is rebated fully on exports, except 
where the product is not eligible for rebate (i.e. th e VAT refund rate is 0) (Table AIII.5).  Since 2010, 
there has been no change in the consumption tax.  On 1 January 2009, China suspended the collection 
of consumption tax on aviation kerosene.  
Business tax 
176. Business tax is applied to domestic taxable services, transfers of intangible assets, and sales of 
immovable property, all of whic h are excluded from VAT.  The business tax on imported services is 
collected when the organizations or individuals r eceiving the services are within mainland China.  The 
revenue is for the use of local governments, except for taxes collected from ra ilways, headquarters of 
banks, and insurance companies.   Business tax rates on imported entertainment activities are 
determined by provincial governments within a range of 5-20%;  other business tax rates are set at 3% 
or 5% on business turnover.   
177. On 1 January 2012, China started to conduct a pi lot reform of collecting VAT instead of sales 
tax in some industries in Shanghai.161   
(c) Direct taxes 
178. Direct taxes accounted for 24% of total tax revenue in 2011, down from 26% in 2009.162  
Revenues from enterprise income tax and individual income tax are shared 60:40 between the Central 
and local governments.  
Enterprise income tax 
179. Enterprise income taxes apply equally, at the statutory rate of 25%, to FIEs and domestic 
enterprises.  A transition period is in place for tax incentives already granted to FIEs, as a result of a 
reform of the enterprise income tax system in a ccordance with the Enterprise Income Tax Law, which 
                                                      
159 Taxpayers with total sales of less than ¥0.5 million engaged in the production of goods or taxable 
services, or those with total sales of less th an ¥0.8 million in wholesaling or retailing. 
160 Capital goods such as small passenger vehicles , motorcycles, and yachts are excluded, and are 
subject to consumption tax. 
161 Notice of the Ministry of Finance and the State Administration of Taxation on Issuing the Pilot 
Program for Collecting VAT instead of Sales Tax (Cai Shui 110/2011), and Notice of the Ministry of Finance 
and the State Administration of Taxation on the Pilot Program of Collecting VAT instead of Sales Tax in 
Transportation and some Service Industries in Shanghai (Cai Shui 111/2011). 
162 Direct taxes are defined here as the sum of the en terprise income tax and the individual consumption 
tax.    China WT/TPR/S/264/Rev.1 
 Page 67 
 
 
  entered into force in January 2008.  FIEs that were established before 16 March 2007 (when the new 
Law was issued) and subject to a 15% income tax ra te were subject to income tax at 18% in 2008, 
20% in 2009, 22% in 2010, and 24% in  2011, and will be subject to the statutory rate of 25% in 2012.  
FIEs that were subject to an income tax rate of  24% before 2008 began to pay 25% from 2008.  FIEs 
that were benefiting from the "two-year exemption followed by a three-year half deduction" or the 
"five-year exemption followed by a five-year half  deduction" tax holidays, retain the tax holidays 
until they expire.163   
Individual income tax 
180. China's individual income tax is payable on wo rldwide income for Chinese residents, and on 
income earned in China by non-residents.  
181. As a result of the reform of individual income tax, which entered into force on 
1 September 2011, the progressive income tax rates on salaries and wages currently range from 3% to 
45%, with seven different rates (previously the range was 5% to 45% with nine different rates).  The 
current standard threshold for payment of indi vidual income is ¥3,500 per month (previously 
¥2,000 per month).  Foreign expatiates receive an  additional allowance of ¥1,300 per month (i.e. 
¥4,800 threshold).  For individual industrial and commercial households, income from their 
production or business operations is  taxed at rates ranging from 5%  to 35%, with deductions for 
relevant costs and fees.164  A flat rate of 20% applies to othe r income, including royalties, interest, 
dividends, incidental income, and income from prope rty renting (i.e. rentals).  Since 9 October 2008, 
interest income from bank deposits has been tem porarily exempted from individual income tax.   
(d) Tax incentives 
182. Tax incentives accorded in China include enterprise income tax rate reductions or exemptions 
and VAT reductions.   
183. Under the Enterprise Income Tax Law, incentiv es are given to enterprises investing in less 
developed regions, such as western China, and fo r investment in activities encouraged by the 
Government, such as agriculture, environmental protection, renewable energy, software and 
integrated circuits industries, and securities inv estment and fund development.  Enterprises engaging 
in high-tech and new-technology activities are subject to an enterprise income tax at 15% (instead of 
the statutory 25%);  if such enterprises were est ablished in SEZs or Shanghai Pudong New Area on or 
after 1 January 2008, they are exempt from income  tax for two years from the year in which revenue 
from production and business operation is first derived, and subject to 12.5% (i.e. half of the standard 
statutory rate) in the third to the fifth years. 
184. Small and medium-sized enterprises (SMEs) may benefit from, inter alia , lower enterprise 
income tax and lower VAT.  Sma ll-scale, low-profit enterprises meeting certain requirements pay 
enterprise income tax at 20%.165  For small enterprises with taxable income below ¥30,000 in 2010, 
                                                      
163 Where an FIE was entitled to such a tax holiday, but the tax holiday had not commenced due to 
accumulated losses, it would start benefiting from the ta x holiday from 2008.  Stat e Council Notice (No. 39, 
2007) on the Implementation of the Transitional Preferential Enterprise Income Tax Policies. 
164 On 1 September 2011, the amount of deductions for relevant costs and fees of individual industrial 
and commercial households was raised from ¥2,000 per month to ¥3,500 per month (¥42,000 per year). 
165 Small-scale, low-profit enterprises are:  industrial enterpri ses whose total assets are less than 
¥30 million, with annual taxable income below ¥0.3 million, and with less than 100 employees;  or other 
enterprises whose assets are less than ¥10 million, with a nnual taxable income lower than ¥0.3 million, and with 
less than 80 employees. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 68 
  
  their taxable income is reduced by half.  With a view to reducing burdens on  small-scale, low-profit 
enterprises, since 1 January 2012 (effective until 31 December 2015), enterprise income tax has been 
imposed at 20% on 50% of taxable income of sm all-scale and low-profit enterprises with an annual 
taxable income not higher than ¥60,000.  Small-scal e tax payers are subject to VAT at 3%;  they are 
subject to  simplified procedures (e.g. not requiring invoice).166 
185. Preferential tax treatment, in terms of lower rate  enterprise income tax, previously granted to 
firms located in special economic and high-tech devel opment zones, is being gr andfathered.  After the 
transition period, there will no preferential tax treatment for enterprises in these zones.167   
186. The Government has not undertaken any cost-b enefit analysis of these tax incentives.   
(e) Transfer pricing 
187. China's taxation regarding transfer pricing is b ased on relevant regulations in Chapter 6 of the 
Law on Business Income Tax (or Enterprise Income Tax Law), Chapter 6 of the Regulations on the 
Implementation of the Enterprise Income Tax Law, Article 36 of the Tax Collection and 
Administration Law, Articles 51 to 56 of the Implementing Rules of the Tax Collection and Administration Law, the Implementing Rules of Special Taxation Adjustment (for trial implementation) (Guo Shui Fa 2/2009), as well as Ar ticle 9 of the tax agreements signed by China 
and relevant countries.  Article 41 of the Law on Enterprise Income Tax stipulates that business 
transactions between enterprises and their affiliates th at are deemed to reduce the taxable income or 
income of such enterprises and their affiliates and that are not in compliance with the arm's-length 
principle are subject to the Law.  In this case,  the taxation authority has the right to make an 
adjustment in accordance with reasonable methods.  The Regulations on the Implementation of the 
Enterprise Income Tax Law further sets out deta ils of the arm's-length principle and reasonable 
methods for transfer pricing.    
(f) Bilateral agreements on a voidance of double taxation 
188. China had signed 96 agreements on avoidance of double taxation by the end of June 2011.  In 
the period between 2010 and 2011, China concluded or updated such agreements with Finland, Malta, 
Syria, and Zambia.   
(ii) Subsidies and other government assistance
168 
(a) General features 
189. The use of subsidies and other government assistance appear to be an important feature of 
China's trade policy making.  However, because of  the limited information made available to the 
Secretariat, it is difficult to confirm this.  In general, very few details are available on China's 
                                                      
166 Small-scale taxpayers are those with total sales of less than ¥0.5 million engaged in the production 
of goods or taxable services, or those with total sales of less than ¥0.8 million in wholesaling or retailing. 
167 According to the applicable laws and regulations on income tax on enterprises prior to the 
implementation of the 2008 Law on Enterprise Income Tax, a transition period may be given to enterprises that 
enjoy regional tax preferences after 2008 in accordance with Article 57 of the Law on Enterprise Income Tax 
and the provisions stipulated in the Notice of the State Council on the Im plementation of the Grandfathering 
Preferential Policies for Enterprise Income Tax (Guo Fa 39/2007). 
168 The use of the term "subsidies" in this report is not confined to the definition provided in Article 1 
of the Agreement on Subsidies an d Countervailing Measures.    China WT/TPR/S/264/Rev.1 
 Page 69 
 
 
  subsidies and other government assistance, particularly at the sub-central level, on their type and size, 
the financial outlays involved, and the obj ectives of the programmes and their results. 
190. Government assistance to business is granted at the central and sub-central (e.g. provincial) 
levels.  The main instruments of support are direct grants, subsidized loans, and tax benefits, which 
include exemption or reduction of  value-added tax, enterprise income tax, and import duties.  
191. In many cases, this assistance is implemented on the basis of circulars issued by the State 
Council (on its own or jointly with  relevant ministries and agenci es), which announce policy guidance 
(e.g. the medium- and long-term plans) or sector-spe cific industrial policies.  Such circulars usually 
do not provide details of assistance, but indicate which level of the government (central or sub-
central) will finance the programmes.  When a programme is financed mainly by the central 
government, sub-central governments may provide f acilities and other supplementary support.  For 
example, under the "torch programme", aime d at promoting new- and high-technologies169, the central 
government provides qualified projects with, inter alia,  tax benefits and financial assistance, and the 
authorities at the local level provide supplementary financial assistance.   
192. China's latest notification to the WTO on subs idies (2009 notification) contains information 
on assistance to businesses established in vari ous sectors or regions (Table AIII.6).170  I t  l i s t s  
programmes providing government assistance at the central government level between 2005 and 
2008;  no information regarding subsidy programmes provided by local governments has been provided.
171  In many cases, there are no precise figures on the magnitude of subsidies provided by the 
government, many of which are in the form of tax be nefits.  China's 2009 notification has not yet been 
reviewed in the Committee on Subsidies and Countervailing Measures. 
193. An economic stimulus package announced in Nove mber 2008, involving ¥4 trillion (12.7% of 
2008 GDP) for investment in the economy in 2009-10, was implemented between 2008 and 2010.  A large part of the package was to be implemented through increased bank lending;  ¥1.18 trillion of the 
package was to come from the central government budge t.  No information was made available to the 
Secretariat on disbursement in 2009 and 2010, the be neficiary sectors or indications, or the terms of 
repayment (if any).   
194. During the period under review, programmes describ ed in the industrial revitalization plans 
adopted in 2009 for ten sectors were implemented (s ee section (iii) below).  No details on the budget 
allocated to and actually disbursed  on these programmes was made available to the Secretariat.   
(b) Assistance to the energy sector and to undert akings aimed at environmental protection 
195. The National Development and Reform Commi ssion (NDRC) issued a National Medium-
and-Long-Term Development Plan for Renewabl e Energy in September 2007 with a view to 
                                                      
169 China's national torch programme is managed by the Ministry of Science of Technology, in 
accordance with the Administra tion Measures for National Torch Programme  Projects (in Chinese).  Viewed at:  
http://202.205.177.9/edoas/website18/54/info3354.htm;  see Chapter II(4)(iii) and Chapter IV(4)(i)) for the 
details of high-technology industries. 
170 WTO document G/SCM/N/155/CH N and G/SCM/N/186/CHN, 20 October 2011.  The document 
notes that the notification is transparency oriented;  it does not prejudge the legal status of the notified 
programmes under GATT 1994 and the SCM Agreement, the effects under the SCM Agreement, or the nature of the programmes themselves.   
171 China's previous subsidy notification was subm itted in April 2006, covering the period between 
2001 and 2004. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 70 
  
  promoting renewable energy (e.g. wind power, so lar power, hydro power, biomass power, geothermal 
power, and ocean power).  The Plan provides for guaranteed purchase by distributors (national or regional power grids)
172 of electricity generated from renewable energy), and a Special Fund for 
Development of Renewable Energy has been estab lished since 2007 to provide grants to energy 
conservation projects;  no information on the size of  the Fund was made available to the Secretariat.  
Construction projects for electricity generation fr om renewable energy benefit from subsidized 
loans.173 
196. The manufacture of parts and components of wind power generation equipment is assisted by 
grants, rebates on import duties, and local component requirements.  The duration and the scope of the 
assistance are not clear to the Secretariat.  Some measures, such as grants from the Special Fund for 
the Industrialization of Wind Power Equipment a nd import duties rebate, were abolished in 2009.174  
197. Under the Golden Sun Demonstration Project175, which aims to provide assistance for 
construction projects of solar power generation, c onstruction investment may receive grants up to 
50% for power generation and distribution and up to  70% for projects in remote regions not covered 
by the national power grid.176  Grants are also accorded to proj ects to build solar power panels for 
buildings in urban and rural areas.177   
198. It would appear that there are complementary assistance programmes for renewable energy at 
the sub-central government level.  No detaile d information about these programmes was made 
available to the Secretariat. 
(c) Assistance to the automotive sector 
199. In the face of the global economic recession,  an Industry Revitalization Plan for the 
Automotive Sector was adopted for the period 2009-11.  Consumers, inter alia,  in rural areas received 
financial assistance when they purchased new vehicl es;  assistance was also extended for scrapping 
old automobiles.  The authorities note that this programme was abolished on 1 January 2011.   
                                                      
172 See the revised Law on Renewable Energy (effective 1 April 2010), and the Administration 
Measures on Power Grid Enterprises' Full Purchase of Electricity Generated by Renewable Energy (State 
Electricity Regulatory Commission Decree 2007/25) (in Chinese).  Viewed at:  http://www.serc.gov.cn/ 
zwgk/jggz/200802/t20080220_4704.htm.  
173 The State Development Planning Commission (SDPC) and the Ministry of Science and Technology 
(MOST) Joint Circular on Issues Concerning Further Support to Renewable Energy Development (in Chinese).  Viewed at:  http://www.crein.org.cn/paperf iles/paper/state-document/SDPC/002.htm.   
174 WTO document G/SCM/N/155/CHN and G/SCM/N/186/CHN, item 26.  Ministry of Financial 
Circular Cai Shui 2009/55 states that the measures on import duties rebate in MOF Circular Cai Shui 2008/36 was abolished on 1 July 2009.  
175 Ministry of Finance Circular Cai Jian 2009/129, 23 March 2009.  Viewed at:  http://www.gov.cn/ 
zwgk/2009-03/26/content_1269258.htm.  
176 To be eligible for the assistance, projects must, inter alia,  be selected in a regional implementation 
programme for the Golden Sun Demonstr ation Project, and each individual pr oject's capacity must be less than 
300kW.   
177 To be eligible, each individual project's capacity mu st not be less than 50kW.  Grants at the rate of 
¥20/W are accorded to projects deemed  to integrate opto-electronic parts into building materials or construction 
parts.  Grants at the rate of ¥15/W are accorded to pr ojects deemed to integrate op to-electronic parts into the 
surface of buildings.  For details, see Interim Admi nistration Measures for Fiscal Subsidy Fund for 
Optoelectronic Application Buildings (in Chinese).  Viewed at:  http://www.gov.cn/zwgk/2009-03/26/ 
content_1269258.htm.  China WT/TPR/S/264/Rev.1 
 Page 71 
 
 
  200. In 2009, the central government started to provi de lump sum grants to consumers who bought 
new energy-saving or new-energy cars listed in a promotion catalogue.178   
(d) Assistance to small and medium-sized enterprises 
201. The Government accords financial assistance to small and medium-sized enterprises (SMEs);  
this includes grants, subsidized loans, and capital investment to the enterprises.179  
202. The Development Fund for SMEs provides them wi th grants or subsidized loans for projects 
that SMEs invest in.  Assistance up to ¥3 million is  provided for each individual project invested.  
Government assistance for interest payment should not exceed 2 years.  
203. A Special Fund for the Establishment of Service System for SMEs provides financial 
assistance to institutions that provide SMEs with se rvices, including training, management consulting, 
and helping SMEs to start a business.  A Fund for SMEs International Mark et Exploration provides 
SMEs with financial assistance for their internati onal marketing activities;  the assistance includes 
grants covering the cost of attending exhibitions , accreditation fees for quality management system, 
environment management system or for the product.   
204. Enterprises making low profits receive preferential tax treatment.180   
(e) Other assistance 
205. The authorities issued a number of circulars related to China's export brands.181  I t  w o u l d  
appear that the measures described in those circulars have been abo lished; some incentives appear to 
exist at the sub-central level, mainly cash awar ds, for locally registered enterprises to apply for 
famous brand recognition.  It was not clear to the Secretariat whether all measures at the sub-central 
level have been abolished along with the abo lition of measures at the central level.   
206. China notified a number of measures to assist research and development;  most of them 
involved preferential tax treatment. 
207. Regarding regional development, enterprises in the western regions enga ging in "encouraged" 
industries receive a preferential income tax rate (15%).   It would appear that enterprises established in 
the old industrial base of north-eastern China are exempt from unpaid tax incurred before 
31 December 1997.182 
208. Foreign direct investment and foreign-invested enterprises received preferential tax treatment 
until the end of 2007, except for "grandfathering" measures (Chapter II(4)(i)).  Since 1 January 2008, 
high- and new-technology industries have been subj ect to a preferential enterprise income tax rate 
                                                      
178 Ministry of Finance Circular Cai Jian 2010/219, effective 26 May 2010.  Lump sum grants ranging 
from ¥3,000 to ¥60,000 are granted depending on the model of cars.   
179 WTO document G/SCM/N/155/CHN and G/SCM/N/186/CHN, 21 October 2011, items 46-49. 
180 WTO document G/SCM/N/155/CHN and G/SCM/N/186/CHN, 21 October 2011, item 28.  
181 Related to these, the United States, Mexico, and Guatemala requested consultations with China with 
regard to certain measures offering  grants, loans, and other incentives to enterprises in China (WT/DS387, 
WT/DS388, and WT/DS390).  The Chinese authorities note that these disputes have been settled bilaterally. 
182 MOF Circular 2006/17, effective 6 December 2006. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 72 
  
  (15%, instead of the standard rate of 25%);  high- and new-technology industries established in 
certain special economic zones and some other areas receive preferential tax treatment.183   
209. For agriculture, China adopts domestic support measures including direct payments, 
insurance programmes, input subsidies, a nd internal price supports (Chapter IV(1)).   
(iii) Industrial policies  
210. Industrial policies remain important aspects of  the Government's policies to "guide" the 
allocation of resources.  During the period unde r review, no changes were made to the 2009 
"industrial policy" programmes that identified ten sectors (nine manufacturing) most affected by 
reduced external demand due to the global crisis.184      
211. Under the 2009 programme, sector-specific polici es were issued to boost development of the 
ten sectors.  The major measures include:  lowering the taxes levied on enterprises, for example, by 
adjusting VAT rebate rates;  providing preferential loans or other financial assistance to enterprises in 
these industries to encourage, inter alia , innovation.  The Government  also aims to consolidate 
industry structures by encouraging mergers and ac quisitions.  Tax policies China adopted under the 
industrial revitalization plans for ten sectors incl uded adjustments of the VAT rebate on exports of 
certain products, and reduction of the purchase tax for certain passenger cars.185  During the period 
under review, value-added tax rebate  rates were not adjusted in favour of exporters.  Financial 
supports provided under the industrial revitalization plans for ten sectors are mainly those to promote 
direct consumption, including subsidies for home appliances going to the countryside, automobiles 
and motorbikes to the countryside,  and "old for new" household app liances.  The authorities maintain 
that commercial banks in China follow ma rket principles when providing loans. 
(iv) Price controls  
212. Price controls are used to regulate the cost of  certain goods and services.  They are established 
under the Pricing Law, and are set by the Government price-management bodies, namely the NDRC 
at the central level and by the Bureau of  Commodity Pricing in each province.   
213. Price controls are applied to commodities and ser vices deemed to have a direct bearing on the 
national economy and people's livelihood.  Price controls are implemented in accordance with an 
NDRC notice 11 (2001)186, through "government prices" and "government guided prices";  the 
difference between the two price categories is whethe r to set a fixed price or a certain range within 
which prices could fluctuate.  
214. The authorities state that criteria used to calculate government prices or government guidance 
prices are:  "average social costs", the supply an d demand situation, and "needs of national economy, 
social development, and social endurance".  In add ition, consideration is given to the limitations on 
consumers' purchasing power.  As the cost and pr ice of some of these variables, such as normal 
production costs and purchasing power, may vary from province to province, there may be a variation 
                                                      
183 WTO document G/SCM/N/155/CHN and G/SCM/N/186/CHN, 21 October 2011, items 11-13.  
184 Nine manufacturing sectors (iron and steel, automobiles, shipbuilding, petrochemical industry, 
textiles and clothing, light industry, non-ferrous metals, equipment manufact uring, electronics and information 
industry);  and one services sector (logistics). 
185 WTO document WT/TPR/M/230/Add.1, 22 February 2011. 
186 NDRC online information (in Chinese).  View ed at:  http://www.sdpc.gov.cn/zcfb/zcfbl/ 
zcfbl2003pro/t20050707_27540.htm [4.10. 2011]. China WT/TPR/S/264/Rev.1 
 Page 73 
 
 
  in the price set by different provinces;  this is esp ecially the case for "social goods" such as water, gas, 
and electricity.  The methodology for setting prices is the same across provinces.      
215. Government prices are applied to the State's key reserve materials (grain, cotton, sugar, 
silkworm cocoons, crude oil, process ed oil, and chemical fertilizer)187, and items subject to state 
monopoly or oligopoly (e.g. tobacco leaf, salt, explos ives for civilian use, drugs on medical insurance, 
teaching materials, certain types of refined oil products, natural gas, water supply by hydro projects directly under the administration of the Central G overnment and by inter-provincial hydro projects, 
military goods, some transportation services, b asic postal services, and basic telecommunications 
services).  Government guided prices are applied to grain, vegetable oil, processed oil, silkworm 
cocoons, and cotton.  The list of goods and servi ces subject to government prices and government 
guided prices has not changed since January 2009.
188  
216. At the central level, the NDRC is in charge of price controls in respect of, for example, key 
reserve materials of the State, natural gas, elect ric power, important transport (such as rail and civil 
aviation), and post and telecom services.189  Health-related services, and passenger transport by road 
are subject to price controls by provincial governments.190   
217. In addition, minimum procurement prices for ri ce and wheat remain in place for main grain-
producing areas (seven provinces for rice, and six provinces for wheat) (Chapter IV(1)(ii)).     
(v) State-owned enterprises, private enterprises, and corporate governance   
218. Enterprises may be grouped in to:  state-owned enterprises191  (SOEs), collectively owned 
enterprises, joint-stock enterprises, "domestic private" enterprises, individual businesses (sole 
proprietorships), and foreign-invested enterprises (F IEs).  Under the "guidance" of the Government, 
inter alia , FIEs, whose productivity is usually higher, ha ve been encouraged owing to their more 
advanced technology, or better sales channels abroad.   
219. SOEs have traditionally bene fited from better access to capital than domestic private 
enterprises, although the authorities emphasize that this is due, inter alia , to historical reasons and the 
size of enterprises, and that the Government has always supported the development of enterprises of 
all ownership structures equally.   
                                                      
187 Designated SOEs stockpile these commodities as requ ired by the State, but their purchase is at 
market prices.  When claiming losses from the Ministry of Finance, these SOEs may refer to government guided 
prices.  These settlement prices extend only to  products held by the State as its reserves.   
188 The Notice on Reforming Pricing Mechanism of Fertilizers (Notice 268/2009), issued by NDRC 
and MOFCOM in January 2009, eliminated  price controls on fertilizers.   
189 Other products subject to price controls at the central level are: state-m onopolized tobacco, edible 
salt, civil explosive equipment, some fertilizers, some key medicines, educational materials,  water-resource 
projects subordinated to the Central Government or constructed in more than one province, and military 
materials. 
190 Prices of freight transport by road, and waterway  transport are determined by the market.  Other 
prices controlled by local governments  are:  thermal power, water resources  (apart from those subject to price 
controls by the Central Government), medical services, education, selling prices and rents of residential apartments and home s for the elderly. 
191 SOEs include wholly state-owned enterprises and state-controlled (through equity shares) 
enterprises. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 74 
  
  (a) Reform of state-owned enterprises 
220. In accordance with the State- Owned Asset Law, which sets out legal requirements for, 
inter alia,  transfer/management of state-owned asset s, the central level State-Owned Asset 
Supervision and Administration Commission (SASAC) mainly manages government assets and 
engages in reform of central-leve l SOEs;  and local level SASACs ma nage and engage in reform of 
local-level SOEs.  The number of central-level non-financial SOEs fell from 129 in December 2009 to 
120 in August 2011;  these SOEs are, on average, mu ch bigger than domestic private enterprises, and 
larger than their foreign counterparts.  The tota l value of state-owned assets in SOEs was about 
¥68.6 trillion in 2010, up from ¥53.5 trillion in 2009.  The share of SOEs in China's industrial output 
was 27% in 2010.192   
221. Mergers/closures during the review period reduced  the number of China's SOEs (Table III.8).  
The authorities consider that SOEs in some s ectors (e.g. chemicals, coal, electric power, and 
automobiles) were particularly  in need of reform due to, inter alia,  inferior technology, heavy 
pollution, excess-capacity or  outdated management.   
Table III.8 
Number of enterprises, 2008-10 
 2008 2009 2010 
SOEs  568,793 498,176 457,820 
Collective-owned enterprises  856,677 756,060 647,858 
FIEs:  equity joint ventures  85,932 81,466 79,537 
FIEs:  contractual joint ventures   13,360 11,992 11,054 
FIEs:  wholly foreign-owned enterprises  188,777 190,276 197,497 
Domestic private enterprises  6,574,171 7,401,539 8,455,158 
Source:   Data provided by the Chinese authorities. 
222. Some SOEs were also corporatized and/or listed on stock-exchanges.  At the end of 
September 2011, 1,047 SOEs were listed on the exchange in Shanghai and Shenzhen, accounting for 
44.7% of companies listed.  According to the aut horities, about 99% of the listed SOEs had completed 
or were in the process of the reform of non-tradeable share conversion by the end of May 2011 
(Table III.9).  The originally non-tradeable shares will be traded on stock exchanges after a lock-up 
period following completion of non-tradeable share c onversion.  The SASAC intends to diversify the 
ownership structure of SOEs that do not meet requi rements for listing, by inviting private investment, 
including foreign investment, in SOEs' equities. 
223.  In 2010, China Securities Regulatory Commission (CSRC) launched a specific campaign for 
"resolving problems of horizontal co mpetition and related transactions".193  In the campaign, the 
CSRC simplified its case review pr ocedure to support partially listed companies to realize full listing 
through M&A or encouraged issuance of additiona l shares.  The campaign selected 136 companies as 
                                                      
192 World Bank (2012). 
193 "Horizontal competition" is where the principal bu siness of a listed company is identical or similar 
to that of the controlling shareholders of the compan y.  Through SOEs' corporatization and listing on stock 
exchanges, a large number of listed SOEs are actually the divested "good  assets" of SOE holding groups.  
Hence, they may face horizontal competition with thei r parent SOE companies or controlling shareholders.  
"Related transactions" include transactions between a parent company and subsidiaries or between companies 
that are controlled directly or indirectly by a third party. Related transactions may involve issues of transfer 
pricing, cover-up loss, and profit fabrication or manipulation. China WT/TPR/S/264/Rev.1 
 Page 75 
 
 
  the key objects.  The authorities consider that 92 of  the 136 companies have resolved the problems of 
horizontal competition.   
Table III.9 
Tradeable and non-tradeable shares of companies listed in China, 2008-10 
(Billion unless otherwise specified) 
 2008 2009 2010 
Total (billion) 1,890.0 12 2,060.626 2,698.449 
Number of tradeable shares 696.497 1,420.019 1,944.215 
A sharesa 669.676 1,392.871 1,916.047 
B sharesb 26.821 27.148 28.168 
Number of non-tradeable shares  1,193.515 640.607 754.234 
Number of converted sharesc 71.219 189.605 330.404 
Number of disposal of converted sharesd 8.701 12.581 10.446 
Converted shares as a percentage of non-tradeable shares (%) 5.97 29.60 43.81 
Disposal of converted shares as a percentage  of converted shares (%) 12.22 6.64 3.17 
Tradeable shares as a percentage of total shares (%) 36.85 68.91 72.05 
a A shares are shares issued by joint-stoc k companies registered in China and listed on the domestic stock exchanges, with face  
value denominated in RMB, and traded in RMB by domestic companies, institutions, organizations or individuals (excluding 
investors from Hong Kong, China;  M acao, China;  and Chinese Taipei). 
b B shares are shares issued by joint-stoc k companies registered in China and listed on the domestic stock exchanges, with face  
value denominated in RMB, but traded in U.S. dollars on the Sh anghai Stock Exchange and in HK dollars on the Shenzhen Stock 
Exchange. 
c Converted shares are shares released from originally non- tradeable shares through the conversion programmes.  After the 
conversion programme, the origina lly non-tradeable shares will become tradeable on the A-share market, but there is a lockup 
period of 1 to 3 years before those converted shares are actually traded on the market. 
d Disposal of converted shares are converted shares ac tually sold off on the market after the lockup period. 
Source:  CSRC (2010), China Securities and Fu tures Statistical Yearbook . 
224. The dividend amount payable by SOEs to the Government (in terms of percentages of net 
profit) was increased on 1 January 2011.194  For SOEs in natural resources, dividend payments were 
increased to 15% of net profits;  for SOEs in the "general competitive sectors", to 10%;  and others 
pay 5%.  Since 1 January 2011, 652 SOEs have been  added to the list of SOE paying dividends (SOEs 
in the financial services and telecommunication s ectors are not on the list).  This expansion is 
expected to reduce the amount of retained earnings , and thus reduce the amount of corporate savings 
of SOEs.  
225. The NDRC, in line with the SASAC, supports na tional champions and promotes the reform of 
key industries, such as automobil es and steel, via industrial polici es to improve the competitiveness of 
the dominant SOEs.195  
226. SOE dominance is to be maintained in industr ies related to "vital interests of national 
economy", and to national security.196  These industries include:  industries regarding national 
security, important and large-scale infrastructure and vital mineral resources;  industries providing vital public products and services;  and major en terprises in "pillar industries" and high and new 
                                                      
194 Ministry of Finance Circular Cai Qi 2010/392 on Improvement to Certain Issues about Operation 
Budget of State-Owned Assets, pr omulgated on 23 December 2010. 
195 OECD (2009b), Chapter 3, p. 124. 
196 See, for example, Article 7 of the Anti-Monopoly Law, the Circular on Deepening the Reform of 
Economic Regime in 2010, the State Council's Opinions on Encouragement of and Guidance to Healthy 
Development of Private Investments, and the 12th Five-Year Plan. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 76 
  
  technology industries.  In other areas, China in tends to promote state-owned capital to retreat 
"appropriately from general competitive sectors".197  A recently published joint-research report by the 
World Bank and the Development Research Centre of  China's State Council argues that the industries 
and sectors that must maintain SOE dominance in China are too broadly defined, and suggests 
limiting the range of industries and sectors.  The report also suggests that China define a more clear 
state-ownership policy regarding the disposal of SO Es' non-tradeable shares, and private participation 
through SOE equity diversification.198    
227. Despite all the reforms, SOEs, still tend to be nefit from lower cost of and better access to 
capital than non-public-sector enterprises. 
(b) Non-public-sector enterprises 
228. In China, enterprises in the non-public sector include domestic private enterprises (including 
individual businesses) and foreig n invested enterprises (FIEs).199  According to the authorities, 
domestic private enterprises and FIEs are treated equally, i.e. they enjoy equal market access, equal 
corporate income tax, and other administrative measures.  
229. Domestic private enterprises have developed rapidly despite various  entry barriers and 
financial constraints, in particular in sectors where SOEs retreated, and in the eastern coastal provinces.
200  At the end of 2010, there were more than 8 million private enterprises.  In addition to 
contributing to productivit y gains from more intensive competition, the private sector has become a 
major part of China's exports.  In 2010, gro ss exports by Chinese private enterprises exceeded 
US$450 billion, accounting for more than 30% of Ch ina's total exports, and more than double the 
gross exports of SOEs.  
230. The State Council's Certain Opinions on Enc ouraging and Guiding the Sound Development of 
Private Investment (also known as 36-clauses on Private Investment, or new State Council's 36-clauses)
201, is an operational document for the State Council's Certain Opinions on the Guidelines 
on Encouraging and Supporting the Development of the Non-Public Economy (also known as 
36-clauses on Non-public economy, or old State C ouncil's 36-clauses), issued in 2005.  The new 
36-clauses further stipulates and details policies an d provisions on specific scopes, approaches, and 
policy support for private capital access to th e sectors laid out in the old 36-clauses. 
231. In addition to granting access to the sectors in  which SOEs are dominant, it "encourages" 
domestic private firms to participate in the reform and restructure of some SOEs.  Detailed measures to promote market access of private sectors, in acco rdance with the new 36-clauses, have not yet been 
published.
202  Measures related to the new 36-clauses on private access to the sectors in which SOEs 
are dominant are not applicable to FIEs or foreign investors.  
                                                      
197 See the State Council's General Office Circular on the Guidance Opinions about Promoting the 
Adjustment of State-owned Assets and the Restructuring of State owned Enterprise (Guo Ban Fa 2006/97);  and Section 2.2 of the State Council Circular on Deepening the Reform of Economic Regime in 2010. 
198 World Bank (2012), pp.117-120. 
199 For a more detailed description of the ownership structure of enterprises in China, please see WTO 
(2006), pp. 127-139;  WTO (2008), pp. 91-99;  and WTO (2010), pp. 54-58. 
200 See OECD (2010b), Chapter 4. 
201 Guo Fa 2010/13. 
202 Interview with Chen Yong Jie, Director of Research, All China Federation of Industry and 
Commerce.  Viewed at:  h ttp://news.sohu.com/20100414/n 271489535.shtml;  and Semina r on new-36 clauses.  
Viewed at:  http://politics.people.com.cn/GB/1026/11643265.html. China WT/TPR/S/264/Rev.1 
 Page 77 
 
 
  232. Private enterprises may face a less favourable e nvironment than SOEs, such as administrative 
barriers and related parties' refusal to deal.  For ex ample, it would appear that the state-owned aviation 
fuel company offers less generous terms to servi ce private passenger carriers, and the computerized 
reservation system denies access by private carriers.203 
233. In general, domestic private enterprises, in particular private small and medium-sized 
enterprises (SMEs), face more financial constraints than  SOEs and FIEs.  To re spond to this situation, 
state-owned commercial banks and joint-stock comme rcial banks are required to establish a system 
specifically to provide financial services to SMEs.204  
234. Parallel to the establishment of the SME Board,  Growth Board, and ChiNext Board in the 
capital market, a pilot programme of collective corporate bonds was introduced.  Eligible credit 
guarantee institutions for SMEs are exempted from business tax. 
235. Preferential tax treatment was granted to SMEs  during the review period.  For small-sized 
low-profit enterprises with annual taxable income below ¥30,000 (inclusive), the taxable income 
amount was calculated as 50% of the income, and the corporate income tax was collected at the rate 
of 20% for the period 1 January 2010 to 31 December  2011;  the threshold for tax reduction is up to 
¥60,000 (inclusive) for 2012 to 2015.  The tax rate  was lowered, on 1 January 2009, to 3% (from 6%) 
for small-scale industrial taxpayers, a nd 4% for small-scale commerce taxpayers. 
236. Other funding opportunities for SMEs to apply fo r financial support include the Specific Fund 
for SMEs Development, the Innovation Fund for Technology-Oriented SMEs, and the Specific 
Subsidy Fund for Services System for SMEs. 
(vi) Competition and consumer protection policy 
237. During the period under review, several provisi ons have been adopted on the implementation 
of reviews of concentrations of undertakings (anti- trust reviews), and reviews of foreign companies' 
mergers and acquisitions of domestic companies re lating to "national security" (national security 
reviews), with a view to increasing transparency.  Provisions on anti-trust reviews include:  the Measures on the Examination of Concentration of Undertakings, the Measures on the Notification of 
Concentration of Undertakings (both with effect  from 1 January 2010), and the Interim Rules on 
Assessment of Impact of Concentration of Undertakings on Competition (effective 
5 September 2011), all by MOFCOM.  Relevant provis ions on national security reviews include the 
State Council Circular on the Establishment of Nati onal Security Review on Ac quisitions of Domestic 
Enterprises by Foreign Investors (effective 5 March 2011), and Rules on Implementing National 
Security Review Mechanism over Mergers and Ac quisitions of Domestic Enterprises by Foreign 
Investors (effective 1 September 2011). 
238. With a view to increasing transparency of measures against abuse of dominant positions, 
abuse of administrative monopoly, and price fixing, China has adopted:  NDRC Provisions on Prohibition of Price Monopoly, SAIC Provisions on  the Prohibition of Monopoly Agreements, SAIC 
Provisions on the Prohibition of Abuse of Mark et Dominant Positions, SAIC Provisions on the 
Suppression of Abuse of Administrative Power to E liminate and Restrict Competitive Conducts (since 
                                                      
203 New York Times , 29 August 2010.  Viewed at:  http://w ww.nytimes.com/2010/08/30/world/asia/ 
30china.html?pagewanted=all. 
204 See State Council's Opinions on Further Promoting the Development of Small and Medium-Sized 
Enterprises, and Opinions on Further Working on Financing Services of Small and Medium-Sized Enterprises. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 78 
  
  1 February 2011), and Revised Provisions on the Administrative Punishment of Price-related 
Violations (since 4 December 2010). 
(a) Legislative and institutional framework 
239. China's laws and provisions concerning competition include the Anti-Monopoly Law (AML), 
the Anti-Unfair Competition Law205, the Price Law, the Law on Bid Invitation and Bidding or 
Tendering, and the Rules on Acquisition of Dom estic Enterprises.  The AML does not take 
precedence over other competition-related legislation.   
240. The policy objective of China's competition legislat ion, as stated in Article 1 of the AML, is 
to:  safeguard fair market competition;  improve  economic efficiency;  protect the interests of 
consumers and of the public;  and promote the hea lthy development of the socialist market economy. 
241. The AML targets particularly three types of  "monopolistic conduct":  conclusion of monopoly 
agreements;  abuse of dominant market positions; an d concentration of enterprises that have (or are 
likely to have) the effect of eliminating or restricting competition. 
242. Under Article 7 of the AML, the State protects the "legitimate business operations" of firms in 
industries that are vital to the national economy a nd national security where the state-owned economy 
is dominant, and in the industries of exclusive tradi ng.  It also states that the State will supervise and 
regulate the above-mentioned firms'  operations and the prices of the goods and services they supply, 
to protect consumers' interests and to promote tech nology progress. This is apparently a compromise 
between industrial policie s and competition policy.206 
243. Enforcement of competition legislation in China is shared by three agencies, coordinated and 
"guided" by the Anti-Monopoly Commissi on under the State Council (Table III.10).207  T h e  
Anti-Monopoly Bureau of the MOFCOM is responsible  for anti-trust reviews.  The Price Supervision 
and Anti-Monopoly Bureau of the National Devel opment and Reform Commission is the authority 
over price-related violations of the rules ag ainst monopoly agreements and abuse of market 
dominance and of administrative power.  Th e Anti-Monopoly and Anti-Unfair Competition 
Enforcement Bureau of the State Administration for Industry and Commerce (SAIC) enforces the 
Anti-Unfair Competition Law on issues related to m onopoly agreements, abuse of market dominance, 
and abuse of administrative powers (excluding price -related monopolies).  China continued to develop 
its capacity on competition enforcement during the review period (Box III.1). 
244. In addition to administrative measures, par ties injured by violations of anti-monopoly 
provisions may take their cases to the courts. 
245. The Anti-Monopoly Law covers all sectors of the economy (except agriculture208) and all 
types of enterprises.  The AML applies to monopo listic operations within China, as well as to 
activities outside the territory of China that have "e liminative or restrictive effects" on competition in 
China's domestic market.  This extra-territoriality  is to be achieved mainly through international 
cooperation on competition policy. 
                                                      
205 According to the authorities, the revision of anti- unfair competition law is at the final stage of the 
legislative process. 
206 WTO (2010). 
207 The General Office of the Anti-Monopoly Commission is situated in MOFCOM. 
208 The AML is not applicable to a ssociated or concerted conduct by  agricultural producers and rural 
economic organizations in their business activities related to agricultural products. China WT/TPR/S/264/Rev.1 
 Page 79 
 
 
  Table III.10 
Competition legislations and enforcement 
Enforcement 
agency Legislation, regulations, 
administrative rules Function/authority Enforcement delegation 
MOFCOM AML 
1. Measures on the Examination of 
Concentration of Undertakings 
2. Measures on the Notification of 
Concentration of Undertakings  
3. Interim Rules on Assessment of 
Impact of Concentration of Undertakings on Competition 
4. Interim Provisions on National 
Security Review over 
Acquisitions of Domestic 
Enterprises by Foreign Investors 
5. Interim Provision on 
Investigations of Un-notified 
Concentrations of Undertakings 1. Anti-trust review 
2. National security review 
3. General Office for the National 
Anti-Monopoly Commission No delegation 
NDRC AML;  Price Law 
1. NDRC Provisions on Prohibition 
of Price Monopoly  
2. State Council Provisions on the 
Administrative Punishment of 
Price-related Violation 1. Sanction against price-related 
monopolistic agreements 
2. Sanction against pricing 
manipulation Anti-Monopoly Enforcement may be 
delegated to the authorities at the level one below the provincial level 
Price Law enforcement may be 
exercised at the local level 
SAIC AML;  Anti-Unfair Competition Law 
1. SAIC Provisions on the 
Prohibition of Monopoly 
Agreements 
2. SAIC Provisions on the 
Prohibition of Abuse of 
Dominant Market Positions 
3. SAIC Provisions on the 
Suppression of Abuse of 
Administrative Power to 
Eliminate and Restrict 
Competitive Conducts 
4. SAIC Provisions on 
Investigating and Handling 
Cases Concerning Monopoly Agreements and Abuse of Dominant Market Positions 1. Sanction against non-price-
related monopolistic agreements; 
2. Regulation on non-price-related 
market dominant abuses; 
3. Sanction against administrative 
monopolies; 
4. Regulator for tendering and 
bidding activities Anti-Monopoly enforcement may be 
delegated to the authorities at the 
provincial level, but no further down. Cases must be registered at SAIC before delegation 
Anti-Unfair Competition enforcement 
may be exercised at local level 
MOFCOM:  Ministry of Commerce. 
NDRC:  National Developmen t and Reform Commission. 
SAIC:  State Administration of Industry and Commerce. 
AML:  the Anti-Monopoly Law. 
Source:  WTO Secretariat. 
246. China participates in competition-policy-rela ted activities of APEC, OECD, and UNCTAD.  
China also engages in exch anges and cooperation with competition authorities in, inter alia, the 
European Union, Japan, the Republic of Korea, a nd the United States.    MOFCOM jointly with 
NDRC and SAIC signed the MOU on Anti-monopol y/Antitrust Cooperation with the U.S. 
Department of Justice and Federa l Trade Commission in July 2011. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 80 
  
   
Box III.1:  Competition enforcement in China  
The Price Supervision and Anti-Monopoly Bureau of the NDRC is the regulato ry authority on all price-related 
anti-competition behaviour;  thus, any activities to fix or at tempt to fix either prices or quantities of commodities are 
under the jurisdiction of the NDRC.  In the NDRC Provisi ons on Procedures of Administrative Enforcement of 
Prohibition of Price Monopoly (NDRC Decr ee 2010/8), relevant provincial-level authorities (including provincial 
DRCs), delegated by NDRC, are the an ti-price-monopoly enforcemen t within their administrative territories.  The 
provincial DRCs are allowed to delegate investigation to local price supervision departments one level below 
themselves.   
Price fixing and quantitative restrictions, such as cartels, are prohibited in accordance with the AML and the Price Law.  
The NDRC investigated and convicted a number of cases of pr ice violation during 2010 and 2011, including:  a case 
involving Unilever, on the ground of abuse of dominant position to disturb the order of market prices;  the price cartel 
organized by the Paper Industry Association of Fuyang, Zhej iang Province;  the price cartel for rice noodles in Guangxi 
Autonomous Region;  and a case involving Carrefour, on th e ground of price fraud.  Although cartels of "concerted 
movements" to raise prices are prohibited, it is not clear to the Secretariat whether calls by any entities for 
"self-disciplined pricing" (e.g. not to increase prices rath er than usually not to decrease prices) are regarded as de facto  
price fixing, and are regulated accordingly.   Data on price-related competition enforcement were not made available to 
the Secretariat.   
Some research argues that the boundary of jurisdicti on between the NDRC and SAIC is not clear in some 
anti-competitive cases.  For instance, under the AML, predat ory pricing is the responsibility of the NDRC, whereas the 
SAIC is responsible under the Anti-Unfair-Competition Law;  according to the authorities, neither law takes precedence 
over the other.  The situation is similar for jurisdiction over lo yalty rebates.  However, according to the authorities, the 
NDRC and SAIC have clearly-divided f unctions in the enforcement practice. 
The Anti-Unfair-Competition and Anti-Monopolies Enforcement Bu reau of the SAIC is res ponsible for enforcing all 
non-price-related violations and other "unfair-competition" ac tivities, such as formation of agreements or abuse of 
dominant position leading to refusal to deal, or imposition of unreasonable conditions, and administrative monopolies.  
In investigating monopoly agreements and abuse of dominant po sition, the SAIC may delegate the investigation to the 
provincial AIC on a case-by-case basis, but provincial AICs are not allowed to delegate the case to a lower level. 
The SAIC investigated (November 2009) and convicted  (July 2010) the Concrete Committee of the Lianyungang 
Association of Construction Materials and Construction Equipment on the ground of organizing its members to form a 
monopoly agreement for market segmentation, and refusal to deal.  Five members and the Committee itself were fined a 
total of ¥730,723.19. 
One case against administrative monopoly has arisen since the promulgation of the AML and the SAIC provisions on 
administrative monopoly.  The AIC of Guangdong Province in June 2011 corrected a m onopolistic intervention from a 
local government to the GPS service market.  It was also reported that Taiyuan Railway Bureau was taken to court on 
13 September 2011 for alleged ad ministrative monopoly behaviour. 
Some researchers argue that there is an inherent shortcom ing in the enforcement of the Anti-Monopoly Law in China, 
which seems to place more emphasis on administrative measures than judicial litigation.  When the authorities intervene 
in any anti-competition activity on behalf of the public, they are likely to face the dilemma of being the complainant and 
judge at the same time.  The situation with administrative monopolies may be more serious.  Some researchers argue that 
the courts base their findings mainly on examining the proce dures rather than substance, which was evident in the case 
being rejected when the AQSIQ was sued in 2008 for da mages from administrative monopol istic operations.  Others 
argue that not sharing the vision of competition across agen cies may create more tension between competition policy and 
industrial policies (e.g. creating national champions), in pa rticular in the transition period when major SOEs still have 
strong connections with their industria l regulators.  The authorities, howev er, argue that anti-monopoly enforcement 
involves special expertise;  the author ities also note that a good coordination mechanism has been established between 
the industrial regulators and competition agencies to ensure  the balance between competition policies and industrial 
polices. 
Source:  Article 3 of the SAIC Provisions on the Procedures for Monopoly Agreements and Abuse of Dominant Market 
Positions Investigations (SAIC Decree 2009/42);  Un irule Institute of Economics (2010), "Why is the 
Anti-Monopoly Law Difficult to Enforce?", China Reform,  Vol. 2010 (12), [in Chinese];  Bai, Guixiu (2008), 
"The Nature of Administrative M onopoly and its Remedies -- Ideas from the first case of the Anti-Monopoly 
Law of China", Journal of Political Science and Law Es , Vol. 2008 (6), [in Chinese];  Li, Junfeng (2010), "The 
Chinese Competition Enforcement Structure in  the Perspective of Industry Regulation", Studies in Law and 
Business,  Vol. 2010 (2), [in Chinese];  Li, Rechean (2011) , "Unravelling the Jurisdictional Riddle of China's 
Antitrust Regime", Competition Policy International,  Vol. 2, February;  Emch, A. (2011), "The antitrust 
enforcers' new year resolutions", China Law & Practice , February, pp. 20-24;  China Competition Research 
Centre (2011), China Competition Bulletin , September;  a nd WTO Secretariat.  China WT/TPR/S/264/Rev.1 
 Page 81 
 
 
  247. China is not a member of the International Competition Network.209  The authorities noted 
that there is no a clear timeline for Chin a to consider to join the network. 
(b) Monopoly agreements and dominant market positions 
248. A number of implementation regulations for th e Anti-Monopoly Law entered into effect on 
1 February 2011, including the NDRC Provisions on Prohibition of Price Monopoly (NDRC Decree 
2010/7), the SAIC Provisions on the Prohibition of Monopoly Agreements (SAIC Decree 2010/53), 
and the SAIC Provisions on the Prohibition of Abu se of Dominant Market Positions (SAIC Decree 
2010/54). 
249. On monopoly agreements, five types of horizont al agreements (those among competitors) and 
two types of vertical agreements (those among count erparties) are prohibited. Article 2 of SAIC 
Provisions on Monopoly Agreements states that monopoly agreements are prohibited whether written 
or verbal, or by "concerted practice" whereby sev eral companies essentially coordinate behaviours 
even without explicit written or verbal agreement.  There are several situations in which a particular 
agreement may be exempted, as set out in Article 15 of the AML210;  however, no departmental rules 
provide quantitative criteria on how to identify whether a monopoly agreement may be exempted. 
250. Industrial associations are prohibited from organizing or facilitating monopoly agreements 
among their members.211  Violations are punishable by fines or de-registration of the association by 
the registration authority. 
251. A dominant market position is defined as one that  enables an enterprise to control price, 
output, and conditions in a relevant ma rket or to control the entry into this market by other enterprises. 
Enterprises with a dominant market position are prohibited from, inter alia , selling products at 
unreasonably high prices or purchasing products at  unreasonably low prices, and "without valid 
reasons", selling products at a price below cost, or  tying products or im posing unreasonable trading 
conditions. 
252. Dominant firms are prohibited from refusing to grant competitors access to an essential 
facility on "reasonable conditions".212  Dominant firms are also prohibited from restricting customers, 
                                                      
209 The International Competition Network (ICN) is a forum-like virtual organization for competition 
agencies of all kinds of jurisdictions. It was establishe d in 2001 with 14 members, i.e. Australia, Canada, the 
EU, France, Germany, Israel, Italy, Japan, Korea, Mexi co, South Africa, the UK, th e U.S., and Zambia.  There 
were 104 members as of November 2011.  The ICN en courages the dissemination of antitrust experience and 
recommended practices, and the implementation of su ch practices, which facilitates more consistent 
enforcement across countries.  The ICN develops cons ensuses benchmarks for various competition enforcement 
operations, for example, benchmarks for merger notificatio n, review procedures, and merger analysis are used 
among members voluntarily to reduce unnecessary  delays in transnational merger cases. 
210 Exemptions apply if it can be demonstrated that an agreement is aimed at improving technology and 
R&D or ensuring legitimate interests in foreign trade an d economic cooperation.  The agreement also should 
prove it would not severely harm the competition in the relevant domestic market, and it would share the benefit generated from the agr eement with consumers. 
211 Article 9 of the NDRC Provisions on Prohibition of Price Monopoly;  Article 9 and Article 10 of the 
SAIC Provisions on the Prohibition of Monopoly Agreements. 
212 Reasonable conditions include whether the party requesting access can invest in and develop an 
alternative facility;  how much its business depends on access to the facility;  whether the dominant firm is able 
to grant access and to what extent such  access could impact its own business. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 82 
  
  without proper reasons, to trade with the dominan t firm or firms designated by the dominant firms 
through the means of loyalty programmes such as discounts or rebates.213 
Administrative monopolies 
253. The Anti-Monopoly Law specifically prohibits "administrative monopolies".214  In the SAIC's 
Provisions on the Suppression of Abuse of Admi nistrative Power to Eliminate and Restrict 
Competitive Conduct (entered into effect on 1 Febr uary 2011, SAIC Decree 2011/55), administrative 
monopolies are defined as use of administrative powers to eliminate or restrict competition by administrative agencies at all levels  as well as authorized organizati ons of public affairs management. 
Such abuses include compelling businesses to concl ude monopoly agreements or to exercise dominant 
market power, and issuing rules that impede competition.
215  Similar provisions are set out in the 
NDRC Provisions on Prohibition of Price Monopoly with a focus on price-related violations.  
Statutory monopolies (or oligopolies) by SOEs are not classified as administrative monopolies. 
254. SAIC Decree 2011/55 also prohibits busin ess operators from implementing monopolistic 
agreements and abusing their dominant position "by means of administrative" decisions, delegation, 
or regulation.216  If business operators' monopoly activities are caused by administrative means, 
measures prescribed in SAIC Decree 2011/53 (pro visions on monopoly agreement) and SAIC Decree 
2011/54 (provisions on market dominant positions) w ill be applied to the business operators that 
benefit from administrative monopoly, and remedies against such abuses are administrative.  Thus, 
the competition enforcement authorities may call the s ituation to the attention of other administrative 
bodies, including local governments, and propose th at they correct their actions.  In the only case 
since the promulgation of the SAIC Provision on the Suppression of Abuse of Administrative Power 
to Eliminate and Restrict Competitive Conducts , the provincial government, in line with the 
provincial AIC proposal, corrected a violation by a government at the prefecture level.   
255. In terms of judicial remedies, it was not clear to the Secretariat whether the Anti-Monopoly 
Law or the Administrative Litigation Law will be a pplied in the event of administrative monopoly.  
No case has been registered in the courts against administrative monopoly since promulgation of the 
AML.  
(c) Mergers and acquisitions 
Anti-trust review 
256. Under Chapter 4 of the Anti-Monopoly Law, all merger transactions above a certain 
threshold217 are subject to prior anti-trust review coordinated by MOFCOM.218  Between 2008 
                                                      
213 Proper reasons include to safeguard a product's qua lity and safety;  to maintain the brand image or 
improve services;  to be able to significantly reduce co sts, improve efficiency;  a nd share with customers the 
interests arised from the restricting activities of trad ing. Article 14 of the NDRC Provision on Prohibition of 
Price Monopoly. 
214 Article 8 and Chapter 5 of the Anti-Monopoly Law. 
215 Article 3 and Article 4 of SAIC Provisions on the Suppression of Abuse of Administrative Power to 
Eliminate and Restrict Competitive Conduct. 
216 Article 5 of SAIC Provisions on the Suppressi on of Abuse of Administrative Power to Eliminate 
and Restrict Competitive Conduct. 
217 See State Council Regulation on Notification Thresholds for Concentrations of Undertakings, State 
Council Decree 529, entered into force on 3 August 2008. 
218 Other agencies involved in merger reviews include  SAIC, and sectoral regul ators, i.e. CSSC, CBSC, 
CISC, MIIT, and CAAC.  A transaction below the thresh old might be required to be notified to authorities, China WT/TPR/S/264/Rev.1 
 Page 83 
 
 
  and 2011, MOFCOM received 382 cases for review, of which 371 were unc onditionally cleared, 10 
were cleared subject to conditions, and 1 case was rejected.  Data on cases withdrawn by applicants 
were not made available to the Secretariat.  
257. Three administrative rules were adopted, during the period under review, to clarify 
procedures for anti-trust reviews:  the Measure s on the Examination of Concentrations of 
Undertakings  (MOFCOM Decree 2009/12) and the  Measures on the Notification of Concentrations of 
Undertakings  (MOFCOM Decree 2009/11) (both in effect 1 January 2010), and the Interim Provisions 
on Assessment of Impact of Concentrations  of Undertakings on Competition (MOFCOM 
Announcement 2011/55) (in effect 5 September 2011).   
258. In the process of review, MOFCOM may undertak e hearings on market concentration on its 
own initiative or upon request from relevant parties.   At the end of the review, the authorities may 
reject, approve, or approve with conditions the notif ied merger applications.  In conducting merger 
reviews, the authorities must decide, with in 30 days, whether a further review (2nd-stage review) is 
necessary. 
259. Conditions attached to approved mergers as a result of anti-trust reviews may include:  
divestment of certain assets or business219;  opening infrastructure (e.g. network or platform) to the 
public, licensing key technologies (including patented know-how), or ceasing exclusive 
agreements.220 
260. In reviews of transnational M&As, MOFCOM may exchange information with competition 
authorities of other jurisdictions when it considers such exchange necessary. 
261. In anti-trust reviews, MOFCOM assesses the impact of the concentration on competition, 
paying attention to control over and influence on the relevant markets.  The assessment is focused on 
whether the concentration induces or strengthens the capability, motive, and feasibility of business 
operator(s) to exclude or restrict competition in the relevant markets or the associated markets along the value chain.  The authorities state that the same criteria apply to all businesses, including SOEs. 
262. The Herfindahl-Hirschman Index (HHI) and Concentration Ratios (CRs) are used in assessing 
the impact on competition of concentrations.  Howe ver, the HHI and CRs are not always published.  
263. Multiple concentration activities between the sa me players within a two-year period are 
considered as a single transaction whose value is the sum of turnover from the transactions.  If the 
total transaction turnover is above the notification threshold, even if each individual action is below 
the threshold, the multiple concentration activities mu st be notified to the enforcement authorities and 
subject to anti-trust reviews.
221 
                                                                                                                                                                     
subject to discretion of the authorities, if a request is extended by a domestic competitor, department or 
association. 
219 On 5 July 2010, MOFCOM releas ed the Interim Regulations for Implementing Divestures of Assets 
or Businesses during Concentrations of Business Operators (MOFCOM Announcement 2010/41, entered into 
force on 5 July 2010). 
220 Article 11, Measures on the Examination of Concentrations of Undertakings, MOFCOM Decree 
2009/12. 
221 Article 7, Measures on the Notification of Concentrations of Undertakings, MOFCOM Decree 
2009/11. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 84 
  
  264. With a view to enhancing transparency, MOFCOM issued the Interim Provisions on 
Investigation of Un-notified Concentrations of Unde rtakings (in effect 1 February 2012).  Under the 
Provisions, MOFCOM may initiate in vestigations on whether un-notif ied concentration activities are 
subject to anti-trust review;  participants ma y face a fine up to ¥500,000 if the un-notified 
concentration activity requires clearance through  anti-trust review;  and MOFCOM may order 
participants to restore the pre-concentration business status.  
National security review 
265. Acquisitions of domestic enterprises by foreign investors are regulated by the Provisions on 
Mergers and Acquisitions of Domestic Enterprises by  Foreign Investors, last revised in June 2009.222  
According to Article 31 of the Anti-Monopoly Law, acquisitions by foreign investors are subject to 
national security reviews in addition to anti-trust revi ews, if the acquisitions are deemed to be related 
to national security. 
266. The Circular on the Establishment of National Security Review on Acquisitions of Domestic 
Enterprises by Foreign Investors (Guo Ban Fa 2011/ 6), which entered into force on 5 March 2011, 
prescribes the scope of national security reviews.  Ac tivities subject to national security review are:  
defence related (i.e. acquisition of defence or defence-affiliated enterprises, and acquisition of 
enterprises locationally adjunct to defence facilitie s);  and acquisition of and gaining control over 
enterprises related to national security in the sector s of key agricultural products, key energy and 
natural resources, key infrastructure, key tran sportation, and key machinery manufacturing.223 
267. National security reviews are conducted by the Inter-Ministerial Joint Conference on National 
Security Review over Acquisitions of Domestic Enterprises by Foreign Investors.  The Joint 
Conference is led by NDRC and MOFCOM.  The secretariat of the Joint Conference is situated in MOFCOM. 
268. Detailed procedures for carrying out national security reviews entered into force on 
1 September 2011 as MOFCOM promulgated th e MOFCOM Rules on Implementing National 
Security Review Mechanism over Mergers and Ac quisitions of Domestic Enterprises by Foreign 
Investors (MOFCOM Announcement 2011/53) on 25 August 2011. 
269. Foreign investors must apply to MOFCOM for national security reviews if the merger cases 
fell into the scope described in national security re view mechanism.  Other relevant miniseries or 
agencies, industrial associations, enterprises in th e same industry or enterprises along the value chain 
may also request MOFCOM to initiate national secur ity reviews.  Article 9 of the MOFCOM rules 
states that decisions on whether an M&A transaction falls within the scope of nation security reviews 
depend on the substance and the actual impact of the transaction. 
270. There are strict timelines for completing national security reviews.  General reviews (1
st stage) 
must be completed in 30 days.  If an applicati on passes the general review, it will not proceed to 
                                                      
222 MOFCOM Degree 2009/6. M&As of domestic enterprises by foreign investors are defined as:  
(1) foreign investors' equity  investment exceed 25% of a domestic comp any's registered capital;  (2) FIEs set up 
by foreign investors in order to acquire and operate assets  of domestic enterprises;  or (3) acquisition by foreign 
investors of assets of domestic enterprises and setting up of FIEs based on the acquired assets. 
223 Gaining control over an enterprise by foreign investors means the share of equities held by all 
parties of foreign investors exceeds 50%;   or the equity share held by fo reign investors is large enough to 
significantly influence decisions of the annual general meeting of shareholders, and/or of the board of directors. China WT/TPR/S/264/Rev.1 
 Page 85 
 
 
  special review (2nd stage), and the acquisition activity continues.   An application that fails to pass the 
general review will proceed to the stage of special  review, which must be completed in 60 days. 
271. National security reviews grant clearance to merger cases for any other administrative 
procedures including anti-trust reviews.  Where a merger case is not cleared even if the merger 
activity proceeded, MOFCOM would, jointly with other relevant au thorities, terminate the merger 
transaction or take action such as equity or asset transfer to eliminate the negative impact on national security caused by the merger activity. 
272. Three cases have been taken to national security review since 5 March 2011.  
(vii) Intellectual property rights 
Overview 273. In the 12
th Five Year Plan, China announced its in tention to adopt a "sustainable growth" 
model, with emphases on value-a dding, innovation,  and structural adjustment.  The authorities 
consider that intellectual property is an essential element to realize this change.   
274. In terms of the proportion of domestic use of the IP system, China is among the highest in the 
world.  Applications for patents, utility models, trade marks, and industrial designs have increased 
substantially since 2004.224  Despite the recent global economic slow down, total patent applications in 
China increased by 25.2% between 2009 and 2010 (dom estic applications grew by 26.4%), and trade 
mark applications increased by 29.1% (with dom estic applications at 31.2%) (Table III.11). 
275. The National Intellectual Property Strategy, announced by the State Council in June 2008225, 
established four medium-term goals for a five-year  period between 2008 and 2013:  a large-scale 
increase in "indigenous intellectual property rights";  a significant increase in the share of IP-intensive 
commodities;  improvement in IPR protection;  and an overall increase in awareness of intellectual property rights.  In order to achieve the goal set out in the strategy, China provides a number of subsidies, including tax incentives, to R&D activities.
226  China ranked third in the world in terms of 
its resident patents-to-GDP ratio (26.6) and resi dent patents-to-R&D expenditure ratio (2.0) in 
2008.227  Such an increase in innovation can be exp ected, over time, to increase public awareness of 
the need to protect IPRs and to make effective u se of the IP system as a tool for economic growth. 
276. In June 2011, China announced the decoupling of the "indigenous innovative" products with 
the provisions of government procurement preferences (section (viii)).228  
 
                                                      
224 See WIPO Statistical Country Profile: China.  Viewed at:  http://w ww.wipo.int/ipstats/en/ 
statistics/country_profile/countries/cn.html. 
225 State Council's Circular on Distribution of National Intellectual Property Strategy (Guo Fa 
2008/18), issued on 5 June 2008 (in Chinese).  Viewed at:  http://www .gov.cn/zwgk/2008-06/10/ 
content_1012269.htm.  The Strategy also calls on sub- central authorities and indu stries to formulate and 
implement their own intellectual property strategies.  By the end of 2010, 25 out of 32 provincial-level authorities (including autonomous regions and municipalities, excluding the Hong Kong SAR and the Macao 
SAR) had promulgated local intellectual property strategies or implementation plans for the strategy. 
226 WTO documents G/SCM/N/155/CHN, 21 October 2011 and G/SCM/N/186/CHN, 21 October 2011. 
227 WIPO (2010). 
228 Circulars issued by the Ministry of Finan ce.  Viewed at:  http://www.gov.cn/ zwgk/2011-
06/30/content_1896559.htm [in Chinese]. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 86 
  
  Table III.11 
Intellectual property rights applications, 2009-10 
 2009  2010  
% increase % of total 
 Total 
Patent applications 976,686 1,222,286 25.2 100 
Domestic 877,611 1,109,428 26.4 90.8 
Foreign 99,075 112,858 13.9 9.2 
Inventions 314,573 391,177 24.4 32 
Domestic 229,096 293,066 27.9 74.9 
Foreign 85,477 98,111 14.8 25.1 
Utility models 310,771 409,836 31.9 33.5 
Domestic 308,861 407,238 31.9 99.4 
Foreign 1,910 2,598 36 0.6 
Designs 351,342 421,273 19.9 34.5 
Domestic 339,654 409,124 20.5 97.1 
Foreign 11,688 12,149 3.9 2.9 
Patents granted 581,992 814,825 40 100 
Domestic 501,786 740,626 47.6 90.9 
Foreign 80,206 74,199 -7.5 9.1 
Inventions 128,489 135,110 5.2 16.6 
Domestic 65,391 79,767 22 59 
Foreign 63,098 55,343 -12.3 41 
Utility models 203,802 344,472 69 42.3 
Domestic 202,113 342,258 69.3 99.4 
Foreign 1,689 2,214 31.1 0.6 
Designs 249,701 335,243 34.3 41.1 
Domestic 234,282 318,601 36 95 
Foreign 15,419 16,642 7.9 5 
Trade mark applications (new) 830,488 1,072,187 29.1 100 
Domestic 741,763 973,460 31.2 90.8 
Foreign 88,714 98,727 11.3 9.2 
Trade marks granted 837,643 1,349,237 61.1 100 
Domestic 737,228 1,211,428 64.3 89.8 
Foreign 100,415 137,809 37.2 10.2 
Source:   Data provided by the Chinese authorities. 
277. In order to coordinate implementation across relevant ministries and agencies, an Inter-
Ministerial Joint Conference for the Implementati on of National Intellectual Property Strategy was 
established in October 2008 (Chart III.5).  The Conf erence is chaired by the Commissioner of the 
State Intellectual Property Office (SIPO).229  The Conference has issued a Promotion Plan for the 
Implementation of the National Intellectual Prope rty Strategy annually since 2009.  Each annual 
promotion plan assigns detailed tasks to relevant authorities with a view to attaining the aims of the 
                                                      
229 The National Intellectual Property Strategy Office has been designated an executive role for the 
Joint Conference.  The Office is situ ated in the SIPO.  The website of the Office (http://www.nipso.cn/) contains 
information (in Chinese) on China's intellectual property strategy at the national, regional, and industrial level. China WT/TPR/S/264/Rev.1 
 Page 87 
 
 
  national strategy.  For 2011, the plan assigned 176 tasks230 including:  the launch of a national specific 
campaign on IPR protection, and revisions of th e Trademark Law, the Copyright Law, and the 
Measures for Exercising Compulsory Licence as well as drafting Anti-Monopoly Guidelines for 
Abusive Use of Intellectual Property Rights. 
278. A number of regulations and de partmental rules on IPRs have been amended since China's 
previous Review, such as amendments to the Re gulations on Implementing the Patent Law, to the 
Copyright Law, and to the Regulations on Customs Protection of Intellectual Property.  China also 
promulgated the Interim Measures on Payment by Radio and TV Stations for Broadcasting Audio 
Products. 
279. China launched a specific national campaign in November 2010 with a focus on cracking 
down on intellectual property rights infringement.  The authorities expect the national campaign to 
become permanently institutionalized and a cabinet-l evel enforcement structure, led by vice-Premier, 
is to be established to coordinate IPR enforcem ent nationwide.  "Political accountability" for IPR 
violations is to be increased at the provincial level231, to encourage better enforcement efforts. 
280. China is a member of the World Intellectual Property Organization (WIPO), and a contracting 
party to various international conve ntions and treaties (Table AIII.7).  At the end of 2010, China filed 
12,296 applications through the PCT system, an increase of about 56% over 2009, while 1,928 applications were filed through the Madrid system.
232 
(a) Industrial property 
Patent 
281. The State Intellectual Property Office (SIPO), under the State Council, is in charge of patent 
administration nationwide.  The State Patent Office, under the SIPO, is in charge of receiving patent 
applications and granting patents, while local IPR administrative offices are responsible for patent 
disputes. 
282. Patent rights (for inventions, utility models, and industrial designs) are protected by the Patent 
Law (last amended in 2009)233;  its Implementation Regula tions (last amended in 2010)234, which in 
the last amendment adds provisions on national inte rest clearance (confidentiality examinations), and 
patents based on genetic resources, as well as elaborates details on compulsory licences, and administrative procedures for patents and utility models;  and rules promulgated by the SIPO.
235  
Patent rights are granted for 20 years from the date of filing for inventions, and 10 years from filing 
for utility models and industrial designs.   
 
                                                      
230 Among 176 tasks in the 2011 Promotion Plan, 13 task s have been identified as key tasks.  General 
understanding is that key tasks are those that address immediate needs, are critical to how the Plan advances, 
and are expected to be completed within a short time-frame. 
231 Enforcement of IP rights in their regions will be  taken into account for provincial officials' 
performance. 
232 WIPO statistics.  Viewed at:  http://www.wipo. int/ipstats/en/statistics/country_profile/countries/ 
cn.html. 
233 WTO documents IP/N/1/CHN/3 , 15 December 2010 and IP/N/1 /CHN/P/2, 21 December 2010. 
234 WTO documents IP/N/1/CHN/4, 24 August 2011 and IP/N/1/CHN/P/3, 26 August 2011. 
235 Departmental rules on patent-related issues are available (in Chinese) at:  http://www.sipo.gov.cn/ 
zcfg/flfg/zl/bmgz/. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 88 
  
  Chart III.5
Structure of IPR administration and enforcement
Inter-
Ministerial
Joint-Conference 
for 
Implementation
of the National 
Intellectual 
Property Strategy 
under the
State CouncilState Patent Office
In charge of receiving patent applications 
and granting patentsState Intellectual Property Office
(also the National
Intellectual Property Strategy Office)
Administration of patents nationwide, 
including accepting and granting patent 
applications and integrated circuit designs;  
also in charge of handling and coordinating 
IPR-related international affairsLocal IPR administrative offices
In charge of patent disputes
State Trademark Office
In charge of registration and 
enforcement of trademarks and 
geographical indications
Local trademark offices
In charge of administration of trademarks 
and geographical indicationsState Administration of 
Industry and Commerce
(SAIC) Deals with trademark registration 
and administration, geographical 
indications, and trade secrets
Public Security and Procuratorate
In charge of investigating and prosecuting 
criminal activities involving IPRsMinistry of Agriculture
Deals with the administration of 
(agricultural-relate d) geographical 
indications. Also in ch arge of the protection 
of new plant varieties
Customs
In charge of supervising and enforcing 
IPRs at the borderLocal copyright offices
In charge of local copyright registration 
and administration of copyrightState Copyright Office
Deals with copyright administration on a 
national scale, and copyright cases
State Office of IPRs,
Ministry of CommerceAdministration of Quality Supervision, 
Inspection & Quarantine 
(AQSIQ) Also deals with the administration 
of geographical indications
Source : WTO Secretariat, based on China National Intellectual-Property Strategy.
Viewed at: http://www.nipso.cn [in Chinese];  and data provided by the Chinese authorities.Entry & Exit Inspection and 
Quarantine bureaus
In charge of border measures for 
protection of geographical indications
Local quality supervision bureaus
In charge of proctection of geographical 
indications
 
 
 China WT/TPR/S/264/Rev.1 
 Page 89 
 
 
  283. China's patent system is currently ranked sec ond in the world in terms of applications.  
During the period under review, pate nt applications and grants c ontinued to increase rapidly, in 
particular for utility models.  In 2011, there were  1.6 million applications, up 34.5% from 2010.  As 
increase in patent applications, there is a clear positive correlation between patent applications and 
patent invalidation requests in China.236  The detailed data on pate nt applications and patent 
invalidation applications was not ma de available to the Secretariat. 
284. Applications for invention patents are made to the SIPO.  If it finds the application to be in 
conformity with the requirements of the Patent Law,  it must publish the application within 18 months 
of the date of filing.  The applicant must su bmit a request for substantive examination within 
three years of filing, otherwise the application is de emed to have been withdrawn;  the SIPO carries 
out the substantive examination.  The delayed substantive examination process is based on two 
considerations:  first, it allows the applicant to w ithdraw the application if he or she considers it no 
longer necessary, thus saving them the cost of the fees;  and second, it redu ces the costs to the SIPO 
of unnecessary examinations.  For inventions, pa tent rights are protected provisionally during the 
period from publication of the application to the grant of the patent. 
285. Once the SIPO has decided to grant the patent, a notification is issued;  the applicant must 
complete registration formalities within two months of receipt of this notification, including paying 
the registration, annual, and printing fees.  If th e applicant is unable to complete these formalities 
within the specified time, he/she is  assumed to have relinquished his/her right to obtain the patent.  
The average time required to complete substantive ex amination for an invention patent was 24 months 
in 2010 (the latest year for which data were available). 
286. Patent applications may be re-examined by th e Patent Re-examination Board, which consists 
of technical and legal experts appointed by the SIPO  and headed by the head of the SIPO.  Under the 
Rules for the Implementation of the Patent Law (A rticle 62), if the Board finds that the SIPO's 
decision does not comply with the provisions of the Patent Law and its accompanying rules and regulations, it may revoke the decision and ask the SIPO  to continue the patent examination.  In 2010, 
the Patent Re-examination Board accepted 12,369 applications for re-examination, up 34.5% from 
2009, among which 9,005 were concluded.   
287. National-interest clearance, through a "confiden tiality examination" is required before an 
application may be made for a foreign or interna tional patent for an invention or utility model in 
which "substantial contents" of the technical so lution were achieved within the Chinese territory.
237  
However, in the current Implementation Regulations  for the Patent Law, there is no definition of 
"substantial contents".  The confidentiality examina tion must be carried out prior to any foreign or 
international applications  for patent protection.238  If application is made for foreign or international 
patent without the completion of confidentiality ex aminations, the application for domestic patent 
protection may be rejected.239  There have been more than 76, 000 applications for confidentiality 
                                                      
236 WIPO (2010). 
237 Provisions in Article 8 of the Implementing Re gulations on Patent Law.  Article 7 of the 
Implementing Regulations states that patent authorities must follow the procedure for "confidential patents 
applications" if the authorities believe the inventions or utility models require confidentiality due to such 
inventions or utility models being involved in non-defence -related national security or of vital interest to the 
country. 
238 Applicants may apply for foreign or internationa l patents if they do not receive, notification of a 
confidentiality examination from the authorities within 4 months.  If the authorities carry out a confidentiality 
examination, the appli cant may apply for foreign or international pa tents if they do not receive a decision of 
confidentiality from the authority within 6 months. 
239 Article 20 of the Patent Law. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 90 
  
  examination as of 30 September 2011.  Only one case failed the examination and was not approved to 
apply for foreign patent.  
288. Clearance through a "confidentiality examination" is also required for inventions or utility 
models that result from R&D activities of nationa l major projects.  The units responsible for 
undertaking national major projects are "encouraged" to apply within the priority period for foreign patent rights or other IPRs in the coun tries that have arrangements with China.
240  
289. Indigenous intellectual property rights obtained from "national major projects"241 must first be 
non-exclusively licensed within the territory of mainland China.  If indigenous intellectual property rights are transferred or licensed to foreign parties, the transfer or licence is subject to the Regulation 
on the Administration of Technology Import and Export (revised in December 2010). 
290. The amendment to the Implementing Regulati ons for the Patent Law included revised 
provisions on compulsory licensing;  for exampl e it gives the definition of "insufficiency" in 
Article 48 of the Patent Law.  
291. A compulsory licence may be granted in the event of, inter alia , "national emergency", or 
"any extraordinary state of affairs", or "in the publ ic interest".  A compulsory licence may also be 
granted under certain circumstances for patented pharmaceutical products.
242  M o r e o v e r ,  a  
compulsory licence may be granted if the patent  owner, without justification, has failed to 
"sufficiently" exploit patent rights for three years or  uses the rights in a manner that eliminates or 
restricts competition.  Under Article 73 of the Implementation Regulations of the Patent Law, 
"insufficiency" is when the manner or the scale of the patent exploited by its ri ght-holders or licensees 
cannot satisfy the domestic demand for the patented products or patented know-how.  The test of 
"without justification" is provided in the Paris Convention.  
292. Article 48 of the Patent Law states that compul sory licences for patented  inventions or utility 
models may be granted if the patent holders are convicted of restricting/limiting competition through 
abuse of their intellectual property rights.243  Compulsory licences may also be granted upon the 
request of an injured party in addition to the remedy provided by the Anti-Monopoly Law (AML).  
However, the AML and its various affiliated implementation rules do not  provide clear criteria for the 
                                                      
240 The "priority period" is the duration of "priority".  Among the contracting parties to the Paris 
Convention on the Protection of Industrial Property, under the principle of priority, an applicant who files an 
application for protection for an invention with one contracting party is deemed to have filed applications to other contracting parties on the same date as the first ap plication, if the applications are filed within a given 
period of the filing of the first application. 
241 National major projects are projects in the 16 fields listed in the 2006 Medium and Long-term Plan 
for Science and Technology that must be completed within a certain period to push forward "core-technologies" 
and social and economic development.  The Ministry of  Science and Technology is the coordinator for these 
projects. 
242 The 2009 amendment to the Patent Law gives effect to the WTO General Council Decision on the 
Implementation of Paragraph 6 of the Doha Declara tion on the TRIPS Agreement and Public Health and 
subsequent Decision on the Amendment of the TRIPS Ag reement in providing for compulsory licensing to 
enable third parties to manufacture patented drugs fo r export to recipients under  the WTO "paragraph 6" 
mechanism.  Article 22 and Article 33 of the Measures for Exercising Patent  Compulsory Licences stipulate the 
detailed administration on compulsory licensing of patented drugs. 
243 Article 53 of the Patent Law stipulates that compulsory licences should serve mainly for supplies to 
the domestic market, but this excludes compulsory licences granted on the ground of competition or of public 
health. China WT/TPR/S/264/Rev.1 
 Page 91 
 
 
  distinction between legitimate and abusive exercise of  intellectual property.  The authorities noted that 
Guidelines for Competition against Abusing Intellectual Property Rights are being drafted.244  
293. The SIPO is the administrative agency for issu es related to compulsory licencing.  Patent 
right-holders will be notified of compulsory licen ce requests, in writing, if the SIPO accepts the 
request is valid.  Patent right-holders must res pond to the SIPO with comments within a designated 
period in order to challenge the granting of a compulsory licence.245  The SIPO must also conduct 
open hearings upon the request of the applicant for a compulsory licence or from the patent 
right-holder.246  Patent right-holders may pursue a lawsuit against the decision by the SIPO, within 
three months, with regard to granting or terminating compulsory licences. 
294. China has not granted any compulso ry licences since the entry into force of the Patent Law.   
295. The current legislation on patents allows parallel imports.247 
Trade marks 
296. The State Trademark Office (TMO), under the State Administration of Industry and 
Commerce (SAIC), is responsible for the registra tion and administration of trade marks.  Local 
enforcement authorities are responsible for admini stration of trade marks at the local level. 
297. The TMO examined about 1.4 million trade mark applications in 2010.  The authorities noted 
that trade mark registration takes 12 months ( as of October 2010), down from 36 months in 2008;  
they expect it to be further shortened to 10 months by 2012. 
298. Trade marks are protected under the Trademark Law (last revised in 2001), its 
Implementation Regulations (promulgated in 20 02), and various rules issued by the SAIC.248  I n  
accordance with 2011 promotion plan for the IP strategy, the Trademark Law is being revised.249  
Trade marks are protected for ten years, renewable for ten years, indefinitely. 
299. Trade marks must be registered with the Trademark Office to be protected under the 
Trademark Law.  Foreign applicants must file applications in accordance  with any agreements 
concluded between their country of origin and Chin a, or any international treaty to which both are 
parties, or on the basis of reciprocity.  Trade mark s may be registered through an agent recognized or 
designated by the SAIC.   
300. Under Article 13 of the Trademark Law, registra tion may be rejected and usage of a relevant 
mark is forbidden under the following circumstanc es:  if the mark involves a copy, imitation, or 
translation of well-known brands that have not been registered in China for the same or similar goods 
and services, and such a copy, imitation, or transl ation easily creates ambiguity;  and if the mark 
involves a copy, imitation, or translation of well-known  brands that have been registered in China for 
                                                      
244 Task Item 34 in the Promotion Plan for the National Intellectual Property Strategy '2011. 
245 The length of designated period varies by case.   
246 The hearings will include the compulsory licence applicant, the patent right-holder, and other 
relevant stakeholders.  If related to national secrets, trad e secrets, or privacy, the h earing will not be open to the 
public.  In case of "national emergency", "extraordinary state of affairs", or "in the public interest", open hearing procedures for compulsory licence are not applicable. 
247 Article 69 of the Patent Law. 
248 For the rules related to trade mark administration in China, see:  http://sbj.saic.gov.cn/. 
249 The draft revision was published for comments on 2 September 2011 on the websites of the China 
Legislative Information Network and the Chinese Central Government.  The consultation ended on 
8 October 2011.  Viewed at:  http://www.gov.cn/gzdt/2011-09/02/content_1939013.htm. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 92 
  
  goods and services that are not deemed identical or similar to the goods and services in question, and 
such a copy, imitation, or translation may misl ead the public and result in possible harm to the 
interests of the right-holders of the well-known brand.250 
301. In its Rules on Recognition of and Protecti on over Well-known Brands (promulgated in 
April 2003), the SAIC defines "well-known brands" as  trade marks that are widely known and enjoy a 
high reputation among the relevant public in China.251  Well-known brands are recognized by the 
TMO or the Trademark Appeal Board.252  Five factors are taken into account in recognizing well-
known brands in administrative procedures, i.e. regi stration, review, and administration, and in civil 
litigation procedures:  (1) the degree of knowledge of  the brand in question by the public;  (2) the 
duration of usage of the brand;  (3) evidence of th e publicity campaign for the brand in question, such 
as duration, intensity, and geographical areas of the campaign;  (4) the protection record of the brand 
as a well-known brand;  and (5) other relevant information.253  Decision to recognize a trade mark as a 
well-known brand is made within  six months of receipt of the application by the TMO.254  As of end 
2011, 3,187 trade marks had been recognized as well-known brands through trade mark administration, i.e. registration, review, and dispute settlements, among which 156 are owned by 
foreign enterprises or their subsidiaries in China. 
302. There is a five-year period for appeal from registration of a trade mark wherein the prior 
right-holder or relevant stakeholder may request th e Trademark Appeal Board to revoke the registered 
trade mark.  For "abusive registration", well-know n brand right-holders are not limited by the 
five-year period.
255  
303. Appeals against a decision by the Trademark Office to refuse registration may be made within 
15 days from receipt of the notification, to the Trademark Review and Adjudication Board.  If the 
decision taken by the Board is also unsatisfactory, legal proceedings may be instituted in the People's 
Court within 30 days of notification by the Board.   There is no time limit within which the Board 
must make its decision.   
304. The SAIC announced on 28 July 2011 that Ch ina intends to shorten the time required to 
complete the procedure for trade mark reviews and dispute settlement to 20 months.  The SAIC also 
announced that trade marks that have not been used for three consecutive years will be revoked.256  
305. The SAIC has started to enhance trade mark prot ection in e-commerce.  An SAIC Circular of 
Opinions on Strengthening the Cross-Provincial En forcement to Commodities Trading on Internet and 
its Related Services (Gong Shang Shi Zi 2011/11), issued on 27 Ma y 2011, requires cross-provincial 
case investigation be completed within 30 days.  Acco rding to the authorities, the SAIC is building an 
                                                      
250 Article 31 of the Trademark Law and Article 34 of  the revision draft of Trademark Law states that 
application for trade mark registration shall not harm the existing rights of others;  in addition, abusive pre-emptive registrations are not allowed. 
251 According to Article 16 of TRIPS and Article 6 of Paris Convention, trade marks that have become 
well known in a particular market enjoy additional protection. 
252 Article 5 of the Implementation Regulations for Trademark Law. 
253 Article 14 of the Trademark Law.  The Supreme Pe ople's Court issued a judicial Interpretation on 
Some Issues Concerning the Application of Law in the Trial of Cases of Civil Disputes Involving Well-Known 
Trademark Protection (came into effect on 1 May 2009), providing detailed guidelines for recognizing 
well-known brands in civil litigation. 
254 Article 8 of the SAIC Rules on Recognitio n of and Protection ov er Well-known Brands. 
255 Article 41 of the Trademark Law. 
256 The SAIC announced on 28 July 2011 that it would employ several measures to curb abusive 
registration of trade marks.  Viewed at:  http ://www.gov.cn/jrzg/2011-07/28/content_1915944.htm. China WT/TPR/S/264/Rev.1 
 Page 93 
 
 
  e-commerce monitoring system, and is in the process of establishing a Procedure of Electronic-
Evidence Gathering for Investigation on e-Comme rce Violations.  A joint government/industry 
programme between China and the United States agains t online sales of counterfeit physical products 
on the internet will launch in spring 2012. 
306. The Interim Measures on Administration over Co mmodities Trading on the Internet and its 
Related Services (SAIC Decree 2010/49, entered into  effect on 1 July 2010) requires that natural 
persons selling products and services on the internet trading platform must provide authentic information to the operator of the trading platform .  Article 24 of the Measures requires the operator 
of the internet trading platform to take necessar y actions against trade mark infringement.  The 
operator is responsible for disciplining users of the platform, and is liable fo r any damage caused by 
misuse of the platform. 
307. Parallel imports are not addressed in the legislation on trade marks, and it is not clear to the 
Secretariat whether they are prohibited/allowed.  The authorities state that no case of parallel imports has been brought to their attention. 
Geographical indications 
308. Geographical indications (GIs) are currently regulated by the State Trademark Office, the 
AQSIQ, and the Ministry of Agriculture. 
309. GIs may be registered as collective marks or certification marks with the TMO under the 
same procedure as for trade marks.  Protection of re gistered GIs is the same as for other trade marks, 
i.e. ten-year protection, renewable for ten years, indefinitely.   
310. As from 2005, GIs may also be registered with the AQSIQ.  Once registered with the AQSIQ, 
these GIs are protected permanently.  In additi on, as from February 2008, GIs for agricultural 
products may be registered with the Ministry of Agriculture.  Agricultural product GIs from foreign 
countries must be registered in China to be pr otected.  Once registered, they are protected 
permanently.  
311. GIs are protected under the Trademark Law and its Implementing Regulations.  It was not 
clear to the Secretariat whether there is any coor dination mechanism for enforcement against violation 
if GIs are registered with only one authority.  
(b) Copyright and related rights 
312. The National Copyright Administration of China (NCAC), under the State Council, 
administers copyright on a national scale.  Local copyright registration and administration at the 
provincial level is carried out by local copyright administration offices. 
313. Protection is granted under the Copyright Law (revised in 2010), its Implementing Regulation 
(last revised in 2010), and accompanying regulations.
257  Protection for cinematographic and 
                                                      
257 These include, inter alia , the Regulations for the Protection of Computer Software, the Regulation 
on the Collective Administration of Copyright, and the Regulations on Protection of the Right of 
Communication through Information Network. WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 94 
  
  photographic works is for 50 years, and typographical designs for 10 years.258  Protection for 
computer software is granted from the date on whic h its development was completed, and the term of 
protection varies.259  Audio and video productions, broadcas ting, and public performance are granted 
protection for 50 years from the first day of  production, broadcasting, or performance.260 
314. Copyright protection generally co vers work by anyone regardless of whether and/or where the 
work is published.261 
315. Promotion of genuine software used in governme nt agencies and enterprises is a key task for 
IP protection in China.262  A verification campaign on genuine software for government agencies was 
launched in 2010 to consolidate the achievement  from the software legalization programme for 
government agencies between 2001 and 2005.263  China aims to complete  its software legalization 
programme at the provincial level by mid-2012, a nd at the prefecture and county level by 2013. 
316. Parallel imports are not covered in the current  copyright legislation, and the authorities 
maintain that they are not prohibited. 
(c) Other IPRs  
317. Since the previous Review of China, there ha s been no significant change to the legislation 
protecting other IPRs, including layout-designs of in tegrated circuits, plant varieties, and undisclosed 
information or trade secrets.   
318. Layout-designs of integrated circuits are regist ered with and granted by the SIPO.  They are 
protected for 10 years from the date of filing or the date of first commercial exploitation anywhere in 
the world, whichever expires earlie r; the maximum duration of protection is 15 years from the date of 
creation.  In special circumstances (such as nati onal emergencies), or to remedy unfair competition 
practices, a "non-voluntary" licence may be issued  to exploit a layout design.  So far, no 
"non-voluntary" licences have been issued. 
319. Plant varieties are protected for 20 years from the date of authorization of vines, forest trees, 
and ornamental trees, and 15 years for other plants .  Applications for the protection of new plant 
varieties are made to the Ministry of Agriculture or the State Forestry Administration. Compulsory 
licences may be granted by the approval and examin ation authority for exploi tation of the protected 
plant variety where it is in the national or public interest.  No such compulsory licences have been 
granted. 
                                                      
258 Article 21 of the Copyright Law specifies that ci nematographic or photographic works are protected 
for 50 years after first publication;  however, the work is  not protected under this law if it is not published within 
50 years of completion of its creation. 
259 Software copyright exists from the date on which its development is completed.  For a natural 
person, protection is for the lifetime of the person plus 50 years.  For software developed jointly by two or more 
persons, protection expires at the end of the 50th year after the death of the last surviving developer.  Copyright 
belonging to a legal entity or other body is protected for 50 years from first publication; however, if it has not been published within 50 years of its development, it is not protected. 
260 Provision by Article 39, 42 and 45 of the Copyright Law (revised in 2010). 
261 Provision by Article 2 of the Copyright Law (revised in 2010). 
262 Task 51 of the Promotion Plan for National Intellectual Property Strategy 2011. 
263 According to the authorities, encouragement to use genuine software in government agencies has 
reached sub-central author ities to prefecture-level. China WT/TPR/S/264/Rev.1 
 Page 95 
 
 
  320. Undisclosed information and trade secrets are protected by, inter alia,  the Criminal Law, the 
Anti-Unfair Competition Law, the Labour Law, and re gulations issued in acco rdance with these laws.  
The SAIC is in charge of protecting trade secrets, while the public security agency is responsible for 
criminal investigation in cases involving severe dama ge or criminal activity related to undisclosed 
information or trade secrets.  According to the Implementation of the Law of Drug Control, China 
protects test data and other data that are self-obt ained, undisclosed, and submitted by manufacturers or 
sellers to obtain an approval for manufacturing or sel ling a drug that contains new chemical entities.  
No one may use such undisclosed test data and ot her data for improper commercial purpose.  Within 
six years from the date the manufacturer or seller ob tains the approval for manufacturing or selling the 
drug, the drug supervision and administrative aut horities must not grant another approval to others 
who apply for approval using the same data.  Similar protection for undisclosed data on 
agri-chemicals is provided by the Regulations  on Administration of Agricultural Chemicals. 
(d) Enforcement 
321. During the last TPR of China, a number of its trading partners expressed  concerns about the 
lack of effective enforcement of intellectual prope rty rights, particularly at the regional and local 
levels.  China was urged to step up its efforts in enforcing IPR protection, including greater and 
effective customs control and criminal prosecution. 
322. Intellectual property rights in China are enfor ced by two means: administrative actions, and 
judicial measures. Administrative actions consist of mediation by the authorities, involving a large number of agencies.  Judicial actions are taken through the public security authorities, procuratorial 
organs, and the courts (Table III.12). 
Table III.12 
Intellectual property enforcement, 2008-10 
 2008 2009 2010 
Cases dealt with by administrative actions     
Patents     
Number of disputes (patent infri ngement disputes) 1,092 937 1,095 
Number concluded  .. .. .. 
Copyright     
Number of disputes/administra tive penalties 9,032  9,419 10,590 
Number concluded   .. .. .. 
Imposition of fines (¥ million)  14.2 26.4 22.1 
Cases transferred to judici al agencies  238 374 538 
Business inspected  782,670 1,099,012 963,842 
Illegal operation units banned  36,601 16,727 61,995 
Underground dens detected   694 862 727 
Trade marks     
Number of disputes  56,634 51,044 56,034 
Trade mark infringements  47,045 43,596 48,548 
Other  9,589 7,448 7,486 
Cases transferred to judici al agencies  137 92 175 
Value of fines (¥ million)   467.4 405.5 460.0 
Cases handled by Customs at the border      
Value (¥ million)  294.8 452.3 277.1 
Cases dealt with by courts      
First instance civil IPR cases  accepted  24,406  30,626 42,931 
Table III.12 (cont'd)  WT/TPR/S/264/Rev.1 Trade Policy Review 
Page 96 
  
   2008 2009 2010 
First instance civil IPR cases closed  23,518 30,509 41,718 
Patent cases accepted  4,074 4, 422 5,785 
Patent cases closed  4,132 4,524 5,298 
Trade mark cases accepte d  6,233 6, 906 8,460 
Trade mark cases closed  6,068 6,975 8,153 
Copyright cases accepted  10,951 15,302 24,719 
Copyright cases closed  10,255 15,180 24,138 
Technical contract cases  accepted  623 747 670 
Technical contract cases  closed  636 717 694 
Unfair competition cases ac cepted  1,185 1,282 1,131 
Unfair competition cases cl osed  24,406 1,287 1,176 
Other IPR cases accepted  23,518 1,967 2,166 
Other IPR cases closed  4,074 1,826 2,259 
Second instance civil IPR cases accepted  4,132 5,340 6,522 
Second instance civil IPR cases closed  6,233 5,492 6,481 
.. Not available. 
Source : Information provided by the authorities. 
Border enforcement 
323. Customs is in charge of enforcement of intell ectual property rights at the border.  The revised 
Regulations on Customs Protection of Intellectua l Property entered into effect on 1 April 2010. 
324. Intellectual property right-holders, i.e. holders of trade mark, copyright and related rights, 
may register their rights in Customs records for bor der protection.  Each registration, subject to 
approval, is valid for ten years, and renewable.  Right-holders may apply to Customs for detention of 
suspected infringing goods, regardless of whether th ey have registered their rights in the record.264  
Counterfeit goods will be seized by Customs.  Article  27 of the regulation states that counterfeit goods 
seized by Customs may not enter commercial channe ls by simple removal of trade marks from the 
counterfeit goods.  Customs must destroy the goods if the infringing features cannot be removed. 
Specific campaign 
325. A national IPR enforcement campaign against infringement started in November 2010, and 
was completed in June 2011.265  The campaign's focus was on cracking down IPR violations in the 
industries of press and publication, entertainment, software, high-tech, and agriculture, with special 
emphasis on products such as audio-visual products, au to parts, handsets, pharmaceuticals, and plant 
seeds.  Enforcement activities are conducted by the MOFCOM (as the main coordinator), the Ministry of Public Security, AQSIQ, and the SIPO. 
326. In the national campaign, the SAIC investigated  851 cases of trade mark violation on internet 
trading, among which 47 were transferred to th e public security authorities for further criminal 
investigation. 
                                                      
264 See State Intellectual Property Office of the PRC (2011), p. 27. 
265 "Circular on the Specific Campaign for Cracking Intellectual Property Violation and Infringering 
Commodities", State Council General Office Circular, No. 2010/50. China WT/TPR/S/264/Rev.1 
 Page 97 
 
 
  327. As part of the national campaign, the National Copyright Administration of China (NCAC) 
took an initiative to remove numerous unauthorized audio-visual materials from large file-sharing 
websites in November 2010. 
328. In addition to ad hoc campaigns, clear rules a nd fully implemented procedures will play more 
important roles in protecting IPRs.  A key task under the Promotion Plan for National Intellectual 
Property Strategy 2011, is the establishment of a l ong-term mechanism on IP protection, in particular 
a regular mechanism to enforce IP protection again internet violation. 
329. It is reported that the leadership structure of this specific campaign will be made permanent, 
as regular IPR enforcement in China.  A vice-P remier will take on the role of overseeing IPR 
enforcement.  Officials at the provincial level are al so expected to be more proactive in enforcement 
as such enforcement effort will be taken in to account in their performance evaluations. 
330. In January 2011, the Supreme People's Court, the Supreme People's Procuratorate, the 
Ministry of Public Security, and the Ministry of Justice jointly issued the Circular of Opinions on 
Some Issues Concerning the Application of Law in the Trial of Criminal Cases Involving IPRs 
Infringement.  This circular provides standards of conduct regarding whether to launch criminal 
investigation or accept cases in courts.  
331. Reportedly, China has prepared judicial interp retations regarding the liability of internet 
infringement facilitators and of mark et managers for counterfeit goods.266 
International cooperation 
332. China participates in international cooperation in IPR enforcement, including in discussions 
and negotiations in multilateral and plurilateral frameworks such as WIPO, the WTO, and APEC. 
333. China is also engaged in bilateral cooperation in IPR protection with the United States, the 
EU, France, Germany, the United Kingdom, Aust ralia, Japan, Korea, Thailand, Romania, 
Czech Republic, and Russia, in the regard to trade mark, copyright, border measures, and other related 
issues. 
 
                                                      
266 Agreement reached in the 21st US-China Joint Commission on Commerce and Trade in 
December 2010.  Viewed at:  http://w ww.commerce.gov/node/12467.