RESTRICTED  
  
WT/TPR/S/342  
15 June 2016  
(16-3273)  Page: 1/164  
Trade Policy Review Body   
 
TRADE POLICY REVIEW 
REPORT BY THE SECRETARIAT 
CHINA 
This report, prepared for the sixth Trade Policy Review of China, has been drawn up by the WTO 
Secretariat on its own responsibility. The Secr etariat has, as required by the Agreement 
establishing the Trade Policy Review Mech anism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from China on its trade policies 
and practices.  Any technical questions arising from this report may be addressed to Angelo Silvy 
(tel: 022 739 5249); Eugenia Lizano (tel: 022 739 6578); and Pierre Latrille (Services Section 4.2) 
(tel: 022 739 5266).  
Document WT/TPR/G/342 contains the policy statement submitted by China. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on China. This report was drafted in 
English. WT/TPR/S/342 • China 
 
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  CONTENTS 
SUMMARY ....................................................................................................................... . 8 
1   ECONOMIC ENVIRONMENT ........................................................................................ 15  
1.1   Recent Econ omic Developments.................................................................................. 15 
1.2   Fiscal Policy and Structural Reform .............................................................................. 18 
1.2.1   Fiscal policy and related issues ................................................................................ 18 
1.2.2   Structural reform measures ..................................................................................... 20 
1.2.3   Monetary and exchange ra te policy .......................................................................... 22 
1.2.3.1   Monetary policy .................................................................................................. 22 
1.2.3.2   Exchange  rate po licy ........................................................................................... 23 
1.2.4   Balance of payments .............................................................................................. 24 
1.3   Developments in Trade and Foreign Direct Investment ................................................... 26 
1.3.1   Mercha ndise trade ................................................................................................. 26 
1.3.2   Trade in services ................................................................................................... 28 
1.3.3   Foreign di rect inve stment........................................................................................ 29 
1.3.4   Outlook ............................................................................................................... . 31 
2   TRADE AND INVE STMENT RE GIME ............................................................................ 32  
2.1   Institutional and Legal Framework .............................................................................. 32 
2.2   Trade Policy Fram ework and Ob jectives ....................................................................... 35 
2.2.1   Institut ional framework .......................................................................................... 35 
2.2.2   Trade policy form ulation and ob jectives .................................................................... 35 
2.3   Participation in th e World Trade Organization................................................................ 36 
2.4   Regional Tr ade Agreements ....................................................................................... 37 
2.5   Foreign Inve stment Regime ....................................................................................... 37 
2.5.1   Regulatory framew ork and market  access ................................................................. 37 
2.5.2   Examination and approval procedures ....................................................................... 40 
2.5.3   Incentives fo r foreign in vestment ............................................................................. 43 
3   TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 46  
3.1   Measures Direct ly Affectin g Imports ............................................................................ 46 
3.1.1   Customs procedur es and requirements ..................................................................... 46 
3.1.2   Custom s valuation ................................................................................................. 48 
3.1.3   Rules of origin .......................................................................................................  49 
3.1.4   Tariffs ............................................................................................................... ... 49 
3.1.4.1   Applied tariffs  and tariff struct ure .......................................................................... 49 
3.1.4.2   Bo und tariffs ...................................................................................................... 51 
3.1.4.3   Bilateral and regional preferences .......................................................................... 51 
3.1.4.4   Tariff-rate  quotas (TRQs) ..................................................................................... 52 
3.1.4.5   Tariff concessions ................................................................................................ 52 
3.1.5   Other charge s affecting imports ............................................................................... 53 
3.1.6   Import prohibitions, restrictions, an d licensing ........................................................... 54 WT/TPR/S/342 • China 
 
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  3.1.7   Anti-dumping, countervai ling, and safegu ard measures ............................................... 57 
3.1.7.1   Anti-dum ping measures ....................................................................................... 57 
3.1.7.2   Counterv ailing measures ...................................................................................... 60 
3.1.7.3   Safeguards ........................................................................................................ 61 
3.1.8   Standards and othe r technical requirements .............................................................. 62 
3.1.8.1   Standards and technical regulations ....................................................................... 62 
3.1.8.2   Product certification ............................................................................................. 65 
3.1.8.3   Labelling ............................................................................................................ 67 
3.1.9   Sanitary and phyt osanitary requ irements .................................................................. 67 
3.2   Measures Directly Affecting Exports ............................................................................. 72 
3.2.1   Export procedur es and requirements ........................................................................ 72 
3.2.2   Export taxes, charges, an d levies ............................................................................. 73 
3.2.3   Export prohibitions, restrictions, and licensing ............................................................ 74 
3.2.4   Export suppo rt and pr omotion ................................................................................. 76 
3.2.5   Export finance, in surance, and guarantees ................................................................ 77 
3.3   Measures Affectin g Production and Trade ..................................................................... 80 
3.3.1   In centives ............................................................................................................  80 
3.3.2   Competition policy ................................................................................................. 84 
3.3.2.1   Legislative and institutional framework ................................................................... 84 
3.3.2.2   Monopoly agreements and dominant mark et positions .............................................. 86 
3.3.2.3   Administrative monopolies .................................................................................... 87 
3.3.2.4   Mergers and acquisitions ...................................................................................... 88 
3.3.3   National security review of conc entrations ................................................................. 90 
3.3.4   Pric e contro ls ........................................................................................................  91 
3.3.5   State trading and state-owned en terprises ................................................................ 93 
3.3.5.1   St ate trad ing ...................................................................................................... 93 
3.3.5.2   State-owned enterprises ...................................................................................... 95 
3.3.6   Governme nt procurement ....................................................................................... 98 
3.3.7   Intellectual property rights .................................................................................... 102  
3.3.7.1   Overview and inst itutional deve lopments .............................................................. 102  
3.3.7.2   Industri al property ............................................................................................ 104  
3.3.7.2.1   Patents ......................................................................................................... 1 04 
3.3.7.2.2   Trademarks ................................................................................................... 106  
3.3.7.2.3   Geographical indications .................................................................................. 108  
3.3.7.3   Copyright an d related rights ............................................................................... 109  
3.3.7.4   Ot her IPRs ....................................................................................................... 11 0 
3.3.7.4.1   Layout-designs of integrated circuits ................................................................. 110  
3.3.7.4.2   New plant varieties ......................................................................................... 110  
3.3.7.4.3   Undisclosed info rmation and trad e secrets ......................................................... 111  
3.3.7.5   Enforcement ..................................................................................................... 111  WT/TPR/S/342 • China 
 
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  3.3.7.5.1   Overview ...................................................................................................... 111  
3.3.7.5.2   Administra tive enforcement ............................................................................. 112  
3.3.7.5.3   Judici al enforcement ....................................................................................... 113  
3.3.7.5.4   Customs law enforcement ................................................................................ 114  
4   TRADE POLICIES BY SECTOR ................................................................................... 115  
4.1   Agriculture ............................................................................................................ 115 
4.1.1   Features and ma rket developments ........................................................................ 115  
4.1.2   Policy objectives  and administ ration ....................................................................... 116  
4.1.2.1   Policy formulation, inst itutional and legal framework .............................................. 116  
4.1.3   Policy instruments ............................................................................................... 116  
4.1.3.1   Bord er measures............................................................................................... 116  
4.1.3.1.1   Measures affecting im ports .............................................................................. 116  
4.1.3.1.2   Measures affecting exports .............................................................................. 118  
4.1.3.2   Intern al measures ............................................................................................. 119  
4.1.3.2.1   Support measures .......................................................................................... 119  
4.1.3.2.2   Price cont rols and marketing ............................................................................ 123  
4.1.3.2.3   Othe r measures ............................................................................................. 124  
4.2   Services ................................................................................................................  124 
4.2.1   Telecommunications services ................................................................................. 124  
4.2.1.1   Statistical overview ........................................................................................... 124  
4.2.1.2   Regulato ry framew ork ....................................................................................... 125  
4.2.2   Financial services ................................................................................................. 127  
4.2.2.1   Market overview ............................................................................................... 128  
4.2.2.2   Regulatory fr amework for banking ....................................................................... 129  
4.2.2.3   Regulatory framework for insurance ..................................................................... 134  
4.2.2.4   Regulatory regime for securities and st ock exchanges ............................................ 135  
4.2.2.5   Regulatory framework for mutual  funds and asset mana gement companies ............... 137  
4.2.2.6   Regulatory framework for pension funds ............................................................... 137  
4.2.3   Health and social serv ices ..................................................................................... 138  
4.2.3.1   Hospital an d medical services ............................................................................. 138  
4.2.3.2   Retirement  home services .................................................................................. 140  
4.2.3.3   Heath insurance services .................................................................................... 140  
4.2.4   Audiovisual services ............................................................................................. 140  
4.2.4.1   Overview ......................................................................................................... 14 0 
4.2.4.2   Motion picture and videotape pr oduction and distribu tion services ............................ 142  
4.2.4.3   Motion picture projection services ........................................................................ 144  
4.2.4.4   Radio and television produc tion and transmissi on services ...................................... 144  
4.2.4.5   Sound reco rding services ................................................................................... 144  
5   APPENDIX TABLES .................................................................................................. 145  
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  CHARTS 
 Chart 1.1 Product composition of merchandise trad e, 2013 an d 2015 ...................................... 27
 
Chart 1.2 Direction of merchandise trade, 2013 and 2015 ...................................................... 28 
Chart 3.1 Distribution of MFN applied tariff rates, 2011, 2013 and 2015 ................................... 51 
Chart 3.2 Import licensing  by HS sect ion, 2015 .................................................................... 56 
Chart 3.3 Distribution of export re bate rates, by HS  section,  2015 .......................................... 77 
Chart 3.4 Eximbank operations , 2010-14  ............................................................................ 79 
 
TABLES 
 
Table 1.1 Selected macroeco nomic indicato rs, 2011- 15 ......................................................... 15 
Table 1.2 GDP by sector, 2011-1 5 ...................................................................................... 17 
Table 1.3 Government operations , 2011-15  ......................................................................... 18 
Table 1.4 Balance of payments, 2011-15 ............................................................................. 24 
Table 1.5 Composition of trade in servic es, 2011-15 (balance-of- payments basis)  ..................... 29 
Table 1.6 Inward foreign direct investment by sector, 2012-14 ............................................... 30 
Table 1.7 Inward foreign direct investment by country, 2012-15 ............................................. 30 
Table 1.8 Main destinations of outw ard foreign direct investment , 2014 ................................... 30 
Table 2.1 Foreign direct investme nt subject to verification ..................................................... 41 
Table 2.2 Incentives in the form of preferential tax treatment under the Enterprise Income 
Tax Law ....................................................................................................................... .. 44 
Table 3.1 Legislation related to customs procedures .............................................................. 46 
Table 3.2 China's tariff stru cture, 2011, 2013 and 2 015 ........................................................ 50 
Table 3.3 Summary analysis of the Chinese preferenti al tariff,  2015 ........................................ 51 
Table 3.4 Excise (or consumption) tax, 2013-15 ................................................................... 53 
Table 3.5 Anti-dumping measures by product and by country (in force as at 31 December 
2015)  ........................................................................................................................ .... 60 
Table 3.6 Countervailing investigations  and measures, 31 December 2015 ............................... 61 
Table 3.7 Standards approved, 2013-15 .............................................................................. 65 
Table 3.8 Laws and regulations re lated to China' s SPS regime ................................................ 67 
Table 3.9 Institutions in char ge of the SPS system, 2015 ....................................................... 69 
Table 3.10 Export duty types of  by HS Chapte r, 2015 (May) .................................................. 73 
Table 3.11 Products subject to expo rt quotas and li censing, 2015-16  ...................................... 75 
Table 3.12 New support programmes notified to th e WTO in  2015 .......................................... 81 
Table 3.13 Selected catalogues .......................................................................................... 82 
Table 3.14 Various suppo rt measur es, 2015  ........................................................................ 83 
Table 3.15 Central government set or  government-guide d prices , 2015 ................................... 92 
Table 3.16 Local government set or  government-guide d prices , 2015 ...................................... 93 
Table 3.17 Imports under state tradin g, 2013- 15 ................................................................. 94 
Table 3.18 Export products subject to  state-trading a rrangements , 2014- 15 ............................ 95 
Table 3.19 Definition/Classific ation of SOEs in China ............................................................. 96 WT/TPR/S/342 • China 
 
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  Table 3.20 SOEs in Chin a's economy,  2009-14  ..................................................................... 96 
Table 3.21 Ten largest state-owned enterprises, 2013 ........................................................... 97 
Table 3.22 Top 10 companies listed in SSE/SZS E that received pub lic support  in 2014 ............... 98 
Table 3.23 Government procurement by type of pu rchase, 2011-14  ........................................ 98 
Table 3.24 Government procurement by procurement me thod, 2012- 14 ................................ 101  
Table 3.25 China's membership of international intellectual property rights conventions, 
2015  ......................................................................................................................... . 104 
Table 3.26 Intellectual property rights  applications and grants, 2013-15 ................................ 106  
Table 3.27 Intellectual proper ty enforcemen t, 2012-15  ....................................................... 111  
Table 4.1 Principal indicators for agriculture, livestock, forestry and fishing, 2011-15 ............... 115  
Table 4.2 Tariff rate quotas and their utiliza tion, 2013- 14 .................................................... 117  
Table 4.3 Agricultural products subject to export quotas and licensing in 2016 ........................ 119  
Table 4.4 Support to agricu lture and fore stry, 2015  ............................................................ 119  
Table 4.5 Outlays for agricultural  support progra mmes, 2011- 15 .......................................... 120  
Table 4.6 Agriculture Support and Preservation  Subsidy ...................................................... 122  
Table 4.7 ITU price basket s for China, 2008-14  .................................................................. 127  
Table 4.8 Policy measures taken by Ch ina to stabilize th e stock ma rket ................................. 135  
Table 4.9 National health expe nses, 1995, 2000, 2005, 2010- 14 .......................................... 138  
Table 4.10 Main indicators for audiovisual services in China, 2010-15 .................................... 141  
Table 4.11 Outstanding credit from 21 major banks to cultural industries, 2013-15 ................. 141  
Table 4.12 Foreign investment catalogue status  of audiovisual acti vities, 2011 an d 2015 ......... 142  
 
BOXES 
 
Box 2.1 Procedures to appr ove legislation in China ............................................................... 33 
Box 2.2 Summary of the major changes in the 2015 Investment Catalogue .............................. 38 
Box 3.1 Goods exempted from import duties ....................................................................... 53 
Box 4.1 Economic characteristics and evolut ion of the telecommuni cations se ctor ................... 124  
Box 4.2 Financial services: statistical overview ................................................................... 128  
 
APPENDIX TABLES 
 
Table A1.1 Status of Selected Reforms Announced in the Third Plenum of the 18th CCP 
Central Committee Communiqué (12 November 2013), and the Decisions on Major Issues 
Concerning Comprehensively Deepening Refo rm (15 November 2 013), April 2016 .................. 145  
Table A1.2 Summary of the Outline of the 13th Five-Year Plan for National Economic and 
Social Development (2016-2020), as endorsed by  the NPC .................................................. 147  
Table A1.3 China's merchandise expo rts by product gr oup, 2011 -15 ..................................... 148  
Table A1.4 China's merchandise impo rts by product gr oup, 2011 -15 ..................................... 149  
Table A1.5 China's merchandise exports by destination, 2011-15 .......................................... 150  
Table A1.6 China's merchandise imports by orig in, 2011-1 5 ................................................. 151  
 
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  Table A2.1 Main notifications under WTO Agreements (1 January 2014-1 March 2016, (or 
last notification if applicable) ........................................................................................... 15 2 
Table A2.2 WTO dispute settlement cases invo lving China, 1 Januar y 2014-1 Marc h 2016 ........ 155  
Table A2.3 Industries in which FDI was/is restricted, 2011 and/or 2015 ................................. 156  
Table A2.4 Industries in which FDI was/is prohibited, 2011 and/or 2015 ................................ 160  
 
 
Table A3.1 China's MFN app lied tariff su mmary, 2015 ......................................................... 162  
Table A3.2 Tax preferences at  the central le vel, 2015  ......................................................... 163  
 WT/TPR/S/342 • China 
 
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  SUMMARY 
1. During the period under review (2014-2016), China's economic growth slowed down. The 
authorities consider that the economy has entered a "New Normal" situation that will imply more 
stable, albeit lower, GDP growth rates of around  6.5%-7% a year. Real GDP expanded by 7.3% in 
2014 and by 6.9% in 2015, down from 7.7% in bo th 2012 and 2013. As in the previous two-year 
period, the driving force behind growth was strong domestic demand, supported by domestic credit expansion and availability, and by rising incomes. This situation continues to reflect the 
policy adopted by China since 2011, aimed at boosting domestic consumption and making it the 
major force driving growth. In 2015, consumption contributed 4.6 percentage points to GDP growth, while investment contributed 2.5 percentage  points. Although growth in domestic demand 
continued to be robust, domestically-produced goods and services benefitted more than imports, 
since the latter fell considerably in 2015. Consum er price inflation has remained moderate during 
the review period, increasing by just 2% in 2014 and 1.4% in 2015, as pressures stemming from strong domestic demand and higher wages were countered by the decline in world prices of 
primary commodities. 
2. As stated in the Outline of the 13
th Five-Year Plan (2016-2020), the authorities are intent on 
continuing the process of structural economic reform, which includes the promotion of private 
sector participation in the economy, as well as  the reform of State-Owned Enterprises (SOEs), 
while keeping the preponderance of public ownership. Other measures mentioned in the Plan include the promotion of competition, fiscal reform, financial sector reform to increase private capital participation in banking and expand the provision of financial services, and making the 
exchange rate and interest rate more market-ori ented. The authorities have also recently taken 
steps aimed at dealing with overcapacity in certain industries. Measures were introduced to discourage or reduce production in industries such as iron and steel, electrolytic aluminium, 
cement, plate glasses and vessels. Local authorities and central departments are not allowed to 
approve any new capacity-expanding projects in those areas. 
3. China's current account surplus saw an upward trend during the review period. It totalled 
US$330.6 billion in 2015, and was equivalent to 3% of GDP. This higher surplus stems, to a large 
extent, from a large increase in the merchandise trade surplus. The merchandise trade surplus increased sharply in 2014 and 2015, when it reache d US$567 billion or the equivalent of 5.2% of 
GDP. This mainly reflected the decline in imports. Imports as a share of GDP declined to 14.5% 
in 2015, down from 17.5% in 2014 and 21.1% in 2011. This contraction is partly caused by lower 
oil import prices. China's traditional external current account surplus reflects the excess of national savings over investment, which, after narrowing  up to 2014, widened again in 2015 to 3.4% of 
GDP. 
4. During the period under review, China continued to implement a proactive fiscal stance, with 
expenditure increasing faster than revenue. Th e fiscal deficit reached 2.4% of GDP in 2015; 
however, if off-budget activities are included, the deficit may be as high as 10% of GDP. Partly in 
response to the need to control off-budget spending  and to consolidate the budget of the different 
government levels, a new Budget Law was adopted. This Law stipulates that, in principle, during budget implementation, governments at the different levels may not introduce new measures to 
increase or reduce revenue or to increase expenditure, unless approved by the Standing 
Committee of the People's Congress at the same le vel of government. Tax reform measures have 
also been implemented, including progress in the implementation of VAT and in the elimination of 
double taxation. 
5. In 2014 and 2015, China initially adjusted its monetary policy to support the real economy 
a n d  l a t e r  t o  a d j u s t  i t  t o  t h e  " N e w  N o r m a l " .  T h e  P e o p l e ' s  B a n k  o f  C h i n a  ( P B O C )  c o n t i n u e d  i t s  
interest rate liberalization policy, which started with the free determination by banks of their 
lending rates and was followed by the gradual removal of upper interest rate limits for foreign currency deposits. The period has also been characterized by repeated cuts in loan and deposit benchmark interest rates and by targeted cuts  in the reserve requirement ratio. This was 
combined with the introduction of new financial instruments to increase the liquidity available to 
the banking system. The PBOC has also guided financial institutions to raise the proportion of credit granted to rural projects and to small an d micro businesses by establishing an incentives 
mechanism. This has resulted in a rapid growth of credit and other monetary indicators. The 
outstanding amount of RMB and foreign currency loans in late 2015 was some 140% of GDP, while outstanding deposits represented just over 200% of GDP. WT/TPR/S/342 • China 
 
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  6. The PBOC continues to maintain a managed floating exchange rate regime, which takes a 
basket of currencies as a reference. Since 2013,  the PBOC has pushed forward reforms to let the 
market play a more decisive role in exchange rate formation. The floating range of the RMB 
exchange rate has gradually been expanded, and the flexibility range of the RMB/US$ exchange 
rate has been increased to 2%. A number of steps leading to less intervention in the market were 
taken during the review period, including the elim ination of the control over the spread between 
US$ selling and RMB buying prices, and the subs equent introduction of market-based daily 
intermediate prices (RMB against US$). In the ten-year period ending in late 2015, the RMB 
experienced a nominal effective appreciation of 45.9% and a real effective appreciation of 56.2%. However, it has been noted that, since the second half of 2014, the RMB has depreciated somewhat. 
7. Although China remains the world's largest trader (excluding intra-EU trade), trade, in 
particularly imports, lost considerable momentum during the review period, contrasting with the developments highlighted in the previous review . In 2015, both exports and imports of goods 
declined, with exports totalling US$2.28 trillion, down from US$2.34 trillion in 2014, and imports 
amounting to US$1.68 trillion, down from US$1.96 trillion in 2014. Import contraction in value terms reflects, to a considerable extent, lower oil and other commodity prices. Imports of fuels fell 
by some US$120 billion in 2015 with respect to the previous year, to around US$200 billion; this 
decline accounted for over half of that year's contraction in imports. Manufactured products remained the dominant component of exports, a ccounting for slightly over 94% of the total. 
Among them, office machines and telecommunication equipment; and textiles and clothing 
continued to be China's main exports. Manufactu red products accounted for 64.4% of imports in 
2015. The main categories include office machines and telecommunications equipment; and chemicals. Fuels and other mining products accounted for some 21% of China's imports in 2015, 
while agricultural products accounted for 9.5%. 
8. In 2015, the main destinations for merchandise exports were the United States; the EU; 
Hong Kong, China; Japan; the Republic of Korea; and ASEAN countries, which combined 
represented about 70% of exports. The main source s of its imports were the EU, the Republic of 
Korea, the United States, Chinese Taipei, Japan, and Australia, and ASEAN countries. In 2015, services represented 12.3% of China's total export s and 22.9% of its imports. Exports of travel, 
construction, telecommunications, financial and business services were the most dynamic in the 
review period, while, among imports, travel services continued to gain a considerable market 
share, accounting for 62.3% of the total in 2015. 
9. China remains one of the largest recipients of foreign direct investment (FDI) in the world. 
In 2014, FDI inflows reached US$119.6 billion, 1.7% more than those registered in 2013. The 
main sectors attracting FDI in 2014 were manufacturing (33.4% of the total), real estate (29%), leasing and business services (10.4%), and wholesale and retail trade (7.9%). China has 
continued to seek to attract further FDI by facilitating procedures, through a number of incentive 
schemes and through liberalization in the four existing Pilot Free Trade Zones. Hong Kong, China continued to be the main source of FDI, accounting for 73% of the total in 2015. It was followed by Singapore, Chinese Taipei, the Republic of Korea, Japan, and the United States. 
10. In the next few years, and through its process of structural reform, China aims to attain a 
"New Normal" which is to be characterized by a somewhat lower, and increasingly more service- and technology-oriented, economic growth. Given Ch ina's role as a major player in global trade, 
this will have implications for the rest of the worl d due to the possible effe ct on trade patterns. The 
shift to a production pattern based on greater inno vative capacity will need to be supported by a 
more skilled labour force, and access to the latest technology. This will require further adjustment 
efforts and an increasingly more market-oriented approach to investment, with the market playing 
the main role in the allocation of resources. Th e authorities are aware that some risks to future 
growth and development persist, including increa sing aggregate debt levels, rising production 
costs, insufficient financing for small and micro businesses, oversupply in some industries and 
shortages in others, and structural bottlenecks. They have identified a roadmap to deal with risks 
and achieve stable medium-term growth through a number of measures to strengthen the role of the market, such as: tax reform, an improvement of local government debt financing mechanisms, 
the reduction of overcapacity, the promotion of market-based pricing and more market-
determined interest and exchange rates. Other proposed measures, on the other hand, such as 
increasing financial support to the real economy, especially credit support to key and weak areas, WT/TPR/S/342 • China 
 
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  and supporting the development of strategic emer ging industries, would seem to point in a 
different direction. 
11. China is an observer to the Plurilateral Agreement on Government Procurement (GPA) and 
continues negotiating its accession thereto. It is also an observer to the Plurilateral Agreement on 
Trade in Civil Aircraft, and, as a participant in  the Information Technology Agreement (ITA), has 
agreed to its expansion. China submitted its notification of Category A commitments under the Agreement on Trade Facilitation and, on 4 Septem ber 2015, it ratified the Agreement. During the 
review period, it was involved in three cases under the WTO dispute settlement system: in two 
cases as a respondent and in one as a complainant. It was also involved as a third party in 17 cases brought to the Dispute Settlement Body (DSB). 
12. As at December 2015, China had signed 15 preferential trade agreements. During the period 
under review, it signed FTAs with Australia and wi th the Republic of Korea. The agreements with 
Iceland and Switzerland entered into force in 2015. Since its last Review in 2014, China has continued to deepen its integration with Hong Kong, China and with Macao, China through the 
signature of supplementary agreements to their respective Closer Economic Partnership 
Arrangements (CEPAs). China continues to grant unilateral preferences to LDCs. As 
of December 2015, duty-free treatment on 97%  of tariff lines was granted to 33 LDCs. 
13. The Investment Catalogue, which is revised periodically, remains the main instrument used 
to guide FDI in China. Under the Catalogue, foreign investment projects are classified as encouraged, restricted or prohibited. Projects that fall outside of these three groups are permitted. 
Projects in the encouraged category are eligible for preferential treatment, for example, customs 
duty exemptions for the importation of capital goods, while projects in the restricted category 
must undergo a more thorough examination and approval process. The 2015 revision of the 
Catalogue encourages FDI in technology, advanced manufacturing, energy conservation and 
environmental protection, new power sources, and service industries. The authorities noted that 
the revised Catalogue is intended to promote the use of foreign investment in a more efficient manner, and that it denotes an effort to open  up the Chinese economy to foreign investment, 
mainly in the services sector but also in manufacturing. However, a direct comparison between the 
revised and previous Catalogues is difficult, as th e content of each category is somewhat different 
and the descriptions/names of some activities were updated to reflect technological changes. 
14. During the period under review, China has continued encouraging FDI as well as joint 
ventures between Chinese and foreign companies, particularly in areas in which it has a strategic 
interest. FDI has been encouraged in areas such as high-end manufacturing, high-tech industries, 
service industries, new energy, and energy-saving en vironmental protection industries. It has also 
encouraged FDI in the central and western regions, where projects may benefit from favourable 
policies. FDI involving investments in Chinese domestic enterprises might be subject to national security reviews if the project is related to defence,  or is deemed to have an influence on national 
security. Foreign-invested projects (FIPs) in China are subject to verification (approval) or to 
record-filing. Projects subject to verification are listed in a specific Catalogue, while most projects not included in it are subject to record-filing. Verification requires the examination of the investment project, and a number of conditions need to be met. Record-filing is a simplified 
process and is generally used in FIP applications not deemed to have a negative impact on 
national security, the environment or public interest. 
15. The pilot reform of the foreign investment system, which was initiated in 2013 through the 
establishment of the China (Shanghai) Pilot Free Trade Zone (CSPFTZ), was expanded in 2015 to 
three other pilot free trade zones in Guangdong, Fujian and Tianjin. FDI access to these four zones is based on a negative list approach. FIPs not included in the negative list are granted national 
treatment, as they are exempt from examinatio n and approval, and are subject only to record-
filing. The authorities seem intent on gradually expanding the negative list approach to all investment. In October 2015, the State Council issued an Opinion that calls for the creation of two negative lists, one for market access, to be applied to both domestic and foreign companies, and 
another for foreign investment. The use of these lists will be gradually implemented; it is not clear 
as yet how they will relate to the Investment Catalogue. 
16. China has continued its efforts to facilitate trade during the review period by launching a 
series of reforms to make customs procedures more efficient both for imports and exports. 
Paperless customs clearance was implemented across China in 2014, except for goods subject to WT/TPR/S/342 • China 
 
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  licensing or other restrictions. In 2015, a pilot paperless customs clearance scheme for products 
subject to automatic import licensing, excluding those for which a licence can be used for multiple shipments, which had been implemented in th e CSPFTZ, was expanded to Tianjin, Fujian, 
Guangdong, Ningbo and Suzhou. 
17. China's applied MFN tariff in 2015 consisted mainly of ad valorem rates (99.5% of the total 
number of lines). The non- ad valorem  rates comprised specific and alternate rates, and formula 
duties. China's average applied MFN rate in 2015 was 9.5%, almost unchanged since the last 
Review. This average continues to be higher for agricultural products (WTO definition), at 14.8%, 
than for non-agricultural ones, at 8.6%. China makes use of tariff-rate quotas (TRQs); in 2015, they applied to 47 tariff lines including products such as wheat, maize, rice, some cereal flours, cane and beet sugar, some mineral and chemical fertilizers, wool, and cotton. 
18. Imports continue to be classified into three categories: not restricted, restricted and 
prohibited. Automatic import licensing is in place for statistical purposes to monitor trade volumes of imports that are not restricted. These goods are listed in the Catalogue of Goods subject to 
Automatic Licensing,  which is issued annually, and in the Catalogue of Automatic Licensing for 
Solid Waste. In 2015, 396 products at the HS 8-digit level were included in the former (46 less than in 2013); however, eight tariff lines were added to it later in the year. There were 
17 products listed in the Catalogue of Automatic Licensing for Solid Waste. Since the last Review, 
automatic import licensing requirements were removed for certain machinery and equipment, and vehicles. Restricted goods are administered through non-automatic licences and/or quotas. Non-automatic licences apply to imports regardless of the origin. Products subject to non-automatic 
licensing are listed in the Catalogue of Goods Subject to Licensing and in the Catalogue of 
Restricted Imports for Solid Waste. In 2015, 134 tariff lines at the HS 8-digit level were subject to non-automatic import licensing. In 2015, as in 2013, these imports were mainly second-hand 
machinery and electronic equipment. The terms and procedures to obtain such a licence remain 
unchanged since the previous Review. 
19. During the period examined, the number of anti -dumping (AD) measures in place continued 
to decline. China had 91 AD duty orders in effect as at 31 December 2015, down from 
113 measures as at December 2013. Imports from 13 countries or territories were affected, three less than at the time of the last Review. By end-December 2015, imports from the United States and Japan were subject to the largest number of AD  duty orders, followed by those from the EU, 
the Republic of Korea, and Chinese Taipei. Measures continued to be concentrated in a few areas, 
in particular chemical products, which accounted fo r over 60% of the total number of AD orders in 
place as of 31 December 2015. Although the number of measures in place was lower than at the 
time of the last Review, their average length of application was slightly longer. Furthermore, 
although the number of AD investigation initiations by China fell from eleven in 2013 to seven in 2014, it rose again to 11 in 2015. No countervailing (CV) duty investigations were initiated 
in 2014 or 2015. As at 31 December 2015, four CV measures affecting imports from the EU and 
the United States were in place. As at end-2 015, the longest existing CV measure had been in 
place for slightly over five years. China did not initiate any safeguard investigations during the period under review. 
20. Although China's legal framework to conduct AD and CV investigations was not modified 
during the period under review, there were chan ges at the institutional level. In April 2014, a 
Trade Remedy and Investigation Bureau (TRB) was established, consolidating the functions of the 
former Bureau of Fair Trade for Imports and Expo rts (BOFT) and of the Investigation Bureau of 
Industry Injury (IBII) in the area of trade remedy investigations. The authorities consider that the changes will improve efficiency, reduce interested parties' burden in litigation, and streamline the 
investigation procedures, while not compromising the independent determination of the margin of 
dumping and injury. 
21. China has four kinds of standards: national, industry/sectoral, local, and enterprise. The first 
three can be either voluntary or mandatory (technical regulations). National standards are 
developed by the Standardization Administration of  China (SAC), through a process that comprises 
a number of steps in which the respective indust ries play a supportive role. They are reviewed 
after five years of implementation to confirm whethe r they are still valid, or whether they need to 
be amended or annulled. Industry/sectoral standards are formulated by the relevant technical 
committees. China maintains a compulsory product certification system to enforce product compliance with technical requirements, which applies to both domestic products and imports. The WT/TPR/S/342 • China 
 
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  products subject to compulsory product certification are listed in the Compulsory Product 
Certification Catalogue; they cannot be sold in China or imported without obtaining certification and a corresponding mark. In 2015, 493 HS tariff lines at the 10-digit level were subject to this certification. Over 80% of the lines were machinery and mechanical appliances, electrical 
machinery and equipment, and vehicles. Food safety  and quality control of the food supply chain 
have become a national priority. In this context, China promulgated the new Food Safety Law in 2015, which aims at strengthening the domestic food safety management system, imposing 
greater responsibility for food safety on produc ers, traders, and local governments; it imposes 
severe punishments on those violating the Law. 
22. China charges export taxes on certain products, and applies quotas or bans on others. 
MOFCOM, in collaboration with other relevant departments, issues a Catalogue of Goods Restricted 
or Forbidden for Export. Export licences may be required for goods subject to export restrictions. 
The list of goods subject to statutory and interim ex port taxes is issued every year. Exports paying 
interim taxes may also be subject to special export duties, which are applied seasonally and may 
be substantially higher than interim duty rates. China is the leading world exporter of certain 
products, some of which are subject to export taxes. During the period under review, there were two important changes regarding the imposition of  export duties. First, in May 2015, interim 
export duties were removed on items included in 91 tariff lines at the HS 8-digit level, such as 
chemical elements, certain iron and steel articl es, tungsten, and molybdenum; however, statutory 
export rates remained in place for all these item s. Second, the special export duty rate of 75%, 
which applied mainly to fertilizers, was eliminated. In 2015, interim duties were levied on 
314 tariff lines at the HS 8-digit level, compared to 320 in 2013, ranging from 0% to 35%. Export 
taxes (including both statutory and interim duties) were applied to some 4.1% of all tariff lines at the HS 8-digit level in 2015. Exporters are entitled to VAT rebates on all exported goods. The 
rebate rates vary according to the product, and are usually lower than the VAT paid, ranging from 
0% to 17%. 
23. There were some changes regarding competition policy regulations since the last Review. 
New regulations with respect to mergers were introduced in February 2014, to allow the use of 
simplified procedures when analysing concentration operations involving a relatively low combined market share. Provisions, effective from January 2015, were issued to provide a clearer legal basis for the determination, evaluation and supervision of restrictive conditions attached to the approval 
of mergers. Provisions, effective 1 August 2015, geared to avoiding conflict between intellectual 
property (IP) protection and competition policy enforcement, were also introduced. Under these provisions, an agreement involving IP must be subject to certain conditions, including maximum 
market share limits. The provisions also outlaw practices that may exclude or restrict competition, 
such as refusal to licence, exclusive trading, or tying or bundling the sale of additional products. 
They also forbid entering into abus ive IP standard-setting agreements. 
24. China applies price controls, at both the central and provincial levels, on commodities and 
services deemed to have a direct impact on the national economy and people's livelihoods. These take two forms: government prices, which are fixed prices set by the authorities, and government-guided prices, set within a range. The commodities and services subject to price controls are listed 
in a Central Government Pricing Catalogue and in Local Government Pricing Catalogues. Since the 
last Review, China has liberalized the price of several goods and services, such as the ex-factory price of explosive materials, the charges for some construction projects, and the prices of military 
goods and of tobacco leaves. Government-set prices are currently applied to refined oil products, 
natural gas, certain medicines, and some services. Products classified as important central reserve materials (grain, cotton, sugar, filature silk, crude oil, processed oil, and chemical fertilizers) are 
no longer subject to government-set prices. 
25. China maintains a number of support programmes at the sectoral, regional and enterprise 
levels to attain different economic and social goals. In 2015, it submitted a notification to the WTO regarding its support programmes at the central level, covering the 2009-2014 period. The 
notification contains 86 programmes, of which 30 had not been previously notified to the WTO. 
The programmes listed included incentives provided to: Foreign-Invested Enterprises (FIE); Special Economic Zones; less developed regions; small and medium enterprises (SMEs); specific 
industries (i.e. energy and strategic emerging industries); and agriculture. 
26. Public ownership remains the mainstay of th e Chinese economy, while diverse forms of 
ownership are allowed to develop alongside it. The private sector is dominant in industries such as WT/TPR/S/342 • China 
 
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  clothing, food, and assembly for export, while sectors of strategic importance (energy, utilities, 
transport, education, and health-care services) remain only partially open to private investment. These sectors are often dominated by large SOEs which may be for-profit entities or public services entities, depending on their activity. During this Review, the authorities stated that the 
Government was in the process of reforming SOEs to further develop mixed ownership in China, as 
required by the Guiding Opinion on Further Deep ening the Reform of State-Owned Enterprises. 
27. China's Government Procurement Law was amended in 2014 and the implementing 
regulations came into effect in early 2015. New regulations were also introduced in 2014 for both 
competitive and non-competitive bidding. Under th e Government Procurement Law, the authorities 
are required to procure goods, construction projects and services domestically, subject to certain exceptions including unavailability in China or lack of availability on reasonable commercial terms. 
Government procurement can be centralized or decentralized. Purchases of items listed in the  
Centralized Procurement Catalogue must be carried out by centralized procurement agencies; centralized procurement accounted for 86% of total procurement in 2014. There are currently 
six procurement methods, which may be used both at the central and local levels: public 
tendering, selective tendering, competitive negotiations, request for quotations, competitive consultations, and single-source procurement.  The competitive consultation method was 
introduced in 2014. Public tendering is the most widely used method; in 2015, for projects under 
the central budget, it was required for procurement exceeding RMB 1.2 million in the case of goods and services, and over RMB 2 million for construc tion projects. Public tendering accounted for 
84.5% of total procurement in 2014. 
28. During the period under review, China has continued to implement measures aimed at 
improving its intellectual property rights (IPRs) protection regime, including amendments to laws, 
regulations and rules. Measures were introduced in the area of patent protection in 2014 
and 2015, which included: the granting of design patents for graphical user interface products, the 
improvement of the protection of biological materials through patents; measures to improve the patent agency system; and procedures to standard ize patent protection enforcement across China. 
Changes were also introduced in the area of trademark protection related to: the protection of 
sound marks and well-known trademarks, the adoption of multiple-class registration, the protection of exclusive trademark rights, the incr ease of penalties for trademark infringement, and 
the responsibility for trademark infringement of the operator of an Internet trading platform. 
29. China has continued to strengthen its IPR enforcement system, both at the administrative 
and judicial levels. However, despite the efforts undertaken by the authorities to combat infringement, enforcement of IPRs continues to be a major challenge. Public security authorities 
above the prefecture and city levels in China currently have units to crack down on infringement 
and counterfeiting activities. China has also continued to reinforce the judicial infrastructure needed for court enforcement of IPRs, including through the creation in 2014 of specialized IPR 
courts in Beijing, Shanghai and Guangzhou. Cases concerning appeals by right holders, against the 
rulings or decisions made by the departments of the State Council with respect to the authorization or confirmation of IPRs, and administrative cases relating to the licensing of IPRs, are now exclusively dealt with by the Beijing IPR Court. 
30. The Chinese authorities aim to modernize the agricultural sector through mechanization and 
by promoting the development of moderate-scale op erations to increase productivity, ensure grain 
self-sufficiency and promote food safety . These goals are to be attained by, inter alia , increasing 
and improving support to the sector, reforming the price forming system for agricultural products, 
and facilitating access to credit. Support to agriculture continues to be granted mainly through the "four subsidies" programmes: the Direct Subsidy to Farmers (rice, wheat and corn); the 
Comprehensive Subsidy for Agricultural Inputs; the Subsidy for Promoting Superior Strains and 
Seeds; and the Subsidy for Purchasing Agricultural Machinery and Tools. The Comprehensive Subsidy for Agricultural Inputs programme is the la rgest in terms of outlays; in 2014, it accounted 
for some 41% of the RMB 262 billion granted as support outlays for agricultural programmes. The 
authorities are planning to eventually merge th ree of the programmes into one. To this end, 
in 2015, a pilot programme to reform agricultural subsidies was implemented in five provinces (Anhui, Hunan, Shandong, Sichuan and Zhejiang), wh ich consists of combining three of the "four 
subsidies" into one programme, the Agriculture Support and Preservation Subsidy, aimed at using 
funds in a more efficient manner. The Subsidy for Purchasing Agricultural Machinery and Tools will remain in place. WT/TPR/S/342 • China 
 
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  31. During the period under review, a number of me asures were introduced to promote financial 
reform, including measures to promote private investment in banking, to enhance financial service provision to SMEs and rural areas, to increase capital market transparency and to introduce new financial services. In addition, a deposit guarantee scheme with a cap of RMB 500,000 was 
introduced in May 2015. A number of changes were introduced to banking regulations; these touch 
on issues such as licensing regulations, cons umer finance, anti-money laundering measures, 
prudential regulations, and measures to address systemic risks such as non-performing loans, 
shadow banking and real estate bubbles. Amen ded regulations on the administration of 
foreign-invested banks, in effect since January 2015, further ease market access for foreign banks 
by: eliminating the requirement for the establishmen t of representative offices before setting up 
operating agencies; lowering the minimum operation period requirement for applying to conduct 
RMB business from three years to one year and eliminating the two-year profit-making 
requirement; and removing the RMB 100 million  minimum working capital requirement for 
branches of foreign-invested banks. Some liberalization measures had previously been introduced 
in 2014, when restrictions regarding sub-branches of foreign-funded banks were removed. 
32. Some liberalization measures were adopted in telecommunications during the review period, 
as investment in electronic commerce businesses by foreign-invested telecommunication 
companies was eliminated from the restricted category in the 2015 Investment Catalogue. In 
addition, in June 2015, the foreign shareholding ratio limit for operational electronic commerce nationwide was eliminated. In audiovisual services, the establishment of foreign motion picture production and distribution companies remains proh ibited, with the exception of film distribution 
companies owned by investors from Hong Kong, China; and Macao, China, which are permitted to 
establish wholly-owned subsidiaries in China for the distribution of Chinese-made films and are allowed to produce and distribute audiovisual products. Only co-productions between China and 
foreign countries are allowed; in the 2010-2014 period, there were between 42 and 58 of these 
a year. Regarding health services, foreign suppliers are allowed to establish joint-venture hospitals or clinics in line with China's needs, with foreign- majority ownership permitted, but the majority of 
doctors and medical personnel of these hospitals and clinics must be of Chinese nationality. 
However, the 2015 Investment Catalogue classifies medical institutions in the restricted category, and the rules governing joint ventures in the medical area require that total investment be at least RMB 20 million and that the proportion of shares or equity of the Chinese party must be at least 
30%. Furthermore, foreign institutions cannot establish branches. Foreign doctors with 
professional certificates issued by their home co untry are permitted to provide short-term medical 
services in China for a six-month period, which may be extended to one year. 
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  1  ECONOMIC ENVIRONMENT 
1.1  Recent Economic Developments  1.1.  In 2014 and 2015, China's economic growth slowed down somewhat with respect to the 
previous two years. Real GDP expanded by 7. 3% in 2014, down from 7.7% both in 2012 and 
in 2013, and increased by 6.9% in 2015. As in th e previous two-year period, the driving force 
behind growth was strong domestic demand, triggered by domestic credit expansion and its availability, and by rising incomes (Table 1.1). This reflected the policy stance adopted by China 
since 2011 aimed at boosting domestic consumption and making it the major driving force of 
growth. Consumer price inflation was contained, increasing by just 2% in 2014 and 1.4% in 2015. Any pressure stemming from the increase in domestic demand and higher wages was countered by the decline in world prices of primary commodities which were reflected in lower energy prices. 
China's nominal GDP per capita (in US dollar terms) increased from around US$6,995 in 2013 to 
US$7,924 in 2015; it has more than doubled since 2008.  
Table 1.1 Selected macroeconomic indicators, 2011-15 
  2011  2012  2013  2014 2015  
Nominal GDP (RMB billion) 48,412.4  53,412.3  58,801.9  63,591.0  67,670.8  
Nominal GDP (US$ billion)  7,495.6  8,461.4  9,494.6  10,352.1  10,864.9   
Real GDP (RMB billion, 2010 prices)  44,769.6  48,238.2  51,945.5  55,712.0  59,543.7  
Real GDP (US$ billion, 2010 prices)  6,931.6  7,641.7  8,387.5  9,069.5  9,560.0  
GDP per capita (RMB)  36,018.0  39,544.0  43,320.0  46,612.0  49,351.0  
GDP per capita (US$)  5,576.5  6,264.5  6,994.8  7,588.0  7,923.5  
National accounts  
Real GDP (% growth rate) 9.5 7.7 7.7 7.3 6.9 
 Domestic demand (% growth rate)  10.3  7.5 7.8 7.2 6.5  
 Consumption (% growth rate)  11.4 8.2 6.9 6.9 7.1 
 Investment (% growth rate)   9.0 6.7 8.9 7.6 5.8  
 Net exports (% growth rate)  -0.8 0.1 -0.2 0.1 0.2 
Contribution to GDP growth      
 Consumptiona  6.0 4.3 3.7 3.7 4.6 
 Investmenta (% growth rate)  4.2 3.2 4.2 3.4 2.5  
 Net exportsa (% growth rate)  -0.8 0.1 -0.2 0.2 -0.2 
Unemployment rateb (%)  4.3  4.1 4.1 4.1 4.1  
Prices and interest rates  
Inflation (CPI, percentage change)  5.4  2.7 2.6 2.0  1.4  
Lending rate (%, period average)  6.56  6.00  6.00  5.60  5.0 
Deposit rate (%, period average) (six month-rate)  3.50  3.00  3.00  2.75  2.05  
Exchange rate  
RMB per US$ (period average)   6.461  6.312  6.196  6.143  6.228  
Real effective exchange rate index (% change)c 0.1  5.0  5.3  3.1  3.7 
Nominal effective exchange rate index (% change)   2.7  5.6  6.3  3.2   ..  
Monetary indicators       
Domestic credit (% annual growth rate)  ..  17.1 15.1 16.2 14.3  
Broad money, M2 (% change from previous year)   13.6 13.8 13.6 12.2 13.3 
Required reserve ratio (RRR) (in % of bank deposits)  20.5 19.5 19.5 19.5 17.5  
Excess reserve ratio (in % of bank deposits)  2.3 3.3 2.3 2.7 2.1 
Fiscal policyd (% of GDP)      
Government balance  -1.8 -1.5 -2.0 -2.1 -2.4   
Total revenue  21.5  22.0 22.0 22.1 22.5   
Tax revenue  18.5 18.8 18.8 18.7  18.5  
Total expenditure  22.6  23.6 23.8 23.9  26.0  
General government total debt   35.3 36.9 39.5 41.1 43.9 
Savings and investment  
GDP by expenditure approach (RMB billion)  48,086.1  53,474.5  58,973.7  64,042.9  68,808.4  
 Final consumption expenditure (RMB billion) 24,157.9  27,171.9  30,100.8  32,896.2  36,313.2  
 Gross capital formation (RMB billion)  22,759.3  24,839.0  27,417.7  29,400.3 30,123.9  
 Net exports of goods and services (RMB billion)   1,168.9  1,463.6  1,455.2  1,746.3  2,371.3  
 Savings (RMB billion)  23,928.2  26,302.6  28,872.9  31,146.7   32,495.2   
 Savings as a share of GDP by expenditure (%)  49.8  49.2  49.0  48.6   47.2  
 Investment as a share of GDP by expenditure (%)   47.3  46.5  46.5  45.9   43.8  
 Savings-investment gap (% of GDP)  2.4  2.7  2.5  2.7   3.4  
External sector (% of GDP, unless otherwise indicated)  
Current account balance 1.8  2.5  1.6  2.7   3.0 
Net merchandise trade balance  3.1  3.7  3.8  4.4   5.2 
 Value of exports  24.1  23.3  22.6  21.7  19.7   
 Value of imports 21.1  19.6  18.9  17.5   14.5 
Services balance -0.7  -1.1  -1.2  -1.7  -1.7  
Capital account  0.1  0.1  0.0  -0.0   0.0  
Financial account -1.7   -1.6  -0.9  -0.6   -1.3 
 Direct investment (net) 3.1  2.1  2.3  1.4   0.6  
Merchandise exportse (percentage change) 21.6  9.2  8.9  10.5 -4.5  
Merchandise importse (percentage change)  27.3  5.2  7.7  1.1   12.9  WT/TPR/S/342 • China 
 
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    2011  2012  2013  2014 2015  
Service exportse (percentage change)   7.0 4.6 2.7 35.5 2.2  
Service importse (percentage change)  23.2 18.2 17.5  37.0  3.6 
Gross official reservesf (US$ billion; end period)  3,202.8  3,331.1  3,839.5  3,859.2  3,334.6   
 Foreign exchangeg (US$ billion; end period)  3,181.1  3,311.6  3,821.3  3,843.0   3,330.3   
Total external debt (US$ billion; end period)  695.0  737.0  863.2  895.5   1,416.2   
Debt service ratioh  1.7  1.6  1.6  1.9   ..  
.. Not available.  
a Contribution to annual growth in percentage terms. Figures are taken from the National Bureau 
of Statistics of China, Statistical Yearbook 2013 , Tables 2-20.  
b Registered unemployment in urban areas. c An increase in the real effective exchange rate means an appreciation of the Renminbi relative to the 
other major currencies in the index. 
d Including central and local governments. e Growth rates in merchandise and service trade are based on US$. f Excluding gold; including SDRs an d reserve position in the Fund. 
g Excluding gold, SDRs and rese rve position in the Fund.  
h Debt service ratio refers to the ratio of the pa yment of principal and interest of foreign debts 
to the foreign exchange receipts from foreign trad e and non-trade services  of the current year. 
Source: National Bureau of Statistics of China, Statistical Yearbook (2015);  State Administration of Foreign 
Exchange online information. Viewed at: http://www.safe.gov.cn/wps/portal/english/Data/Payments  
[29/01/2014]; and IMF, International Financial Statistics database.   
1.2.  During the period under review, in accordance with the People's Bank of China (PBOC), the 
Chinese Government tried to strike a balance between preserving stable economic growth, 
promoting reform, adjusting the economic structure, improving people's living standards, and preventing risks.
1 It was recognized that new growth drivers are taking shape, and the national 
economy must perform in a steady manner under  the "New Normal", according to which the 
economy is expected to expand at more modera te and stable rates in the next few years. 
1.3.  In 2014, when real GDP growth reached 7.3% , the main contribution to growth came from 
consumption (3.7 percentage points), while investment contributed 3.4 percentage points. Final 
consumption expenditure explained 51.2% of GDP growth in that year.2 Investment growth 
decelerated in 2014 and 2015 increasing at annual rates of 7.6% and 5.8%, respectively, down from 8.9% in 2013. The contribution of net export s to GDP growth was slightly positive in both 
2014 and 2015, mainly on account of lower import s. In 2015, when real GDP expanded by 6.9%, 
growth continued to be led by strong domestic demand, particularly consumption, which contributed 4.6 percentage points to growth, while investment growth decelerated somewhat, 
contributing 2.5 percentage points to GDP expa nsion. Final consumption expenditure explained 
52.8% of GDP growth in 2015. As was the case in the previous review, domestic demand was 
s u p p o r t e d  b y  f a s t  d o m e s t i c  c r e d i t  g r o w t h  i n  b o t h  y e a r s :  c r e d i t  e x p a n d e d  b y  1 6 . 2 %  i n  n o m i n a l  terms in 2014 with respect to the previous year, and by 14.3% in 2015. 
1.4.  According to preliminary estimates, GDP posted a year-on-year increase of 6.7% in the first 
quarter of 2016, reaching RMB 15,852.6 billion. Investment in fixed assets grew 13.8% in real terms (10.7% in nominal terms), while investment in real estate development posted real growth 
of 9.1% (6.2% in nominal terms). The total value of exports dropped by 4.2%, and that of imports 
by 8.2%.
3 
1.5.  In the context of the current Review, the authorities noted that they have continued to 
promote consumption growth, launching a number of  programmes to this end. The policies put 
forward in 2014 included: increasing disposable in come; promoting the consumption of services, in 
particular, elderly care services, healthcare services, tourism services, and cultural services; implementing a paid leave syst em; and promoting electronic commerce. Further measures to 
promote the expansion and upgrading of consumption were adopted by the State Council 
in October 2014. These measures included: further increasing disposable income through a reform 
                                               
1 People's Bank of China (2015), Financial Stability Report 2015 , p. 15. Viewed at: 
http://www.PBOC.gov.cn/english/130736/2946072/2015090616281480816.pdf. 
2 People's Bank of China (2015), Financial Stability Report 2015 , p. 15. Viewed at: 
http://www.PBOC.gov.cn/english/130736/2946072/2015090616281480816.pdf. 
3 National Bureau of Statistics of China, Press Rele ase, "China’s Economy Had a Good Start in the First 
Quarter of 2016", 15 April 2016. Viewed at: http://www.stats.gov.cn/english/PressRelease/201604/t20160415_1343971.html . WT/TPR/S/342 • China 
 
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  of the income distribution system and supportin g measures, and by increasing farmers' income 
through various channels; releasing resources for consumption by improving the social security system, launching critical illness insurance countrywide, and promoting the development of a social assistance system; improving the distribution networks for agricultural and other key 
products; and promoting legislation on consum er product safety. In 2015, the authorities 
continued to implement the same policies to promote consumption.
4 To this end, the authorities 
identified six major areas in which they wish to promote consumption: online shopping; green 
consumption (energy-saving products); housing; tourism and leisure consumption; educational, 
cultural and sports consumption; and elderly care and healthcare services.5 
1.6.  Reflecting the faster growth of consumption, China's savings-investment gap declined 
somewhat between 2010 and 2014. However, in 2015, the savings-investment gap increased 
ag ain, to 3 .4 %  of G DP , on ac c ount of the  hig he r  external current account surplus, falling from 
3.7% of GDP in 2010, to 2.5% in 2013 and 2.7% in 2014. Savings represented 47.2% of GDP by expenditure in 2015, while investment was 43.8% of GDP. The IMF considers that continued 
reform is needed to redress domestic imbalances and that the measures spelled out in the Third 
Plenum reform blueprint (Table A1.1), some of wh ich have already been executed, need to be fully 
implemented by 2020.
6  
1.7.  Consumer price inflation continued to decline during the period under review. While, in 2013, 
the consumer price index (CPI) increased by 2.6%  year-on-year, it rose by only 2% in 2014 and 
by 1.4% in 2015. This result is almost entirely du e to external effects, such as lower oil prices. In 
the first quarter of 2016, the CPI rose by 2.1% year-on-year. As of December 2015, the producer 
price index (PPI) had registered a negative grow th for 46 consecutive months, and fell by 5.2% 
year-on-year for the whole 2015.  
1.8.  At the sectoral level, financial intermediation services constituted the fastest growing sector 
in 2014 and 2015, with growth rates in current terms exceeding 13% in 2014 and 23% in 2015. 
They were followed by hotels and restaurants (9.0% in 2015), real estate (8.7%), transport (6.6%) and wholesale and retail trade (6.1%). Industry, which includes manufacturing, mining 
and electricity, weakened in 2015 (it increased by only 0.4% in current terms, but by 5.9% in 
constant terms). Construction grew rapidly in 2014, but weakened in 2015 (Table 1.2). The primary sector (agriculture, forestry, animal husbandry and fisheries) grew more modestly, at 5.6% in 2014 and 4.6% in 2015. The value added of the primary sector accounted for 9.3% of 
GDP in 2015, industry accounted for 33.8%, construction for 6.9% and services for 50.5%. In the 
first quarter of 2016, the value added of the primar y sector expanded by 2.9% year-on-year; that 
of industry and construction was up by 5.8% ; and that of services increased by 7.6%. 
Table 1.2 GDP by sector, 2011-15 
  2011  2012  2013 2014 2015  
GDP by industry at current prices (annual percentage change)  
Agriculture, forestry, animal husbandry and fishing 17.2  10.3 8.8  5.6  4.6 
Industry (including mining and quarrying, manufacturing, and 
electricity) 18.0 6.8 6.2  5.0 0.4 
Construction 20.8  12.1 10.9  9.8  3.7 
Services 18.7 13.3  13.5  10.8  11.7 
Wholesale and retail trade  21.8 14.0  12.9  10.9  6.1 
Transport, storage and communications 16.3  8.8  9.6  9.4 6.6 
Restaurants and hotels 11.1  11.3 7.2 9.1  9.0 
Financial intermediation 19.5  14.7  17.1  13.3  23.2 
Real estate 19.5 10.9 15.2  5.6  8.7 
Other 18.0 14.6  13.6  12.4  12.7 
                                               
4 In August 2015, the State Council issued the Opinions of the State Council on Promoting the 
Modernization of Domestic Trade Circulation and Building the Business Environment Under the Rule of Law (Guo Fa [2015] No. 49) to improve the distribution system. 
5 In 2015, total retail sales of consumer goods amounted to RMB 30.1 trillion, a rise of 10.7% over the 
previous year. Of this amount, RMB 3.2 trillion is a ttributable to online retail  sales, a rise of 31.6%. 
6 IMF (2014), Country Report No. 14/235: People's Republic of China, 2014 Article IV Consultation , 
July 2014. Viewed at: http://www.imf.org/external/pubs/ft/scr/2014/cr14235.pdf ; and IMF (2015), Country 
Report No. 15/234:  People's Republic of China, 2015 Article IV Consultation , August 2015. Viewed at: 
http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf . WT/TPR/S/342 • China 
 
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    2011  2012  2013 2014 2015  
Share of main sectors in GDP (%)  
Agriculture, forestry and fishing  9.8  9.8  9.7  9.5  9.3 
Industry (including mining and quarrying, manufacturing, and 
electricity) 39.6  38.3  36.9  35.9  33.8 
Construction 6.8  6.9  6.9  7.0  6.9 
Services 44.3 45.5 46.9 48.1  50.5 
Wholesale and retail trade  9.0  9.3  9.6  9.8  9.8 
Transport, storage and communications 4.5  4.4  4.4  4.5  4.5 
Restaurants and hotels 1.8  1.8  1.7  1.8  1.8 
Financial intermediation 6.3  6.6  7.0  7.3  8.5 
Real estate 5.8  5.9  6.1  6.0  6.1 
Other 16.4  17.0  17.6  18.3  19.3 
GDP by industry at constant pr ices (annual percentage change)  
Agriculture, forestry and fishing  4.2  4.5  4.0  4.2  4.0 
Industry (including mining and quarrying, manufacturing, and 
electricity) 10.8  7.9  7.6  6.9  5.9  
Construction 9.8  9.8  9.7  9.1  6.8  
Services 9.5  8.0  8.3  7.8  8.3 
Wholesale and retail trade 12.5  10.3  10.5  9.7  6.1 
Transport, storage and communications 9.7  6.1  6.6  6.5  6.1 
Restaurants and hotels 5.1  6.5  3.9  5.8 6.2 
Financial intermediation 7.7  9.4  10.6  9.9  15.9 
Real estate 7.4  4.7  7.2  2.0 3.8  
Other 9.6  8.0  7.3  8.5  9.2  
Source: National Bureau of Statistics of China, Statistical Yearbook (2015) ; and National Bureau of Statistics 
of China online information, "National Data: Quarterly Data". Viewed at: http://data.stats.gov.cn/english/easyquery.htm?cn=B01 . 
1.9.  At the end of 2014, the number of em ployed people in China was 772.5 million, and 
employment in urban areas was 393 million. Of  the total employed population, 40.6% were 
employed in the tertiary sector, 29.9% in the se condary sector and 29.5% in the primary sector. 
The urban unemployment rate registered was 4.1% at year end, roughly the same as in every year since 2010. The average annual wage of employed persons in state-owned units was 
RMB 57,296, with wages ranging from RMB 94,943 in the financial industry to RMB 27,782 in 
agriculture, animal husbandry, forestry and fishing.
7  
1.2  Fiscal Policy and Structural Reform  
1.2.1  Fiscal policy and related issues 
1.10.  China continued to apply a proactive fiscal stance during the period under review. In the 
authorities' view, the implementation of proactive fiscal policies has played an important role in 
stabilizing economic growth and adjusting the economic structure in China in recent years. They 
consider that fiscal policy has been successfully used as an automatic stabilizer and counter-cyclical regulator, thus helping achieve sustained and steady economic and social development. In 
accordance with IMF estimates, the 2015 budget implied a positive fiscal impulse of about 
0.4 percentage points of GDP.
8 The fiscal deficit reached 2.1% of GDP in 2014 and 2.4% of GDP 
in 2015 (Table 1.3). Expenditure increased by 13.2% in 2015, while revenue rose by 5.8%. The share of general Government debt in GDP increased from 41.1% in 2014 to 43.9% in 2015.  
Table 1.3 Government operations, 2011-15 
  2011  2012  2013 2014 2015a 
Total government balance (RMB billion)b -850  -800  -1,200  -1,350  -1,620 
Central government balance (RMB billion) -650  -550  -850  -950  -1,120 
Local government balance (RMB billion) ） -200  -250  -350  -400  -500 
Government balance as share of GDP (%) -1.8 -1.5 -2.0 -2.1 -2.4 
Total government revenue (RMB billion) 10,387 11,725 12,921 14,037 15,222  
Central government (%) 49.4  47.9  46.6  45.9  45.5 
Local government (%) 50.6  52.1  53.4  54.1  54.5 
                                               
7 National Bureau of Statistics of China (201 6), "National Data: Quarterly Data". Viewed at: 
http://data.stats.gov.cn/english/easyquery.htm?cn=B01 . 
8 IMF (2015), Country Report No. 15/234:  People's Republic of China,  2015 Article IV Consultation , 
August 2015. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf . WT/TPR/S/342 • China 
 
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    2011  2012  2013 2014 2015a 
Total government expenditure (RMB billion) 10,925  12,595  14,021  15,179  17,577 
Central government (%) 15.1  14.9  14.6  14.9  14.5 
Local government (%) 84.9  85.1  85.4  85.1  85.5 
Tax revenue (RMB billion) 8,973.8  10,061.4  11,053.1  11,917.5  12,489  
Central government (%) 54.2  53.0  51.2  50.4  49.8 
Local government (%) 45.8  47.0  48.8  49.6  50.2 
Indirect taxes (% of total tax revenue) 74.6  74.7  73.8  73.1  71.4 
Domestic value-added tax 27.0  26.3  26.1  25.9  24.9 
Domestic consumption tax 7.7  7.8  7.4  7.5  8.4 
VAT and consumption tax from imports 15.1  14.7  12.7  12.1  10.0 
VAT and consumption tax rebate from exports -10.3  -10.4  -9.5  -9.5  -10.3 
Business tax 15.2  15.7  15.6  14.9  15.5 
City maintenance and construction tax 3.1  3.1  3.1  3.1  3.1 
House property tax 1.2  1.4  1.4  1.6  1.6 
Stamp tax 1.2  1.0  1.1  1.3  2.8 
Urban land use tax 1.4  1.5  1.6  1.7  1.7 
Land appreciation tax 2.3  2.7  3.0  3.3  3.1 
Vehicle purchase tax 2.3  2.2  2.3  2.4  2.2 
Tariffs 2.9  2.8  2.4  2.4  2.0 
Farm land occupation tax 1.2  1.6  1.6  1.7  1.7 
Deed tax  3.1  2.9  3.5  3.4  3.1 
Other tax revenue 1.1  1.5  1.5  1.5  1.6 
Direct taxes (% of total tax revenue) 25.4  25.3  26.2  26.9  28.6 
Corporate income tax 18.7  19.5  20.3  20.7  21.7 
Individual income tax 6.7  5.8  5.9  6.2  6.9 
a Data for 2011-14 are final accounts; data for 2015 are executed budget figures, since the final 
accounts for the year had not been comp leted when this report was drafted. 
b The government balance does not equal revenue minus expenditure directly. The difference is 
explained mainly by the contribution from, or re plenishment of, the Budget  Stabilization Fund and 
the use of carry-over or balance funds, among other elements.  
Source: National Bureau of Statistics of China, China Statistical Yearbook  (various issues); and information 
provided by the authorities. 
1.11.  The IMF considers that the official budget de ficit is not a good indicator of the fiscal stance 
since fiscal developments continue to be dominated since 2008 by off-budget activity, mainly off-
budget spending. IMF staff has estimated an augmented deficit (including off-budget activities) of some 10% of GDP. It was found that government debt including off-budget activity rose to some 
57% of GDP as of end-2014.
9  
1.12.  Partly in response to the need to contro l off-budget spending and to consolidate the budget, 
the Standing Committee of the National People's Congress adopted and approved a new Budget Law in August 2014. This Law aims at strengthening budget management and supervision, by 
establishing and improving a standardized and more  transparent budget system. It mandates that 
State budgets at each of the five government levels, with the national budget consisting of the central budget and local budgets.
10 The Law also specifies that a local general budget at any level 
must consist of the budget of the government at the corresponding level and the aggregate 
general budget at the next lower level. During budget implementation, governments may generally 
not introduce new measures to increase or reduce revenue or to increase expenditure. If such a 
policy or measure is deemed indispensable and a budgetary adjustment is required, a request 
must be submitted to the Standing Committee of the National People's Congress at the same level for examination and approval.
11  
1.13.  The authorities continue to consider tax reform as an ongoing priority. During the period 
under review, they advanced in the implementati on of the VAT reform and the elimination of 
double taxation. They estimate that the replacement of the business tax with VAT resulted in lower taxes of RMB 140 billion and RMB 191.8 billion in 2013 and 2014, respectively. Measures to reduce 
charges across the board were also implemented; charges for administrative services and 
                                               
9 IMF (2015), Country Report No. 15/234:  People's Republic of China,  2015 Article IV Consultation , 
August 2015. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf . 
10 The five levels are: Central Go vernment; provinces, autonomous re gions and municipalities directly 
under the Central Government; cities divided into distri cts and autonomous prefectures; counties, autonomous 
counties, cities not divided into districts, and municipal districts; and townships, nationality townships and 
towns.  
11 Article 68 of the Budget Law of the People 's Republic of China, adopted at the 10th Session of the 
Standing Committee of the 12th National People's Congress on 31 August 2014. WT/TPR/S/342 • China 
 
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  government funds for activities involving small and micro businesses were reduced or waived.12 
The authorities have stated that, while continuing to engage in a VAT reform process, they intend 
to focus reform on improving the personal income tax system to lower the tax burden on low- and middle-income households, as well as on strengthening resource taxation to help protect the 
environment, and on introducing a nationwide property tax.
13  
1.14.  Since the last Review, changes have also been introduced to the central-local government 
income allocation system. For example, the Cent ral Government increased the allowance to local 
governments for incremental export tax rebates borne by them in 2014, and stipulated that all 
incremental export tax rebates are to be borne by the Central Government from 1 January 2015 
onwards.  
1.15.  During the review period, China rationalized  spending by prioritizing government investment 
in central infrastructure, major state projects, trans-regional and cross-watershed projects, and 
projects with strong externalities, while seeking to adjust the orientation of investment elsewhere, by promoting the adoption of more market-oriented operational modes, such as the private-public 
(PPP) model. As relates to general expenditure,  priority was given to public services and 
infrastructure and projects to support people's livelihood, in particular those which promote employment and entrepreneurship, and support education. 
1.16.  The Government is also seeking to accelerate the reform of the pension and the medical and 
health systems, and promote affordable housing.  With respect to the reform of the pension 
system, in February 2014, the Ministry of Human Re sources and Social Security and the Ministry of 
Finance jointly issued the Interim Measures for the Connection of Urban and Rural Pension 
Insurance Systems, in which stipulations were made as to the timing and approach to connect the 
two pension insurance systems, including the transf er of funds, the collection of pensions, and the 
handling of procedures. A reform of the pension insurance system for employees in government 
agencies and public service units started to be implemented in October 2014. 
1.2.2  Structural reform measures  1.17.  Some of the main structural changes which China intends to implement in the near future 
are included in the Outline of the 13
th Five-Year Plan (2016-2020) as endorsed by the National 
People's Congress, which calls for: an administration management reform; the promotion of private sector participation in the economy, while keeping the preponderance of public ownership; state-owned enterprises (SOEs) reform; less government intervention and administration 
approvals; the promotion of competition; fiscal reform; promoting financial sector reform to allow 
more private capital participation in banking, and expanding the provision of financial services to SMEs and rural areas; making the exchange rate and interest rate more market-determined; 
expanding employment; and stabilizing prices, among other goals (Table A1.2)  
1.18.  China continues to promote private participation in the economy as an integral part of the 
process of structural reform. The authorities have noted in the context of the present Review that, 
during the period covered by it, the number of pr ivate enterprises and individual industrial and 
commercial households has been steadily growing, the amount of their registered capital has been 
rapidly rising, and the average registered capita l per enterprise or household has also been 
increasing. By end-2015, 19.1 million private ente rprises were registered nationwide, a year-on-
year increase of 23.4%, with registered capital of RMB 90.6 trillion, a year-on-year increase of 
52.9%. By end-2015, the total number of individu al industrial and commercial entities reached 
54.1 million, a year-on-year increase of 8.5%, with registered capital of RMB 3.7 trillion, a year-
on-year increase of 26.1%. There were 280 million people engaged in individual industrial and 
commercial undertakings, 31 million more than at the end of 2014. With respect to trade, the latest figures available show that, in 2014, the total value of exports by private enterprises 
reached US$443.8 billion, representing 41.8% of total export value. The value of imports by 
private enterprises reached US$274.1 billion, and accounted for 28.6% of total import value. 
                                               
12 In 2015, a total of 106 central administrative charges and five governmental funds were cancelled, 
terminated or exempted, and 17 charging standards were lowered. The authorities estimate that this may 
reduce the burden for enterprises and in dividuals by some RMB 57 billion a year. 
13 IMF (2015), Country Report No. 15/234: People's Republic of China, 2015 Article IV Consultation , 
August 2015. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf . WT/TPR/S/342 • China 
 
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  1.19.  The Communiqué of the Third Plenum of the 18th CPC Central Commi ttee, released on 
12 November 2013, outlines a path for China's market-oriented reforms over the 2014-2020 period. The Communiqué stresses that reforms should allow the market to play a decisive role in allocating resources, and calls for further reforms of China's inward and outward 
investment regime. On 15 November 2013, the CPC released the Decision on Certain Major Issues 
Concerning the Comprehensive Deepening of Reform, a 60-point reform blueprint, which expanded on most of the issues mentioned in the Communiqu é. The Decision calls for a number of reforms in 
the financial system including: promoting qualif ied private capital to set up small and medium-
sized banks; the establishment of a deposit insurance system for depositors; a multi-tier capital market; a market-based exit mechanism for financial institutions; and changing the system for companies to launch initial public offerings (IPOs) from an approval-based one to a registration-
based system. The Decision makes reference to liberalizing the exchange rate, the capital account, 
and deposit interest rates and includes a reform proposal with respect to SOEs, which are to increase the proportion of their operational income  to be allocated to public finance to 30% by 
2020 (Table A1.2). The Decision also calls for the elimination of unreasonable regulations and 
hidden market access barriers for private enterprises, encourages private-public sector ventures, calls for more public disclosure of SOE finances and for an improvement of the enterprise 
bankruptcy system.  
1.20.  The authorities have indicated that, during the period under review, the State Council has 
tried to lower market access barriers, establish transparent market rules, and create an investment environment with rights, opportunities and rules. In November 2014, the State Council 
put forward measures to further liberalize market access, facilitate investment and financing, 
promote investor diversification, and improve the price formation mechanism in areas such as public services, natural resources and the environment, and ecological construction and 
infrastructure.
14 To promote public-private projects, the National Development and Reform 
Commission (NDRC) issued the Guiding Opinions on Conducting Public-Private Partnership in 2014
15, and the Guiding Opinions on Promoting the Model of Public-Private Partnership in Public 
Service Sectors in 2015.16 The State Council also issued the Guiding Opinions on Promoting the 
Model of Public-Private Partnership in Public Service Sectors, which contain norms for pushing forward the PPP modality.
17 Since then, the pricing of about 80 items, mostly services, has been 
liberalized or delegated to lower levels.  
1.21.  During the review period, financial preferential measures were implemented to support 
SMEs, especially small and micro enterprises. From 1 January 2015 to 31 December 2017, small 
and low-profit enterprises with an annual taxable income not exceeding RMB 200,000 pay 
corporate income tax on only 50% of their taxable income, at a rate of 20%.18 This was further 
extended to small and low-profit enterprises with  an annual taxable income over RMB 200,000 but 
not exceeding RMB 300,000 from 1 October 2015 to 31 December 2017.19 Also, the VAT and 
business tax provisional exemption granted since 1 August 2013 to small and micro enterprises 
with monthly sales of no more than RMB 20,000 was extended to small and micro enterprises with sales of up to RMB 30,000 for the period from 1 October 2014 to 31 December 2015, and later further extended to 31 December 2017.
20 Small and micro enterprises are also exempt from the 
stamp tax on loan contracts signed with financial institutions from 1 November 2011 to 
31 December 2017.21 Since 1 January 2015, small and micro enterprises have been exempted 
from 42 items of administrative and undertakin g fees collected by the central government. 
                                               
14 Guo Fa [2014] No. 60, 16 November 2014. Viewed at: http://www.gov.cn/zhengce/content/2014-
11/26/content_9260.htm  (in Chinese only). 
15 Fa Gai Tou Zi [2014] No. 2742, 2 December 2014. Viewed at: 
http://www.sdpc.gov.cn/gzdt/201412/t20141204_651014.html  (in Chinese only). 
16 The Guiding Opinions on Promoting the Model of Public-Private Partnership in Public Service Sectors 
in 2015. Viewed at: http://www.sdpc.gov.cn/gzdt/201412/W020141204398139719768.pdf  (in Chinese only). 
17 Guo Ban Fa [2015] No. 42, 19 May 2015. Viewed at: http://www.gov.cn/zhengce/content/2015-
05/22/content_9797.htm  (in Chinese only). 
18 Notice of the Ministry of Finance (MOF) and th e State Administration of Taxation (SAT) on the 
Preferential Policy of Corporate Income Tax of Smal l and Low-profit Enterprises (Cai Shui [2015] No. 34) 
19 Notice of the MOF and the SAT on further Expanding the Scope of the Preferential Policy of Corporate 
Income Tax of Small and Low-profit Enterprises (Cai Shui [2015] No. 99). 
20 Notice of the MOF and the SAT on Continuing to  Implement the Value-added Tax and Business Tax 
Policies for Small and Micro Enterprises (Cai Shui [2015] No. 96). 
21 Notice of the MPF and the SAT on Exemption from the Stamp Tax on Loan Contracts Signed between 
Financial Institutions and Small and Micro Enterprises (Cai Shui [2011] No. 105 and Cai Shui [2014] No. 78). WT/TPR/S/342 • China 
 
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  1.22.  The authorities have noted that China continues to carry out measures concerning financial 
support to agriculture, rural areas and farmers.  On 25 April 2014, the PBOC lowered the reserve 
requirements for county-level commercial banks in rural areas and rural cooperative banks by 
2 and 0.5 percentage points respectively , which resulted in more liquidity available for loans. The 
PBOC also released the Guiding Opinions on Providing Financial Services to New Types of 
Agricultural Entities Including Family Farms. Financial institutions engaging in the agro-linked business were guided to support at least one ne w type of agricultural entity in counties of 
agricultural importance by providing comprehensive financial services in a one-to-one manner. 
Additionally, the PBOC provided banks with a new lo an facility to offer credit to agriculture. By 
end-2014, outstanding agro-linked loans from financial institutions stood at RMB 23.6 trillion, 13% above the level the previous year and representing some 37% of GDP.
22 
1.23.  Measures were introduced to discourage production in areas where there is overcapacity. In 
accordance with the Circular of the State Council on Publishing the Catalogue of Investment Projects subject to Government Approval (2014 Version) (Guo Fa [2014] No. 53)
23, projects in 
industries with excess capacity, such as the iron and steel, electrolytic aluminium, cement, plate 
glasses and vessels industries, are now subject to filing with local governments. The Circular further specifies that the above projects are strict ly subject to the Guiding Opinions of the State 
Council on Resolving Overcapacity (Guo Fa [2013] No. 41)
24, under which local authorities and 
central departments are not allowed to approve any new capacity expanding projects in those 
areas . 
1.24.  A major change during the period under review is the introduction of a deposit guarantee 
scheme. The Regulations on Deposit Insurance were implemented on 1 May 2015. The core 
elements of the Chinese deposit insurance system include: a) universal coverage: the implementation of the scheme is compulsory for all types of financial institutions taking deposits 
established within the territory of China; b) limited compensation, with a cap of RMB 500,000; 
c) differentiated risk: a system combining a base coverage and rates of coverage according to risk will be implemented; d) it is financed by institutions: the deposit insurance funds are mainly comprised of insurance premiums paid by deposit financial institutions; e) maintenance of a 
surveillance system, including collecting and chec king information, taking early-stage remedial 
actions and dealing with risks in a timely manner.  
1.2.3  Monetary and exchange rate policy 
1.2.3.1  Monetary policy 
1.25.  During the period under review, the People 's Bank of China (PBOC) continued to build on 
the changes introduced in 2013, which included further steps toward interest rate liberalization, 
with financial institutions free to determine their lending rates. In March 2014, the PBOC removed 
the upper interest rate limit for small-amount foreign currency deposits within the China (Shanghai) Free Trade Pilot Zone. In May 2015, the PBOC removed the upper interest rate limit for small-amount foreign currency deposits nationwide, and cancelled the upper interest rate limit in 
October. Other important measures included the establishment of Short-Term Liquidity Operations 
(SLO) and a Standing Lending Facility (SLF), th e extension of part of the matured three-year 
central bank bills, and an increase in the quota of central bank discount funds to provide liquidity 
to financial institutions. The authorities explained that the monetary policy stance remained 
neutral, and that going forward, the policy stance would remain the same.
25  
1.26.  In 2014, the PBOC adjusted monetary policy initially to support the real economy while 
retaining the stability of the monetary aggregates and later to adjust it to the "New Normal". The 
PBOC implemented targeted cuts in the reserv e requirement ratio (RRR) twice during 2014, and 
                                               
22 People's Bank of China (2015), Annual Report 2014 . Viewed at: http://www.pbc.gov.cn/ . 
23 Guo Fa [2014] No. 53, 31 October 2014. Viewed at: http://www.gov.cn/zhengce/content/2014-
11/18/content_9219.htm  (in Chinese only). 
24 Guo Fa [2013] No. 41, 6 October 2013. Viewed at: http://www.gov.cn/zwgk/2013-
10/15/content_2507143.htm  (in Chinese only). 
25 IMF (2015), Country Report No. 15/234: People's Republic of China, 2015 Article IV Consultation, 
August 2015. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf;  and 
http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf.  WT/TPR/S/342 • China 
 
- 23 - 
 
  used differentiated RRRs to promote counter-cyclical adjustment.26 The PBOC also lowered in an 
asymmetric manner deposit and loan benchmark in terest rates in November 2014, with the one-
year deposit benchmark interest rate (DBIR) reduced by 0.25% to 2.75%, while the one-year loan benchmark interest rate (LBIR) was lowered by 0.4% to 5.6%. The ceiling of the floating range of 
the deposit rate offered by financial institutions was adjusted to 1.3 times the benchmark interest 
rate. The PBOC guided the reduction of the 14-day repurchase interest rate four times in 2014, by a total of 60 base points. In 2015, the PBOC implemented five targeted cuts to the deposit RRR, 
and reduced the LBIR and the DBIR five times. The one-year loan and deposit benchmark interest 
rates were reduced accumulatively by 1.25 percentage points to 4.35% and 1.5% respectively.  
1.27.  During the review period, the PBOC used cr edit structure guidance to impact liquidity. It 
established an incentives mechanism for guiding financial institutions to raise the proportion of 
credit granted to rural projects, and to small and micro businesses.
27 In 2014, the PBOC put in 
place a new tool to provide liquidity to banks to provide credit to targeted sectors and regions, 
known as "credit-policy supporting central bank lending", with central bank lending quotas 
increased on several occasions. In addition, access to discounted agro-linked financing notes and 
financing notes of micro and small businesses at preferential rates was made available. 
1.28.  The last few years have witnessed a rapid increase in monetary indicators. Domestic credit 
expanded at an annual average rate of 16.1% between 2011 and 2014. At end-October 2015, the 
broad money supply (M2) stood at RMB 136.1 trillion,  slightly over 200% of GDP, having increased 
by 13.5% year-on-year. At the same date, outstanding RMB and foreign currency loans totalled RMB 98.2 trillion (some 140% of GDP), up 14.4% year-on-year. On the other hand, the 
outstanding amount of RMB and foreign currency deposits was RMB 138.4 trillion (over 200% of 
GDP), up 12.5% year-on-year. The monthly weighted average interbank RMB lending rate for October stood at 1.99% and the monthly weighted average interest rate on bond pledged repo at 
1.94%. There was also a steep increase in lendin g, spot bond and repo transactions in the 
interbank RMB market; in October 2015, these transactions had an average daily turnover of almost RMB 3.1 trillion, up 98.3% year-on-year.
28 
1.2.3.2  Exchange rate policy 
1.29.  China has continued to maintain a managed floating exchange rate regime, which takes a 
basket of currencies as reference. Since 2013, th e PBOC has pushed forward reform to let the 
market play a more decisive role in exchange rate formation. The floating range of the 
RMB exchange rate has gradually been expanded, an d the flexibility of the RMB exchange rate has 
increased. In April 2012, the trading band of th e RMB/US$ exchange rate in the interbank spot 
foreign exchange market was expanded from 0.5% to 1%, and further to 2% in March 2014. By 
the end of January 2016, the intermediate RMB/US$ exchange rate was 6.5516, registering a 
depreciation of 6.6% from the end of 2014. 
1.30.  A number of steps leading to less market intervention were taken during the review period. 
On 1 July 2014, the management and control over the spread between US$ selling and buying 
RMB prices was cancelled and the banks were allowed to set them on the basis of market supply and demand. As from 11 August 2015, market makers began to provide an intermediate price (RMB against US$) to the Chinese Foreign Exchange Trading Centre every day before the inter-
bank foreign exchange opens, which takes the clos ing rate of inter-bank foreign exchange of the 
previous day as a reference, and takes into account  the supply and demand of foreign exchange as 
well as the fluctuation of the exchange rates of other major currencies. In 2015, direct trading 
between the RMB and the Swiss Franc was launche d. The PBOC has also continued to promote 
direct trading between the RMB and other currencies such as the Australian dollar, the Euro, the Pound Sterling, the New Zealand dollar and the Singapore dollar.  
                                               
26 People's Bank of China (2015), Financial Stability Report 2015 , p. 46. Viewed at: 
http://www.PBOC.gov.cn/english/130736/2946072/2015090616281480816.pdf . 
27 The PBOC employed the targeted reductions of  the RRR ratio in 2014 to set up an incentives 
mechanism to help guide financial institutions to increase loans to the agro-linked sector and small and micro businesses.
 People's Bank of China (2015), Financial Stability Report 2015 , p. 46. Viewed at: 
http://www.PBOC.gov.cn/english/130736/2946072/2015090616281480816.pdf . 
28 People's Bank of China (2015), Financial Statistics, October 2015. Viewed at: 
http://www.PBOC.gov.cn/english/130721/2989845/index.html . WT/TPR/S/342 • China 
 
- 24 - 
 
  1.31.  From the launching of the exchange rate reform in 2005 to the end of 2015, the RMB/US$ 
exchange rate increased by 26.3%, the RMB/EUR exchange rate was up 39.7%, and the RMB/JPY 
was up by 32.3%. The nominal effective RMB exchange rate increased by 45.9% and the real effective RMB exchange rate was up by 56.2%. Since the second half of 2014, the RMB exchange 
rate has been falling somewhat, with the RMB/US $ intermediate price dropping by 0.36% in 2014, 
5.77% in 2015, and 0.89% in January 2016. 
1.32.  In the course of the present Review, the authorities stated that they consider that the 
reform of the exchange rate formation mechanism has had a generally positive impact on the real 
economy, as reflected in the following aspects: a) it has helped shift the growth pattern towards domestic demand, in particular consumption, as shown by the fact that, in 2014, the contribution 
made by domestic demand to economic growth was 98.7%, up 9.7 percentage points compared 
with that of 2005; b) it has been conducive to econ omic restructuring, including a redistribution of 
sectoral weights in favour of services, the contribution of which to GDP increased by 6.7 percentage points between 2005 and 2014; c) it has contributed to make companies adapt to 
exchange rate risk and enhanced their ability to cope with it; d) it has contributed to reduce 
foreign trade and payments imbalances; e) it ha s promoted the rapid development of the foreign 
exchange market: as RMB exchange rates have become more flexible, the inter-bank foreign 
exchange market has realized a rapid growth in  its trading volume and the foreign exchange 
market has played a greater role in allocating resources. Total trading on the inter-bank foreign exchange reached US$13.2 trillion in 2015, up 51.7% from 2014.   
1.33.  In a recent evaluation of China's exchange rate, IMF staff considered that a more flexible, 
market-determined exchange rate is needed to allow the market to play a more decisive role in 
the economy, rebalancing toward consumption, and maintaining an independent monetary policy as the capital account opens. They recommend a further widening of the fluctuation band and 
changes to how the central parity is set.
29 The authorities have noted that improving the exchange 
rate formation mechanism and opening up the capital account are among China's reform objectives. In this respect, since August 2015, the PBOC reformed the way in which the central 
parity of the RMB against the US$ is  set, allowing it to act better as a benchmark price. They have 
also noted that China's goal is to establish an exchange rate mechanism based on market demand and supply, with a basket of currencies as reference, and flexible two-way movements.  
1.2.4  Balance of payments  
1.34.  During the period under review, China continued to post a sizeable surplus in the current 
account of the balance of payments, which reflects the surplus of national savings over domestic investment. The current account surplus shrank between 2012 and 2013, from 2.5% of GDP to 
1.6%, mainly on account of a sharp increase in imports of both goods and services, and due to a 
deterioration of the secondary income balances (Table 1.4). However, since 2014, the current account surplus has been in an upward trend. In 2014, the merchandise trade balance surplus 
increased to 4.2% of GDP due to a strong rise  in merchandise exports, which exceeded the 
increase in imports and the current account defici t rose to 2.7% of GDP. The merchandise trade 
surplus increased sharply again in 2015, to US$567 bi llion, this time mainly on account of a sharp 
decrease in imports. The current account surp lus reached US$330.6 billion which represented a 
19.2% increase over the previous year, and was equivalent to 3% of GDP. 
Table 1.4 Balance of payments, 2011-15 
(US$ million) 
 2011  2012  2013  2014 2015  
Current account 136,097  215,392  148,204  277,434  330,602  
Goods and services  181,904  231,845  235,380  262,687  384,642  
Credit 2,008,852  2,175,092  2,355,595  2,524,238 2,331,192  
Debit 1,826,949  1,943,247  2,120,216  2,261,552 2,044,652  
Goods  228,701  311,570  358,981  435,042  566,998  
Credit 1,807,805  1,973,516  2,148,589  2,243,761  2,142,754  
Debit -1,579,105  -1,661,947  -1,789,608  -1,808,720  -1,575,756  
Services  -46,797  -79,725  -123,602  -172,355  -182,356  
Credit 201,047  201,576  207,006  280,477  286,540  
Debit -247,844  -281,300  -330,608  -452,832  -468,896  
                                               
29 IMF (2015), IMF Country Report No. 15/234:  People's Republic of China,  2015 Article IV Consultation , 
August 2015. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf . WT/TPR/S/342 • China 
 
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   2011  2012  2013  2014 2015  
Primary income -70,318  -19,887  -78,442  13,301  -45,363  
Credit 144,268  167,037  183,973  239,372  227,805  
Debit -214,585  -186,924  -262,415  -226,071  -273,167  
Secondary income  24,511  3,434  -8,733  1,446  -8,677  
Credit 55,570  51,167  53,162  41,127  35,938  
Debit -31,060  -47,733  -61,895  -39,681  -44,615  
Capital and financial account -122,331  -128,317  -85,279  -169,174  -142,359  
Capital account 5,446  4,272  3,052  -33  316  
Credit 5,621  4,550  4,452  1,939  512  
Debit -174  -278  -1,400  -1,972  -196  
Financial account -127,777  -132,590  -88,331  -169,141  -142,675  
Assets -613,579  -399,586  -651,666  -580,634  -49,067  
Liabilities 485,801  266,996  563,334   411,493  -93,608  
Direct investment  231,652  176,250  217,958  144,968  62,058  
Assets -48,421  -64,963  -72,971  -123,130  -187,801  
Liabilities 280,072  241,214  290,928  268,097  249,859  
Portfolio investment  19,639  47,779  52,891  82,429  -66,470  
Assets 6,248  -6,391  -5,353  -10,815  -73,209  
Liabilities 13,391  54,170  58,244  93,244  6,739  
Financial derivatives and employee stock 
options  0  0  0  0  -2,087  
Assets 0  0  0  0  -3,420  
Liabilities 0  0  0  0  1,333  
Other investment  8,733  -260,068  72,200  -278,758  -479,115  
Assets -183,604  -231,680  -141,962  -328,909  -127,577  
Liabilities 192,338  -28,388  214,162  50,151  -351,538  
Reserve assets (change) -387,801  -96,552  -431,379  -117,780  342,939  
Special drawing rights (change) 465  505  203  61  -287  
Reserve position in the IMF  (change) -3,449  1,616  1,114  977  911  
Foreign exchange reserves  (change) -384,818  -98,673  -432,696  -118,818  342,316  
Net errors and omissions -13,766  -87,074  -62,925  -108,260  -188,244  
Source: State Administration of Foreign Ex change online information. Viewed at: http://www.safe.gov.cn . 
1.35.  As at early 2016, the RMB is fully convertible for current account transactions, and partly 
convertible for some capital account transactions. Since 2011, all residents and non-residents have 
b e e n  a b l e  t o u s e  R M B  f o r  F D I ;  i n  t h e  f o l l o w i n g  y e a r s ,  s e v e r a l  m e a s u r e s  w e r e  a d o p t e d  to w a r d s  convertibility.
30 However, portfolio investment continues to be controlled by quotas and can only 
be done through Qualified Foreign Institutional Investors (QFIIs), and foreign borrowing is subject 
to a ceiling (short-term borrowing) or approval requirements (long-term borrowing).31 The holding 
of cross-border accounts requires State Administration of Foreign Exchange (SAFE) approval. 
1.36.  During the period under review, the SAFE continued to take measures to liberalize 
the capital account and move towards convertibility. Some of the main measures include: expanding the convertibility scope for investment in securities; facilitating direct investment by allowing enterprises to directly handle business with a bank after first registration; allowing 
Chinese-funded enterprises that meet certain conditions to borrow abroad and carry out foreign 
exchange settlement transactions; and allowing discretional foreign exchange sales for foreign-invested enterprises. The authorities also so ught to facilitate cross-border investment. 
1.37.  Another step towards capital account conver tibility was the decision to further expand the 
RMB Qualified Foreign Institutional Investors (RQFII) pilot projects, with overseas RQFII pilot projects extended to 16 countries and regions and with a total investment quota of 
RMB 1.02 trillion, up from a quota of RMB 500 billion in 2014.
32 The authorities have also 
                                               
30 In 2011, access to RMB loans was extended to Ch inese-invested enterprises with their foreign 
exchange earnings as guarantee. In 2012, restrictions on the opening of foreign exchange accounts and the 
use of capital were removed, while in 2013, the approval formalities for holding foreign debt accounts, for the withdrawal and payment of the principal and interest on foreign debts, and for the foreign debt exchange 
settlement of foreign-invested enterprises, were removed. 
31 Inward portfolio investme nt is channelled through QFIIs and subject to at least a three-month lock-in 
period for most shares and an overall ceiling of US$80 billion. Outward portfolio investment is channelled through QDIIs, subject to a ceiling of US$90 billion. 
32 In 2011, China launched the RMB Qualified Foreign Institutional Investors (RQFIIs) system and has 
since then raised the total RQFII quota several times, the latest in 2015 to RMB 1.03 trillion. Before March 2013, only Hong Kong, China subsidiaries of eligible fund management and securities companies were 
allowed to participate in the RQFII scheme. Since th en, the scope has been broadened to include fund 
management companies, securities companies, commercial banks, and insurance companies, registered in and operated in a total of 16 countries and regions (Hong Kong, China; the United Ki ngdom; Singapore; France; WT/TPR/S/342 • China 
 
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  continued to push forward the Qualified Domest ic Individual Investors (QDIIs) system. By 
end-2015, 156 RQFIIs had been approved with a cumulative approved investment quota of 
RMB 444.3 billion. Also, by end 2015, 279 Qualified Foreign Institutional Investors (QFIIs) and 13 Qualified Domestic Institutional Investors (QDIIs) had been approved. Pilot capital liberalization 
measures (under the precondition that the risk is controllable) are currently being tried in the 
four Pilot Free Trade Zones. 
1.38.  In the context of the current review, th e authorities have stressed the convenience of 
pushing forward the further convertibility of RMB capital account transactions. With respect to the 
management of cross-border capital flows, they stated that the focus should be shifted from 
administrative examination and approval to further monitoring and analysis and from the use of a positive list to the administration of a negative list. In fact, the CPC Proposals on Formulating the 
13
th Five-Year Plan call for RMB capital account convertibility to be orderly achieved, for a 
reduction to limitations on foreign exchange transactions, and for the introduction of a Negative List approach for foreign exchange management. The Proposals also call for the monitoring of the 
balance of payments to keep international paym ents balanced, and for two-way capital market 
openness and the gradual elimination of limitations on domestic and foreign investment.  
1.39.  With respect to the bidirectional opening up  of capital markets, the authorities noted that 
the PBOC should further expand the scope and number of RQFIIs, increase investment types and 
quotas, and improve the convertibility of cross-bo rder capital and financial trading. They also 
stated that the PBOC should establish foreign debt and capital flow management systems, strengthen the supervision of short-term capital flows and improve risk management linked to 
convertibility. In a recent assessment of China's capital account liberalization, the IMF noted that 
despite the opening measures, the non-FDI capital account remains subject to restrictions. For example, external borrowing is regulated and portfolio flows are primarily channelled through 
programmes subject to quotas and approvals.
33  
1.3  Developments in Trade and Foreign Direct Investment 1.3.1  Merchandise trade  
1.40.  China is the world's largest trader (excluding intra-EU trade). Although exports of goods 
in 2015 were over 20% higher than in 2010, their share of GDP, has, however, declined from 26.7% of GDP in 2010 to 20.9% in 2015. In 2015, exports contracted by 2.9%, to US$2.27 trillion, while imports declined by 14.2% with respect to 2014, reaching US$1.68 trillion. 
China's net merchandise trade surplus stood at 5.5% of GDP in 2015, on account of a sharper 
decline in imports than in exports. The share of  imports in GDP fell to 15.5% in 2015. In the 
context of the current Review, the authorities reit erated that China is implementing policies to 
promote the balanced development of foreign trade through consumption-friendly policies to 
expand domestic demand and hence imports, while stabilizing exports. 
1.41.  In 2015, manufactured products remained the dominant component of China's exports, 
accounting for 94.3% of the total, slightly high er than in the previous year (Chart 1.1 and 
Table A1.3). Among manufactured products, office machines and telecommunication equipment and textiles and clothing continued to be China's main exports. Agricultural exports accounted for only 3.2% of the total exported. Exports under processing trade accounted for 35.0% of total 
exports in 2015. Manufactures accounted for 64.4% of China's imports in 2015 (Chart 1.1 and 
Table A1.4). China's main manufacturing imports include office machines and telecommunication equipment, chemicals and transport equipment. Fuels and other mining products accounted for 
21.3% of China's imports in 2015 compared to 26.9% in 2014 (mainly due to a decline in the 
imports of fuels, from 16.2% in 2014 to 11.8% in 2015). Imports of agricultural products accounted for some 9.5% of the total. In 2015,  imports under processing trade accounted for 
26.6% of China's total goods. 
1.42.  In 2015, the main destinations for China's merchandise exports remained the United States; 
the EU; Hong Kong, China; the ASEAN countries; Japan; the Republic of Korea and Viet Nam 
                                                                                                                                               
the Republic of Korea; Germany; Qatar; Canada; Au stralia; Switzerland; Luxembourg; Chile; Hungary; 
Thailand; Malaysia; and the United Arab Emirates). 
33 IMF (2013), IMF Country Report No. 13/211:  People's Republic of China,  2013 Article IV Consultation , 
July 2013. Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . WT/TPR/S/342 • China 
 
- 27 - 
 
  (Chart 1.2 and Table A1.5). The main sources of its imports were the EU; ASEAN countries; the 
Republic of Korea; the United States; Chinese Taipei; Japan; and Australia (Chart 1.2 and Table A1.6). 
Chart 1.1 Product composition of merchandise trade, 2013 and 2015 
2013 2015
(a)    Exports (f.o.b.)
Other consumer goods
18.2%
Manufactures
94.0%
Total:  US$2,209. 0 billion Total:  US$2,281.9 billion
(b)    Imports (c.i.f.)
Chemicals
9.7%Transport 
equipment
5.7%
Manufactures
58.2%Office machines
&  telecom 
equipment
20.2%Other electrical 
machines  4.8%
Non-electrical 
machinery  5.8%Other
4.8%Other electrical 
machines  5.1%Office machines & 
telecom equipment
25.9%
Other semi-manuf.  
4.3%Chemicals
10.2%Manufactures
64.4%Office machines 
& telecom
equipment
22.9%
Total:  US$1, 950.0 b illion Total:  US$1,681.7 billionManufactures
94.3%Other electrical
machines  8.0%Mining  2.4% 
Other electrical 
machines  7.7%
Other consumer 
goods  9.0%
Other
5.4%Office machines & 
telecom equipment
26.9%Textiles
4.8%Clothing
7.7%
Other semi-
manuf.  11.4% 
Non-electrical 
machinery  7.6%Transport 
equipment  5.3%Mining  2.7%
Other consumer
goods  8.2%Other consumer goods
18.0%
Textiles
4.8%
Other semi-
manuf.  10.5%
Non-electrical 
machinery  7.4%
Other semi-manuf.
3.9%Transport
equipment  5.0%
Agriculture
9.5%Agriculture
8.5%Transport 
equipment
6.6%Chemicals
5.4%Chemicals
5.7%Agriculture  3.2% Agriculture  3.2% Clothing
8.0%
Fuels
11.8% Fuels
16.2%
Other mining
9.5%
Other mining  
11.8%Non-electrical
machinery  6.3%
 
Source: UNSD, Comtrade database (SITC Rev.3).  
 WT/TPR/S/342 • China 
 
- 28 - 
 
  Chart 1.2 Direction of merchandise trade, 2013 and 2015 
2013 2015
(a)    Exports (f.o.b.)
Asia
47.1%
Total:   US$2,209 billion Total:  US$2,281.9 billion
(b)    Imports (c.i.f.)
Other  0.2%
EU-28
11.3%Middle East
8.0%
CIS
3.6%United States
7.9%Australia
5.1%
EU-28
12.4%Australia
4.4%
CIS
3.2%United States
9.0%
Total:   US $1,950.0 billion Total:   US $1,681.7 billionJapan
6.8%
Middle East
6.0%Korea, Rep. of
10.4%Korea, Rep. of  
9.4%United States
16.7%Other Asia
18.7%
United States
18.0%Middle East
4.8%
Japan
8.5%Chinaa
8.1%CIS  2.5%
EU-28
15.6%CIS  3.8%Africa  4.2%
Japan
8.3%Other Asia
14.0%Hong Kong, China
14.6%
EU-28
15.4%Middle East
4.4%
Other Europe
1.1%
Other America
7.4%Hong Kong, China
17.4%
Japan
6.0%
Chinese Taipei
8.6%Other Asia
21.0%
Africa
6.0%Other Asia   
13.0%Korea, Rep. of
4.1%
Other Europe
1.1%Africa  4.6%
Chinese Taipei
8.0%
Asia
45.9%Asia
43.8%Asia
46.0%
Other America
7.7%Other America
7.8%Other America
7.1%
Africa
4.0%
Other 
Europe
3.3%Other 
Europe
2.9%Korea, Rep. of
4.4%
Chinaa
8.6%
 
a Includes goods that have been  exported from China and therea fter re-imported into China. 
Source: UNSD, Comtrade database. 
1.3.2  Trade in services 
1.43.  During the period under review, imports of services have continued to become increasingly 
important as a component of total imports. Imports of services have increased amidst a decline of 
imports of goods. Considering balance-of-payments figures, in 2015, services represented 22.9% 
of China's imports compared to 15.6% in 2013 (Table 1.5). The share of services in China's total WT/TPR/S/342 • China 
 
- 29 - 
 
  exports has also increased, from 8.8% in 2013 to 12.3% in 2015. China's exports of travel, 
construction, telecommunications, financial and business services have increased their share of the total, while the share of transport, manufacturing and government services has fallen. Among imports, travel continued to gain considerable market share, accounting for 62.3% of total imports 
in 2015. Transport is another important item among services imports, accounting for 16.1% of the 
total.  
Table 1.5 Composition of trade in servic es, 2011-15 (balance-of-payments basis) 
(US$ million) 2011  2012  2013  2014 2015  
Services balance -46,797  -79,725  -123,602  -172,355  -182,356  
Credit 201,047  201,576  207,006  280,477  286,540  
Debit -247,844   -281,300  -330,608  -452,832  -468,896  
Manufacturing services on physical inputs  26,339  25,625  23,178  21,305  20,275  
Credit 26,529  25,745  23,257  21,421  20,436  
Debit -190  -120  -79  -116  -161  
Maintenance and repair services  -  - - - 2,286  
Credit - - - - 3,605  
Debit -  - - - -1,319  
Transport -44,875  -46,949  -56,678  -57,915  -37,020  
Credit 35,570  38,912  37,646  38,243  38,594  
Debit -80,445  -85,862  -94,324  -96,158  -75,614  
Travel -24,121  -51,949  -76,912  -129,282  -178,091  
Credit 48,464  50,028  51,664  105,380  114,109  
Debit -72,585  -101,977  -128,576  -234,662  -292,200  
Construction 10,996  8,627  6,773  10,485  6,455  
Credit 14,724  12,246  10,663  15,355  16,652  
Debit -3,728  -3,619  -3,890  -4,870  -10,197  
Insurance and pension services -16,720  -17,271  -18,097  -17,880  -4,350  
Credit 3,018  3,329  3,996  4,574  4,976  
Debit -19,738  -20,600  -22,093  -22,454  -9,327  
Financial services 103  -40  -506  -409  -310  
Credit 849  1,886  3,185  4,531  2,334  
Debit -747  -1,926  -3,691  -4,940  -2,645  
Charges for the use of in tellectual property -13,963  -16,705  -20,146  -21,937  -20,938  
Credit 743  1,044  887  676  1,085  
Debit -14,706  -17,749  -21,033  -22,614  -22,022  
Telecommunications, computer, and 
information services 8,874  10,757  9,474  9,425  13,140  
Credit 13,908  16,247  17,098  20,173  24,549  
Debit -5,035  -5,490  -7,624  -10,748  -11,409  
Other business services 7,159  8,669  9,910  15,525  18,861  
Credit 56,365  51,023  57,235  68,895  58,403  
Debit -49,206  -42,354  -47,325  -53,370  -39,542  
Personal, cultural, and recreational services  -277  -439  -636  -699  -1,163  
Credit 123  126  147  175  731  
Debit -400  -564  -783  -873  -1,894  
Government goods and services  -312   -50  39  -973  -1,501  
Credit 753  990  1,228  1,054  1,064  
Debit -1,065  -1,040  -1,189  -2,027  -2,566  
- Negligible. 
Source: State Administration of Foreig n Exchange, Time Series of the Bala nce of Payments of China. Viewed 
at: http://www.safe.gov.cn/wps/portal .  
1.3.3  Foreign direct investment  
1.44.  During the period under review the Government has extended the policy of facilitating FDI 
inflows through the gradual removal of restrict ions (Sections 2.5.1 and 2.5.2). It has also 
continued to seek to further attract FDI through a number of incentive schemes (Section 2.5.3) 
and through liberalization in the four existing Pilot Free Trade Zones.  
1.45.  China remained one of the world's largest re cipients of FDI during the period under review. 
In 2013, FDI inflows reached US$117.6 billion, up 5.2% from 2012. In 2014, FDI inflows reached 
US$119.6 billion, 1.7% higher than in 2013. The main sectors attracting FDI in 2014 were 
manufacturing (33.4% of the total), real estate (29%), leasing and business services (10.4%), and wholesale and retail trade (7.9%) (Table 1.6).  WT/TPR/S/342 • China 
 
- 30 - 
 
  Table 1.6 Inward foreign direct investment by sector, 2012-14 
 2012  2013  2014  
Foreign 
capital 
actually 
used 
(US$ 
million) 
Foreign 
capital 
actually 
used 
(US$ 
million) 
Foreign 
capital 
actually 
used 
(US$ 
million) 
% of 
total FDI 
Total 111,716.1  117,586.2  119,561.6  100.0  
Agriculture, forestry and fishery 2,062.2  1,800.0  1,522.3  1.3  
Mining 770.5  365.0  562.2  0.5  
Manufacturing 48,866.5  45,555.0  39,938.7  33.4  
Electricity, gas and wate r 1,639.0  2,429.1  2,202.9  1.8  
Construction 1,181.8  1,219.8  1,239.5  1.0  
Transport, storage and post 3,473.8  4,217.4  4,455.6  3.7  
Information transmission, computer and software  3,358.1  2,880.6  2,755.1  2.3  
Wholesale and retail trade 9,461.9  11,511.0  9,463.4  7.9  
Hotels and catering services 701.6  771.8  650.2  0.5  
Financial intermediation 2,119.5  2,330.5  4,182.2  3.5  
Real estate 24,124.9  28,798.1  34,626.1  29.0  
Leasing and business services  8,211.1  10,361.6  2,485.9  10.4  
Scientific research, technical services, geological prospecting  3,095.5  2,750.3  3,254.7  2.7  
Water conservancy, environment, public facilities 850.3  1,035.9  573.5  0.5   
Other 1,799.8  1,560.3  1,649.4  1.4  
Source: Data provided by the Chinese authorities. 
1.46.  During the period under review Hong Kong , China continued to be the main source of FDI 
into China, accounting for 73.4% of total FDI in 2015. It was followed by Singapore; Chinese Taipei; the Republic of Korea; Japan; the United States; Germany; and France (Table 1.7).  
Table 1.7 Inward foreign direct investment by country, 2012-15 
(US$ billion) 
 2012 2013  2014  2015 
     % of total FDI  
Total 111.72 117.59  119.56  126.27 100.0  
Hong Kong, China 71.29 78.30  85.74  92.67 73.4 
Singapore  6.54 7.33  5.93 6.97 5.5  
Chinese Taipei 6.18 5.25 5.18 4.41 3.5 
Korea, Rep. of 3.07 3.06  3.97 4.04 3.2  
Japan 7.38 7.06 4.33 3.21 2.5 
United States 3.13 3.35  2.67 2.59 2.1  
Germany 1.47 2.10 2.07 1.56 1.2 
France .. 0.76  0.71 1.22 1.0  
United Kingdom 1.03 1.04 1.35 1.08 0.9 
Macao, China .. ..  .. 0.89 0.7  
Netherlands 1.14 1.28 0.64 .. .. 
Other 10.49 8.06  6.97 7.63 6.0  
.. Not among the 10 main investors in that year. 
Note: Figures refer to foreign capital actually used. Source: MOFCOM online information. 
1.47.  During the period under review, China continued to step up outward FDI, with the main 
destination being Hong Kong, China, followed by the United States, as shown in Table 1.8. Most 
OFDI took place in the areas of leasing and comm ercial services, wholesale and retailing, mining, 
finance, manufacturing, real estate, transport, construction, software and IT technology and 
services. 
Table 1.8 Main destinations of outw ard foreign direct investment, 2014 
Country/Region Value (US$ billion) 
Total 111.13 
Hong Kong, China 70.87 
United States 7.60 
Luxembourg 4.58 
British Virgin Islands 4.57 
Cayman Islands 4.19 
Australia 4.05 
Singapore 2.81 WT/TPR/S/342 • China 
 
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  Country/Region Value (US$ billion) 
United Kingdom 1.50 
Germany 1.44 
Indonesia   1.27 
Netherlands 1.03 
Laos 1.03 
Pakistan 1.01 
Others 5.18 
Source: Data provided by the authorities. 
1.3.4  Outlook 
1.48.  The authorities will continue pursuing a rebalancing strategy to promote growth hinging 
more on domestic demand, particularly private consumption, which they expect will play a major role in spearheading economic growth. On the supp ly side, the authorities have stated that they 
are intent on cutting surplus production capacity and inventories. They consider that, as China has 
entered a "New Normal", growth drivers have be come more diversified. They also noted that 
continuous efforts will be made to promote a new industrialization, an information-oriented 
development, as well as urbanization and agricultural modernization. They expect that in-depth 
structural reform, continuing with the policy of  opening up the economy and promoting innovation, 
will allow China to attain annual growth rates of around 6.5-7%.  
1.49.  The authorities are aware that some risk s to future growth and development persist, 
including increasing aggregate debt levels, rising production costs, insufficient financing for small and micro businesses, oversupply in some industries and shortages in others, and structural bottlenecks. The authorities have identified a ro admap to deal with risks and achieve stable 
medium-run growth; it includes the following measures: a) continuing to implement a proactive 
fiscal policy and a sound monetary policy; b) using targeted regulation; c) improving local government debt financing mechanisms; d) continuing to carry out structural tax reductions and 
removing fees; e) implementing tax preferential policies for small and micro businesses; 
f) increasing financial support to the real economy, especially by increasing credit support to key and weak areas in the economy; g) optimizing the credit structure; and h) promoting market- 
based pricing and more market-determined exchange rates.
34 
1.50.  The IMF forecasts growth of 6.5% in 2016 and 6.2% in 2017.35 These rates are slightly 
higher than those initially estimated in January (6.3% and 6%). The Fund expects consumer price inflation to remain moderate at around 1.8% in 2016 and 2% in 2017 due to low commodity prices 
and lower inflationary pressures. The current account  deficit is forecast to be at around 2.6% of 
GDP in 2016. 
 
 
                                               
34 People's Bank of China (2015), Annual Report 2014 , pp. 24-25. Viewed online at: 
http://www.PBOC.gov.cn/eportal/fileDir/image_public/UserFiles/english/upload/File/2014.pdf. 
35 IMF (2016), World Economic Outlook Update , April 2016. Viewed at: 
http://www.imf.org/external/pubs/ft/weo/2016/01/index.htm . WT/TPR/S/342 • China 
 
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  2  TRADE AND INVESTMENT REGIME 
2.1  Institutional and Legal Framework 
2.1.  The National People's Congress (NPC) of the People's Republic of China and its Standing 
Committee exercise the legislative power in China. The NPC is composed of deputies elected from 
the provinces, the autonomous regions, the muni cipalities directly under the Central Government, 
the Special Administrative Regions, and the armed forces. Deputies are elected for a term of five years.
1 The number of deputies to the NPC and the procedures for their election are prescribed 
by law; according to which, the number of deputies to the NPC cannot exceed 3,000.2 The NPC 
meets in session once a year.3 The deputies elect the members of its Standing Committee, which 
has the power to interpret the Constitution and other laws, and enact and amend laws, with the exception of those enacted by the NPC. The Standi ng Committee of the NPC also has the faculty of 
ratifying or abrogating treaties and agreements concluded with foreign states. When the NPC is 
not in session, it may also exercise the following functions: partially supplement and amend laws; review and approve partial adjustments to the nati onal economic and social development plans or 
to the state budget; and appoint Ministers.
4 Local people's congresses exercise legislative power at 
the local level, while local people's governments exercise the executive power.  
2.2.  The President and Vice-President of Chin a are elected by the NPC and may serve no more 
than two consecutive five-year terms. The President appoints the Premier, Vice-Premiers, State 
Councillors, and Ministers, and has the power to remove them. The President promulgates the legislation adopted by the NPC or its Standing Committee, but does not have the power to veto it. The President is responsible for ratifying or abrogating treaties and important agreements 
concluded with foreign states. 
2.3.  The State Council (the Central People's Government) is the executive body and the highest 
organ of state administration. Led by the Premier, the State Council is composed of Vice-Premiers, 
State Councillors, Ministers in charge of ministries and Ministers in charge of commissions, 
the Auditor-General and the Secretary-General. A new cabinet took office in 2013.  
2.4.  China's judicial system consists of the Supreme People's Court, the local people's courts at 
different levels, and special courts dealing with, inter alia , military, railway and maritime issues. In 
2014, three intellectual property courts, locate d in Beijing, Shanghai and Guangzhou, were 
established (Section 3.3.7).
5 
2.5.  Under Chinese domestic legislation, the Constitution prevails over any other statute, followed 
by laws and administrative regulations (issued by the State Council); local regulations, 
autonomous regulations, and separate regulations; departmental rules (enacted by ministries or departments exclusively at the Central Government level)
6; and local rules (enacted by the 
People's Government at the provincial, autonomous region and municipal levels directly under the 
Central Government and the People's Government of cities with districts or autonomous prefectures) (Box 2.1). Local rules and regu lations may vary across regions, reflecting 
local differences. In this respec t, the authorities have noted that  the Legal Affairs Office of the 
State Council reviews local rules and regulations to ensure policy coherence and indicates those 
                                               
1 The 12th NPC was elected in 2013. 
2 Article 59 of the Constitution; Article 15 of the Elec toral Law of the NPC and Local People's Congresses 
at All Levels, Order No. 27 of the President of the People 's Republic of China; and Decision of the Standing 
Committee of the NPC on Revising the Organic Law of the People's Republic of China on Local People's 
Congresses at all Levels and Local People's Governments at all Levels; the Electoral Law of the People's Republic of China on the NPC and Local People's Congress es at all Levels and the La w of the People's Republic 
of China on Delegates to the NPC and Delegates to Local People's Congresses at all Levels, Order No. 33 of the President of the People's Republic of China. 
3 However, an interim session of the NPC may be co nvened at any time if the Standing Committee of 
the NPC deems it necessary or if one fift h or more of its deputies so propose. 
4 Article 67 of the Constitution. 
5 Decision of the Standing Committee of the NPC on Establishing Intellectual Property Courts in Beijing, 
Shanghai and Guangzhou, 31  August 2014. Viewed at: http://www.npc.gov.cn/npc/xinwen/2014-
09/01/content_1877042.htm .  
6 Departmental rules are issued to cl arify the application of laws, administrative regulations, decisions or 
orders of the State Council. WT/TPR/S/342 • China 
 
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  that need to be revised or eliminated.7 Special Economic Zones may also develop regulations that 
can be applied in their jurisdiction, in accordance with the Legislation Law.  
Box 2.1 Procedures to approve legislation in China 
The Constitution  
Only the NPC has the power to amend the Constitution. Amendments to the Constitution have to be proposed 
by the NPC Standing Committee or by one-fifth or more of the deputies to the NPC, and they must be passed 
by a majority of two-thirds of the vote.  
Laws 
The NPC enacts and amends fundamental laws, for instance those concerning criminal offences, civil affairs, 
and state organs. The NPC Standing Co mmittee enacts and amends all other laws that are not enacted by the 
NPC. When the NPC is not in session, the Standing Committee may supplement and partially amend the laws 
normally enacted by the NPC; none of these changes can contradict the basic principles of the original law. 
The Presidium of the NPC, the NPC Standing Committee, the State Council, the Central Military Commission, 
the Supreme People's Court, the Supr eme People's Procuratorate, the special committees of the NPC, or a 
delegation of 30 or more NPC deputies  may submit a legislative bill to the NPC. The Council of Chairmen, the 
State Council, the Central Military Commission, th e Supreme People's Court, the Supreme People's 
Procuratorate, the special committees of the NPC, or  ten or more members of the Standing Committee may 
submit a bill to the Standing Committee.a 
The draft law, its drafting notes or the revisions of a bill that are to be discussed by the Standing Committee 
must be published for public comment on the NPC website ( http://www.npc.gov.cn/ ), unless it is decided that 
such bill does not require public comment.b The period for soliciting public comments should, in general, be 
not less than 30 days. 
A draft bill submitted for approval must be adopted by a simple majority of all the deputies of the NPC or by a 
simple majority of the full member ship of the Standing Committee. 
A law adopted by the NPC or its Standing Committee is promulgated by a presidenti al decree signed by the 
President. Thereafter, the law is published in the Bulletin of the NPC Standing Committee, on the official 
website of the NPC (www.npc.gov. cn), and in newspapers circul ated at the national level.  
Administrative Regulationsc 
The State Council formulates administ rative regulations. Draft administrative regulations must be published 
for public comment, unless the State Council decides that it is not necessary.b 
Administrative regulations are promulgated by a decree of the Stat e Council signed by the Premier of the 
State Council. Once signed and prom ulgated, administrative regulations are published in the Gazette of the 
State Council, on the Government's legal information network ( http://www.chinalaw.gov.cn/ ), and in 
newspapers circulated at the national level.  
Local Regulations, Autonomous Regulations, Separate Regulations 
Local regulations are formulated by the people's congre sses or their standing committees in the provinces, 
autonomous regions and municipalities directly under the Central Government. The people's congresses of 
cities with districts and their standing committees may only formulate local regulations related to, inter alia , 
urban and rural construction projects , environmental protection, and the pr otection of historic and cultural 
sights. The people's congresses or their standing co mmittees of the provinces and cities where special 
economic zones are located may form ulate regulations to be enforced within the limits of the special 
economic zones. The people's co ngresses of the autonomous regi ons have the power to formulate 
autonomous regulations an d separate regulations. 
Local regulations governing "important matters" of an administrative area have to adopted by the people's 
congress of that area.d 
Local regulations formulated by the people's congress  of a province, autonomous region or municipality 
directly under the Central Government are promulgated,  upon approval, by the Presidium of the congress 
through an announcement. Local regulations formulated by the standing committee of the people's congress 
of a province, autonomous region or municipality dire ctly under the Central Government are, upon approval, 
promulgated by its standing committee through an announcement. Local regulations formulated by the 
people's congress of a city with districts or an autono mous prefecture are, upon approval, promulgated by its 
standing committee through an announcement. Autonomous regulations or separate regulations are, upon 
approval, promulgated by the standing  committee of the local people's congress of the autonomous region, 
autonomous prefecture or autonomo us county through an announcement. 
Upon promulgation, local regulations and the autono mous regulations and special regulations of an 
autonomous region shall be published in the bulletin of the standing committee of the people's congress at 
the same level, on the official website of the NPC ( www.npc.gov.cn ), on the website of the local people's 
congress, and in newspapers circulated within the local administrative region.  
                                               
7 The Office reviews local regulations, local governme nt rules and departmental rules, so that they do 
not contradict the Constitution, laws or administ rative regulations or each other. Viewed at: 
http://www.chinalaw.gov.cn/article/jgzn/zyzn/ .  WT/TPR/S/342 • China 
 
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  Departmental Rulese 
The ministries and commissions of the State Council, the People's Bank of China, the State Audit 
Administration, and other organs endo wed with administrative functions directly under the State Council may 
formulate departmental rules. 
Departmental rules are approved in  an executive meeting of ministries or of a commission, and are 
promulgated by decrees signed by the heads of the departments. Thereafter, they are published in the 
Gazette of the State Council or the gazettes of the relevant departments, on the Government's legal 
information network ( http://www.chinalaw.gov.cn/ ), and in newspapers circulated nationally.  
Local Government Rulese 
The people's government of a province, autonomous region or municipality directly under the central 
government, a city with districts or an au tonomous prefecture may formulate rules. 
Local government rules are approved at the executiv e meetings or plenary meetings of the respective 
governments, and are promulgated by a decree signed by the governor of the relevant province, the 
chairman of the relevant autonomous region, the mayor of the relevant city with districts, or the governor of 
the relevant autonomous prefecture. Thereafter, they ar e published in the gazette of  the people's government 
at the same level, on the Government's legal information network ( http://www.chinalaw.gov.cn/ ), and in 
newspapers circulated within the administrative region.  
a For more details on differences in submitting a bill to  the NPC or to the Standing Committee, refer to the 
Legislation Law, Chapter II, Section 2. 
b The criteria specifying which bills require public comment are not specified in the Legislation Law. c Administrative regulations usually come into effect 30 days after their publication, with the exception of 
those related to national security, foreign exchange an d monetary policy, which may take effect on the day 
of their publication (Article 29 of Regulations on Procedures for the Formulation of Administrative 
Regulations, 1 January 2002. Viewed at: http://www.gov.cn/gongbao/con tent/2002/content_61545.htm ). 
d The Legislation Law does not define "important matters". 
e These rules usually come into effect 30 days after their publication, with the exception of those related to 
national security, foreign exchange and monetary po licy, which may take effect on the day of their 
publication (Article 32 of Regulations on Procedures for the Formulation of Rules, 1 January 2002. Viewed at: http://www.gov.cn/gongbao/content/2002/content_61556.htm ). 
Source: The Legislation Law, 15 March 2015. Viewed at: http://www.npc.gov.cn/npc/dbdhhy/12_3/2015-
03/18/content_1930713.htm . 
2.6.  In order to promote transparency, draft laws  and other draft regulations are published online 
for a 30-day period for public comments, except wh en, as per decision of the State Council, laws 
and regulations need to be kept confidential in accordance with articles 37 and 67 of the 
Legislation Law. Public comments can be submitted through the website of the Legislative Affairs 
Office of the State Council.8 In addition, as of 2014, all rules, normative documents and other 
policy measures formulated by various departments of the State Council, as well as by local 
people's governments at all levels and their departments, that are related to or affect trade in 
goods, services and/or trade-related intellectual property rights must comply with international 
trade rules.9 If necessary, in this regard, the different departments may consult with the Ministry 
of Commerce (MOFCOM).  
2.7.  The China Foreign Trade and Cooperation Economic Gazette , issued by MOFCOM, publishes 
China's trade-related laws, regulations and rules. Currently, laws, regulations, rules and draft rules published for comments are also published in the Gazette. However, the text is only available in 
Chinese, while the title is available in both English and Chinese.
10 
2.8.  Administrative decisions may be challenged within six months by those that deem that their 
legitimate rights have been damaged.11 Appeals are, in general, made to a department at higher 
level that the one that made the decision. In addition, since 2008, several independent 
administrative reconsideration commissions have been established throughout the country as a pilot programme. The authorities noted that, as of March 2014, the pilot programme had been 
implemented in 21 provinces, autonomous regions,  and municipalities directly under the Central 
Government.  
                                               
8 China Legislative Information Network System. Viewed at: http://www.chinalaw.gov.cn  and 
http://www.chinalaw.gov.cn/article/cayjzjxt/index.html . 
9 State Council, Guo Ban Fa [2014] No. 29, Notice of the General Office of the State Council on Further 
Enhancing the Compliance  of Trade Policies. 
10 China Foreign Trade and Cooperatio n Economic Gazette. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/gazette/201509/20150901125925.shtml . 
11 Administrative Procedure Law (last amended in 2014). Viewed at: 
http://www.npc.gov.cn/wxzl/gongbao/2014-12/23/content_1892467.htm  (in Chinese only). WT/TPR/S/342 • China 
 
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  2.9.  Complaints from foreign-invested enterprises (FIEs) are dealt with by the Complaint 
Coordination Office for Foreign-invested Enterprises and the National Complaint Centre for Foreign-invested Enterprises, both under MOFCOM.
12 Between January 2014 and end-2015 
six complaints were filed by foreign investors.  
2.2  Trade Policy Framework and Objectives  
2.2.1  Institutional framework 2.10.  The National Development and Reform Commiss ion (NDRC) is in charge of designing China's 
overall national economic and social developmen t policy. The NDRC is also responsible for: 
conducting research and setting objectives an d policies on economic reform, such as those 
included in the Five-Year Plans; and for designing the foreign direct investment (FDI) policy. MOFCOM is mainly responsible for the coordina tion and implementation of trade-related, 
investment and economic cooperation policies. The Ministries of: Agriculture, Environmental 
Protection, Finance, Industry and Information Technology, and Transportation are also involved in the formulation and implementation of trade policy. 
2.11.  A major institutional reform in 2013 was the establishment of the National Leading Group 
for Comprehensive Deepening Reform, which is in charge of outlining a roadmap for reforms and coordinating their implementation.
13 Six subgroups were established under the Group to undertake 
this task.14 MOFCOM is involved in the subgroup dealing with economic reform and environmental 
protection. 
2.2.2  Trade policy formulation and objectives 2.12.  China's economic, trade, investment and development policies are outlined in a number of 
legal instruments, including Central Government Five-Year Plans, sectoral and provincial Five-Year 
Plans and different Catalogues that provide guidance on the implementation of the overall policies, listing, inter alia , those products that are subject to licences or export taxes; industries that can 
benefit from preferential treatment; and sectors in which investment is encouraged, permitted, or 
prohibited. China's main trade-policy objectives have not changed substantially since the last review in 2014; according to the authorities, China is prepared to continue liberalizing its trade 
and investment regime to reshape its economy. China considers that the multilateral trading 
system (MTS) plays a leading role in China's process of opening up, and RTAs are viewed as a complement to the MTS. 
2.13.  The authorities indicated that China will continue its policy of "opening up", focusing on: the 
modernization of existing industries; the development of clean and knowledge-based industries; 
and the services sector. They also noted that China remains concerned about: overcapacity in certain industries, energy conservation, and the prot ection of the environment. In this respect, the 
authorities stated that they are guiding FDI into emerging industries, high-tech industries, energy 
conservation and environmental protection industries. These goals have been reflected in the latest 2015 Investment Catalogue – which encourages investment in those sectors where capital is 
needed, and discourages and prohibits investment in areas where there is overcapacity – and in 
the expansion of the China (Shanghai) Pilot Free Trade Zone (CSPFTZ), launched in 2013, and the 
establishment of other pilot free trade zones (in Guangdong, Tianjin and Fujian). Through these pilot projects China is exploring, inter alia , the establishment of a new foreign investment 
regulatory framework, based on granting pre-esta blishment national treatment (i.e. no approval 
required at the time of establishment) to foreign investment in activities not included in a negative list.  
2.14.  China is also promoting its "Going Abroad Policy", as outward direct investment is 
considered a way to promote trade. The Belt and Road Initiative aims at, inter alia , promoting 
                                               
12 MOFCOM Decree 2006/2, 1 October 2006 (in Chinese). Viewed at: 
http://www.gov.cn/gongbao/content/2007/content_494436.htm . 
13 This group was established as a result of a de cision taken by the Third Plenary Session of the 
18th National Congress of the Communist Party of China (CPC) held in November 2013. 
14 The six subgroups are: i) econom ic reform and environmental protec tion; ii) democracy and rule of 
law; iii) cultural issues; iv) social issues; v) refo rm of the Party's building sy stem; and vi) disciplinary 
inspection (anti-corruption). WT/TPR/S/342 • China 
 
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  connectivity and cooperation through the development of infrastructure among countries on the 
original Silk Road through Central Asia, West Asia, the Middle East and Europe. The Chinese Government has also encouraged Chinese compan ies, including state-owned enterprises (SOEs), 
to invest abroad.  
2.15.  The Decision on Major Issues Concerning Comprehensively Deepening Reforms, issued after 
the Third Plenary Session of the 18
th National Congress of the CPC in 2013, has also shaped 
China's trade and investment policies during the period under review, even though the focus of 
this Decision was mainly on judicial reforms. These legal reforms are considered necessary for 
China's continued economic reform process and growth. The aim is to create a more independent legal system that can support economic reform. Regarding trade and commercial policy reform, 
the Decision included the following changes: a) the reform of the domestic trading and circulation 
system (Section 3)
15; b) the reform of the investment regime (inward and outward); c) the 
acceleration of the implementation of free-trade agreements; d) the acceleration of the development of the CSPFTZ; and e) the opening up of inland and border areas.
16 
2.16.  More recently, at the meeting of the Chinese Communist Party's Central Committee 
(26-29 October 2015), China's leaders restated their intention of implementing a more proactive strategy of opening up and attracting foreign investment and foreign technologies. At the meeting, 
several "opinions" were examined and adopted, inter alia : a) Opinions on the Implementation of a 
Market Access Negative List System for Investment; b) Opinions on the Development of Open Borders; and c) Opinions on Promoting the Reform of the Price Mechanism.
17  
2.3  Participation in the World Trade Organization 
2.17.  China became a WTO Member on 11 December 2001. China's trade policies have reviewed 
five times. The last Review took place in July  2014. China is an observer to the Committee on 
Government Procurement and is in the process of negotiating its accession to the Plurilateral 
Agreement on Government Procurement. China presented its fifth offer to the Committee in 
December 2014.18 The country is a participant in the Information Technology Agreement (ITA) and 
has agreed on the expansion of the ITA.19 It is an observer to the Plurilateral Agreement on Trade 
in Civil Aircraft. On 1 April 2014 China submitted its notification of Category A commitments under 
the Agreement on Trade Facilitation and on 4 Se ptember 2015 China ratified the Trade Facilitation 
Agreement.20  
2.18.  China has participated actively in the Doha Development Agenda (DDA) negotiations. At the 
MC9, the authorities expressed China's support for the multilateral trading system (MTS), its 
openness towards further multilateral and plurilateral negotiations, and its commitment to achieving development objectives through trade.
21 China considers that an early harvest should 
"serve as the base for kick-starting negotiations of remaining issues on the DDA and eventually 
achieving the development objectives". At the MC10, the Chinese authorities reiterated their support for the MTS and its commitment to the Doha development mandate.  
2.19.  During the period under review, China su bmitted a large number of notifications to the 
WTO, which cover a wide range of agreements, including those on subsidies, state trading, and quantitative restrictions, areas in which China was lagging behind (Table A2.1). Nevertheless, 
notifications on domestic support remain pending. Already implemented changes and updates to 
laws and regulations in different areas, as well as the creation of new agencies (e.g. customs 
procedures, inspection of imports and exports,  food safety, government procurement, and 
intellectual property) also require to be notifi ed as an update or amendment to former WTO 
notifications. 
                                               
15 The goal is to: create a law-based business envi ronment, remove market access barriers, improve 
resource allocation, and foster and facilitate do mestic trade. 
16 This is an attempt to shift the exclusive focus of development, which has been concentrated in the 
eastern and coastal regions in the past three deca des, to the inland and border areas of China. 
17 Xinhua News Agency, "Central Leading Group Comprehensively Deepen Reforms, 16th Meeting", 
15 September 2015. Viewed at: http://www.gov.cn/xinwen/2015-09/15/content_2932105.htm .  
18 WTO document GPA/ACC/CHN/45, 5 January 2015. 
19 WTO document WT/L/956, 28 July 2015. 
20 WTO document WT/PCTF/N/CHN/1, 1 July 2014. 
21 WTO document WT/MIN(13)/ST/99, 24 January 2014, Statement by China's Minister of Commerce at 
the WTO Ministerial Conference, Ninth Session, Bali, 3-6 December 2013. WT/TPR/S/342 • China 
 
- 37 - 
 
  2.20.  Between 1 January 2014 and 1 March 2016, China was involved in three cases under the 
WTO dispute settlement system; as a respondent in two cases and as a complainant in one. China was also involved as a third party in 17 cases brought to the Dispute Settlement Body (DSB) (Table A2.2). 
2.4  Regional Trade Agreements 
2.21.  During the period under review, China signed  FTAs with Australia and with the Republic of 
Korea. The agreements with Iceland and Switzerland entered into force in 2015. As at 
December 2015, China had signed 15 preferential  trade agreements. China is a member of the 
Asia-Pacific Economic Cooperation (APEC) forum (1991), and a signatory to the Asia-Pacific Trade 
Agreement (APTA) (2001) and to the Association of Southeast Asian Nations (ASEAN) (2004). 
2.22.  Since its last Review in 2014, China has continued to deepen its integration with Hong 
Kong, China and with Macao, China through the signature of supplementary agreements to the 
Closer Economic Partnership Arrangements (CEPA) with Hong Kong, China and with Macao, China, 
in 2014.
22 
2.23.  China continues to grant unilateral preferences to LDCs. As of 1 January 2015, China 
granted unilateral tariff preferences to 40 LDCs. Th e preferences granted to them vary: 24 LDCs 
were granted duty-free treatment on 97% of their ta riff lines; 14 LDCs on 95%  of their tariff lines; 
and the remaining 2 LDCs on 62% of their tariff li nes. As of December 2015, duty-free treatment 
on 97% of tariff lines has been granted to 33 LDCs. 
2.5  Foreign Investment Regime 2.5.1  Regulatory framework and market access 
2.24.  The main laws regulating foreign investment in China are the Company Law
23, last amended 
in 2013, and the three laws specifically related to FDI: the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Cooperative Joint Ventures, and the Law on Wholly Foreign-
Owned Enterprises, as well as their related ad ministrative regulations and rules. MOFCOM is 
revising these three laws to combine them into one statute, the draft Foreign Investment Law.
24  
2.25.  The Catalogue for the Guidance of Foreign Investment Industries (Investment Catalogue), 
which is revised periodically, is the main instrument used to guide FDI in China. The Catalogue 
lists the industries where FDI is encouraged, restrict ed or prohibited. Projects that do not fall into 
one of these three groups are "permitted".25 In general, projects in the "encouraged" category 
(those that the authorities are interested in promoting) are those that use improved technology 
and are less polluting, while "restricted" indust ries are those deemed to employ outdated 
technologies, over-exploit scarce natural resources or harm the environment. The "prohibited" category includes projects that pollute the environment, destroy natural resources or go against 
social and public interests. The NDRC and MOFC OM jointly issued a revised Catalogue for the 
Guidance of Foreign Investment Industries 2015 (the 2015 Investment Catalogue).
26 The 2015 
Catalogue has been in force since April 2015 and replaced the 2011 Investment Catalogue. A 
                                               
22 The latest subsequent agreements are: the CEPA Agreement between mainland China and Hong 
Kong, China to achieve liberalization of trade in services in Guangdong (18 December 2014); the Mainland China and Hong Kong, China Closer Economic Partners hip Arrangement, Agreement on Trade in Services 
(25 November 2015); the CEPA Agreement between mainland  China and Macao, China to achieve liberalization 
of trade in services in Guangdong; and the mainland  China and Macao, China Closer Economic Partnership 
Arrangement, Agreement on Trade in Services (25 November 2015) (Information provided by the authorities). 
23 Company Law of the People's Republic of China (Revised in 2013). Viewed at: 
http://www.fdi.gov.cn/1800000121_39_4814_0_7.html . 
24 Foreign Investment Law of the People's Republic of China (Draft for Public  Comments). Viewed at: 
http://tfs.mofcom.gov.cn/article/as/201501/20150100871010.shtml  (in Chinese), and at: 
https://www.uschina.org/sites/default/files/2015% 20Draft%20Foreign%20Inv estment%20Law%20of%20the
%20People%27s%20Republic%20of%20China_JonesDay_0.pdf  (in English).  
25 Provisions on Guiding Foreign Investment of 11 February 2002 . Viewed at: 
http://www.mofcom.gov.cn/article/zt_swfg/subjectby/200612/20061204133533.shtml . 
26 MOFCOM and NDRC, Catalogue for the Guidance of Foreign Investment Industries 2015 (2015 
Amendment Order), Guo Fa [2015] No. 22. Viewed at: http://www.mofcom.gov.cn/article/b/c/201503/20150300911747.shtml  (in Chinese). WT/TPR/S/342 • China 
 
- 38 - 
 
  clause in the 2011 Investment Catalogue stating that, if the State Council were to issue any 
special provisions or industrial policies that contradicted the Catalogue, the State Council's provisions and policies would prevail, was elim inated. In this regard, the 2015 Catalogue only 
states that the provisions stipulated in any of th e preferential and free trade agreements signed by 
China shall prevail over the Catalogue. 
2.26.  The authorities consider that the revision of the Investment Catalogue denotes an important 
effort to comprehensively open up the Chinese economy to foreign investment. According to the 
information supplied by the authorities, the 2015 Ca talogue includes a total of 423 entries, 48 less 
than the 2011 Catalogue. The authorities also no ted that the number of restricted sectors was 
reduced from 79 in 2011 to 39 in 2015; while the number of encouraged sectors remained mainly unchanged (Box 2.2; Table A2.3; and Table A2.4). The revised Catalogue aims at channelling FDI 
towards industries that require restructuring through the use of new equipment and new and 
greener technologies. According to the authorities, the 2015 Catalogue was revised to open the economy mainly in the services sector but also in manufacturing; the revision is intended to 
promote the use of foreign investment in a more efficient manner. 
Box 2.2 Summary of the major changes in the 2015 Investment Catalogue 
Encouraged Category  
Activities removed (or moved) from the en couraged category in the 2015 Catalogue : 
Agriculture: planting of trees or bamb oo and development of improved varieties;  and development of new varieties of 
polyploid trees. 
Manufacturing: tobacco industry (which is now included in the prohibited category); and papermaking and paper 
products industry totally removed. 
Activities included in the encourag ed category in the 2015 Catalogue: 
Manufacturing: petroleum processing; manufacturing of raw chemical materials and chemical products; manufacturing 
of special-purpose equipment; manufacturing of computers, telecommunications and other electronic equipment. 
Mining and energy: exploration; mining and ore dres sing of minerals in acute shortage in China. 
Services: production and supply of electricity, gas and water (e.g. construction and operation of power grids and 
sewage treatment plants); transport (e.g. construction and operation of trains); research and technology industries; 
and health and social services (e.g. care centres for the elderly). 
Industries that are no longer restricted to Sino-for eign equity/cooperative joint venture operations or 
equity shareholding requirements (i.e. Chinese partie s as the controlling shareholders) or for which these 
restrictions have been somewhat relaxed : 
Agriculture: planting of traditional Chinese medicine herbs. 
Manufacturing:  manufacturing of general equipment; manufacturing of railway, vessels, aviation and aerospace, and 
other transportation equipment; manufacturing of electr ic machinery and of key auxiliary equipment for power 
transmission. 
Mining and energy: development and application of enhanc ed oil recovery and other relevant new technologies; 
development and application of new technologies for oil exploration and exploitation in areas of geophysical 
prospecting; drilling; well logging; mud logging and down-hole operation. 
Services: leasing and commercial services industries (e.g. accounting and auditing); water conservancy, 
environmental and public facilities management industries ; transport (e.g. construction and operation of urban 
subway, light railway and other modes of track transport); entertainment (operation of performance sites). 
Restricted Category  
Activities removed from the restricted category: 
In the manufacturing sector the number of items listed in the restricted category was largely reduced.  
Manufacturing: beverages; tobacco (was moved to the prohib ited category); printing and reproduction of recording 
media; petroleum processing, coking and nuclear fuel processing industries; manufacturing of chemical raw materials 
and chemical products; manufacturing of medical and pharmaceutical products; manufacturing of chemical fibre; 
smelting and rolling of non-ferrous metals; manufacturi ng of general-purpose equipment and special-purpose 
equipment. 
Services: construction; transport; wholesale and retail; some financial services; legal consulting; photography 
services; recreational services; and real estate. 
Activities included in the restricted category: 
Manufacturing: the manufacturing of automobiles, special-use vehicles and motorcycles. 
Services: general aviation companies for business flights, air sightseeing tours, institutions of higher learning, 
preschool education institutions and medical institutions. 
Changes regarding the nationality of the controlling party and/or the percentage of foreign investment 
that is allowed .  
Banking:  
 a bank, as a single overseas financial institution and th e affiliated parties under its control or joint control, 
is allowed to have a maximum of 20% participation in a single Chinese-funded commercial bank;  
 WT/TPR/S/342 • China 
 
- 39 - 
 
   multiple overseas financial institutions and the affiliated parties under their control or joint control are only 
allowed to have a 25% participation in a single Chinese-funded commercial bank; and 
 overseas banking financial institutions may invest in rural small and medium-sized financial institutions.  
Financial institutions were also included in the restricted category of the 2011 Catalogue; however, the 2011 
Catalogue did not specify the investment requirement. 
Prohibited Category 
Activities removed from the prohibited category 
Agriculture: research and development of genetically modified varieties; processing of green tea and special tea with 
China's traditional methods (fam ous tea, dark tea, etc.). 
Manufacturing: manufacturing of open-lead-acid cells, mercury buttontype silver oxide cells, paste dioxide-zinc battery 
and nickel cadmium cells; bodiless lacquerware and of enamel products; production of carcinogenic, teratogenic, and 
other organic pollutant products. 
Services: construction and operation of  coal fired small power plants (of ≤ 300,000 kW) in a small grid; construction 
and operation of thermal plants with a single generator capacity of 100,000 kW or less; general map compilations; 
importation of books, newspapers and periodic als; management of golf courses and villas. 
Activities included in the prohibited category 
Agriculture: seed selection of genetically modified varieties. 
Mining and energy: Production of nuclear energy.  
Service: Construction and operation of coal-fired power plants (of ≤ 300,000 kW) in a large grid; construction and 
operation of thermal plants with a single generator capacity of 200,000 kW or less; wholesale and retail of tobacco 
leaves, cigarettes, re-dried tobacco leaves and other tobacco products. 
Source: Information provided by the authorities.  
2.27.  Technology transfer is also at the core of China's FDI policy. Nonetheless, the authorities 
maintain that technology transfer is not a mandatory requirement for FDI to be approved. One of 
the main features of the 2015 Investment Catalogue is that several industries are no longer restricted to Sino-foreign equity/cooperative joint venture operations, or are no longer required to 
be controlled by Chinese shareholders. For instan ce, the requirement that Chinese shareholders 
should hold a dominant position was relaxed in key industries such as: e-commerce, chain-store 
operation, wholesale of refined oil products, insurance brokerage, and trust and finance companies. 
2.28.  The revision of the Investment Catalogue appears to be consistent with the goals of the 
12
th Five-Year Plan, which calls for a more efficient use of foreign investment in sectors such as 
modern agriculture, high and new technology, advanced manufacturing, energy conservation and 
environmental protection, new power sources, and modern service industries, areas in which 
foreigners should be encouraged to invest.27 
2.29.  A comparison between the 2011 and 2015 Catalo gues is difficult, as the content of each 
category is somewhat different and the description /name of some activities has been updated to 
reflect technological changes. This is the case in industries such as the manufacturing of raw 
chemical materials, chemical products, and chemical fibres; and of computer, telecommunications and other electronic equipment. In other instances,  only one activity within  the industry has been 
removed from one of the categories, or industries may have been removed from the Catalogue 
because they are now subject to the same (restrictive) conditions as domestic industries. Furthermore, the Investment Catalogue is very specific, which makes comparing the two 
catalogues difficult. For instance, an activi ty encouraged in the 2011 Catalogue was the 
"manufacturing of large-scale digital integrated ci rcuits with a line width of 0.18 microns or less", 
while in the 2015 Catalogue the activity that is encouraged is "the manufacturing of large-scale digital integrated circuits with a line width of 0.28 microns or less". Given the specificity of the 
type of changes, it is difficult to interpret what  they mean in terms of market access. Moreover, 
the Chinese authorities have not clarified the policies in place to guide FDI into the "encouraged" sectors. 
2.30.  On 2 October 2015, the State Council issued an Opinion that calls for the design of two 
negative lists – one for market access, applying to both domestic and foreign companies, and another for foreign investment – the use of these lists will be gradually implemented.
28 The 
                                               
27 Chapter 52 of the 12th Five-Year Plan. Viewed at: http://dangshi.people.com.cn/GB/151935/204121/  
(in Chinese only). 
28 Opinions of the State Council on Implementing  a Market Access Negative List System. Online 
information. Viewed at: http://news.xinhuanet.com/politics/2015-10/19/c_1116863718.htm . WT/TPR/S/342 • China 
 
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  Opinion states that the development and implementation of the market access and foreign 
investment negative lists will adhere to the genera l concept of national security and will take into 
account regional development differences. It is not clear how these lists will relate to the investment catalogue that is currently used to guide investment. 
2.31.  FDI in the form of mergers and acquisitions (M&As) is subject to anti-trust reviews
29, which 
are intended to assess their impact on the market. In 2011, China issued guidelines to assess the impact of anti-trust reviews.
30 In addition, FDI involving investments in Chinese domestic 
enterprises might be subject to national security reviews if the FDI is related to defence, or is 
deemed to have an influence on national security. In 2011, the authorities took some steps to clarify the procedures and scope of these reviews.
31  
2.5.2  Examination and approval procedures 
2.32.  Foreign-invested projects (FIPs) in China ar e either subject to verification (approval) or to 
record-filing. In 2014, the NDRC released a docume nt stipulating the procedures and requirements 
for the verification (approval) and record-filing of FIPs32, which replaced the 2004 Interim 
Measures.33 The document defines FIPs as: equity/cooperative joint ventures, wholly foreign-
owned enterprises and foreign investment partne rships, as well as foreign enterprises merging 
with domestic enterprises, new investments in a foreign-invested enterprise and reinvestments by 
foreigners. 
2.33.  Projects subject to verification (approval) are those listed in the Catalogue of Investment 
Projects Subject to Government Verification34, while most of the other projects not included in it 
are subject to record-filing. Verification (i.e. approval), requires the examination of the investment 
project, and a number of conditions need to be met, including those related to the environmental 
impact of the project and to land use. In contrast, record-filing is a simplified process handled by the competent local authorities. However, the local authorities may consider that a FIP does not 
qualify for record-filing. In these cases the relevant authority needs to issue a written opinion 
specifying the reasons for the decision within seven working days.
35 The authorities noted that, in 
general, FIPs are subject to the same requiremen ts as domestic investors when filing for an 
investment project. Record-filing requires an applicant to establish an enterprise; apply for a 
business licence; register with the relevant author ities (taxation, customs, foreign exchange and 
                                               
29 The administrative regulations with regard to FD I involving M&As include: Article 31 of the Anti-
Monopoly Law, 1 August 2008. Viewed at: http://www.gov.cn/flfg/2007-08/30/content_732591.htm  (in 
Chinese only); Provisions of the State Council on the Thresholds for Declaring Concentration of Business 
Operators, 3 August 2008. Viewed at: http://www.gov.cn/zwgk/2008-08/04/content_1063769.htm  (in Chinese 
only); the Regulations on Mergers and Acquisition of Do mestic Enterprises by Foreig n Investors, 22 June 2009. 
Viewed at: http://www.mofcom.gov.cn/article/b/f/200907/20090706416939.shtml  (in Chinese only); Measures 
on the Examination of Concentrations of Undertakings, 1 January 2010. Viewed at: 
http://fldj.mofcom.gov.cn/article/c/200911/20091106639145.shtml  (in Chinese only); Measures on the 
Notification of Concentrations of Undertakings, 1 January 2010. Viewed at: 
http://fldj.mofcom.gov.cn/article/c/200911/20091106639149.shtml  (in Chinese only); and the Provisions on 
National Security Review of Acquisitions of Domestic Enterprises by Foreign Investors, 1 September 2011. 
Viewed at: http://www.mofcom.gov.cn/aarticle/b/c/201108/20110807713530.html  (in Chinese only). 
30 The Interim Provisions on the Assessment of the Impact of Concentration of Undertakings on 
Competition, 5 September 2011. 
31 MOFCOM Provisions on National Security Review of  Acquisitions of Domestic  Enterprises by Foreign 
Investors, 1 September 2011. 
32 The Administrative Measures for the Approval and Record-Filing of Foreign-In vested Projects (FIPs), 
NDRC [2014] No. 12. Viewed at: http://www.sdpc.gov.cn/zcfb/zcfbl/201405/W020140521524444536751.pdf ; 
and Decision on Revising Certain Articles of the Admini strative Measures for the Verification and Approval and 
Record-Filing of Outbound Investment Projects and th e Administrative Measures for the Verification and 
Approval and the Record-Filing of Foreign Investment Projects, NDRC [2014] No. 20. Viewed at: http://www.sdpc.gov.cn/gzdt/201501/W020150115586334332592.pdf . 
33 The Interim Measures for the Admi nistration of Examination and Veri fication of Foreign Investment 
Projects, NDRC Decree [2004] No. 22. Viewed at: http://www.gov.cn/gongbao/content/2005/content_64246.htm  (in Chinese only). 
34 State Council Circular, Guo Fa [2014] No. 53. Viewed at: http://www.gov.cn/zhengce/content/ 
2014-11/18/content_9219.htm  (in Chinese).  
35 Article 20 of NDRC Notice [2014] No. 12. WT/TPR/S/342 • China 
 
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  the pertinent regulatory bodies) and submit th e required documents to the local government 
authorities.36 
2.34.  The Catalogue of Investment Projects Subject to Government Verification lists specific 
projects in areas such as: agriculture, energy, transportation, information technology, raw 
materials, manufacturing of machinery, light manufacturing, high and new technology and 
construction in urban areas, which would require verification (i.e. approval) both for domestic and foreign investment. In addition, the Catalogue indicates in which instances FIPs are subject to 
verification and the authorities in charge of undertaking the procedure.
37 Depending on the 
amount invested or location of the project, verification is carried out by the State Council, the NDRC, or one of its local branches (Table 2.1). Th e agencies in charge of approval, as well as the 
requirements to obtain approval, are listed in th e Catalogue. Moreover, in the case of projects 
involving "huge" overcapacity, including steel, electrolytic aluminium, cement, sheet glass and 
vessels, the approval process is outlined in a specific piece of legislation.
38 Approval is also 
required for projects designed to expand capacity in any of these sectors. 
Table 2.1 Foreign direct investment subject to verification 
Investment 
category Threshold and ownership requirement Approving agency  
Encouraged  Less than US$1 billion 
China's equity share of a minimum of 51% or relative control Government at the provincial 
level 
US$1 billion or above 
China's equity share of a minimum of 51% or relative control State Council or NDRC  
US$2 billion or above 
China's equity share of a minimum of 51%  NDRC approval 
State Council for record-filing 
Restricted  Less than US$100 million Government at the provincial 
level 
US$100 million or above State Council or NDRC  
US$2 billion or above NDRC approval 
State Council for record-filing 
Source: Guo Fa [2014] No. 53.  
2.35.  According to the authorities, FIP applications  are in general approved as long as they have 
no negative impact on national security, the environment or public interest, and they comply with 
the relevant laws and regulations; the Catalogue for the Guidance of Foreign Investment Industries; the Catalogue of Priority Industries for Foreign Investment in the Central-Western Regions of China; and the national deve lopment plans and industrial policies.
39  
2.36.  Foreign-invested enterprises (FIEs) must also register with the State Administration for 
Industry and Commerce (SAIC) or with the provincial commercial department, and with the State Administration of Foreign Exchange (SAFE). Registration requirements are the same as those that 
apply to domestic enterprises, but may vary slig htly depending on the activity. Corporations are 
registered in accordance with the Company Law, while partnerships are registered in accordance 
with the Partnership Law and other measures.
40 
2.37.  The Company Law was amended in 2013 to adapt the provisions regarding capital 
requirements, and replace the paid-up capital re gistration system with a subscribed capital 
registration system. For instance, the general minimum capital requirement to establish a wholly foreign-owned enterprise (WFOE) of RMB 30,000, or RMB 100,000 if there is only one shareholder 
was removed, except for specific industries such as banking and insurance. Capital may be 
contributed in cash or in kind. The revised Company Law also abolished the requirement for a minimum 30% cash contribution of the registered capital, as well as other requirements in terms 
                                               
36 These documents include: the description of the project, the supporting documents to register an 
enterprise; the letter of inve stment intent; and the relevant  resolution of the board of directors in the case of a 
project to increase capital or an M&A project (Article 18 of NDRC Notice [2014] No. 12). 
37 The Catalogue also stipulates the verification requ irements for outward invest ment (Article 11 of the 
Catalogue of Investment Projects Approved by the Government (2014 Version). Guo Fa [2014] No. 53). 
38 Guidance Opinions on Resolving Serious Production Overcapacity Conflicts, Guo Fa [2013] No. 41. 
39 Article 16 of NDRC Notice [2014] No. 12. 
40 The Measures for the Administration of the Establis hment of Partnership Enterprises in the Territory of 
China by Foreign Enterprises or Individuals. Viewed at: http://www.gov.cn/zwgk/2009-
12/02/content_1478238.htm  (in Chinese only). WT/TPR/S/342 • China 
 
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  of the capital contribution deadlines and capital verification, suggesting a more open and relaxed 
environment for the set-up and operation of businesses. 
2.38.  The pilot reform of the foreign investment system, which was initiated in 2013, through the 
establishment of the China (Shanghai) Pilot Free Trade Zone (CSPFTZ)41, was expanded in 2015 to 
three other pilot free trade zones (FTZ) in Guangdong, Fujian and Tianjin.42 The foreign 
investment access in these four zones is based on a negative list approach, which applies to the four of them. FIPs not listed in the negative list  are exempt from examin ation and approval. These 
FIPs are only subject to record-filing. 
2.39.  In addition to establishing other pilot FTZs, the State Council and MOFCOM released various 
policies related to investment in the FTZs. These included: the Special Administrative Measures (Negative List) for Foreign Investment Access to Pilot Free Trade Zones (2015 Negative List)
43, the 
Measures for Record-Filing Administration of Foreign Investment in Pilot Free Trade Zones (for 
Trial Implementation) (Record-Filing Measures)44, and the Trial Measures for National Security 
Review of Foreign  Investment in Pilot Free Trade Zones (National Security Measures).45  
2.40.  The 2015 Negative List provides an outline of those sectors in which foreign investment is 
restricted or prohibited, and replaced the 2014 Negative List, which only applied to the CSPFTZ.46 
The new List applies to all existing FTZs. For all industries not listed in this document, foreign 
investors will receive treatment similar to domestic companies with regard to the establishment 
and approval requirements and process. This mean s that they do not require government approval 
and, instead, benefit from a simplified filing procedure, in addition to the incorporation procedure required by the SAIC. Under the new Record-Filing Measures, this procedure must be completed 
within 30 days of the company's incorporation, or within 30 days of the filing of contracts and 
articles of association of the foreign-funded enterprise.  
2.41.  The 2015 Negative List enumerates 122 prohibited or restricted areas, reduced from 139 in 
the 2014 Negative List. The changes made to the 2015 List mirror those incorporated in the 2015 
Foreign Investment Catalogue, including reducing the number of sectors that are restricted or prohibited to foreign investors and reducing the number of industries where foreign investors can 
only participate through a joint venture with a Chinese company or need a minimum amount of 
Chinese equity participation. Certain items have also been removed from the prohibited category of the List, for example the manufacturing of we apons and ammunition. However, this does not 
mean that foreign investors may now manufacture weapons within the FTZs. The 2015 Negative 
List only serves to identify instances in which foreign investors are treated differently than 
domestic investors. Weapons and ammunition are not allowed to be produced by regular Chinese entities either, hence their removal from the List. Thus, the Negative List needs to be read in 
conjunction with other laws and regulations. 
                                               
41 State Council Circular on Printing  and Distributing the Overall Plan  for China (Shanghai) Pilot Free 
Trade Zone, Guo Fa [2013] No. 38. Viewed at: http://www.gov.cn/zwgk/2013-09/27/content_2496147.htm  (in 
Chinese only). 
42 Notice of the State Council on Printing and Distri buting the "Overall Plan for the China (Guangdong) 
Pilot Free Trade Zone", Guo Fa [2015] No. 18. Viewed at: http://www.gov.cn/zhengce/content/2015-
04/20/content_9623.htm  (in Chinese only); Notice of the State Council on Printing and Distributing the 
"Overall Plan for the China (Fujian) Pilot Free Trade Zone", Guo Fa [2015] No. 20. Viewed at: 
http://www.gov.cn/zhengce/content/2015-04/20/content_9633.htm  (in Chinese only); Notice of the State 
Council on Printing and Distributing the "Overall Plan for the China (Tianjin) Pilot Free Trade Zone", Guo Fa 
[2015] No. 19. Viewed at: http://www.gov.cn/zhengce/content/2015-04/20/content_9625.htm  (in Chinese 
only).  
43 Notice of the General Office of the State Council on  Printing and Distributing the Special Management 
Measures for the Market Entry of Foreign Investment in  Pilot Free Trade Zones (Negative List), 8 April 2015, 
Guo Ban Fa [2013] No. 23. Viewed at: http://www.gov.cn/zhengce/content/2015-04/20/content_9627.htm  (in 
Chinese only). 
44 Measures for Record-Filing Administration of Fore ign Investment in Pilot Free Trade Zones (for Trial 
Implementation), MOFCOM Announcement [2015] No. 12. Viewed at: http://wzs.mofcom.gov.cn/article/n/201504/20150400946303.shtml  (in Chinese only). 
45 Notice of the General Office of the State Council on  Printing and Distributing the Trial Measures for 
the National Security Review of Foreign Investment in Pilot Free Trade Zones, Guo Ban Fa [2015] No. 24. Viewed at: http://www.gov.cn/zhengce/content/2015-04/20/content_9629.htm  (in Chinese only). 
46 Special Management Measures for the Market Entr y of Foreign Investment in the China (Shanghai) 
Pilot Free Trade Zone (Negative List) (2014 Revision), Sh anghai Municipal People's Government Announcement 
[2014] No. 1. Viewed at: http://www.china-shftz.gov.cn/PublicInformation.aspx?GID=8f7d8298-3462-4c6f-
8cc8-8c42a315143c&CID=953a259a-1544-4d72-be6a-264677089690&MenuType=1 . WT/TPR/S/342 • China 
 
- 43 - 
 
  2.42.  In 2015, the State Council also released the Circular on Distributing the Trial Measures on 
National Security Review of Foreign Investment in the Pilot Free Trade Zones to ensure control 
over potential national security risks as restrictions are relaxed for foreign investors. The Circular clarifies standards for conducting security reviews of foreign investment that may affect national 
security or involve sensitive investors as well as acquisition targets, and industries and technology. 
The measures are broader than the existing regime, which only applies to certain types of foreign M&A transactions. Under the FTZ pilot rules, investments by foreign companies will be strictly 
reviewed if they involve a controlling stake of businesses related to: the military fields, key 
agricultural products, energy, infrastructure, transportation, culture, information technology and equipment manufacturing that concern national security. The review applies not only to foreign M&As but to all other types of foreign investment, including offshore transactions, reinvestment by 
FIEs and arrangements using share nominees. The review will evaluate the influence of foreign 
investment on national security, economic stability , social order, morality, Internet safety and the 
development of key technology concerning State security. However, there are no details in the 
Circular on how to carry out the evaluation or on the definition of any of these factors. A joint 
committee with representatives from the NDRC, MOFCOM and other agencies will conduct the reviews. 
2.5.3  Incentives for foreign investment 
2.43.  China still offers various tax incentives to promote sectors deemed beneficial to the 
development of its economy. As a result, most capital goods imported to be used in projects in sectors listed in the "encouraged" category of the Investment Catalogue  may benefit from customs 
duty exemptions.
47 Goods listed in the Catalogue of Products Imported for Foreign Investment 
Projects and Not Eligible for Tax Exemption (last revised in 2008), and in the Catalogue of Imported Major Technical Equipment and Products Not Eligible for Tax Exemption (last revised 
in 2014), are excluded from this treatment.
48  
2.44.  Foreign-invested projects (FIPs) in sectors listed in the Catalogue of Priority Industries for 
Foreign Investment in the Central-Western Regions of China are entitled to the same preferential 
treatment as those classified as "encouraged" in the Investment Catalogue.49 These projects 
benefit from customs duty exemptions on the importation of capital goods and continue to enjoy a reduced enterprise income tax (EIT) rate of 15%; this benefit will be in place until 2020.
50 The 
Central and Western Regions Catalogue was last revised in 2013 to enlarge its sectoral and 
geographical scope: it now has 500 sectors, 173 more than the previous Catalogue, and its 
geographical coverage was extended.51 At present the Hainan province is also covered by the 
Catalogue. Newly included sectors were related to emerging industries and services (solar power 
generation and its equipment, spare parts manufacturing, cloud computing, the "Internet of 
Things", and mobile Internet). 
2.45.  China continues to encourage FDI in high-tech enterprises and R&D; "qualified" R&D centres 
can apply for import duty and import VAT exem ption for "qualified" imported R&D equipment.52 
                                               
47 The VAT exemption was removed in 2009 (GACC Announcement [2008] No. 103. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab1/info154122.htm ). 
48 General Administration of Customs Announcement [2015] No. 29. Viewed at:  
http://www.customs.gov.cn/publish/portal0/tab65603/info761268.htm  (in Chinese only); Catalogue of 
Products Imported for FIPs and Not Eligible for Tax Exemption, GACC Announcement [2008] No. 65. Viewed 
at: http://www.customs.gov.cn/publish/portal0/tab399/info125825.htm  (in Chinese only); and the Catalogue  
of Imported Major Technical Equipment and Products Not Eligible for Tax Exemption, Cai Guan Shui [2014] 
No. 2. Viewed at:  http://www.gov.cn/gzdt/2014-02/28/content_2625354.htm (in Chinese only). 
49 Catalogue of Priority Industries for Foreign Inve stment in Central-Western Regions of China, NDRC 
MOFCOM Decree [2013] No. 1. Viewed at: http://www.sdpc.gov.cn/zcfb/zcfbl/201305/t20130516_541505.html  . 
50 WTO document G/SCM/N/284/CHN, 30 October 2015. 
51 A full English version of the revised Catalogue was no t available at the time of writing this report. The 
Chinese version is available at: http://www.mofcom.gov.cn/article/b/g/201309/20130900322859.shtml . An 
abbreviated English version of the revise d Catalogue in English is available at: http://www.china-
briefing.com/news/2013/05/16/china-updates-catalogue-of -priority-industries-for-foreign-investment-in-
central-and-western-regions.html . 
52 SAT Announcement [2011] No. 73 on Management Me asures on VAT refund for domestic equipment 
purchased by R&D centres. Viewed at: http://www.chinatax.gov.cn/n810341/n 810765/n812156/n812454/c1185476/content.html  ; and Circular WT/TPR/S/342 • China 
 
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  2.46.  Incentives are also granted to companies importing technologies or products included in the 
Catalogue of Encouraged Technology and Prod uct Imports, which was last updated in 2015 
replacing the 2011 Catalogue.53 The Catalogue, which MOFCOM updates from time to time, covers 
the importation of various advanced technologies , essential equipment and components, critical 
resource products, as well as raw materials. It reflects China's need to obtain core technologies 
from overseas and to purchase key equipment and components that it currently does not manufacture. The 2009 Catalogue stipulated that companies that import technologies or products 
included in the Catalogue will benefit from a preferential interest rate.
54 H o w e v e r ,  i t  d o e s  n o t  
provide any more details regarding the interest rate or the amount of the reduction, which apparently are not determined at the Central Government level; this support is financed through a special fund set up by the Government to promote economic development and trade.
55 According 
to the authorities none of these preferential policies are currently in place.  
2.47.  Preferential tax treatment continues to be provided under the EIT Law for both foreign- and 
domestic-invested enterprises under certain circumstances (Table 2.2). This  Law allows for tax 
reduction, the application of an accelerated de preciation method or the shortening of the 
depreciation period when the depreciation of a fixed asset is accelerated. Autonomous local authorities may also opt for tax reduction or exemption for their portion of the EIT shared by the 
local authorities. 
Table 2.2 Incentives in the form of prefer ential tax treatment under the Enterprise 
Income Tax Law 
Type of 
enterprise Conditions for eligibility Form of the incentive 
Small 
enterprises with low profits Industrial enterprises with an annual taxable income of no more than 
RMB 300,000, a payroll size of at most 100 persons, and a total amount of assets not exceeding RMB 30 million. 
Other enterprises, with an annual taxable income of no more than RMB 
300,000, a payroll size of at most 80 persons, and a total amount of 
assets not exceeding RMB 10 million Reduced rate of 20% 
High and new 
technology 
enterprises State-encouraged. Recognized high-tech enterprises must engage in a 
business involving products (services) that fall within the scope 
specified in the Advanced and New Technology Areas Eligible for the 
Key Support of the State . To be recognized as high-tech enterprises, 
companies must meet some parameters regarding R&D expenses, 
income from high-end new technolo gical products and the number of 
R&D personnel Reduced rate of 15% 
Venture 
capital 
enterprises Venture capital investments are supported and encouraged by the 
State Partial deduction of the 
invested amount from 
taxable income 
All enterprises Income derived from one of the following: 
 Projects in agriculture, forestry, animal husbandry and fisheries; 
 Public infrastructure investment projects supported by the State 
 Qualified projects related to environmental protection, and energy 
and water conservation 
 Qualified transfer of technology Deduction/exemption from 
income tax 
All enterprises R&D expenses incurred for the development of new technology, 
products or techniques Deduction of the incurred 
expenses 
All enterprises Income from the production of goods in conformity with the industrial 
policies of the State and by way of comprehensive utilization of 
resources Deduction of such income 
from taxable income 
All enterprises Investment made in specialized equipment for environmental 
protection, energy and water conservation, or production safety Partial deduction of the 
invested amount from income tax 
Source: EIT Law of the People's Republic of China. 
                                                                                                                                               
Caishui [2011] No. 88. Viewed at: 
http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201110/t20111019_600479.html . 
53 Catalogue of Encouraged Technology and Product Imports (2015). Viewed at: 
http://www.mofcom.gov.cn/article/difang/201508/20150801074747.shtml. 
54 The Catalogue of Encouraged Technology and Product Imports (2009). Viewed at: 
http://www.sdpc.gov.cn/fzgggz/gyfz/zcfg/200908/t20090831_299031.html. 
55 Administrative Measures for Special Fund of Foreign Economy and Trade Development, Cai Qi [2014] 
No. 36. Viewed at: 
http://www.mof.gov.cn/zhengwuxinxi/caizhengwengao/wg2014/201408wg/201503/t20150327_1208373.html  
(in Chinese only). WT/TPR/S/342 • China 
 
- 45 - 
 
  2.48.  In order to attract investment, especially foreign investment, and promote economic 
development, China has historically implemented preferential tax regimes in specific regions. However, according to the information provided by the authorities, several of these regimes have been eliminated. The regimes that applied in: some Special Economic Zones; Coastal Open Cities; 
Economic and Technological Development Zones; the Binhai New Area of Tianjin; the Pudong New 
District of Shanghai; and the Three Gorges of the Yangtze River Economic Zone have been removed. Tax preferences remain in place for high-tech enterprises that were established as of 
1 January 2008 in a special economic zone (i.e. Shenzhen, Zhuhai, Shantou, Xiamen, or Hainan) 
or the Pudong New Area of Shanghai. Income earned in any of those zones is exempt from EIT for the first two years following the initial year in which income derived from production or operations is earned, and a preferential rate of 50% of the statutory tax rate of 25% is applied between the 
third and fifth years. Encouraged industries established in China's Western Development Regions 
continue to enjoy a preferential enterprise income tax (EIT) of 15% instead of the statutory EIT of 25%. 
 
 WT/TPR/S/342 • China 
 
- 46 - 
 
  3  TRADE POLICIES AND PRACTICES BY MEASURE 
3.1  Measures Directly Affecting Imports 3.1.1  Customs procedures and requirements 3.1.  Customs procedures continue to be regulated by several pieces of legislation (Table 3.1). In 
addition, the General Administration of Customs of the People's Republic of China (GACC), the 
national authority responsible for customs administration in China, issues administrative customs ordinances and announcements to introduce and enforce changes in customs procedures.
1 
Between January 2014 and September 2015, the GACC issued 142 GACC announcements and 
13 GACC decrees. The announcements focused, inter alia , on: paperless procedures, the 
harmonization of customs procedures throughout China, the imposition of anti-dumping duties, and tariff classification.
2 The decrees were related to: impr oving the transparency of customs 
operations through the disclosure of information3; facilitating the return of imported goods4; 
standardizing the registration of customs declaration entities5; implementing free trade 
agreements6; and rating enterprises according to their credit history.7 
Table 3.1 Legislation relate d to customs procedures 
Legislation Date of issuance/amendment  
Customs Law of the People's Republic of China Order No. 50 issued in 1987, and amended in 2000 and 2013 (last amended, 
28 December 2013. Viewed at: http://www.npc.gov.cn/npc/xinwen/2013-
12/30/content_1821988.htm ) 
Regulations of the People's Republic of China 
on Import and Export Duties State Council Decree No. 392, 29  October 2003. Viewed at: 
http://english.mofcom.gov.cn/aarticle/policyrelease/internationalpolicy/2007
05/20070504715851.html  (in English) 
Provisions of the People's Republic of China on 
the Customs Administration of Declarations for 
the Import and Export of Goods GACC Decree No. 103 of 2004, and amended by No. 218 of 2014 (last 
amended, 13 March 2014. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info265127.htm ) 
Customs Rules on Administration of the 
Levying of Duties on Imports and Exports GACC Decree No. 124 of 2005 amended by GACC Decree No. 218 of 2014 
(last amended, 13 March 2014. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info4487.htm )  
Note: Legislation may be viewed in Chinese only.  
Source: WTO Secretariat. 
3.2.  Importers (and exporters) must register as foreign trade operators with the 
Ministry of Commerce of the People's Republic of China (MOFCOM) or its authorized bodies before 
filing customs declarations. Foreign-invested enterprises (FIEs) may also register as foreign trade 
operators; FIEs require a copy of the certificat e of "approval of foreign-invested enterprises" 
to register.8 Import (and export) declarations must be made in paper and electronic format or 
through the paperless procedure, and can be made either by a natural person or by a customs 
declaration enterprise.9 In 2014, the registration requirements for customs declaration enterprises 
                                               
1 For a full list of the laws and regulations, see Genera l Administration of Customs of the People's 
Republic of China (GACC)  online information: http://www.customs.gov.cn /Default.aspx?tabid=399  (in Chinese 
only).  
2 For a full list of announcements and decrees, see GACC online information: 
http://www.customs.gov.cn/tabid/49659/Default.aspx.  (in Chinese only). 
3 GACC Decree of No. 215, 26 February 2014. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info697390.htm  (in Chinese only). 
4 GACC Decree of No. 217, 12 March 2014. Viewed at 
http://www.customs.gov.cn/publish/portal0/tab49660/info700175.htm  (in Chinese only). 
5 GACC Decree of No. 221, 13 March 2014. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info700178.htm  (in Chinese only). 
6 China-Iceland FTA (GACC No. 222, 30 June 2014). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info711364.htm ; China–Switzerland FTA (GACC No. 223 
of 30 June 2014). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49660/info711366.htm ; and 
China-Chile FTA (GACC No. 224, 30 September 2014). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info720320.htm  (in Chinese only). 
7 GACC Decree No. 225, 8 of October 2014. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info720845.htm  (in Chinese only). 
8 Rules for the Registration of Foreign Trade Operators. Viewed at: 
http://www.mofcom.gov.cn/article/b/g/201303/20130300041141.shtml  (in Chinese only). 
9 GACC Announcement No. 25, 1 April 2014. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49564/info702075.htm . WT/TPR/S/342 • China 
 
- 47 - 
 
  were amended.10 According to the Chinese authorities, as a result the new provisions simplify the 
licensing requirements and the establishment proced ures for declaration enterprises. For instance, 
previously these enterprises were required to obtain an administrative licence to establish branches across the 42 customs areas that exist in China; this requirement was removed and was 
replaced by a filing requirement. 
3.3.  Importers (and exporters) need to comply with the inspection and quarantine requirements 
of Customs and the General Administration of Quality Supervision, Inspection and Quarantine 
(AQSIQ), as stipulated by law and by the Catalo gue of Import and Export Commodities Subject to 
Compulsory Inspection.
11 The Catalogue is amended every year to add or remove commodities as 
required to protect human, animal or plant health and the environment, and to prevent fraud and safeguard national security.
12  
3.4.  In order to facilitate trade, China has launched a series of reforms to make customs 
procedures more efficient both for imports and exports. In 2009, China started implementing a pilot programme on the Reform of Classified Customs Clearance.
13 As a result, the Classified 
Enterprise Administration Reform, whose implementation started in 2010, was extended across 
China in 2012. Under this reform, enterprises were classified in five categories: AA, A, B, C, and D, based, inter alia , on credit rating, and compliance with the law. This classification was replaced 
in 2014; enterprises have since been classified, mainly based on their credit rating, as: authorized 
enterprises, enterprises of general in tegrity, and "dishonest" enterprises.
14 Customs clearance 
continues to depend upon the enterprise's classification and on four other aspects: internal control, financial status, compliance with rules, and trade security. Authorized enterprises, known as 
Authorized Economic Operators (formerly classified AA and A), benefit from more simplified 
customs clearance procedures. Enterprises of general integrity, formerly category B, are subject to 
intermediate customs clearance procedures, and "dishonest" enterprises are subject to stricter 
controls.
15 Enterprises may change category according to their credit rating. Customs recertifies 
authorized enterprises every three years, and rece rtifies enterprises of general integrity on an 
ad hoc  basis. "Dishonest" enterprises may be reclassifi ed as an enterprise of general integrity after 
one year of "good behaviour"; and they may apply for reclassification, as an authorized enterprise, 
one year after becoming an ente rprise of general integrity. 
3.5.  In 2012, with the aim of further facilitating  trade, China started implementing the "Reform of 
Paperless Customs Clearance", which covers imports and exports via air, sea and land, as a pilot 
programme. In 2013, the programme was implemented across China's 42 customs offices and 
by 2014 it applied across the whole country.16 The Paperless Reform was not applied to goods 
subject to licensing or other restrictions. However, as of 2015, a pilot paperless customs clearance 
scheme for products subject to automatic import licensing, which had been implemented in the 
Shanghai pilot Free Trade Zone17, was expanded to Tianjin, Fujian, Guangdong, Ningbo and 
                                               
10 Administrative Provisions on Registration of Customs Declaration Entities (GACC Decree [2014] 
No. 221). Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info700322.htm  (in Chinese only). 
11 GACC and AQSIQ Announcement [2014] No. 146. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjgg/2014/201501/t20150106_429636.htm  (in Chinese 
only). 
12 Implementing Regulations for the Law on Inspection of Import and Export Commodities, Order of the 
State Council, No. 447. Viewed at: http://www.asianlii.org/cn/legis/cen/laws/irftlotprocoioiaec1072 . 
13 GACC Announcement [2009] No. 33. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab1/info174780.htm  (in Chinese only); and GACC Announcement 
[2010] No. 56 . Viewed at : http://www.e-to-
china.com/tariff_changes/china_customs_practice/2010/0903/85925.html . 
14 Interim Measures for Enterprise Credit Management (GACC Decree [2015] No. 225). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info720845.htm  (in Chinese only). 
15 GACC Announcement [2010] No. 56 on Further Promot ion of Classified Customs Clearance Expanding 
the Scope of Classified Customs Clearance Reform. Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info237228.htm  (in Chinese only). 
16 Announcement on Further Promoting Paperless Customs Clearance, GACC Decree [2014] No. 25. 
Viewed at: http://www.customs.gov.cn/publish/portal0/tab49564/info702038.htm  (in Chinese only). 
17 Announcement on Paperless Customs Declaration in Shanghai Pilot Free Trade Zone. Viewed at 
http://www.customs.gov.cn/publish/portal27/tab61724/info762104.htm  (in Chinese only). WT/TPR/S/342 • China 
 
- 48 - 
 
  Suzhou.18 The pilot scheme covers all goods subject to automatic import licensing, excluding those 
for which a licence can be us ed for multiple shipments. 
3.6.  In addition to the ordinary import regime, China has six additional regimes including: the 
importation of goods at no cost to replace damaged products; the importation of leased goods; the 
temporary entry of goods; the entry of goods for maintenance and repair; the importation 
of returned goods; and imports into special customs supervision areas.19 These regimes have not 
undergone substantial changes since 2014. Goods entering (and exiting) bonded zones, export 
processing zones and other special customs superv ision areas, as well as border trade imports 
(and exports), are subject to different customs procedures formulated by GACC, and to different inspection and quarantine requirements, which are formulated by the AQSIQ with the GACC.
20  
3.7.  China has continued to make efforts to harmonize customs procedures across its 42 customs 
areas. Nevertheless, "special customs supervis ion areas", which are governed by different 
regulations, continue to exist despite the guiding opinions issued by the State Council in 2012, which called for the unification of the rules applied in those areas.
21 China also applies different 
customs procedures to specific areas, in some in stances on a trial basis, to assess if they work.22 
More recently in 2014, China started to promote the integration of customs areas to harmonize 
clearance procedures. According to the authorities, this integration has taken place amongst the 
42 customs areas to create five clusters including: in Beijing/Tianjin/Hebei23, the Pearl River 
provinces24, and the Chang Jiang River Economic Belt.25 
3.1.2  Customs valuation 3.8.  Although the legislation regulating customs valuation, which has been in place since 2006, 
was amended in 2013, valuation procedures have not undergone major changes.
26 Customs value 
is determined on the basis of the transaction value and, when it cannot be used, the other valuations methods are used in sequential order, as stipulated in the WTO's Customs Valuation 
Agreement (i.e. transaction value of identical goods; transaction value of similar goods; deductive 
value; computed value; and reasonable means). The valuation of freight and insurance for goods transported by road and railways was clarified in the 2013 amendment, which also repealed the 
provisions concerning the dutiable price of special imported goods (e.g. goods imported to be 
repaired and then exported or goods imported temporarily).  
                                               
18 Announcement on Further Expanding the Pilot Paperless Customs Clearance under Automatic Import 
Licence, GACC Decree [2015] No. 35. Viewed at 
http://www.customs.gov.cn/publish/portal0/tab49661/info766990.htm  (in Chinese only). 
19 GACC Decree [2005] No. 124. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info4487.htm  (in Chinese only). 
20 Art 44 of the Implementing Regulations for the Law on Inspection of Import and Export Commodities, 
Order of the State Council, No. 447. Viewed at: http://www.asianlii.org/cn/legis/cen/laws/irftlotprocoioiaec1072 . 
21 Guo Fa [2012] No. 58, Guiding Opinions of the State Council on Promoting the Scientific Development 
in Special Customs Superv ision Areas. Viewed at: http://www.gov.cn/zwgk/2012-
11/02/content_2256060.htm . 
22 GACC Decree No. 209, 27 June 2013, Customs Supervision Measures for Hengqin New Area. Viewed 
at: http://www.customs.gov.cn/publish/portal0/tab49660/info623256.htm ; and GACC Decree 
No. 208, 27 June 2013, China Customs Regulatory Approach to Pingtan Comprehensive Experimental Zone 
(Trial). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49660/info623257.htm  (in Chinese only). 
23 GACC Announcement [2014] No. 45, Reform of customs clearance integration in Beijing, Tinajin and 
Hebei. Viewed at http://www.customs.gov.cn/publish/portal0/tab49661/info710895.htm ; and GACC 
Announcement [2014] No. 68, Reform of Customs Integration in Shijiazhuang. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49661/info718634.htm  (in Chinese only). 
24 GACC Announcement [2014] No. 66, Reform of customs clearance integration in Guangdong Province. 
Viewed at: http://www.customs.gov.cn/publish/portal0/tab49661/info718158.htm  (in Chinese only). 
25 GACC Announcement [2014] No. 84, Reform of customs clearance integration in Changjiang River 
Economic Belt. Viewed at: http://www.customs.gov.cn/publish/portal0/tab49661/info725557.htm  (in Chinese 
only). 
26 GACC Decree [2013] No. 213, Amendment to the Customs Measures for Assessing and Determining 
Duty-Paid Value of Imported and Exported Goods (GACC Decree [2006] No. 148). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49660/info688746.htm  (in Chinese only). WT/TPR/S/342 • China 
 
- 49 - 
 
  3.1.3  Rules of origin  
3.9.  China applies preferential and non-preferenti al rules of origin. The legislation regulating non-
preferential rules of origin has not undergone major changes since 2004, as notified in 2015 by 
China.27 As a result, non-preferential rules of origin remained unchanged and continue to be used 
to: apply the MFN tariff rate; ensure the origin of goods subject to anti-dumping, countervailing 
and safeguard measures; ensure that import quotas  and tariff quota limits are imposed on specific 
countries; and determine the origin of imported goods purchased by the government.28 
3.10.  Preferential rules of origin apply in a ccordance with the specifications of the various 
preferential agreements signed by China. They ar e also used to grant preferential treatment to 
imports from LDCs.29 In general, the criteria used to determine origin include: change in tariff 
classification, whether the good is wholly obtained in one party; regional value content, processing 
operation or other requirements. In most FTAs, bilateral cumulation is allowed. 
3.1.4  Tariffs 3.1.4.1  Applied tariffs and tariff structure 
3.11.  China's tariff is comprised of MFN rates, "agreement tariff rates", special preferential tariff 
rates, general tariff rates, and tariff quota rates. In addition, interim tariff rates, which are usually lower than MFN rates, are applied for a specific period of time (i.e. usually one year). 
3.12.  Agreement rates apply to imports from countries and customs territories with which China 
has preferential trade agreements (Section 2) . Special preference duty rates are unilateral 
preferences applied to imports originating in least developed countries with which China has a trade agreement.
30 General rates apply to: products whose origin cannot be determined; products 
from countries that do not have a reciprocal trade agreement with China; non-WTO Members; and 
some territories of EU member States. According to the authorities, if a country appears in several lists and may be subject to various duty rates, the most favourable rate applies, taking into 
account the rules of origin. Interim duties are fixed annually by the Customs Tariff Commission, 
and usually apply from 1 January to 31 December of each year. Interim duties are applied on an MFN basis and replace the MFN duties for the lines that are affected. Interim duty rates are lower 
than the MFN rates and in certain instances the interim duty rate applies to just part of a tariff 
line. 
3.13.  China's applied MFN tariff in 2015 consists of 8,285 lines at the eight-digit level in the 
Harmonized System 2012; some 99.5% (8,243 lines) of the lines are ad valorem  and 42 tariff 
lines are subject to non- ad valorem  rates (34 lines have specific rates, three have alternate rates 
and five lines carry either an ad valorem  rate, if the price is below or equal to a certain amount, or 
                                               
27 Decree of the State Council [2005] No. 416, Regulations on the Origin of Imported - Exported Goods. 
Viewed at: http://www.gov.cn/zwgk/2005-05/23/content_240.htm  (in Chinese only); and WTO document 
G/RO/N/132 of 7 September 2015. 
28 According to the Regulations, origin is granted if goods are wholly obtained in one country; and, if 
goods are produced in more than two countries, the country where the final substantive transformation is 
made determines the origin. Origin is also granted if there is substantive transformation, as determined by a change of tariff classification, or, if this is not the case, value added (of not less than 30% of the total value of the product) can be used as  a supplementary criterion. 
29 For complete list of China's rules of origin unde r the preferential agreements signed prior to the 
period under review, see: WTO documents WT/TPR/S /264/Rev.1, 20 July 2012; and WT/TPR/S/300/Rev.1, 
7 October 2014. 
30 Afghanistan; Angola; Bangladesh; Benin; Bur undi; Cambodia; Central African Republic; Chad; 
Comoros; Democratic Republic of the Congo; Djibouti ; East Timor; Equatorial Guinea; Eritrea; Ethiopia; 
Guinea; Guinea-Bissau; Lesotho; Liberia; Madagascar; Malawi; Mali; Mauritania; Mozambique; Myanmar; 
Nepal; Niger; Rwanda; Samoa; Sie rra Leone; Senegal; Somalia; South Sudan; Sudan; Tanzania; Togo; 
Uganda; Vanuatu; Yemen and Zambia (Ministry of Fina nce P.R.C. (2015), Customs Tariffs on Imports and 
Exports of the People's Republic of China, 2015, Beijing, China). WT/TPR/S/342 • China 
 
- 50 - 
 
  a compound rate, if the price is higher).31 The tariff lines subject to specific rates have not 
changed since the previous review.32  
3.14.  The average applied MFN rate in 2015 was 9.5%, almost unchanged since 2011 and 2013 
when the average stood at 9.5% and 9.4% respectively. The tariff was higher for agricultural 
products (WTO definition), at 14.8%, showing no change for 2013 and a slight decline from the 
average calculated for 2011 (Table 3.2). The averag e applied tariff on non-agricultural products 
remained unchanged since 2011, at 8.6%. The percentage of tariffs that exceeded 15% 
(international tariff peaks) also remained unchanged since 2013 at 14.4%, down from 14.8% 
in 2011. 
Table 3.2 China's tariff st ructure, 2011, 2013 and 2015 
 MFN applied Final bounda 2011  2013  2015 
Simple average rateb 9.5 9.4 9.5 9.8 
WTO agricultural products 15.1 14.8 14.8 15.1 
WTO non-agricultural products 8.6 8.6 8.6 9.0 
Duty-free tariff lines (% of all tariff lines) 9.4 9.8 9.7 7.7 
Simple average rate of dutiable lines only 10.5 10.5 10.5 10.6 
Tariff quotas (% of all tariff lines) 0.6 0.6 0.6 0.6 
Non-ad valorem  tariffs (% of all tari ff lines) 0.7 0.5 0.5 0.0 
Domestic tariff "peaks" (% of all tariff lines)c 2.2 2.1 2.2 2.3 
International tariff "peaks" (% of all tariff lines)d 14.8 14.4 14.4 15.3 
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 2.9 2.9 2.6 
Bound tariff lines (% of all tariff lines) 100.0 100.0 100.0 100.0 
Number of lines 7,977 8,238 8,285 8,285 
Ad valorem  rates 7,177 7,385 7,437 7,649 
Duty-free rates 748 810 806 636 
Specific rates 44 35 34 0 
Alternate rates 3 3 3 0 
Otherf 5 5 5 0 
a Final bound rates are based on the 2015 tariff schedule in HS12 nomenclature.  
b The simple average not including interi m 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 de fined as those exceeding 15%.  
e Nuisance rates are those greater than zero, but less than or equal to 2%.  f Rates involving either an ad valorem  rate, if the price is below or equal to a certain amount, or a 
compound rate, if the price is higher.  
Note: 2011 tariff schedule is based on HS07 nomenclature; 2013 and 2015 tariff schedules are based on 
HS12 nomenclature. Calculations are based on nation al 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 wh en fully applied at the 8-digit level.  
Source: WTO Secretariat calculations, based on data provided by the Chinese authorities.  
3.15.  The distribution of China's applied MFN tariff has not changed substantially since the last 
Review. In 2015, China's applied MFN tariff contained 54 different ad valorem  tariff rates, ranging 
from 0% to 65%, in addition to the non- ad valorem  rates (Table A3.1). Some 40% of all tariffs 
ranged from 5% to 10%, also unchanged sinc e 2011 and 2013 (Chart 3.1). The percentages of 
duty-free lines and of lines with rates higher than 30% have not changed either. 
                                               
31 These five lines correspond to HS 8521.10.11, HS 8521.10.19, HS 8521.10.20 (video recording or 
reproducing apparatus); HS 8525.80.12; and HS 8525.80.13 (certain television cameras). 
32 These are in Chapters 37 (photographic or cinematographic goods, 27 tariff lines), 02 (meat and 
edible offal of poultry, 6 tariff lines), and 01 (products of  animal origin, 1 tariff line). In addition, 47 tariff lines 
are subject to tariff rate quotas (Section 4.1), includin g in HS Chapters 10 (wheat and meslin, maize, rice), 
11 (cereal flours other than of wheat and meslin, cere al groats), 17 (cane or beet sugar), 31 (mineral or 
chemical fertilizers), 51 (wool, card ed or combed), and 52 (cotton). WT/TPR/S/342 • China 
 
- 51 - 
 
  Chart 3.1 Distribution of MFN appl ied tariff rates, 2011, 2013 and 2015 
(9.4) (17.6) (43.3)
(14.9)
(8.7) 
(3.9)   
(2.2) (9.8)(17.6)(43.0)
(15.1)
(8.4)
(3.8)
(2.2)(9.7)(17.5) ( 43.1)
(15.2) 
(8.4)
(3.8) 
(2.2)
05001,0001,5002,0002,5003,0003,5004,000
Duty free >0-5 >5-10 >10-15 >15-20 >20-25 >25Number of tariff lines
Tariff rates (%)2011
20152013
 
Note: Figures in parentheses denote the share of total lines.  
Source: WTO Secretariat calculations, based on data provided by the Chinese authorities.  
3.1.4.2  Bound tariffs 
3.16.  Since China's accession to the WTO, its average applied MFN rates have closely followed its 
bound rates. China bound 100% of its tariffs, at ad valorem  rates ranging from 0% to 65% for 
agriculture (WTO definition) and from 0% to 50% for non-agricultural products (Table A3.1). However, while the tariffs were bound at ad valorem  rates, applied tariffs on 42 tariff lines are 
non-ad valorem . The authorities state that the ad valorem  equivalents of the non- ad valorem  rates 
are always equal to the bound tariff rate. 
3.1.4.3  Bilateral and regional preferences 
3.17.  China offers preferential treatment under its different bilateral and regional trade 
agreements. The ASEAN countries, Chile and New Zealand continue to face the lowest tariff rates, together with Costa Rica, whose imports enjoy an average preferential tariff rate of 0.7% (2.8% 
in 2013). The average preferential for rate for Peru also declined to 2.5% in 2015 from 3.5% 
in 2003. The concessions offered
 to Hong Kong, China and Macao, China; and to Chinese Taipei 
remained unchanged since 2013 (Table 3.3). The average preferential tariff applied to 37 LDCs, which stood at 5% in 2013, has declined substant ially. In 2015, China granted duty-free treatment 
on 95.1% of all tariff lines to 14 LDCs and on 97% of all lines to 24 other LDCs. As 
of December 2015, duty-free treatment on 97% of all lines has been extended to other LDCs, at 
present this preferential treatment applies to 33 LDCs. 
Table 3.3 Summary analysis of th e Chinese preferential tariff, 2015 
 Total  WTO agriculture  WTO non-agriculture  
Average 
(%) Duty-free 
ratesa (%) Average  
(%) Duty-free 
ratesa (%) Average 
(%) Duty-free 
ratesa (%) 
MFN 9.5 9.7 14.8 8.1 8.6 10.0 
Agreement tariff rates       
APTAb 8.8 10.0 13.8 9.0 8.0 10.2 
ASEANc 0.7  94.8 1.7 93.6 0.6 95.0  
Hong Kong, China CEPAd 7.0 31.4 12.4 22.3 6.2 32.9 
Macao, China CEPAd 7.4  25.5 10.4 33.5 6.9 24.2  
Chinese Taipei ECFAe 8.8 17.2 14.6 9.4 7.8 18.4 
Pakistan F TA 5.9  35.6 11.5 22.7 5.0 37.7  
Chile FTA 0.5 97.1 2.0 94.8 0.2 97.5 
New Zealand FTA 0.4  96.8 1.8 91.9 0.2 97.6  
Singapore FTA 4.6 43.3 8.7 41.8 3.9 43.6 
Peru FTA 2.5  72.8 6.1 46.2 1.9 77.1  
Costa Rica FTA 0.7 93.7 3.2 84.9 0.4 95.2 WT/TPR/S/342 • China 
 
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   Total  WTO agriculture  WTO non-agriculture  
Average 
(%) Duty-free 
ratesa (%) Average  
(%) Duty-free 
ratesa (%) Average 
(%) Duty-free 
ratesa (%) 
Iceland FTA 0.7  95.5 2.9 91.1 0.3 96.3  
Switzerland FTA 6.8 23.6 11.8 15.5 6.0 25.0 
Least developed preferential rates 
Special preferential tariff agreement for: 
Bangladesh and Laos under APTA 9.2  11.0 14.7 8.1 8.3 11.4  
Cambodia 8.7 15.7 12.0 29.2 8.2 13.5 
Laos 9.0  13.6 12.8 22.9 8.4 12.1  
Myanma r 9.0 13.4 13.9 13.9 8.2 13.3 
2 LDC countries (Bangladesh + Mauritania) 5.0  61.7 9.1 56.7 4.3 62.5  
14 LDC countries 0.9 95.1 2.9 92.1 0.6 95.6 
24 LDC countries 0.6  97.0 2.4 93.6 0.3 97.6  
Memorandum item:       
Bangladeshf 4.7  61.8 8.6 56.9 4.1 62.6  
Cambodiag 0.7 94.8 1.7 93.6 0.6 95.0 
Laosh 0.7  94.8 1.7 93.6 0.6 95.0  
Myanma ri 0.7 94.8 1.7 93.6 0.6 95.0 
Singaporej 0.7  94.8 1.7 93.6 0.6 95.0  
a Duty-free lines as a percentage of total tariff lines.  
b Preferential rates under APTA are applicable to th e Republic of Korea, Sri Lanka, Bangladesh, India, 
and Laos.  
c Preferential rates under ASEAN are applicable to  Brunei Darussalam, Cambodia, Indonesia, Laos, 
Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam.  
d Closer Economic Partnership Agreement.  e Cross-straits Economic Co-operation Framework Agreement.  f Based on lowest rates taken from 2 LDC countr ies, Bangladesh and Laos under APTA, and APTA 
preferential.  
g Based on lowest rates taken among ASEAN, and special preferential for Cambodia, and 14 LDCs.  
h Based on lowest rates taken among ASEAN, special preferential for Laos, Bangladesh and Laos under 
APTA, and APTA preferential.  
i Based on lowest rates taken among ASEAN, and sp ecial preferential for Myanmar, and 14 LDCs.  
j Based on lowest rates taken among ASEAN and Singapore FTA.  
Note: Calculations are based on national tariff line level (8-digit); excluding in-quota rates and including 
AVEs for non- ad valorem  rates provided by the authorities, as available. Interim duty rates are used 
for the calculations when fully appl ied at the 8-digit level. The preferential tariffs negotiated under 
the agreements with Australia and the Republic of Korea were not included as the information is not 
available. 
Source: WTO Secretariat calculations, based on da ta provided by the authorities of China.  
3.1.4.4  Tariff-rate quotas (TRQs)  
3.18.  Since the previous review there do not seem to have been any substantial changes 
regarding the products subject to tariff-rate quotas (TRQs), the tariff rates applied or the system 
to allocate them. In 2015, as at the time of the previous Review, TRQs applied to 47 tariff lines 
included in HS Chapters 10 (wheat and meslin, ma ize, rice), 11 (cereal flours other than of wheat 
or meslin, cereal groats), 17 (cane or beet sugar), 31 (mineral or chemical fertilizers), 51 (wool, 
carded or combed), and 52 (cotton). The in-q uota and out-of-quota rates also remained 
unchanged. The out-of-quota rates are in most cases equal to the bound rates. All in-quota rates are ad valorem , with the exception of the rate that applies to a "certain portion" of imports of 
cotton (Section 4). According to the authorities, th e tariff quota allocation process has not changed 
since 2013. The most recent information available for tariff quota utilization dates from 2014.
33  
3.1.4.5  Tariff concessions  3.19.  Import duty exemptions apply in certain cases and under certain incentives programmes 
(Box 3.1). In addition, duty exemptions and reductions may apply in accordance with the 
provisions set out in the relevant regulations by the State Council and on goods imported into designated areas, for specific enterprises or for a specific use.
34 For instance, imported 
commodities are exempt from import duties and other taxes when entering special customs 
supervision areas and when imports are devoted to specific purposes.35 Under processing trade, 
                                               
33 WTO document G/AG/N/CHN/30, 2 February 2016. 
34 Customs Law, Article 57. 
35 For more details on the different regimes refer to: WTO (2014), Trade Policy Review – China, Geneva. WT/TPR/S/342 • China 
 
- 53 - 
 
  imported goods are exempt from payment of impo rt duty as long as they are processed and 
exported within a specific period of time; if the goods are not exported, import duties are collected by Customs.
36 Regarding border trade, goods imported for daily use and valued at less than 
RMB 8,000 per person per day are exempt from tariffs as well.37 
Box 3.1 Goods exempted from import duties 
Goods in a single consignment on which the duties are estimated to be less than RMB 50. 
Advertising material and samples of no commercial value. 
Goods and materials donated by internationa l organizations or foreign governments. 
Goods damaged prior to customs clearance.  
Fuels, stores, beverages and provisions to be used en route  by vessels that are in transit in China. 
Source: Customs Law and Regulations on Import and Export Tariffs.  
3.1.5  Other charges affecting imports  
3.20.  Imports are subject to Value Added Tax (VAT), which is collected by Customs on behalf 
of the State Administration of Taxation (SAT). VAT  on imports is charged based on the c.i.f. price 
plus the import duty. If goods are also subject to  the consumption (excise) tax, VAT is calculated 
including the consumption tax.38 VAT has two rates: 13% and 17%. The list of products subject to 
the 13% rate and those that are exempt from  the VAT has not changed since the previous 
Review.39 Domestically-produced agricultural products so ld directly by the producer continue to be 
exempted from VAT, while imported goods are not.40 
3.21.  A number of imported and domestically-produced goods are also subject to the consumption 
(excise) tax. The consumption tax is levied on: products that are harmful to human health, social order and the environment; luxury goods; high-energy consumption and high-end products; and 
non-renewable and non-replaceable petroleum products. Tax rates continue to vary considerably 
depending upon the product; they can be ad valorem , specific or compound. Tax rates and the list 
of products subject to this tax may be modified as required (Table 3.4). 
Table 3.4 Excise (or consumption) tax, 2013-15 
Product 2013  2014  2015 
Tobacco     
Cigars 36% 36% 36% 
Cigarettes:    
Production procedure     
Price higher than RMB 70 per carton 56% plus RMB 0.003 
per cigarette 56% plus RMB 0.003 per 
cigarette 56% plus RMB 0.003 
per cigarette 
Price lower than RMB 70 per carton 36% plus RMB  0.003 
per cigarette 36% plus RMB 0.003 per 
cigarette 36% plus RMB 0.003 
per cigarette 
Wholesaling procedure 
5% 5% 5%; 11% plus 
RMB 0.005/cigarette as of 10.05.2015
a 
Cut tobacco 30% 30% 30% 
Alcoholic drinks and liquor   
White spirit distilled from grain, potatoes 
or grapes 20% plus RMB 0.5 per 
500 g (or per 500 ml) 20% plus RMB 0.5 per 500g 
(or per 500 ml) 20% plus RMB 0.5 per 
500g (or per 500 ml) 
Yellow rice wine RMB 240 per tonne  RMB 240 per tonne  RMB 240 per tonne  
Beer made from malt of a value over or 
equal to US$370 per tonne RMB 250 per tonne RMB 250 per tonne RMB 250 per tonne 
                                               
36 Regulations on Import and Export Tariffs, Article 41. 
37 Article 5 of Management Measures on Border Trade, GACC Decree [1996] No. 56, amended by GACC 
Decree [2010] No. 198. Viewed at: http://www.customs.gov.cn/publish/portal0/tab2746/info4198.htm . 
38 Rules for the Implementation of the Interim Regu lation on Consumption Tax, Decree No. 51 of the 
MOF and the STA. Viewed at: http://www.gov.cn/gongbao/content/2009/content_1322133.htm  (in Chinese 
only).  
 
39 Products subject to a 13% VAT rate include: grains; edible vegetable oil; drinking water, heating, air-
conditioning, and hot water; gas, lique fied petroleum gas, natural gas, biog as and dimethyl es ter; coal; books, 
newspapers and magazines; and feedstu ffs, fertilizers, pe sticides, agricultural mach inery and plastic film for 
agricultural use (Interim Regulations on Value-Added Tax, State Council Decree No. 538. Viewed at: 
http://www.chinatax.gov.cn/n810341/n 810765/n812171/n812680/c1190937/content.htm ). 
40 Interpretation of VAT by the SAT, 28 October 2011. Viewed at: 
http://www.gov.cn/gongbao/content/2012/content_2121706.htm  (in Chinese only). WT/TPR/S/342 • China 
 
- 54 - 
 
  Product 2013  2014  2015 
Beer made from malt of a value of less 
than US$370 per tonne RMB 220 per tonne RMB 220 per tonne RMB 220 per tonne 
Other fermented alcoholic beverages 10% 10% 10% 
Ethyl alcohol 5%  5% (removed 1.12.2014) n.a. 
Some cosmetics (apart from skincare 
products) 30% 30% 30% 
Precious jewellery, pearls,  jade, and precious stone  
Gold, silver platinum jewellery, and 
diamonds 5% 5% 5% 
Pearls, jade, and precious stones 10%  10% 10% 
Firecrackers and fireworks  15% 15% 15% 
Gasoline    
Motor gasoline and aviation gasoline 
(containing > 0.013 g of lead per litre) RMB 0.28 per litre  RMB 1.4 per litreb RMB 1.52 per litrec 
Motor gasoline and aviation gasoline 
(containing < 0.013 g of lead per litre) RMB 1 per litre  RMB 1.4 per litreb RMB 1.4 per litre 
Diesel oil RMB 0.8 per litre  RMB 1.1 per litreb RMB 1.2 per litrec 
Aviation kerosene RMB 0.8 per litre  RMB 1.1 per litreb RMB 1.2 per litrec 
Naphtha RMB 1 per litre  RMB 1.4 per litreb RMB 1.52 per litrec 
Solvent RMB 1 per litre  RMB 1.4 per litreb RMB 1.52 per litrec 
Lubricants RMB 1 per litre  RMB 1.4 per litreb RMB 1.52 per litrec 
Fuel oil RMB 0.8 per litre  RMB 1.1 per litreb RMB 1.2 per litrec 
Motor vehicle tyres 3% 3% (removed 1.12.2014) n.a. 
Motorcycles     
With a cylinder capacity of less than or 
equal to 250 ml 3% 3% (removed 1.12.2014) n.a. 
With a cylinder capacity over 250 ml 
10% 10% (until 30.11.2014) and 
3% (=250ml), 10% 
(>250ml) as of 1.12.2014 3% (=250ml) 
10% (>250ml) 
Motor vehiclesc    
Passenger vehicles with less than 9 seats with a cylinder capacity of  
- less than 1,000 ml  1% 1% 1% 
->1,000 ml, but < 1,500 ml  3% 3% 3% 
-> 1,500 ml, but < 2,000 ml  5% 5% 5% 
-> 2,000 ml, but < 2,500 ml  9% 9% 9% 
-> 2,500 ml, but < 3000 ml  12% 12% 12% 
-> 3,000 ml, but < 4,000 ml  25% 25% 25% 
- 4,000 ml or more  40% 40% 40% 
Middle-size or light passenger vehicles 
for commercial purposes 5% 5% 5% 
Yachts 10% 10% 10% 
Luxury watches, with a unit price 
higher than RMB 10,000 20% 20% 20% 
Golf equipment 10% 10% 10% 
Solid wood flooring 5% 5% 5% 
Disposable chopsticks 5% 5% 5% 
Batteries    4% 
Paint    4% 
a Cai Shui [2015] No. 60, MOF SAT Circular on Adjusting Tobacco Exercise Tax. Viewed at: 
http://www.chinatax.gov.cn/n810341/n810765/n1465977/n1466042/c1754889/content.html . 
b SAT Announcement No. 65 of 2014, Announcement on Issues of Refined Oil Exercise Tax. Viewed at: 
http://www.chinatax.gov.cn/n810341/n810755/c1350768/content.html ; and Cai Shui [2014] 
No. 106, MOF SAT Circular on Further Increasing Exercise Tax of Refined Oil. Viewed at: 
http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201412/t20141212_1166868.html .  
c Cai Shui [2015] No. 11, MOF SAT Circular on Further Increasing Exercise Tax of Refined Oil. Viewed 
at: http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201501/t20150112_1178890.html . 
n.a. No longer applied.  
Source: Information provided by the authorities. 
3.1.6  Import prohibitions, restrictions, and licensing  
3.22.  Import prohibitions, restrictions and non-automatic licensing are maintained in China to 
safeguard national security; public morality; human, animal and plant health; the environment 
and exhaustible natural resources; to comply with China's obligations under international agreements; and for balance-of-payments reasons.
41 China notified that it applies an import 
licensing regime, under which there are three types of licences: automatic licences, non-automatic 
                                               
41 Article 16 of the Foreign Trade Law. Viewed at: http://www.gov.cn/flfg/2005-
06/27/content_9851.htm  (in Chinese only); Central People's Governme nt of China online information. Viewed 
at: http://www.gov.cn/jrzg/2007-04/10/content_577619.htm (in Chinese); and WTO document 
G/LIC/N/CHN/13, 22 January 2015. WT/TPR/S/342 • China 
 
- 55 - 
 
  licences and tariff-rate quota certificates. According to China's last notification, the licensing 
regime has not changed substantially since the last Review in 2014.42 
3.23.  Goods subject to automatic import licensing  are listed in the Catalogue of Goods subject to 
Automatic Licensing43, which is issued annually by MOFCOM and the GACC, and in the 
Catalogue of Automatic Licensing for Solid Waste that lists the solid waste that can be used as raw 
material in China.44 There were 396 products at the HS 8-digit level included in the Catalogue of 
Goods subject to Automatic Licensing in 2015 (46 products less than in 2013); and 17 products 
listed in the Catalogue of Solid Waste. The type of products subject to automatic import licensing 
has not changed since 2013, but the number of tariff lines has declined since 2013, as the automatic import licensing requirement was removed for certain machinery and equipment (Chapter 84) and vehicles (Chapter 87) (Chart 3.2). However, the Announcement of Incorporation 
into the Catalogue of Goods subject to Auto matic Licensing of Goods (MOFCOM-GACC No. 34 
of 2015), incorporated eight more tariff lines in the Catalogue.
45 
3.24.  China classifies imports into three categories: not restricted, restricted and prohibited. 
Automatic import licensing is in place to monitor trade volumes of imports that are not restricted, 
for statistical purposes. As a result, there are no quantitative limits on imports of commodities subject to automatic import licensing. The authorities have stated that there have been no major 
changes regarding the process to obtain automatic import licences or their terms since the 
previous Review.
46 Importers may apply for an automatic import licence with the Commerce 
Departments at the different government levels, which issue them upon receipt of a correctly filed application. Automatic import licences are valid for six months and non-transferable. 
3.25.  Restricted goods are administered through non-automatic licences and/or quotas. Non-
automatic licences apply to imports regardless of the origin, unless otherwise stipulated in the free trade agreements negotiated by China. Products subject to non-automatic licensing are listed in 
the Catalogue of Import Goods Subject to Lice nsing, issued by MOFCOM, the GACC and the 
General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), revised on an annual basis.
47 They are also listed in the Catalogue of Restricted Imports for Solid Waste.48 
In 2015, the Catalogue of Import Goods Subject to Licensing  listed 89 tariff lines (87 in 2013) at 
the HS 8-digit level that were subject to non-automatic import licensing; and the Catalogue related to solid waste listed 45 lines (Chart 3.2). In 2015 as in 2013, imports subject to non-automatic licensing were mainly used machinery and electronic equipment. The terms and procedures to 
obtain a non-automatic import licence remain unchanged since the previous Review.
49 
3.26.  During the period 2013-2014 China did not apply any import quotas.50  
                                               
42 WTO document G/LIC/N/CHN/13, 22 January 2015.  
43 Catalogue of Goods Subject to Automatic Licensing (2015), MOFCOM GACC Joint Announcement 
[2014] No. 93. Viewed at: http://www.mofcom.gov.cn/article/b/e/201412/20141200854848.shtml . 
44 Annex 3 of the Announcement on Amending Catalogues of Imported Wastes Management, MEP 
MOFCOM NDRC GACC AQSIQ Announcement [2014] No. 80. Viewed at: http://www.zhb.gov.cn/gkml/hbb/bgg/201412/W020141231557140670168.pdf  (in Chinese only). 
45 The goods incorporated are: barley (HS1003.10.00, 1003.90.00), sorghum (1007.10.00, 
1007.90.00), cassava (0714.10.10, 0714.10.20, 0714.10.30) and distiller's dried grains (2303.30.00).  
46 For details regarding the procedure to obtain automa tic import licences please refer to China's last 
notification under Article 7.3 of the Agreement on Import Licensing Procedures (WTO document 
G/LIC/N/3/CHN/13, 22 January 2015). 
47 Catalogue of Import Goods Subject to Lice nsing (2015), MOFCOM GACC AQSIQ [2014] Joint 
Announcement No. 95. Viewed at: http://www.mofcom.gov.cn/article/b/e/201412/20141200854863.shtml  (in 
Chinese only). 
48 Annex 2 of the Announcement on Amending Catalogues of Imported Wastes Management, MEP 
MOFCOM NDRC GACC AQSIQ Joint Announcement [2014] No. 80. Viewed at: 
http://www.zhb.gov.cn/gkml/hbb/bgg/201412/W020141231557140614407.pdf . 
49 For more details refer to: WTO document G/LIC/N/CHN/13, 22 January 2015. 
50 WTO documents G/MA/QR/N/CHN/2 and G/MA/QR/N/CHN/3, 24 April 2015. WT/TPR/S/342 • China 
 
- 56 - 
 
  Chart 3.2 Import licensing by HS section, 2015 
05101520253035
01 02 03 04 05 06 07 08 09 10 11 14 15 16 17 18 20% of HS section
Automatic import licensing
Non-automatic import licensingHS section
01  Live animals and products02  Vegetable products
03  Animal/vegetable fats and oils
04 Prepared food products05  Mineral products06  Chemicals and products thereof07  Plastic/rubber products thereof08  Raw hides and skins, leather09  Wood and articles thereof10  Pulp, paper and paperboard11  Textiles and clothing14  Precious stones and metals15  Base metals16  Machinery and electrical equipment
17  Transport equipment
18  Precision material20  Miscellaneous manufactures
 
Note: Calculations are based on the 2015 tariff schedule at 8-digit level.  
Source: WTO calculations, based on data provided by  the authorities; and Ministry of Environmental 
Protection online info rmation. Viewed at: http://www.zhb.gov.cn/ . 
3.27.  Prohibited products are listed in th e Catalogue of Commodities Subject to Import 
Prohibitions, issued by MOFCOM and other releva nt ministries and bodies, such as the GACC and 
AQSIQ, which dates to 2005. In 2015, China's notification listed 365 products (HS 8-digit level) 
including mainly machinery (Chapter 85) and transport equipment (Chapter 87).51 Prohibited items 
related to solid waste are listed in the Catalogue of Prohibited Imports for Solid Waste, last amended in 2015.
52 
3.28.  In addition to the general import prohibitions included in the Catalogue of Commodities 
Subject to Import Prohibitions, other prohibitions apply to imports under processing trade and are listed in the Catalogue of Commodities Prohibited under Processing Trade .
53 The 2014 Catalogue 
included 486 tariff lines (in HS 2012 at the 8-digit level) compared to 394 in 2010. The increase in 
the number of tariff lines subject to import prohibition under processing trade is mainly related to 
tariff lines in HS Chapter 72 (iron and steel). The other products subject to these prohibitions have remained unchanged since the last Review.
54  
3.29.  The list of imports subject to restriction or prohibition can be adjusted as necessary, and 
imports of goods that are not included in a Catalogue can be restricted or prohibited on a temporary basis by the relevant authorities. China's legislation also allows the authorities to, 
inter alia , restrict imports to allow the establishment of a particular domestic industry or to 
accelerate its development. Under Article 16 of the Foreign Trade Law, imports of agricultural, 
animal and fish products may also be restricted if circumstances require it. The authorities have noted that this provision has never been used. 
3.30.  In 2015, there were some 40 temporary prohibitions in place on sanitary grounds, which 
affected mainly animal products imported from European countries.
55 Also on sanitary grounds 
China has prohibited the importation of some types of logs and timber originating in several 
European countries.56 In addition, since 1 October 2012, in order to improve energy efficiency and 
                                               
51 WTO documents G/MA/QR/N/CHN/1, G/MA/QR/N/ CHN/2, and G/MA/QR/N/CHN/3, 24 April 2015. 
52 Given the manner in which the items are listed in the Catalogue, the number of tariff lines affected 
cannot be estimated (Annex 1 of The Catalogue of Imported Wastes Management, Announcement [2014] 
No. 80 of the MEP. Viewed at: http://www.zhb.gov.cn/gkml/hbb/bgg/201412/t20141231_293678.htm ). 
53 Under processing trade, imported inputs are processed and exported wi thin a specific period of time. 
Catalogue of Commodities Prohibited under Proces sing Trade, MOFCOM GACC Joint Announcement No. 29 
of 2014. Viewed at: http://www.mofcom.gov.cn/article/b/c/201412/20141200846002.shtml . 
54 Mainly: mineral products; organic chemicals (e.g. anthracite, bituminous coking coal and lignite); 
fertilizers (e.g. urea, animal and vege table fertilizers other than guano); ne w hides and skins; iron and steel; 
machines and electric equipment; waste and used scrap metal; and used mechanical and electrical products. 
55 Information provided by the authorities. 
56 WTO document G/SPS/N/CHN/632, 29 November 2013.  WT/TPR/S/342 • China 
 
- 57 - 
 
  to protect the environment, China has banned imports of incandescent lighting.57 As of 2012, 
imports of charcoal (HS 4402) from Somalia have been banned in order to comply with international obligations.
58  
3.1.7  Anti-dumping, counterva iling, and safeguard measures 
3.1.7.1  Anti-dumping measures 
3.31.  As was the case in the previous review, during the period examined the number of anti-
dumping (AD) measures in place continued to declin e. Measures continued to be concentrated in a 
few areas, in particular chemical products, which accounted for over 60% of the total number of 
measures in place as of 31 December 2015. Although the number of measures in place was lower than in the last review, their average length of a pplication was longer, with an average of six and a 
half years, compared to the six years reported in the last review. In this respect, the authorities 
note that AD measures imposed by China will  normally be terminated after 10 years.  
3.32.  China's legal framework to conduct AD investigations and apply AD measures was not 
modified during the period under review. The Foreign Trade Law, as amended, which entered into 
force on 1 July 2004, together with the relevant Regulations (the Anti-Dumping Regulations), and 
a number of published Rules, some of them provisional, provide the basis for investigating dumping cases and applying AD remedies.
59  
3.33.  MOFCOM is the agency responsible for initiating and conducting AD investigations, and 
determining the existence of dumping, of injury, and their causal link. There have been recent 
internal changes within MOFCOM with respect to the responsibilities assigned to its different 
bureaus. In April 2014, a Trade Remedy and Investigation Bureau (TRB) was established within 
MOFCOM. The TRB consolidated the functions of th e former Bureau of Fair Trade for Imports and 
Exports (BOFT) and those of the Investigation Bureau of Industry Injury (IBII) in the area of trade 
remedy investigations, and is currently responsible for AD, countervailing duty, and safeguards 
investigations and determinations and for other trade remedy measures. The exceptions to this are 
AD investigations involving agricultural products, where the injury investigation is conducted jointly by MOFCOM and the Ministry of Agriculture. The authorities consider that the changes will 
improve the efficiency of trade remedy investigations, reduce interested parties' burden in 
litigation, and streamline the investigation procedures, while not compromising the independent determination of margin of dumping and injury. 
3.34.  The Provisional Rules of the Ministry of Foreign Trade and Economic Co-operation on 
Initiation of Anti-dumping Investigations regulate the initiation of AD investigations.
60 These may 
be initiated at the request of an interested party or may be self-initiated by MOFCOM. Petitions to initiate an AD investigation on behalf of the domestic industry must be presented to MOFCOM in 
writing, by natural or legal persons, or organiza tions, representing the domestic industry. MOFCOM 
must decide within 60 days of the date of receipt of a petition whether there are valid grounds to initiate an investigation. If MOFCOM decides to initiate an AD investigation, a Public Notice is 
issued. Information that is considered non-confidential regarding an investigation is available to 
the public; if MOFCOM decides to treat the information provided as confidential, interested parties are requested to provide non-confidential summaries, as per Article 22 of the Foreign Trade Law.  
3.35.  MOFCOM must make a preliminary determination of dumping and injury, and with respect 
to whether or not there is a causal link between them. This preliminary determination must be 
published. If it is affirmative, the investigation continues and provisional AD measures may be applied, but not earlier than 60 days from the date of publication of the investigation initiation 
decision. Provisional measures generally take the form of provisional AD duties, but they may also 
consist of a request to provide deposits, bonds, or  other forms of guarantee. The decision to apply 
provisional AD duties is made by the State Council Tariff Commission (SCTC) on 
                                               
57 NDRC Announcement [2011] No. 28. Viewed at: http://www.gov.cn/zwgk/2011-
11/14/content_1992476.htm  (in Chinese only). 
58 MOFCOM Announcement [2012] No. 27. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201207/20120708252386.shtml   
59 WTO documents G/ADP/N/1/CHN2/Suppl.1, 2, 4, 5, and 6, 18 February 2003, 14 April 2003, 
1 December 2004, 11 January 2007, and 19 October 2007. 
60 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. WT/TPR/S/342 • China 
 
- 58 - 
 
  the recommendation of MOFCOM, but for measures of a different type, such as the constitution of 
a deposit or a bond, the decision is made directly by MOFCOM. Provisional measures may not in principle be applied for more than four months; however, they may be extended to nine months in cases classified as presenting "special circumstances", which according to the authorities refers to 
cases where the investigating authorities are examining whether a duty lower than the margin of 
dumping would be sufficient to remove the injury to the domestic industry.
61  
3.36.  After MOFCOM has made a preliminary affirmative determination of dumping injury and 
causation, price undertakings can be offered by the exporter or suggested to the exporter by 
MOFCOM. To decide to accept an undertaking, MOFCOM must take into account whether it would result in the elimination of the injury determined, and the possibility of circumvention. If the price undertaking is accepted, MOFCOM may suspend or terminate the AD investigation.  
3.37.  Although the general practice is to determine a separate margin of dumping for each 
individual responding exporter or producer, MO FCOM is authorized to make use of a sampling 
method in investigations where the number of exporters or producers is so large that it would be 
unduly burdensome and prevent the timely completion of the investigation. MOFCOM has the 
faculty to decide on the selection of exporters and producers for the sample and determines a separate margin of dumping for each individual exporter and producer selected in it. The margin 
of dumping for responding exporters and produc ers not subject to individual examination is 
determined on the basis of the weighted average margin of dumping determined for the sampled exporters and producers, calculated excluding zero or de minimis  (less than 2%) margins of 
dumping. The authorities indicated that sampling has been used in three investigations in 2014 
and 2015. 
3.38.  Chinese regulations also allow MOFCOM to have recourse to the sampling of products to 
determine dumping and the margin of dumping if it finds that the number of types of product 
under investigation is too large. The procedures and means of determining dumping are similar to 
those used for exporter/producer sampling. The authorities have indicated that sampling of products has not been used in any investigations. 
3.39.  An AD investigation must be completed within 12 months of the date on which the decision 
to initiate is announced, or within 18 months under special circumstances. Once it has determined the existence of dumping, injury, and causation, MOFCOM submits its findings and provides recommendations to the SCTC, which makes the final decision as to whether to impose AD duties 
based on MOFCOM's recommendations. The final determination is then published. In the context of 
its last Review, China stated that the final determination published by MOFCOM contains complete information on the reasons for levying AD du ties and the basis for applying the measure.
62 
3.40.  AD duties may not exceed the margin of dumping established in this determination. 
Although China's AD regulations do not preclude the imposition of a duty lower than the margin of dumping provided it eliminates the injury caused by dumped imports, the investigating authorities 
do not currently examine if a duty lower than the margin of dumping is sufficient to eliminate 
injury. 
3.41.  MOFCOM's decisions may be appealed by in terested parties, which, if not satisfied, may 
request an administrative reconsideration by the Department of Treaties and Law or may bring the 
case directly to court. The decision resulting from an administrative reconsideration may be 
brought to court. The authorities indicated that, since 2010, there has been one AD case, in which 
the company was not convinced by the award made  by the investigation authority and requested 
an administrative review and administrative litigation with the competent authority and court. The 
product involved was isotropic silicon electrical steel and the applicants were two Russian companies. The companies withdrew their claim in April 2014.  
3.42.  In accordance with the  Provisional Rules of the Ministry of Foreign Trade and Economic 
Cooperation on Refund of Anti-Dumping Duty
63, importers may apply for a refund within 
three months of payment of the duty if they ca n provide evidence that the AD duty paid was 
higher than the margin of dumping. Applications are examined by MOFCOM, which makes a 
                                               
61 WTO document G/ADP/Q1/CHN/54/Suppl.1, 2 May 2005. 
62 WTO document WT/TPR/M/300/Add.1, 9 September 2014. 
63 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. WT/TPR/S/342 • China 
 
- 59 - 
 
  proposal for decision to the SCTC. MOFCOM calculates an updated margin of dumping for the 
product for the six-month period prior to the application and, if found lower than the initial duty determination, refunds the difference to the importer. No interest is paid on the refund. As was the case in the previous review, there have been no requests for refunds during the period under 
review. 
3.43.  Article 56 of the AD Regulations allows for the imposition of retaliatory measures in cases 
where Chinese producers are deemed to have been unjustly treated in foreign AD investigations. 
The authorities have repeatedly stated that these provisions have not been used. In the course of 
China's last Review, Members asked whether Art. 56 contradicted Art. 17 of the Anti-Dumping Agreement (ADA), to which China replied that there was no direct connection between both and reaffirmed that it would resort to WTO rule s for dispute settlement before taking counter 
measures.
64 
3.44.  Final AD measures may be in place for a maximum of five years, but may be extended 
thereafter following review. China's AD Regulations contain provisions regarding "expiry" (sunset) 
and "interim" reviews. With respect to sunset reviews, MOFCOM publishes a notice six months 
before the measure is scheduled to expire, and initiates a review only if the domestic industry submits an application including sufficient evidence that expiry would likely lead to a continuation 
or recurrence of dumping and injury. If there is no petition to conduct a sunset review, the 
AD measure is automatically terminated and a public notice is issued. MOFCOM may also initiate an interim review, ex officio  or upon request of an interested party, provided that a reasonable 
period of time has elapsed. However, the author ities indicated that this has never happened. As 
with sunset reviews, MOFCOM must conclude interim reviews within 12 months of the initiation 
date. Preliminary determinations need no t be made; sampling methods may be used. 
3.45.  The number of AD investigation initiations by China fell from 11 in 2013 to seven in 2014, 
but rose again to 11 in 2015. Initiations during the period affected imports from Canada; Brazil; 
the European Union; India; Japan; the Republic of Korea; Singapore; Thailand; and the United States. Of the 18 investigations initiated in 2013 and 2014, 16 resulted in provisional 
measures and two were terminated due to the withdrawal of the complaint.
65 In 13 of the 16 cases 
subject to provisional measures, the measures took the form of duties; in the remaining three cases, the provisional measures took the form of a deposit.
66 Despite the lower number of 
initiations in 2014, there was a higher number of definitive AD duty orders issued in that 
year (12), compared to 2013 (8) and 2012 (5). This was due to the fact that 9 out of the 
11 investigations initiated in 2013 resulted in definitive AD duty orders, while only one was terminated due to the withdrawal of the complain t, and in another the volume of dumped imports 
was found to be less than 3% of imports, and no definitive duties were applied. Only five definitive 
AD measures were applied in 2015.  All 11 cases initiated in 2015 we re still under in vestigation as 
at 31 December 2015; in three cases provisional duties had been applied. 
3.46.  China had 91 AD duty orders in effect as at 31 December 2015, down from the 
113 measures reported for December 2013 in the previous Review.
67 Imports from 13 countries or 
territories were affected, three less than in the previous review. In late December 2015, imports from the United States and Japan were subject to the largest number of AD duty orders (19, 
accounting for 23.1% of the total in each case, compared to 20 and 22, respectively, in the 
previous Review). They were followed by the EU (15, the same as in the previous Review, or 
16.5% of total orders), the Republic of Korea (10 compared with 16, or 11%), and Chinese Taipei 
(8 compared to 11, or 8.8%). Chemical products accounted for 61.5% of these orders as of 
31 December 2015, while some 17.6% involved resins, plastics, and rubbers. Other categories subject to AD duty orders were paper, machinery and equipment, base metal products, and 
prepared foodstuffs, which accounted for a combined total of 20.9% of all orders (Table 3.5); 
60.8% of AD duty orders (59 out of 97) had been in place for five years or more, slightly up from 60.2% reported in the previous Review.  
                                               
64 WTO document WT/TPR/M/300/Add.1, 9 September 2014. 
65 WTO documents G/ADP/N/272/CHN, 7 September 2015; G/ADP/N/265/CHN, 23 January 2015; 
G/ADP/N/259/CHN, 18 September 2014; and G/ADP/N/252/CHN, 5 February 2014. 
66 MOFCOM Announcement [2015] No. 29, On Preliminar y Ruling of Anti-dumping Investigation against 
Imports of Methyl Methacrylate Originated in  Singapore, Thailand and Japan. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/buwei/201509/20150901105238.shtml  . 
67 WTO documents G/ADP/N/280/CHN, 10 March 2015; and G/ADP/N/252/CHN, 5 February 2014. WT/TPR/S/342 • China 
 
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  Table 3.5 Anti-dumping measures by product and by country (in force as at 31 December 
2015) 
Member (a) (b) (c) (d) (e) (f) (g) Total 
United States 12 2 1 2 2   19 
Japan 11 2 3 2 1   19 
European Union 7 2 2 1 2  1 15 
Korea, Rep. of 8 2      10 
Chinese Taipei 5 3      8 
India 4 1      5 
Russian Federation 3 1      4 
Singapore 3 1      4 
France 1 1      2 
Thailand 2       2 
Brazil    1    1 
Canada    1    1 
Italy  1      1 
Total 56 16 6 7 5 0 1 91 
Products: (a) Products of the chemical and allied industries. 
 (b) Resins, plastics, and articles thereof; rubber and articles thereof. 
 (c) Base metals and articles thereof. 
 (d) Paper, paperboard, and articles thereof.  (e) Machinery and electrical equipment.  (f) Live animals and animal products.  (g) Prepared foodstuffs. 
Source: WTO document G/ADP/N/280/CHN, 10 March 2016. 
3.47.  There was a decrease in the number of sunset reviews conducted during the period under 
review, and a substantial increase in the number of investigations that were terminated without a review. Between January 2014 and 31 December 2015, 20 sunset reviews and four interim 
reviews were initiated. The number of investigatio ns subject to a sunset review represented some 
35.1% of the AD measures expiring during the period (20 out of 57), compared to 62.5% reported in the previous Review. Eight of the 20 sunset  reviews initiated in 2014 and 2015 had been 
concluded by late December 2015: six resulted in the application of duties and two were 
terminated by the authorities. All four reviews in itiated in 2013 resulted in an extension of AD 
duties. The results of the interim reviews initiated in 2015 were still pending as at end-2015. 
3.48.  China's lower rate of renewal of AD measures following sunset reviews addresses worries 
expressed in the past with respect to the result s of these reviews. In China's previous Review, 
concern was expressed with respect to the length of application of AD measures and their frequent renewal after a sunset review as well as with respect to the vagueness and generality of the 
provisions for review of AD measures. Members invited China to issue rules governing more 
specifically and clearly the review procedures. China replied that it conducted a fair and transparent sunset review investigation process in accordance with its AD Regulations and the 
common practice of WTO Members.
68  
3.1.7.2  Countervailing measures 3.49.  The Foreign Trade Law, the Regulations on Countervailing Measures (CV Regulations), 
promulgated in 2001 and amended on 31 March 2004, and a number of provisional rules
69, 
comprise the main legal framework for the application of countervailing measures in China. The 
main laws and regulations have not changed during the review period. 
3.50.  Countervailing (CV) investigations are subject to procedures similar to those applied for AD 
investigations, with a few exceptions. The principal difference is that the exporting country's 
Government is involved in the investigations, through a process of consultations with MOFCOM prior to the investigation's initiation, or by answering the CV questionnaire. If a mutually agreeable 
solution is found as a result of the consultations, MOFCOM may decide not to initiate an 
investigation. Other differences include the absence of published rules for the use of sampling or to 
                                               
68 WTO document WT/TPR/M/300/Add.1, 9 September 2014. 
69 Provisional Rules on Initiation of Countervailing Investigations; Provisional Rules on Questionnaires on 
Countervailing Duty Investigations; Provisional Rules on the Conduct of Public Hearings in Countervailing Duty Investigations ; and Provisional Rules on On-the-Spot Verification in Countervailing Duty Investigations. WT/TPR/S/342 • China 
 
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  conduct interim or judicial reviews and the lack of provisions to regulate the use of price 
undertakings to settle a CV investigation. 
3.51.  Petitioners must provide MOFCOM with a description of the alleged subsidy, including 
information regarding the existence, nature and amount of the subsidy, and an estimation of the 
subsidy per unit. Hearings for the determination of a subsidy are held publicly unless otherwise 
decided by MOFCOM, generally in cases where there is concern with respect to state or commercial secrets or personal privacy. 
3.52.  After the three CV investigations initiated in 2012 concerning saloon and cross-country cars 
(new shipper review) originating in the United States, and solar-grade polysilicon (HS 2804.61.90) 
originating in the EU and the United States, only one investigation was initiated in 2013 (EU, wines), which was terminated due to the withdrawal of the petition.
70 No investigations were 
initiated in 2014 or 2015. In the investigation regarding solar-grade polysilicon initiated in 2012, 
the existence of a subsidy, injury and a causal li nk between the subsidy and the injury were found, 
thus leading to the imposition of CV duties in one case (the United States) and a duty undertaking 
in the other (EU). As at 31 December 2015, there were four CV measures in place affecting 
imports from the EU and the United States (Table 3.6). A fifth measure regarding grain-oriented flat-rolled electrical steel from the United Stat es expired on 10 April 2014, as MOFCOM did not 
receive a petition for a sunset review.
71 As at end-2015, the longest existing CV measure had been 
in place for slightly over five years. In late August 2015, China started a sunset review of the measure applied to broiler products from the United States.
72 
Table 3.6 Countervailing investigations  and measures, 31 December 2015 
Country Product Initiation Provisional measures Final measures Import  volume 
as % of total 
imports 
United States Sola r-grade polysilicon 20.07.2012  16.09.2013  
0%-6.5% 
All others: 6.5% 20.01.2014 
0%-2.1% 
All others: 2.1% 34.53  
 Broiler products 27.09.2009  28.04.2010  
3.8%-11.2% 
All others: 31.4% 29.08.2010 
4%-12.5% 
All others: 30.3% 73 
EU Potato starch  30.08.2010  19.05.2011  
7.7%-11.19% 
All others: 11.19% 16.09.2011 
7.5%-12.4% 
All others: 12.4% 90.27  
 Solar-grade polysilicon 20.07.2012  24.01.2014  
10.7% 
All others: 10.7% 
(MOFCOM provisionally 
determined not to levy) 30.04.2014 
1.2% 
All others: 1.2% 
Undertaking 
14.03.2014 22.56  
Source: WTO documents G/SCM/N/274/CHN, 15 September 2014; G/SCM/N/281/CHN, 28 January 2015; 
G/SCM/N/289/CHN, 22 October 2015; and G/SCM/N/298/CHN, 17 March 2016. 
3.53.  Under the RTAs to which China has subscribed with Hong Kong, China and Macao, China, 
the right to use CV measures between the parties has been waived. Under the RTAs between 
China and ASEAN, Australia, Chile, Costa Rica, Iceland, the Republic of Korea, New Zealand, 
Pakistan, Peru and Switzerland, the parties maintain their rights under the Anti-Dumping and Subsidies and Countervailing Measures Agreements. 
3.1.7.3  Safeguards 
3.54.  China is not an active user  of global safeguards. During th e period under review, and as was 
the case for the previous review, China did not initiate any safeguard investigations pursuant to 
the WTO Agreement on Safeguards. Since its accession to the WTO in 2001, China has notified 
only one initiation of a safeguard investigation on certain steel products. The investigation was initiated on 20 May 2002, and definitive safeguard measures were imposed between 
20 November 2002 and 26 December 2003.  
                                               
70 WTO documents G/SCM/N/274/CHN/, 15 September 2014; and G/SCM/N/281/CHN, 28 January 2015. 
71 WTO document G/SCM/N/289/CHN, 22 October 2015. 
72 WTO document G/SCM/N/298/CHN, 17 March 2016. WT/TPR/S/342 • China 
 
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  3.55.  Procedures with respect to safeguard investigations and the adoption of measures are 
mainly governed by the Foreign Trade Law and th e Regulations on Safeguards (SG Regulations). 
Other legislation with procedures relating to safeguard investigations include: the Provisional Rules for Initiation of Safeguards Investigations; the Provisional Rules for Conduct of Public Hearings in 
Safeguards Investigations; the Rules on Investigations and Determinations of Industry Injury for 
Safeguards; and the Rules on Public Hearings with regard to Investigations of Injury to Industry.
73 
The main laws and regulations have not changed during the review period. 
3.56.  Safeguard investigations are under the responsibility of MOFCOM, which is also in charge of 
investigating and determining if there has been an increase in imports and if injury has been caused. In those cases where an investigation involves agricultural goods, the investigation and determination of injury must be done jointly with the Ministry of Agriculture. Investigations may be 
initiated following the written request of an interested party representing the domestic industry. 
The application must be accompanied by detailed information with respect to the increase in quantities of the imported product, for a period of  at least five years, as well as an analysis of 
reasons for the increase in imports. MOFCOM may also initiate an investigation ex officio  if it has 
sufficient evidence of injury. MOFCOM must review  the evidence provided by the petitioner and 
make a decision on whether to initiate an investigation within 60 days of receipt of the written 
application; this period can be extended in cases considered particularly complicated. The decision 
to initiate an investigation must be published and notified promptly to the WTO Committee on Safeguards. 
3.57.  MOFCOM has the faculty to apply provisional safeguard measures, but they cannot be in 
place for longer than 200 days. Final measures may take the form of tariff increases or 
quantitative restrictions. If a recommendation to apply a final measure in the form of tariff increases is made by MOFCOM, the SCTC on the basis of MOFCOM's proposal will make the 
decision of whether or not to apply the measure. Decisions to adopt a final measure in the form 
of a quantitative restriction are made directly by MOFCOM. The decision to apply a final safeguard measure is published by way of Ministerial Decree on MOFCOM's website.  
3.58.  Final safeguard measures may not remain in place for more than four years, except under 
special circumstances. The period of application of a safeguard measure may be extended if its continuation is deemed to be necessary to prevent or remedy serious injury, there is evidence that 
the domestic industry concerned is undergoing adjustment, and the extended safeguard measure 
is not more restrictive than the initial one. The total period of application of a safeguard measure 
and any extension of it cannot exceed 10 years. MOFCOM must conduct a mid-term review of the 
safeguard measure when its duration exceeds three years. When the period of application of a 
safeguard measure exceeds one year, the measure applied must be progressively liberalized at 
regular intervals during the period of application. There is no appeals mechanism against decisions taken by the authorities.  
3.59.  The RTAs with New Zealand and Singapore provide that a party may exclude imported 
goods originating from another party from the imposition of a safeguard measure, applied pursuant to Article XIX of the GATT and the WTO Agreement on Safeguards, provided that such 
imports are non-injurious. In contrast, the RTAs with ASEAN, Australia, Chile, Costa Rica, Iceland, 
the Republic of Korea, Pakistan, Peru and Switzerl and provide that the parties maintain their right 
under Article XIX and the WTO Agreement on Safeguards. All RTAs preclude the simultaneous imposition of a global safeguard and a bilateral safeguard under the relevant RTA. 
3.1.8  Standards and other technical requirements  
3.1.8.1  Standards and technical regulations 3.60.  China has four kinds of standards: nati onal, industry/sectoral, local, and enterprise 
standards. The first three types can be either voluntary or mandatory (technical regulations). 
National standards are developed for adoption at the national level, while industry/sectoral standards, which are also applicable nationwide , are developed in the absence of a national 
standard, where specific conditions must be complied with in a professional field at the national 
level. Standards may also be developed locally (local standards) when national or industry/sectoral 
standards do not exist. However, if and when equivalent national standards are developed, these 
                                               
73 WTO document G/SG/N/1/CHN/2/Suppl.2, 15 April 2003. WT/TPR/S/342 • China 
 
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  replace local and industry/sectoral standards. The exception to this is in cases where the local 
standards are stricter national ones. Enterprise  standards may be developed for an enterprise 
when national, industry/sectoral or local standards are not available. 
3.61.  The Standardization Administration of Ch ina (SAC), under the General Administration of 
Quality Supervision, Inspection, and Quarantine (AQSIQ), centralizes the administration of the 
standardization system in China. In general terms, the SAC is in charge of the overall coordination and unified management of China's national standa rdization system, as well as of the development 
of national policies and strategies with respect to standardization. The SAC is also in charge of 
approving, numbering and issuing national standa rds, both voluntary and "mandatory" standards 
(as technical regulations are referred to in China). The SAC is assisted in its functions and activities by the National Development and Reform Commission (NDRC), the State Food and Drug 
Administration, the China Association of Standards (CAS), a number of ministries, and local and 
industry standardization associations.
74 The CAS and some non-governmental organizations 
affiliated to AQSIQ, such as the China National Institute of Standardization (CNIS) support SAC 
and other institutions in the development of standards through research and international 
cooperation, to promote the use of best international practices in the development of China's standards.
75 The CAS also disseminates the proper use and application of standards.  
3.62.  According to the relevant provisions of  the Regulations for the Implementation of the 
Standardization Law of the People's Republic of China, the Ministry of Industry and Information Technology (MIIT) is mainly responsible for the development and revision of standards in the 
following areas: chemicals, petrochemicals, ferro us metallurgy, non-ferrous metals, rare earths, 
gold, building materials, machinery, automotive s, shipping, aviation, light industry, textiles, 
packaging, aerospace, ordnance products for ci vilian use, nuclear products, electronics and 
communications. The China Electronics Standardization Institute (CESI), under MIIT, engages in 
standardization in the field of electronics. The China Communications Standards Association 
(CCSA), organized with the approval of the MIIT an d registered with the Ministry of Civil Affairs, 
engages in standardization activities in the field of Information and Communications Technology 
(ICT) across China. 
3.63.  AQSIQ is the ministerial administrative organ in charge of national quality, metrology, 
entry-exit inspection, animal and plant quarantine, certification, accreditation, standardization, and 
administrative law enforcement. AQSIQ is also the body in charge of ensuring that both imports 
and exports comply with technical regulations and certification requirements.
76 AQSIQ administers 
the Certification and Accreditation Administration of China (CNCA). 
3.64.  The Standardization Law (1988) and th e Regulations for the Implementation of the 
Standardization Law  (1990) continue to constitute the main legislation with respect to standards in 
China. Other pieces of legislation have, however, an impact on standards and technical regulations. The revised Regulations on the Supervision and Administration of Medical Devices 
(State Council Decree No. 650), which came into force on 1 June 2014, introduced a number of 
changes in this area, mainly aimed at increasing supervision and safety. These included: the revision of the definition of and classification rules for medical devices and improvements to the 
                                               
74 Both domestic and regi stered foreign-funded enterprises ma y participate in China's national 
standardization activities. They must fi le an application to participate in the corresponding technical committee, 
as specified in the Administration Provisions on National Professional Standardization Technology Committee (Guo Biao Wei Ban [2009] No. 3). The Provisions, Registration Form for Members of the National Standardization Technical Committee and relevant information on the technical committee are available at: 
http://www.sac.gov.cn . 
(WTO document G/TBT/M/300/Add.1, 9 September 2014). 
75 The CAS is a nationwide public association of organizations and individuals engaged in voluntary 
standardization across China. It is approved by the Ministry of Civil A ffairs and led by AQSIQ. Its main activities 
include: conducting research on policies, laws, and regulations related to standardization; providing certification services; and disseminating knowledge on standardization. The CNIS is a non-profit national research body affiliated with AQSI Q and engaged in standardization research, whose main responsibilities are 
to conduct strategic and comprehensive research on st andardization, to research and develop a range of 
fundamental standards, as well as to provide authoritative standards information services. China Association of Standards (CAS). Viewed at: http://www.chinacsrmap.org/Org_Show_EN.asp?ID=539 ; and China National 
Institute of Standardization. Viewed at: http://en.cnis.gov.cn/faq/201305/t20130527_14361.shtml . 
76 Law on Import and Export Commodity Inspection of 2002. Viewed at: 
http://www.china.org.cn/english/government/207371.htm ; and the Regulations on the Implementation of the 
Law on Import and Export Commodity Inspection. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300045852.shtml . WT/TPR/S/342 • China 
 
- 64 - 
 
  approval or filing system for product registration and production, which now allows product 
registration to take place before a production licence has been granted. Also, the record-filing of first class medical devices can now be done at the local or city-level food and drug regulators, instead of at the provincial level, as was previously the case; this is meant to facilitate procedures. 
The revised regulations have also strengthened supervision and administration of the use of 
medical devices, calling for the introduction of systems such as medical-device-related adverse 
event monitoring, traceability, and recall, and imposing greater penalties for illegal acts. 
3.65.  The procedures to formulate national standards are stipulated in the Measures on 
Administration of National Standards, Order No. 10 of 24 August 1990.
77 In China, standardization 
is part of the Government's policy taking into account the needs of the different industries. The 
formulation process is mainly in public hands, while the respective industry plays a supportive role. 
The development of national standards is organized by the SAC, through a process that 
comprises a number of steps: a pre-research stage, project initiation, drafting of the proposed standard, opinion solicitation, examination of the technical contents, approval, and publication. 
National standards are published in the Standard Press of China. They are reviewed after five 
years of implementation to confirm whether they ar e still valid and required as they stand, or if 
they need to be amended or annulled. If it is decided that the standard should be annulled, a 
Notice of Annulment is issued. If it is retained, the results of the review are made public, and any 
modification to the standard listed in the National Standards Development and Revision Plan.  
3.66.  Industry/sectoral standards are formulated by the relevant technical committees. The 
standardization administrations of the competent ministries, with the support of the industry 
institutes of standardization and technical committees, are in charge of establishing 
industry/sectoral standard development plans an d approving the corresponding standards. Most 
national and industry/sectoral standards are filed an d stored at the National Library of Standards, 
but this is not mandatory. Local standards are formulated by the standardization authorities of 
provinces, autonomous regions and municipaliti es directly under the Central Government in 
accordance with the Administrative Measures on Local Standards. Industry/sectoral and local 
standards must also be reviewed within five years of their implementation. The formulation 
procedures for enterprise standards are determined by the enterprises themselves. 
3.67.  Chinese standards are divided into mandatory and voluntary standards. Mandatory 
standards are technical regulations. They are main ly related to the protection of human health, 
personal property and safety, and are applied usually to: medicines, food hygiene, veterinary 
drugs, and pesticides; labour and transportation safety; construction; environmental emissions; and technical terminology. When a technical regulation is to be developed, it must be stipulated 
that it will be a mandatory standard. To this end, for national standards, at the project initiation 
stage, the standardization authority requests an assessment by experts of the need and feasibility 
of making the proposed standard mandatory. Once this is determined, the procedures to develop 
and issue a standard and a technical regulation have some differences: at the technical 
examination stage, mandatory standards must be publicly reviewed by convening meetings and 
the period to receive comments cannot be less than two months. Also, before their approval, mandatory standards with an impact on trade and not resulting from the adoption (without 
changes) of an international standard must be notified to the WTO. Voluntary standards cannot in 
principle become mandatory standards since the nature of the standard has been determined at the beginning of its formulation procedures. However, a (voluntary) standard could be referenced 
in a technical regulation, making it mandatory. Government agencies, such as the NDRC and the 
MIIT, have the faculty to approve and promulgate technical regulations that may make reference to voluntary standards, rendering them mandatory. 
3.68.  According to information provided by the authorities at end-2014 some 74.3% of mandatory 
standards and some 75.2% of voluntary standa rds were adoptions or an adaptation of 
international standards, compared to 69.0% and 73.7% at end-2013. There were some 29,000 standards in place, of which some 15% were mandatory. Of the national standards 
approved in 2015, only 5.9% were mandatory; in 2014, the ratio was 11.7%. No local standards 
complied with international standards as at end-2013 (Table 3.7).
78  
                                               
77 Order No. 10, 24 August 1990. Viewed at: http://www.csms.org.cn/fagui/fagui_03.html . 
78 WTO document G/TBT/M/300/Add.1, 9 September 2014. WT/TPR/S/342 • China 
 
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  Table 3.7 Standards approved, 2013-15 
 2013 2014 2015  
National standards 1,870 1,530 1,930 
Mandatory 211 176 113 
Voluntary 1,627 1,346 1,817 
Sectoral standards 4,522 5,324 4,414 
Mandatory 219 152 70 
Voluntary 4,293 5,143 4,344 
Local standards  3,239 3,536 4,004 
Mandatory 141 140 125 
Voluntary 3,098 3,396 3,879 
Source: Information provided by the Chinese authorities. 
3.69.  AQSIQ is China's TBT Enquiry Point and the body responsible for preparing, checking and 
submitting China's TBT notifications. In 2014 and 2015 China submitted 141 TBT notifications, 
most of them under Article 2.9. The majority of the technical regulations notified were applied to 
regulate the market and to protect human health, safety and the environment, and were related to 
chemical products, machinery, electronic equipment, and transport equipment.79 During the review 
period, Members raised 11 specific trade concerns  against China. Concerns were raised regarding 
inter alia , the rationale, legitimacy and transparency  of the applied measure. These measures 
applied to: cosmetics; drugs and medical devices;  IT equipment; children's footwear; and new 
chemicals.80 
3.70.  During its last Trade Policy Review in 2014, China was invited to streamline and review the 
domestic standards framework, and to look into replacing local standards with national standards where relevant. China replied that it was actively facilitating integration and optimization of 
mandatory national, industrial and local standards to reduce the number of standards.
81 During the 
current Review, the authorities noted that a reform of the standardization system is under way, and that a new mandatory national standards system will be established. As a result, the State 
Council issued a Plan for Deepening Standardizat ion Reform on 15 March 2015 and work has been 
carried out to eliminate unnecessary standards: the authorities indicated that by January 2015, 4,354 local standards had been annulled.  
3.1.8.2  Product certification 
3.71.  China administers both a voluntary certification system and a compulsory product 
certification system. The China National Certification and Accreditation Administration (CNCA), under AQSIQ, manages both systems. Certification and accreditation are regulated by: the 
Standardization Law; the Product Quality Law; the Import and Export Commodity Inspection Law; 
the Regulations on Certification and Accreditation; the Regulations on Compulsory Product Certification
82, as well as the Measures for the Administration of Certification Bodies; the Measures 
for the Administration of Certification Certificates and Certification Marks; the Measures for the 
Administration of Organic Product Certification; and the Measures for the Administration of Energy-saving and Low-carbon-emission Product Certification. 
3.72.  China's compulsory product certification system, which applies to both domestic products 
and imports, was established in 2001 to enforce product compliance with technical requirements. 
The products subject to compulsory product certification are listed in the Compulsory Product Certification Catalogue (CCC Catalogue); they cannot  be sold in China or imported without China's 
Compulsory Certificates (CCC) and the corresponding CCC marks.
83 The CCC certification system is 
mainly based on national compulsory standards. The products that have been listed in the compulsory certification directory may only leave the factory, be sold, imported, and used in other 
business activity after they have been certified and labelled. 
3.73.  The CCC Catalogue is approved and released  jointly by AQSIQ and the CNCA, together with 
the relevant industrial administrative departments, if approval from the industry regulator is 
                                               
79 WTO documents G/TBT/N/CHN/ series from 2 January 2014 to 10 November 2015. 
80 Information available at the TBT Info rmation Management System database: 
http://tbtims.wto.org/web/pages/search/stc/Search.aspx . 
81 WTO document G/TBT/M/300/Add.1, 9 September 2014. 
82 AQSIQ Decree [2009] No. 117. Viewed at: http://www.aqsiqccc.com/en/aqsiq/ccc-5.html . 
83 AQSIQ Decree [2002] No. 5, Administrative Measures for Compulsory Product Certification. WT/TPR/S/342 • China 
 
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  required. Responsibility for the general administ ration of the compulsory product certification 
system and its implementation li es with the CNCA. This involves updating the CCC Catalogue, 
drafting and promulgating the implementing rules for the compulsory certification of products listed in the CCC Catalogue, designing and prom ulgating certification marks, defining the 
requirements for CCCs, designating certification bodi es, testing laboratories and inspection bodies, 
carrying out conformity assessment activities for CCC certification,  designating the organization 
that issues CCC marks, and handling complaints  and appeals related to compulsory product 
certification. The CNCA may also authorize local Quality and Technical Supervision Bureaus and 
Local Entry-Exit Inspection and Quarantine Bureaus as local certification supervision authorities for products listed in the CCC Catalogue in areas under their administration. Random conformity sampling tests are conducted on imports that have already acquired a CCC.  
3.74.  In 2015, the Catalogue listed 158 products including: motor vehicles and safety parts, tyres 
for motor vehicles, electrical wires, circuit switches, low-voltage electrical apparatus, low power motors, electrical tools, household electrical appliances, audio and video equipment (excluding for 
broadcasting service), information technology equipment, telecommunication terminal equipment, 
safety glass, agricultural machinery, fire-fightin g equipment, safety protection products, wireless 
LAN (local area network) products, home decor, and remodelling products and toys. In 2015, there 
were 493 tariff lines at the 10-digit level that were subject to the CCC mark. Over 80% of the lines 
covered items in HS Chapters 84 (machinery and mechanical appliances), 85 (electrical machinery and equipment), and 87 (vehicles).
84 
3.75.  To obtain the CCC mark, an application mu st be submitted to the authorized accredited 
certification bodies (ACB) designated by the CNCA, each of which is authorized to provide 
certification for several products subject to th e CCC. In the context of the present Review, the 
authorities have indicated that there are 22 mandatory certification bodies.85 The application must 
be accompanied by supporting material required under the specific product certification rules. A 
review committee is established by the CNCA, which analyses the application through the examination of files, and the organization of meetings and hearings.
86 The investigation may also 
include type-testing of product samples through a CNCA-designated test laboratory in China, and 
factory inspection by representatives of a CNCA-designated certification body. The resulting report will be analysed by the CNCA, wh ich must make a decision within 10 days or 15 days under special 
circumstances. If a product meets the certific ation requirements, the CCC is issued and the 
applicant notified within 90 days of the date of  the acceptance of the application. The CNCA's 
decision is published on its website. After a CCC is issued, certification bodies re-inspect the manufacturing facilities on a regular basis. The frequency depends on the security level and quality 
stability of the product and the classification status of the producing enterprise. Applications to 
renew the CCC must be submitted 90 days prior to th e expiry of the certificate. CCCs are valid for 
five years from the date of approval of the application. 
3.76.  In 2014, the CNCA refo rmed the issuance and record-filing of CCCs and cancelled the 
annual examination requirement of the printing and mould pressing of CCC marks (Announcement No. 36 of 2014). Along with the reform of the co mpulsive product certification system, the CNCA 
adopted various measures to facilitate certificatio n procedures for enterprises, shortening the time 
period of certification and easing the burden for enterprises during the application process. 
In 2015, another 10 certification bodies were designated to undertake CCC certification, and certification bodies and laboratories were designated on a unified basis so as to facilitate 
enterprises certification and testing, and, in addition, the three categories of information 
technology, audio and video equipment, and telecommunication terminal equipment were integrated into one (electronic products). The authorities have noted that some certification bodies 
                                               
84 CNCA Notice [2015] No. 23, Mandatory product certification directory of products and corresponding 
HS2015 codes. Viewed at: http://www.cnca.gov.cn/bsdt/ywzl/qzxcprz/gwgg/201508/t20150806_48944.html  
(in Chinese only). 
85 Among which: the China Quality Certification Centre; China Security Technology Certification Centre; 
China Agricultural Product Quality Certification Centre; China Safety Glass Certification Centre; Product Conformity Assessment Centre; Ministry of Public Security Fire; China Automotive Certification Centre (List of mandatory product certification bodies on  the website of the CNCA. Viewed at: 
http://www.cnca.gov.cn/cnca/rdht/qzxcprz/jcjggljg/4731.html ).  
86 The reviews examine the applicant's technical capabilities and credibility, and undertake a cost-
efficiency analysis. They must be completed within 30 working days. CNCA online information. Viewed at: 
http://www.cnca.gov.cn/bsdt/szxkxm/qzscprzjgsyshjcjgzdsp/201203/t20120320_4448.shtml . WT/TPR/S/342 • China 
 
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  are already providing one-stop services.87 In addition, designated certification and testing bodies 
have been encouraged to improve their "one-stop" service capacity to shorten the time period of 
the certification.  
3.77.  Under certain ci rcumstances, exemptions from the CCC requirement may be granted. 
Eligible products include: goods used in research and testing, to test production lines with the 
intention of importing technology, and to maintain equipment; goods used to complement factory production lines (excluding office supplies); an d goods imported temporarily, spare parts or 
materials imported under processing trade, parts of machines to be processed and then exported 
as a complete machine, or goods for exclusive use in commercial exhibitions.  
3.1.8.3  Labelling 3.78.  With respect to labelling, a number of laws and regulations are in force. They concentrate 
mainly on labelling and packaging of food, drugs and cosmetics, medical devices, and seeds. The 
labelling and packaging requirements for food  are contained in the Provisions for the 
Administration of Food Labelling (AQSIQ Decree No. 123), the Provisions for the Supervision and 
Administration of Production of Food Additives (AQSIQ Decree No. 127), and the Announcement on 
the Issues Related to the Use of Mark of Corporate Food Production Licence (AQSIQ [2010] Announcement No. 34). The revised Food Safety Law adopted in April 2015 introduced more 
specific and detailed labelling and packaging requ irements for pre-packaged and healthcare food. 
The labelling and packaging requirements for drugs and cosmetics are contained in the Drug Administration Law (Presidential Decree No. 45), the revised Regulations for the Implementation 
of the Drug Administration Law (State Council Decree No. 360), adopted in March 2014, and the 
Regulations for the Hygiene Supervision of Cosmeti cs (Ministry of Health Decree No. 3). Articles 34 
and 35 of the revised Seeds Law specify the labelling and packaging requirements for seeds.  
3.79.  During the period under Review, the regulations that prescribe labelling and packaging 
requirements for medical devices were amended by State Council Decree No. 650.  
3.1.9  Sanitary and phytosanitary requirements  3.80.  The most important change regarding the le gislation that regulates the SPS regime in China 
since the last Review, has been the promulgation of the Food Safety Law in 2015. The other laws 
and regulations that were in place at the time of the last Review, remain in place (Table 3.8). Existing legislation stipulates the procedures to establish SPS requirements and to regulate imports subject to SPS measures, including thei r inspection, quarantine and supervision.  
Table 3.8 Laws and regulations related to China's SPS regime 
Legal instrument Promulgated/Amended 
Laws  
Law on the Entry and Exit Animal and Plant Quarantine 30.10.1991/27.08.2009 
Regulations on Implementation of the Law on the Entry and Exit 
Animal and Plant Quarantine  02.12.1996 
Law on Quality and Safety of Agricultural Products  29.04.2006 
Animal Epidemic Prevention Law (2013 Amendment), further 
amended on 24 April 2015  03.07.1997/30.08.2007/29.06.2013/24.04.2015 
Regulations on Plant Quarantine  03.01.1983/13.05.1992 
Regulations on Control of Pesticides 08.05.1997/29.11.2001 
Regulations on Control of Veterinary Drugs  21.05.1987/29.11.2001, 09.04.2004 and 
29.07.2014 
Regulations on the Administration of Feed and Feed Additives  29.05.1999/29.11.2001 and 03.11.2011 
Law on Frontier Health and Quarantine .. 
Law on Import and Export Commodity Inspection .. 
Food Safety Law 28.02.2009/24.04.2015, with effect 01.10.2015. 
                                               
87 As at December 2015, the certification bodies having completed the reform measures included: China 
Quality Certification Centre (CQC), China Certification Centre for Automotive Products (CCAP), China Quality 
Mark Certification Group (CQM) and Be ijing Zhong Hua Combination Certification Co., Ltd. Other certification 
bodies were in the process of im plementing the re form measures. WT/TPR/S/342 • China 
 
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  Legal instrument Promulgated/Amended 
Rules and administrative measures  
Measures for the Supervision and Administration of Inspection 
and Quarantine of Import and Export Aquatic Products  AQSIQ Decree No. 135 of 2011 
Measures for the Supervision and Administration of Inspection 
and Quarantine of Import and Export Meat Products  AQSIQ Decree No. 136 of 2011 
Measures for the Prevention and Treatment of AIDS at Frontier AQSIQ Decree No. 139 of 2011 
Measures for the Supervision and Administration of Inspection 
and Quarantine of Import and Export Cosmetic Products  AQSIQ Decree No. 143 of 2011 
Administrative Measures on the Safety of Import and Export Food  AQSIQ Decree No. 144 of 2011 
Administrative Measures for Registration of Overseas 
Manufacturers of Imported Food AQSIQ Decree No. 145 of 2012 
Measures for the Supervision and Administration of Inspection 
and Quarantine of Import and Export Dairy Products  AQSIQ Decree No. 152 of 2013 
Administrative Measures on Quarantine of Entry-Exit Yachts of 
Hainan Province AQSIQ Decree No. 152 of 2013 
Measures on Inspection, Quarantine, Supervision and 
Administration of Entry-Exit Non-Edible Animal Products AQSIQ Decree No. 159 of 2014 
Administrative Regulations for Entry-Exit Health Quarantine on 
Special Goods AQSIQ Decree No. 160 of 2014 
.. Not available. 
Source: Information provided by the Chinese authorities. 
3.81.  The 2015 Food Safety Law aims at strengthening the domestic food safety management 
system. It imposes greater responsibility for food safety on food producers and traders, and on local governments; and at the same time imposes severe punishments to those that violate the Law. Some of the main amendments introduced by the Food Safety Law in 2015 are as follows:  
 it adjusts the duties of food safety regulato ry departments in accordance with the Plan 
for Reforming the State Council Agencies;  
 includes the sale of edible agricultural products in the scope of the Law;  
 allows food and drug regulators of the people's governments at county level to set up 
food and drug regulatory offices in towns or specific areas;  
 improves the production licensing system for food additives;  
 enhances the use of food safety risk monitoring results;  
 lists the circumstances (six) under which a food safety risk assessment shall be 
conducted; 
 establishes a food safety risk exchange system;  
 calls for the intensification of the links between the formulation of food safety standards 
and food safety regulation;  
 mandates that national food safety standards be formulated and issued by the health 
administrative authority of the State Council together with the food and drug regulator 
under the State Council;  
 mandates that the limits of pesticide residues and residues from veterinary medicines, 
as well as test methods and rules, be formulated by the health administrative and 
agricultural administrative authorities of the State Council together with food and drug regulator under the State Council;  
 establishes a registration system for infant formula powder and formulas for special 
medical purposes; 
 increases the responsibility of food producers and traders for the implementation of food 
safety management rules; WT/TPR/S/342 • China 
 
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   imposes requirements on food safety process control; 
 establishes food safety self-inspection and reporting systems;  
 calls for the establishment of a food safety tracing system, 
 improves the food recall system and adds recall obligations for food operators;  
 enhances the responsibility of local governments regarding implementation; 
 intensifies innovation in regulatory means;  
 strengthens industry self-discipline and enhances supervision by consumers' 
associations; 
 imposes strict punishments on violations of laws and regulations; administrative 
detention is added as penalty, and the limit of administrative penalties is increased; 
 bans for life a person once sentenced to a fixed-term imprisonment or more severe 
penalty due to food safety crimes from engaging in food production and operation; and  
 enhances civil liabilities, including consumer compensation, and punitive compensation; 
strengthens civil liability for persons spreading false food safety information.88 
3.82.  At the time of the last review in 2014 there were six institutions (i.e. the Ministry of Health 
(MOH), the Ministry of Agriculture (MOA), AQSI Q, the State Administration for Industry and 
Commerce (SAIC), MOFCOM, and the State Food and Dr ug Administration (SFDA)) in charge of the 
SPS system in China. Since then, there have been  major changes regarding these institutions, as 
there was an overlap in functions and thus  challenges regarding the enforcement and 
implementation of policies and specific measures.  
3.83.  The Ministry of Health and the National Population and Family Planning Commission were 
replaced by the newly established National Heal th and Family Planning Commission, which took 
over the Ministry's functions regarding the formulation of food safety standards and food safety risk assessment. At the same time, the Office of Food Safety Commission of the State Council, the 
State Food and Drug Administration (SFDA), and the functions of the State Administration for 
Industry and Commerce (SAIC) regarding SPS meas ures, were merged, to create the China Food 
and Drug Administration (Table 3.9). The author ities noted that the new entity took over the 
functions of the institutions that it absorbed with regard to SPS policies. 
Table 3.9 Institutions in charge of the SPS system, 2015 
Institution  Responsibility 
National Health and Family Planning 
Commission Responsible for: supervising and managing public health; evaluating food 
safety risks; and formulating food safety standards 
Ministry of Agriculture (MOA) Responsible for: supervising the safety and quality of agricultural products; 
supervising and managing livestock and poultry slaughtering facilities; and 
implementing entry and exit animal and plant quarantine 
General Administration of Quality 
Supervision, Inspection and Quarantine (AQSIQ) Responsible for: national quality, entry-exit commodity inspection, entry exit 
health quarantine, entry-exit animal and plant quarantine, certification and accreditation  
China Food and Drug Administration 
(CFDA) Responsible for: drafting laws, regulati ons and departmental rules to formulate 
policies to oversee food safety (including food additives and health foods), 
drugs (including traditional Chinese medicines), medical devices, and 
cosmetics; and supervising safety in food and drug production 
Source: Information provided by the Chinese authorities. 
3.84.  The authorities have noted that the 2015 Food Safety Law did not introduce major changes 
to the procedures to establish SPS requirements in China. In accordance with the Law on the Entry 
and Exit Animal and Plant Quarantine, based on a risk analysis and through a joint order issued by 
the Ministry of Agriculture (MOA) and AQSIQ, China can prohibit the importation of plants or 
                                               
88 Food Safety Law (2015). Viewed at: http://www.gov.cn/xinwen/2015-04/25/content_2852919.htm . WT/TPR/S/342 • China 
 
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  animals that originate in countries or regions where there are plant diseases or epidemics. The 
prohibition may be lifted on the basis of scientifi c assessment. To this end, the country affected 
must submit an application to the relevant Chinese authorities once the epidemic is under control. The MOA and AQSIQ will jointly assess the applicatio n, and an on-site survey will be undertaken to 
assess whether measures taken by the affected country are in accordance with a risk analysis 
based on the principles stipulated by national an d international organizations. Thereafter the MOA 
and AQSIQ solicit comments on the report from the relevant national bodies. China also shares the 
report with the countries affected by the prohibition to obtain their comments and feedback. If 
there are disagreements with China's assessment of the country's sanitary conditions, China might request more evidence to re-assess the risk based on the new evidence. Concerns have been raised at the WTO regarding this system.
89 
3.85.  The authorities have stated that inspection procedures for imports and exports subject to 
SPS measures have not undergone substantial changes since 2013. The Catalogue of Entry-Exit Commodities Subject to Inspection and Quarantine  lists all imports (and exports) subject to 
statutory inspection by the entry and exit inspection and quarantine authorities prior to their 
commercialization (or exit) in (from) China.
90 Regarding imports, in 2015 the Catalogue contained 
2,032 tariff lines at the HS 8-digit level, the same number as in 2015. The last amendment to the 
Catalogue, which took place on 31 December 2014, added one tariff line corresponding to furniture 
(HS 9401.80.90) and removed one line corresponding to vaccines for veterinary medicine (HS 3002.30) from the list of imports that we re subject to inspection and quarantine 
requirements.
91 In 2015 the number of tariff lines of exportable goods at the HS 8-digit level 
subject to inspections declined to 1,920 compared to 2,051 in 2013. The goods removed 
(133 tariff lines at the HS 8-digit level) were mainly motor vehicles and motorcycles.92 The two 
lines added corresponded to ferrosilicon (HS7202.21 and HS7202.29). In 2015, as in the case of 
imports, vaccines for veterinary medicine were  removed from the list of exports subject to 
compulsory inspection but furniture was added. 
3.86.  At the time of the last review there was an  additional catalogue in place, the Catalogue of 
Import Commodities Subject to Safety and Quality Permits, which stipulated the general standards 
for goods that are highly sensitive in terms of safety, sanitation and environmental protection.93 In 
addition, imports of waste, which can be used as raw materials, must be inspected before loading and prior to entering the Chinese territory to  prevent harmful waste from entering China.
94 
3.87.  The 2015 Food Safety Law indicates that im ported (and exported) food must be subject to 
the supervision and administration of state entry-ex it inspection and quarantine authorities both at 
the central and sub-central level. In general, impo rted food, food additives and other food-related 
products must meet China's national food safety standards; however, if these standards do not 
exist, the health administrative department of the National Health and Family Planning Commission may, on a temporary basis, apply the standards of a relevant country (or region) or 
an international standard. Importers (of food, food additives and food-related products) must 
establish a "review system" for overseas exporter s and/or overseas producers. If the imported 
food fails to meet China's national food safety standards, or may harm human health as proved by 
                                               
89 WTO documents G/SPS/R/73, 14 January 2014; and G/SPS/R/78, 21 May 2015. 
90 Catalogue of Entry-Exit Commodities subject to Inspection and Quarantine by the General 
Administration of Quality Supervisio n, Inspection and Quarantine, P.R. China (AQSIQ). 2015 Changes to the 
Catalogue. Viewed at: http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjgg/2014/201501/t20150106_429636.htm ; 2014 Changes 
to the Catalogue. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjgg/2014/201406/t20140610_414823.htm ; 2013 Changes 
to the Catalogue. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/lhgg/201308/t20130801_370419.htm  . 
91 GACC and AQSIQ Announcement [2013] No. 109. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/lhgg/201308/t20130801_370419.htm  (in Chinese only). 
92 The lines removed were: 89 tariff lines related to  motor vehicles and moto rcycles (HS Chapter 87); 
15 tariff lines related to electronic kitchen equipmen t (HS Chapter 85); 12 lines related to refrigerators, 
freezers and equipment thereof (HS Chapter 84); and the re st of the lines related to  table, kitchen or other 
household articles made of aluminium,  ceramic, paper, plastic or steel. 
93 Entry and Exit Quarantine Insp ection information. Viewed at: 
http://english.dg.gov.cn/Entry%20&%20Exit%20Q uarantine%20Inspection%20Administration.htm 
94 Annex 2 of the Announcement on Amending Catalogues of Imported Wastes Management, MEP 
MOFCOM NDRC GACC AQSIQ Joint Announcement [2014] No. 80. Viewed at: http://www.zhb.gov.cn/gkml/hbb/bgg/201412/W020141231557140614407.pdf . WT/TPR/S/342 • China 
 
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  "evidence", the importer concerned will be prohibited from continuing to import the product and all 
imports of the concerned products must be recalled.  
3.88.  Imported pre-packaged food or food additives require a label and an instruction manual (if it 
applies) in Chinese. Such labels and instruction manuals must specify the origin of the product; 
and the name, address and contact details of the domestic agent importing the food. In addition, 
importers must establish a food and food additives import and sales record system to record, inter 
alia: the name of the product, its specifications, qu antity, date of production, and production and 
import batch number; the shelf life of the product and food additives; and the name, address and 
contact details of the exporter. 
3.89.  In 2012, Members raised concerns regarding the registration requirements for foreign 
companies importing food into China.95 This issue has been reiterated on several occasions. At the 
time of the last Review, the authorities indicate d that these measures were based on WTO rules. 
As a result of the 2015 Food Safety Law, the requirements for foreign companies importing food into China have changed. Exporters or agents (forei gn enterprises) that export food into China and 
importers (Chinese enterprises) that import food must apply to the state entry-exit inspection and 
quarantine authority (through record-filing). Overse as enterprises that produce food and/or export 
food into China must be registered by the state en try-exit inspection and quarantine authority. To 
apply for registration, enterprises must be recommended to the CNCA via a competent authority of 
the countries (regions) where such enterprises are located or in other "prescribed manner". If a registered overseas food production enterprise has provided false material or if the imported food has been the object of a major food safety issue, the state entry-exit inspection and quarantine 
authority will cancel the registration of the enterprise and make a public announcement. 
3.90.  Foreign enterprises that manufacture, impo rt, process and store food must be registered 
with the CNCA before their food products are imported into China.
96 In addition, the 2015 Food 
Safety Law in its Articles 74-83 stipulates special regulations for certain food or food-related 
products (e.g. supplements97, "formula food for special medicinal purposes"98; and infant and 
follow-up formula and other special foods), which are subject to strict supervision and 
administration. Enterprises producing these products must fulfil special registration and/or record-
filing formalities, establish a production quality management system, and submit a "self-inspection" report to the food and drug administration of the local government. Registration and record-filing formalities vary according to the product.  
3.91.  China's national enquiry point for SPS continues to be the AQSIQ.
99 Between 2013 and 
January 2016, China made some 417 notification s regarding adopted SPS measures or measures 
that they were to adopt. Most of the measures notified are not based on international standards. 
Three of the notifications were related to emerge ncy measures: two were put in place on grounds 
of plant protection and imposed import prohibit ions on seeds, logs and timber from certain 
territories, and the third notification relates to  adjusting the requirements on wood packaging 
materials used by consignments in international trade to conform to international standards.100 
According to the information provided by the authorities, some 130 measures have been implemented or will be implemented during 2016. Most of the measures implemented relate to 
food additives. During 2014-2015, Members raised several specific concerns regarding measures 
imposed by China on sanitary grounds. These measures included: China's measures on bovine 
meat
101; the Chinese import regime, including quarantine and testing procedures for fish; China's 
                                               
95 WTO documents G/SPS/R/64, 17 January 2012; and G/SPS/R/66, 23 May 2012. 
96 AQSIQ Decree [2012] No. 145, Provisions for the Administration of the Registration of Overseas 
Manufacturers of Imported Food. Viewed at: http://www.chinatt315.org.cn/qwfb/2012-3/31/39530.aspx ; and 
the latest Catalogue of Registration of Foreig n Manufacturers of Imported Foods. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjgg/2013/201305/t20130503_355293.htm  (in Chinese 
only) and https://cdn.chemlinked.com/file/OtherNews/The_Implementation_Catalogue.pdf . 
97 Importers of supplements imported  for the first time must regist er with the CFDA. Importers of 
vitamins or minerals do not requir e registration just record-filing. 
98 For a definition please refer to National Standard GB 29922—2013. Viewed at: 
http://www.lndoh.gov.cn/zxfw/bjcx/spaqbz/201405/P020140514421230724630.pdf .  
99 Information available in the SP S Information Management System: 
http://spsims.wto.org/web/pages/settings/country/Settings.aspx .  
100 WTO documents G/SPS/N/CHN/601, 27 March 2013; G/SPS/N/CHN/632, 29 November 2013; and 
G/SPS/N/CHN/686, 4 November 2014. 
101 WTO document G/SPS/R/78, 21 May 2015. WT/TPR/S/342 • China 
 
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  import restrictions due to African swine fever; and China's proposed amendments to the 
implementation regulations on the safety assessment of agricultural GMOs.102 
3.2  Measures Directly Affecting Exports 3.2.1  Export procedures and requirements 
3.92.  Exporters must register with Customs before making customs declarations. These can be 
done either by a natural person or by a customs declaration enterprise once goods arrive at the customs surveillance zone.
103 The declaration must be made at least 24 hours prior to loading, 
otherwise an overdue declaration fee is charged. 
3.93.  Exporters must comply with the requiremen ts stipulated in the Catalogue of Import and 
Export Commodities Subject to Compulsory Inspection104, which is amended every year to add or 
subtract commodities as required for the protection of human and animal health, the environment, 
and national security, and to promote steady ex port growth and adjust the export structure.105 The 
last amendment, which took place on 31 December 2014, deleted one tariff line at the HS 10-digit level from the list of export items subject to in spection and quarantine requirements and added 
another item (children's car seats – HS 9401.80.90.91).
106 Some items, such as dangerous 
chemicals, fireworks, lighters, toys and strollers, food products, and rare earths, are still subject to export inspection.
107 Exports must be inspected where th ey are produced. The packaging of 
exports of dangerous chemicals and other dangerous goods must also undergo inspection and 
tests.108  
3.94.  Under the Reform of Classified Customs Clearance, initiated in 2009 and adopted by all 
customs offices to facilitate export procedures, enterprises were classified into different groups 
based on risk analysis.109 Customs inspection and supervision depended upon the enterprise's 
rating. Goods exported by high-risk enterprises we re inspected while other exports were released 
through fast-track clearance or a "low-risk examination".110 In 2015, the enterprise classification 
system was amended, and enterprises are now categorized according to their credit rating into: 
authorized enterprises (former AA and A), enterprise s of general integrity (former category B), and 
dishonest enterprises.111 The Reform of Paperless Customs Clearance, which was initiated in 2012 
as a pilot programme, was extended to the rest of the country in 2014. After implementation of 
this Reform, enterprises only need to submit declaration forms and any other accompanying documents in electronic format, to clear customs procedures.
112  
                                               
102 WTO document G/SPS/R/79, 4 September 2015. 
103 The Provisions of the Customs Administration of Declarations for the Import and Export of Goods  
(GACC Decree No. 218). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49564/info701048.htm (in 
Chinese only). 
104 The authorities have stated that this Catalogue is now called  Catalogue of Entry-Exit Commodities 
Inspected and Quarantined by Entry-Ex it Inspection and Quarantine Organs . 
105 Central People's Government on line information. Viewed at: http://www.gov.cn/jrzg/2013-
08/01/content_2459772.htm . 
106 GACC and AQSIQ [2014] Announcement No. 146. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjgg/2014/201501/t20150106_429636.htm  (in Chinese 
only). 
107 Central People's Government on line information. Viewed at: http://www.gov.cn/jrzg/2013-
08/01/content_2459772.htm . 
108 Central People's Government on line information. Viewed at: http://www.gov.cn/jrzg/2013-
08/01/content_2459772.htm . 
109 GACC Announcement [2010] No. 56. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info237228.htm  (in Chinese only). 
110 GACC Announcement [2009] No. 33. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab1/info174780.htm  (in Chinese only); and more information 
concerning classified customs clearance can be viewed at: 
http://www.gov.cn/gzdt/2012-07/04/content_2176701.htm  (in Chinese only). 
111 GACC Announcement [2015] No. 31, Decision of Classification of Goods. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49659/info761279.htm  (in Chinese only). 
112 GACC Decree [2014] No. 25, Announcement on Fu rther Promoting Paperless Customs Clearance. 
Viewed at: http://www.customs.gov.cn/publish/portal0/tab49564/info702038.htm  (in Chinese only). WT/TPR/S/342 • China 
 
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  3.2.2  Export taxes, charges, and levies 
3.95.  China continues to apply export taxes in accordance with the Regulations on Import and 
Export Tariffs.113 The list of goods subject to "statutory" and interim export duties is issued on a 
yearly basis. Exports subject to statutory duties can also be subject to an interim duty, usually at 
a lower rate.114 Exports subject to interim duties may also be charged a special export duty, which 
is applied according to the season and may be substantially higher than interim duty rates. Export duties are ad valorem , specific or they may take other forms as prescribed by the State; in 
practice, most of them are ad valorem . 
3.96.  Export duties are payable on the date wh en Customs accepts the export declaration; they 
are calculated based on the transaction value of exports, and transport and insurance cost.
115 
Certain items are exempt from export duties.116 D u t y  r e d u c t i o n s  o r  e x e m p t i o n s  m a y  a l s o  b e  
granted under specific circumstances.117 
3.97.  Between 2013 and 2015 (May), 4.1% of all tariff lines at the HS 8-digit level were subject to 
export duties (including both statutory and interim duties) (4.2% in 2013) (Table 3.10). Neither 
the goods subject to the statutory export duty nor the duty rates changed during that period.118 As 
was the case in 2013, in 2015 (May), goods subject to statutory export duties usually faced higher rates than those subject to interim export duti es. The exception to this, are three tariff lines 
related to pig iron (HS 7201.10.00, HS 7201.20.00, and HS 7201.50.00), which bear a statutory 
rate of 20% and an interim rate of 25%.  
Table 3.10 Export duty types of by HS Chapter, 2015 (May) 
HS Chapters Statutory duties Interim duties 
No. of lines Range % No. of lines Range % 
Total 102 20-50 314 0-35 
03 Fish and crustaceans 1 20 0 n.a. 
05 Products of animal origin, n.e.s. 4 (1) 40 1 0 
25 Earths and stone; plastering materials 0 n.a. 21 5-35 
26 Ores, slag and ash 7 (2) 20-50 32 0-20 
27 Mineral fuels, oil and waxes 0 n.a. 11 3-15 
28 Inorganic chemicals 3 (1) 20-30 78 5-25 
29 Organic chemicals 1 (1) 40 1 0 
31 Fertilizers 0 n.a. 17 5-30 
38 Misc. chemical products 0 n.a. 1 10 
41 Raw hides and skins 2 20 0 n.a. 
44 Wood and articles of wood 0 n.a. 6 10-15 
47 Pulp of wood, paper or paperboard 0 n.a. 16 10 
72 Iron and steel 17 (5) 20-40 48 10-25 
74 Copper and articles thereof 32 (32) 30 34 0-15 
75 Nickel and articles thereof 4 (4) 40 5 5-15 
76 Aluminium and articles thereof 24 (24) 20-30 24 0-15 
                                               
113 The Regulations on Import and Export Duties of 1 January 2003. Viewed at: 
http://english.mofcom.gov.cn/aarticle/policyrelease/internationalpolicy/200705/20070504715851.html  (in 
English). 
114 Where exports are subject to both a statutory and an interim export duty, the interim duty applies. 
115 GACC Decree [2006] No. 148, The Measures of Customs for Assessing and Determining Duty-Paid 
Value of Imported and Exported Goods as amended by GACC Decree [2013] No. 213. Viewed at http://www.customs.gov.cn/publish/portal0/tab49660/info688746.htm  (in Chinese only). 
116 These are: imported goods that are exported from the Customs territory within  one year of the date 
of importation because they are damaged, of poor quality or do not conform to specifications; goods in a single 
consignment on which the duties are estimated to be not more than RMB 50; advertising material and samples of no commercial value; donated material; and fuel s, stores, beverages and provisions to be used en route  by 
vessels which are in transit in China (Regulations on Im port and Export Tariffs). 
117 For instance: for exports into the special economic zones and other specially-designated areas; 
exports made by specific enterprises such as Chinese-foreign equity joint ventures, Chinese-foreign contractual 
joint ventures and enterprises with exclusive foreign investment; exports devoted to specific purposes and 
materials donated for public welfare use;  and low-volume border transactions. 
118 Goods subject to statutory export duty included, inter alia , phosphorus; ores, and concentrates of 
lead, zinc, tin, and tungsten; an d base metals (iron, steel, copper, nickel and aluminium). WT/TPR/S/342 • China 
 
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  HS Chapters Statutory duties Interim duties 
No. of lines Range % No. of lines Range % 
78 Lead and articles thereof 0 n.a. 2 10 
79 Zinc and articles thereof 4 (4) 20 4 0-15 
80 Tin and articles thereof 0 n.a. 2 10 
81 Other base metals  3 (1) 20 11 5-15 
n.a. Not applicable. 
Note: Figures in brackets under the column "statutory duties" refer to the number of tariff lines subject to 
both a statutory and an interim export duty rate. Lines where exports duty is only partially applied 
are included.  
Source: Customs Tariff of Import and Export of the People's Republic of China, 2015.  
3.98.  China is the world's leading exporter of some of the products to which it applies export 
taxes. The application of export taxes could affe ct the amount exported and their price in the 
world market.119 The highest export tax rate (50%) applies to tin ores and concentrates 
(HS 2609). In 2014, China did not export any of these products.  
3.99.  During the period under review there were two important changes regarding the imposition 
of export duties. First, in May 2015 interim export duties were removed for items included in 
91 tariff lines at the HS 8-digit level; however, statutory export rates remain in place for all these 
items. Interim export duties were removed on chemical elements (e.g. rare earths, ores and concentrates of rare earths, and compounds of rare earth metals); certain iron and steel articles; tungsten; and molybdenum.
120 Second, the special export duty rate of 75%, which applied mainly 
to fertilizers, was eliminated.121 There were no other major changes regarding the range of goods 
subject to interim duties or the rates of the duties charged during the 2013-15 period.  
3.100.  As of May 2015, interim duties were levied on 314 tariff lines at the HS 8-digit level, 
compared to 320 in 2013, ranging from 0% to 35%, with the highest rates applying to products 
classified under HS Chapter 25. The slight decline in the number of tariff lines subject to interim export duties was a result of a reduction in the number of lines subject to duties of inorganic 
chemicals (HS Chapter 28) and fertilizers (HS Chapter 31). Since 2013, export duty rates on 
eight tariff lines related to mineral fuels, oil and waxes (Chapter 27) were lowered from 10% to 
3%; while the minimum rate levied on fertilizers was lowered from 25% to 5%.
122 The 2015 
Customs Tariff shows that in 2015 eight products we re subject to specific interim export duties.123 
However, according to the authorities these were eliminated in 2014. 
3.101.  VAT on exports is 0%, with the except ion of VAT on exports of restricted goods.124  
3.2.3  Export prohibitions, restrictions, and licensing 
3.102.  As in the case of imports, the State may restrict or forbid exports to: maintain national 
security and public morality; protect human, animal and plant health; protect the environment; protect exhaustible natural resources that are in short supply or require "effective protection"; 
organize "export business management"; comply with China's international commitments; or 
under any other circumstance as provided for in any law or administrative regulation.  
                                               
119 In 2014, China's exports of rare-earth metals, scandium and yttrium, whether or not intermixed or 
interalloyed (HS 2805.30), accounted for 52% (62% 2012) of total world exports (United Nations Statistics Division (UNSD), Comtrade database). 
120 Shui Wei Hui [2015] No. 3, Customs Tariff Commission of the State Council, Circular on Adjusting 
Export Duties of Some Products. Viewed at: http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201504/t20150423_1221830.html . . 
121 Twelve tariff lines under HS Chapter 31 (mineral or  chemical fertilizers) and the additional line 
(ammonium chloride for use as fertilizer) (HS 28271010) were subject to special export duties in 2013. 
122 The eight tariff lines were related to coal/lignite/peat (HS 2701-2703). 
123 These products were: phosphoric acid (H S 2809.20.19), anhydrous ammonia (RMB 180/tonne) 
(HS 2814.10.00), ammonia in aqueous solution (RMB 60/tonne) (HS 2814.20.00), urea (RMB 80/tonne) (HS 3102.10.00), potassium chloride (RMB 600/tonne) (HS 3104.20.90), potassium sulphate (RMB 600/tonne) (HS 3104.30.00), diammonium hydrogenorthophosphate  (RMB 100/tonne) (HS 3105.30.00), and ammonium 
dihydrogenorthophosphate and mixtures thereof (RMB 100/tonne) (HS 3105.40.00). 
124 The Interpretation of VAT by the SAT, 28 September 2011. Viewed at: 
http://www.chinatax.gov.cn/n8136506/n8136608/n813887 7/n8139027/8357269.html (in Chinese only). WT/TPR/S/342 • China 
 
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  3.103.  MOFCOM, in collaboration with other relevant departments, formulates and issues a 
Catalogue of Goods Restricted or Forbidden for Export; this Catalogue was last updated in 2008.125 
Reflecting this, the products subject to export prohibitions remained unchanged since 2013. Export prohibitions apply to products such as: bezoar, musk, black moss, certain plants, bones, ivory, 
natural sands (HS Chapter 25) asbestos, haloge nated derivatives of hydrocarbons, organic 
chemicals (HS Chapter 29), fertilizers (not chem ically treated); unprocessed wood and some 
platinum products.
126 
3.104.  China's Foreign Trade Law also distinguishes between goods that may be freely exported 
and those that may be restricted. Restricted exports may be subject to quotas and/or licences. China imposes global and destination-specific export  quotas. The list of products subject to quotas 
and the quota volumes for the following year is published on 31 October of each year.
127 As 
information provided by the authorities shows, in  2013, global export quotas applied to 193 tariff 
lines at HS 8-digit level. On 1 January 2015 China removed the export quotas on rare earth, tungsten and tungsten products, as well as on molybdenum; these products are at present subject 
to export licensing.
128  
3.105.  Goods that are freely exported may be subj ect to automatic export licensing for monitoring 
purposes, while goods that are subject to restriction are subject to non-automatic export licences. 
MOFCOM issues on a yearly basis the Catalogue of  Goods Subject to the Administration of Export 
Licences.129 The Catalogue lists goods that are subject to export quota (licences), export quota 
bidding (licences), and to general export licensing (Table 3.11). For exports subject to a quota, the 
exporter needs to obtain quota access prior to applying for a licence.  The additional requirement of 
obtaining an export permit, which was compulsory prior to requesting the export licence, was 
removed for certain products (i.e. rare earths, tungsten and molybdenum). In addition, to "maintain foreign trade order", export declarations of certain products subject to export licensing 
(e.g. liquorice, some types of magnesia products, rare earths, antimony and antimony products, 
and natural sands), when exported to Chinese Taipei; Hong Kong, China; and Macao, China, may be cleared only through designated ports.
130 
Table 3.11 Products subject to ex port quotas and licensing, 2015-16 
Products Type of 
management Comment 
Goods subject to quota and licensing   
Rice, maize, wheat, cotton, coal Export quota 
(licensing) The quota is allocated 
by the NDRC 
The licence is issued 
by MOFCOM  
Wheat flour; maize flour; rice flour; sawn lumber; live cattle, swine and 
chicken (for export to Hong Kong, China and Macao, China); live pigs (to 
Hong Kong, China and Macao, China); crude oil; refined oil; antimony 
and antimony products; tin and tin products; silver; indium and indium products; and phosphate rock Export quota 
(licensing) The quota is allocated 
by MOFCOM 
Mat rush and mat rush products, talcum lump (powder), magnesia, 
liquorice and liquorice products  Export quota 
bidding 
(licensing) The quota is allocated 
by MOFCOM 
                                               
125 GACC Announcement [2008] No. 96. Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/c/200812/20081205948343.html  (in Chinese only).  
126 WTO documents G/MA/QR/N/CHN/2 and G/MA/QR/N/CHN/3, 24 April 2015.  
127 For more details on the management of the export  quotas, refer to Articles 38-41 of the Regulation 
on the Administration of the Im port and Export of Goods.  
128 MOFCOM GACC Joint Announcement [2014] No. 94. Viewed at: 
http://www.mofcom.gov.cn/article/h/zongzhi/201501/20150100856075.shtml  (in Chinese only). 
129 MOFCOM GACC Joint Announcement [2014] No. 94. 
130 For instance, the designated ports to clear export declarations for rare eart hs are Tianjin Customs, 
Shanghai Customs, Qingdao Custom s, Huangpu Customs, Customs Hohhot, Nanchang Customs, Ningbo 
Customs, Nanjing and Xiamen Customs. WT/TPR/S/342 • China 
 
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  Products Type of 
management Comment 
Goods subject to licensing   
Live cattle, swine and chicken (for markets other than Hong Kong and 
Macao SARs); fresh chilled beef, pork and chicken; frozen beef, pork, and 
chicken; bauxite; rare earth; paraffin; tungsten; carborundum; platinum 
(for processing trade); some metals and metal products; molybdenum 
and molybdenum products; natural sand (including natural sand); oil 
products (oil, grease, lube base oil); citric acid; penicillin industrial salt; 
vitamin C; sulfuric acid; disodium sulphate; motorcycles (including all-
terrain vehicles) and their engines and frames; and motor vehicles 
(including completely knock-down kits) and their chassis  Export licence A licence is granted to 
the exporter who has 
signed the relevant 
export contract 
Substances depleting the ozone layer, and alumina, coke, tungsten 
products, silicon carbide, manganese, and fluorite Export licence  An export permit is 
required before applying for a licence 
Source: MOFCOM GACC Joint Announcement No. 76 of 2015. Viewed at: 
http://wms.mofcom.gov.cn/article/zcfb/g/201512/20151201225345.shtml  (in Chinese only); and 
information provided by the Chinese authorities. 
3.106.  In addition to the list of goods subjec t to export licences under general trade, the 
Catalogue of Goods Subject to the Administration of Export Licences also lists those export licences 
that apply to border trade. In 2015, there were 48 categories of goods subject to export licensing 
under general trade. The number of tariff lines at the HS 8-digit level subject to export licensing 
in 2015 was 450 (unchanged since 2013). 
3.2.4  Export support and promotion  
3.107.  The most recent notification to the WT O regarding export subsidies, in which China 
indicated that it did not maintain nor had it, introduced any export subsidies on agricultural products, covers the year 2012.
131 No information was provided on this matter for the period 
under review. 
3.108.  Exporters are entitled to VAT rebates on all exported goods. The rebate rates vary 
according to the product. Rebate rates are usually lower than the VAT paid. At present, the rebate 
rates are: 17%, 15%, 13%, 9%, 5% and 0% (Chart 3.3).132 The two most common rebate rates 
are 17%, which applies to some 29% of all tariff lines, and 0%, which applies to 22% of lines. Certain goods are not eligible for a rebate.
133 In terms of the value of exports, over 70% of the 
exported goods are subject to 17% and 15% rebate rates. Fruits and nuts are generally subject to 
the rebate rate of 5%, while endangered animal s and plants may not benefit from any rebate. 
3.109.  The management of the VAT rebate is used to meet certain goals. The authorities have 
noted that it accommodates the request for enviro nmental protection, energy saving and emission 
reduction. They noted that the rebate is used  to discourage the production and export of 
environmental polluting products. Rebate rates may be reviewed and changed as considered appropriate. For example, in 2014, the VAT rebate rates were increased for some high-value-
added products, processed maize products and textile and garments; while it was lowered for wigs 
(HS 6704) and eliminated for boron steel products (HS 7225.40.91).  
3.110.  The authorities were unable to provide any other information regarding export support. 
                                               
131 WTO document G/AG/N/CHN/27, 7 March 2014. 
132 SAT online information. Viewed at: http://hd.chinatax.gov.cn/fagui/action/InitChukou.do ; and Cai 
Shui [2014] No. 150, MOFCOM and SAT, the Circular on Adjusting the Export Rebate Rates for Certain 
Products. Viewed at: http://www.mof.gov.cn/zhengwuxinxi/zhengcefabu/201412/t20141231_1175119.htm  (in 
Chinese only). 
133 Products not subject to VAT rebate include: high-energy-consuming pr oducts, high-polluting 
products, and those related to the us e of resources; and endangered spec ies of fauna and flora (information 
provided by the Chinese authorities). WT/TPR/S/342 • China 
 
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  Chart 3.3 Distribution of export re bate rates, by HS section, 2015 
0% 20% 40% 60% 80% 100%212019181716151413121110090807060504030201
01   Live animals & products        
02   Vegetable products03   Fats & oils      04   Prepared food, etc.05   Mineral products06   Chemicals & products07   Plastic & rubber08   Hides & skins09   Wood & articles10   Pulp, paper, etc.11   Textiles & articles
12   Footwear, headgear
13   Articles of stones14   Precious stones, etc.15   Base metals and products16   Machinery17   Transport equipment18   Precision instruments
19   Arms & ammunition
20   Miscellaneous manuf.21   Works of art, etc.Duty free
17%15%13%10%5%
 
Source: WTO Secretariat calculations, based on online information from the State Administration of Taxation 
(SAT). Viewed at: http://hd.chinatax.gov.cn/fagui/action/InitChukou.do .  
3.2.5  Export finance, insurance, and guarantees  
3.111.  Export finance, insurance, and guarantees are granted by at least two institutions: the 
China Export-Import Bank (China Eximbank), which provides export finance; and the China Export 
and Credit Insurance Corporation (SINOSURE), which provides export credit insurance and related 
guarantees.  
3.112.  China Eximbank's mandate is to provide support for the importation and exportation of 
capital goods and services. It also provides export financing services in areas where social and 
commercial capital are unwilling to enter, and provides financing for Chinese companies to 
undertake overseas construction and investment projects. China Eximbank provides export buyers' credit and export sellers' credit. Export buyers' credit consists of loans extended in RMB or foreign 
currencies to overseas borrowers, while export sellers' credit consists of loans granted in RMB or 
foreign currencies to domestic enterprises when exporting vessels, equipment, electromechanical 
products, agricultural products, cultural products and services. The authorities noted that loans are granted at commercial interest rates. Eximbank also has special lines of credit and different 
financial instruments for SMEs. The Bank provides two preferential facilities used as Chinese 
government official development aid to developing countries, namely: government concessional WT/TPR/S/342 • China 
 
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  loans and preferential export buyers' credit. Eximba nk is the only bank designated by the Chinese 
Government to implement such facilities.134 
3.113.  Eximbank's operations and activities have developed rapidly over the 2010-2014 period. 
Export sellers' credit disbursements increased every year between 2010 and 2013 to reach 
RMB 192.4 billion (Chart 3.4). However, they declined to RMB 178.6 billion in 2014. 
3.114.  The main beneficiary industries of Eximbank's credit in 2014 were: hi-tech products 
(29.9% of the total), vessel exports (19.8), overseas investment projects (15.2%), general 
electromechanical products (10.6%), overseas construction projects (8%), and machinery and 
equipment (6.7%).135 Export buyers' credit increased steadily from 2012 to 2014 when the total 
amount of disbursements stood at RMB 59.4 billion . The amount of credit disbursed by Eximbank 
to finance imports has increased steadily between 2010 and 2014, reaching RMB 194.9 billion.  
3.115.  China's official export credit insurance ag ency is the state-owned China Export and Credit 
Insurance Corporation (SINOSURE), which offers, inter alia,  long- and medium-term export credit 
insurance, overseas investment insurance, short- term export credit insurance, domestic credit 
insurance, credit guarantees, and reinsurance related to export credit insurance and debt 
collection services. SINOSURE focuses on the promot ion of Chinese exports of goods, technologies 
and services, especially high-tech and high value- added capital goods, and on assisting national 
enterprises to invest overseas, by providing insurance against non-payment risks.136 
3.116.  SINOSURE offers short-, medium- and long-term export credit insurance, as well as, 
overseas investment insurance. There are several ki nds of short-term export credit insurance, of a 
maximum term of two years: a) the letter of credit (L/C) insurance policy, which covers both 
commercial and political risk; b) the specific buyer's or specific contract insurance policies, which 
cover in addition risks originated by measur es decreed by the government of the buyer's 
country/region, such as the imposition of restrictions or prohibitions on imports and/or the 
cancellation or non-renewal of an import licence; c) the insurance policy against buyer's breach of 
contract, which covers the policyholder from the risk of loss of payment both pre-shipment and post-shipment; and d) the comprehensive cover insurance, which covers receivable risks of export 
enterprises on payments made both by L/C and non-L/C means.
137 
3.117.  Among the medium- and long-term insurance instruments, the Buyer Credit Insurance 
Programme insures against the default of payments by the borrower or guarantor under the credit agreement due to certain political and commercial risks.
138 Chinese financial institutions are 
eligible for the programme, as well as foreign financial institutions with branches in China; they 
must have total assets of no less than US$10 billion and a good cooperation record with export credit agencies. The credit period is of between  2 and 15 years. Similar conditions apply for the 
Supplier's Credit Insurance Programme, which insures against the bankruptcy or default of 
importers. 
3.118.  The Overseas Investment Insurance scheme is designed to encourage investment abroad 
by Chinese enterprises and financial organizations by underwriting an investor's potential economic 
losses in overseas investment caused by political risks in the host country. It consists of equity insurance and liability insurance. Direct investments are eligible to benefit from the scheme, which provides insurance against loss of capital and realized earnings or loss of capital and accrued 
interests directly caused by the insured risks. Th e insured risks are expropriation, restrictions on 
transfers and currency conversion, damage or inability to operate due to war, and breach of undertaking. 
                                               
134China Eximbank online in formation. Viewed at: http://english.eximbank.gov.cn/tm/en-
TCN/index_640.html .  
135 Financial Report of the Export-Import Bank of China (2014). Viewed at: 
http://www.eximbank.gov.cn/tm/report/index_27_27419.html . 
136 SINOSURE online information. Viewed at: 
http://www.sinosure.com.cn/sinosure/english/news_events/114266.html . 
137 SINOSURE online information. Viewed at: 
http://www.sinosure.com.cn/sinosure/english/products_short.htm .  
138 SINOSURE online information.  WT/TPR/S/342 • China 
 
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  Chart 3.4 Eximbank operations, 2010-14 
0255075100125150175200
2010 2011 2012 2013 2014010203040506070
2010 2011 2012 2013 2014
050100150200250
2010 2011 2012 2013 2014024681012141618
2010 2011 2012 2013 2014
020406080100120140
2010 2011 2012 2013 20140510152025303540
2010 2011 2012 2013 2014Actual disbursement of export seller's credit
RMB billionActual disbursement of export buyer's credit
RMB billion
Actual disbursement of import credit
RMB billionLetters of guarantee
US$ billion
International settlement transactions
US$ billionTrade financing transactions
US$ billion
 
Source: The Export-Import Bank of China online information. 
3.119.  By the end of 2015, SINOSURE had supported  export, domestic trade and investment with 
a total value of US$2,401.73 billion. Its policies covered thousands of exporters and hundreds of 
medium-and long-term projects concerning exports of high-technology products, large electro - 
machinery and complete-set equipment, as well as overseas engineering contracts. Also by 
end-2015, SINOSURE had facilitated the lending of RMB 2.4 trillion by banks. WT/TPR/S/342 • China 
 
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  3.3  Measures Affecting Production and Trade 
3.3.1  Incentives 3.120.  During the period under review, China continued to provide a number of incentives to 
different sectors or industries. Some of these schemes are geared at, inter alia , upgrading 
production methods in industries that use obsolete technologies; promoting development in 
remote areas and narrowing the income gap between regions
139; and attracting FDI (Section 2).140 
Support also continues to be granted to, inter alia , specific strategic industries with the purpose of 
promoting innovation, upgrading industries, and protecting the environment and promoting green 
development, as well as to agriculture (Section 4). In general, support is granted through tax preferences, direct transfers, and access to credit (Table A3.2). 
3.121.  In 2015, China submitted a notification to  the Committee on Subsidies and Countervailing 
Measures regarding its support programmes maintained at the Central Level covering the 
2009-14 period.
141 The notification contains 86 programmes, of which 30 had not been notified to 
the WTO previously (Table 3.12).  
3.122.  The new notification does not include one programme, previously notified to the WTO, 
which appears to be in force.142 No information was supplied to the Secretariat regarding support 
measures at the sub-central level. However, th e authorities noted that they are preparing a 
notification of programmes maintained at the sub-central level.143 
3.123.  The programmes listed in the notification included incentives provided to: Foreign-Invested 
Enterprises (FIE) (Section 2); Special Economic Zones; less developed regions; small and medium enterprises (SMEs); specific industries (i.e. energy and Strategic Emerging Industries); and 
agriculture. Agriculture continues to be supported to guarantee farmers' income, protect the 
sector, develop rural areas, and ensure food secu rity (Section 4). According to the authorities, 
China is in the process of "improving" its agricultural subsidy policy.
144  
3.124.  As stated at the time of the last Review in 2014, in addition to the programmes notified by 
China, there are other support programmes and other means to support different industries.145 
However, no information was provided in the context of this Review regarding these specific 
programmes or China's industrial policies. The identi fication of these programmes remains difficult, 
as there is no information published in English and no itemized central budget (to help identify outlays) was provided for the Review. 
3.125.  General policies, as well as industries and activities identified as priorities, are outlined in 
the Central Government Five-Year Plans. For instance, the 12
th Five-Year Plan (2011-2015) called 
for the transformation and upgrading of key existing  industries to increase the competitiveness of 
China's industrial core, and for the development of strategic emerging industries (SEIs).146 
However, the Plan does not outline specific measures. Moreover, support policies, such as those 
for SEIs, are stated by the Central and provincial governments in legal documents, usually an 
                                               
139 The incentives granted to industries established in the Mid-Western Regions are listed in the 
Catalogue of Priority Industries for Foreign Invest ment in the Mid-Western Regions (NDRC-MOFCOM Decree 
[2013] No. 1. Viewed at: http://www.sdpc.gov.cn/zcfb/zcfbl/201305/t20130516_541505.html  (in Chinese 
only)). 
140 For more details on FDI incentives refer to WTO (2014), Trade Policy Review – China, Geneva. 
141 WTO document G/SCM/N/220/CHN, G/SCM/N/253/CHN, G/SCM/N/284/CHN, 30 October 2015. 
142 The programme is called the Preferential tax polic ies for the relief of grai n producers and disaster 
relief for grain producers, compensation to grain prod ucers for returning cultivated land to forests and to 
grassland, and grain rations for mi grants from the re servoir areas. 
143 For incentives to attract foreign di rect investment at the provincial le vel, please refer to Table A3.5 of 
the 2014 Secretariat TPR report (WTO (2014), Trade Policy Review – China , Geneva). 
144 CPC Recommendations on Formulating the 13th Five-Year Plan for National Economic and Social 
Development. Viewed at: http://cpc.people.com.cn/n/2015/1103/c399243-27772351-3.html . 
145 For more details on the specific programmes, see WTO (2014), Trade Policy Review – China , Geneva. 
146 The key manufacturing indu stries listed in the 12th Five-Year Plan are: equipment, shipbuilding, 
automobiles, iron and steel, non-ferrous metals, building materials, petrochemicals, light industry and textiles. The strategic emerging industries mentioned in the Plan are: energy conservation and environmental 
protection; new-generation IT; bi ological products; high-end equipment manufacturing; new energy 
(development of new-generation nuclear energy and so lar utilization, photovoltaic and photo-thermal power 
generation, and intelligent power grids and biomass en ergy); new materials; and new-energy automobiles. WT/TPR/S/342 • China 
 
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  administrative regulation or a local government rule. Thereafter, the governments at the city or 
county levels may promulgate more detailed rules to implement the measures. According to the Recommendations on Developing the 13
th Five-Year Plan, China will continue to encourage the 
development of SEIs through the design of approp riate industrial policies, which should promote 
their competitiveness, and through the guidan ce of investment towards these emerging 
industries.147 However details of the specific measures are as yet unknown. 
Table 3.12 New support programmes notified to the WTO in 2015  
Programme Forms of subsidy Period/Validitya 
Preferential VAT on comprehensively utilized products with 
agricultural surplus and forestry residues as raw materials Preferential taxation  In effect 
Preferential consumption tax on comprehensively utilized and 
produced petroleum products Preferential taxation  In effect 
Preferential VAT on electrical products produced by photovoltaic-
generated power Preferential taxation  1.10.2013 to 31.12.2015  
Preferential VAT on hydropower products Preferential taxation  1.1.2013 to 31.12.2017  
Preferential tax treatment for energy-saving and new energy 
vehicles and vessels  Preferential taxation  In effect 
Preferential tax treatment for the public buses and trolleybuses 
purchased by urban public transportation enterprises Preferential taxation  From 1.1.2012 to 31.12.2015  
Preferential vehicle purchase tax on low-emission cars  Preferential taxation  20.1.2009 to 31.12.2009; 
1.1.2010 to 31.12.2010 
Preferential income tax policies for enterprises that employ 
disabled people Preferential taxation  In effect 
Special fund for the development of international economy and trade Financial appropriations
 In effect 
Fund for disaster prevention and relief in agricultural production  Financial appropriations  In effect  
Preferential tax treatment to import of equipment  Preferential taxation  In effect 
Preferential consumption tax on refined oil Preferential taxation  In effect 
Subsidy fund for Jintaiyang (Golden Sun) Demonstration Project  Financial appropriations  2009-2012 
Subsidy fund for energy-oriented utilization of straw  Financial appropriations  November 2008 to 2013  
Subsidy fund for bio-energy and biochemical raw materials bases  Financial appropriations  In effect 
Incentive fund for non-grain produced bio-energy and biochemical 
industry Financial appropriations  In effect 
Incentive fund for transformation of energy-saving technology  Financial appropriations  2007-2013 
Promotion fund for efficient lighting products Financial appropriations  December 2007 to 2014  
Subsidy fund for the promotion of energy-saving products  Financial appropriations  In effect 
Subsidy fund for renewable energy-saving building materials  Financial appropriations  In effect 
Special fund for energy conservation and emission reduction of 
communication and transportation Financial appropriations  2011 to 31 December 2018  
Subsidy fund for ship-type standardization of the main line of the 
Yangtze River Financial appropriations  1.10.2009 to 31.12. 2013  
Subsidy fund for ship-type standardization of in-land rive r Financial appropriations  1.10.2013 to 31.12.2015  
Special fund for the development of circular economy  Financial appropriations  In effect 
Subsidy fund granted by the central finance to close small 
enterprises Financial appropriations  September 2010 to 2014  
Special fund for the development of strategic emerging industry  Financial appropriations  December 2012 to the 
present 
Subsidy fund for producing goods specially needed by the ethnic 
minorities Financial appropriations  In effect 
Subsidy for household electric appliances Financial appropriations  1.6.2010 to 31.12. 2011  
Subsidy for the sales of household electric appliances in rural 
areas Financial appropriations  1.2.2009 to 31.1.2013  
Subsidy for the sales of automobiles and motorcycles in rural 
areas Financial appropriations  1.3.2009 to 31.12.2009; 
1.2.2009 to 31.1.2013 
a Based on information provided by the authorities of China. 
Source: WTO Secretariat based on document G/SCM/N/220/CHN, G/SCM/N/253/CHN, G/SCM/N/284/CHN, 
30 October 2015; and information provided by the authorities of China. 
3.126.  In addition to the Central Government Five-Year Plans, there are also five-year plans for 
the sectors, provincial five-year plans, and differe nt catalogues that guide implementation of the 
overall policies (Table 3.13). Although the sector al five-year plans and the provincial plans set 
policy guidelines and establish industrial policies, they do not outline the specific measures to be 
applied. The Catalogues enumerate the industries  that can avail themselves of preferential 
treatment and/or "guide" capital as they list the sectors in which investment is encouraged. For 
instance, the 12th Five-Year Plan mentions "the innovati ve development project in SEIs", but 
Ministerial Departments of the State Council and sub-central governments have also issued catalogues concerning SEIs, which give more details regarding the industries that can be defined 
                                               
147 CPC Recommendations on Formulating the 13th Five-Year Plan, 29 October 2015. Viewed at: 
http://cpc.people.com.cn/n/2015/1103/c399243-27772351-3.html . WT/TPR/S/342 • China 
 
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  as SEIs.148 However, it is not always clear how the different catalogues interact, as they may 
sometimes overlap and even conflict, reflecting the different agendas at the different levels.  
Table 3.13 Selected catalogues  
Catalogue  Remarks 
Catalogue of Public 
Infrastructure Projects Eligible 
for Preferential Enterprise Income Tax Treatment (2008) "Ministry of Finance, State Administration of Taxation announced the National Development 
and Reform Commission Catalogue of Public Infrastructure Projects Eligible for Preferential 
Corporate Income Tax Treatment (2008 edition), Notice" (Cai Shui [2008] No. 116). Viewed at: http://www.chinatax.gov.cn/n810341/n810755/c1225570/content.html   
Catalogue of Priority 
Industries for Foreign 
Investment in the Central-
Western Regions (2013) Decree No. 1 of 2013, NDRC and the Ministry of Commerce. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/201305/t20130516_541505.html   
Catalogue of Encouraged 
Technology and Product 
Imports (2015) Jointly issued by the NDRC, Ministry of Finance, and Ministry of Commerce on 6 July 2015. 
Viewed at:  
http://www.mofcom.gov.cn/art icle/difang/201508/20150801074747.shtml  
Catalogue of Comprehensive 
Use of Resources for 
Preferential Enterprise Income 
Tax Treatment "Ministry of Finance, State Administration of Taxation, the State Development and Reform  
Commission on Comprehensive Utilization of Resources announced the Corporate Income Tax 
Catalogue (2008 edition) Notice" (Cai Shui [2008] No. 117). 
Viewed at: http://www.mof.gov.cn/mofhome/ gp/shuizhengsi/200809/t20080924_77975.html   
Catalogue of Chinese High-
Tech Products for Export (2006) On the issuance of Chinese High-
Tech Products Catalogue 2009 "Notice" No. 61 of 2009 by 
the Ministry of Science. Viewed at:  http://www.most.gov.cn/tztg/200910/t20091009_73551.htm  
Catalogue for the Guidance of 
Foreign Investment Industries Directory (2015 Amendment) Foreign Investment Industrial Guidance, National Development 
and Reform Commission and MOFCOM, Order No. 22, 10 March 2015. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/201503/t20150313_667332.html   
Catalogue of Imported 
Products not subject to Tax Exemption under Foreign 
Investment Projects Customs Notice No. 65 of 2008 (regarding adjustments to Catalogue of Non-Duty-Free 
Products under Foreign Investment Projects and other merchandise tariffs) of 5 September 2008. Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info125825.htm  
Catalogue of Imported Major 
Technical Equipment and 
Products not Eligible for Tax 
Exemption Cai Guan Shui [2014] No. 2. Viewed at http://www.gov.cn/gzdt/2014-
02/28/content_2625354.htm  (in Chinese only) 
Category of Non-Tax-
Exempted Imported Items under Domestically Funded Projects Ministry of Finance, Notice No.
 83 of 2012. Viewed at: 
http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201212/t20121231_723618.html  
Source: Information provided by the Chinese authorities and information compiled by the WTO Secretariat. 
3.127.   The People's Bank of China (PBC) continues to guide financial institutions to increase 
financial support to important areas of the econ omy and disadvantaged sectors, and to extend 
credit to key sectors and emerging industries, su ch as railways, clean energy and environmental 
protection. Since 2014, a new category of "credit policy supporting central bank loans" was introduced, which included agriculture-supporting loans and SME-supporting loans. Financial institutions were encouraged to use flexible credit products so as to enhance support for imports 
and domestic consumption. In 2014-2015, financial institutions were guided to increase "green" 
credit. The PBC, in its 2014 Annual Report stated that, in that year guided credit and the improvement of financial services had been in strumental in promoting regional development.
149 
3.128.  China provides industry-specific support to firms that the central and provincial 
governments perceive as strategically important or to revitalize them, as called for by the National Old Industrial Base Adjustment and Renovation Plan (2013-2022) of the NDRC.
150 However, 
according to the authorities, this Plan is intended  to promote the development of old cities and as 
it is only a guiding opinion, it does not involve the provision of any kind of support. Nonetheless, the policy of supporting specific industries seems to remain in place. For instance, the energy 
sector receives support to develop particular alternative energy sources (e.g. natural gas, wind 
power, solar power, geothermal power and nuclear power). To this end, in 2014, the State Council 
                                               
148 Catalogue on the Guidance of Strategic Emerging  Industries Key Products  and Services, National 
Development and Reform Commission, Public Notice 2013 No. 16, 22 February 2013. Viewed at: http://www.sdpc.gov.cn/zcfb/zcfbgg/201303/W020130307592414547502.pdf ; Sichuan Province Catalogue on 
the Guidance of Strategic Emerging Industries (Produ cts) Development (2014), Sichuan Provincial Economic 
and Informatization Commission Office, Chuan Jing Xin Ban Xin Xing [2014] No. 43, 29 April 2014. Viewed at: http://www.sc.gov.cn/10462/10464/10727/10729/2014/5/4/10300650.shtml . 
149 People's Bank of China (2014), Annual Report 2014. Viewed at: 
http://www.pbc.gov.cn/english/130739/index.html . 
150 The National Old Industrial Base Adjustment  and Renovation Plan, NDRC Dongbei No. 543 of 
18 March 2013. Viewed at: http://www.gov.cn/zwgk/2013-04/02/content_2368391.htm .  WT/TPR/S/342 • China 
 
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  issued an Action Plan on the Energy Developm ent Strategy (2014-2020) to improve the policies 
regulating the energy sector, support scientific rese arch in the field, promote the use of renewable 
energy, and encourage financial institutions to support projects related to the production and use of clean energy.
151 In addition, in 2015, the Ministry of Finance (MOF) circulated the Interim 
Measures on the Administration of the Renewable Energy Development Special Fund, which aim at 
supporting the production and use of renewable energy and "new" energy.152 There are no details 
with respect to the types of energy to be su pported or how the Fund will be managed. An 
additional Energy Saving and Emission Reduction Fund was established by the MOF in 2015 to 
provide incentives for the development of techno logies that save energy and reduce emissions.153 
The CPC Recommendations on Developing the 13th Five Year Plan also mention "new" energy" as 
one of the areas that will get government support with the aim of replacing traditional energy and 
improving the environment.  
3.129.  In addition to the support granted to the energy industry, China continues to support, inter 
alia, SMEs, the "international economy and trade" and the purchase of household electric 
appliances in rural areas (Table 3.14). According to the authorities the measures that were in 
place to support the production of aircrafts were removed in 2013.  
Table 3.14 Various support measures, 2015  
Support Type of support Legislation 
National Feed-in Tariffs (FITs)  Guarantee an above-the-market rate paid 
by the grid companies to companies which generate energy from wind, biomass, and 
solar sources Renewable Energy Law 
Promotion of high-efficiency 
energy-saving products .. Circular of the State Council on Printing and 
Distributing the 12th Five-Year Plan on Energy 
Saving and Emission Reduction (Guo 
Fa [2012] No. 40) 
Exemption or reduction of 
corporate income tax and VAT refund and exemption for renewable energy production Preferential enterprise income tax.
 
VAT on sales of electricity generated 
with wind power will be subject to an immediate 50% refund 
upon payment Article 27 of the EIT Law and Article 87 of 
Implementation Regulation. Circular of the Ministry of Finance and State Administration of Taxation on the Value-added Tax Policies 
for Integrated Resource Utilization Products 
and Other Products (Caishui [2008] No. 156) 
Hydropower products VAT refund Circular on VAT policy of large hydroelectric 
power enterprises a 
New energy automobiles Financial appropriations to support 
enterprises manufacturing new energy 
automobiles. The aim of this support measure is to reduce the purchase price for the final consumer Circular on Further Promoting New Energy 
Automobiles
b 
Exemption from the Vehicle Tax  Announcement on Vehicle Purchase Tax Exemption for New Energy Automobiles
c 
SMEs Financial appropriations for R&D projects, 
and assistance in obtaining credit and 
other financial services  Interim Measures on Special Fund for the 
development of SMEsd 
International economy and 
trade Financial appropriations  Administrative Measures on Special Fund for 
International economy and tradee 
Purchase of household electric 
appliances in rural areas Financial appropriations for farmers  Administrative Measures on Support Fund for 
Household Electric Appliances in Rural Areasf 
Domestically produced regional 
aircraft VAT exemption  Circular on the Value-Added Tax Exemption 
for Domestically Produced Regional Aircraft, 
Ministry of Finance and State Administration of Taxation, Cai Shui Zi [2000] No. 51 Circular on the Applicability of the Value-Added Tax Exemption for Domestically 
Produced Regional Aircraft to the N-5 
Aircraft, Ministry of Finance and State Administration of Taxation, Cai Shui [2002] No. 97 
                                               
151 Guo Ban Fa [2014] No. 31, 7 June 2014. Viewed at http://www.gov.cn/zhengce/content/2014-
11/19/content_9222.htm  (in Chinese only). 
152 Cai Jian [2015] No. 87, 2 April 2015. Viewed at 
http://jjs.mof.gov.cn/zhengwuxinxi/zhengcefagui/201504/t20150427_1223373.html  (in Chinese only). 
153 Interim Measure on Administration of Support Fund  for Energy Saving and Emission Reduction. Cai 
Jian [2015] No. 161, 12 May 2015. Viewed at: http://jjs.mof.gov.cn/zhengwuxinxi/zhengcefagui/201505/t20150519_1233458.html  (in Chinese only). WT/TPR/S/342 • China 
 
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  Support Type of support Legislation 
R&D fund for industrial 
technologies Financial subsidy to R&D in key universal 
industrial technologies .. 
Fund for R&D of integrated 
circuit industry Financial subsidy to R&D in key universal 
technologies in integrated circuit industry .. 
.. Not available.  
a Ministry of Finance, State Administration of Taxation, Cai Shui [2014] No. 10, 12 February 2014. 
Viewed at: http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201402/t20140224_1046354.html .  
b Ministry of Finance, Ministry of Science and Technology, Mi nistry of Industry  and Information 
Technology and National Development and Reform Commission, Cia Jian [2013] No. 551, 13 
September 2013. Viewed at: http://www.miit.gov.cn/n11293472/ n11293832/n12843926/n13917042/15629217.html. 
c Ministry of Finance, State Administration of Taxation, Ministry of Industry and Information 
Technology Announcement No. 53 of 2014, 1 August 2014. Viewed at: http://www.miit.gov.cn/n11293472/n 11293832/n12845605/n13916898/16091756.html.  
d Ministry of Finance, Ministry of Industry an d Information Technology, Ministry of Science and 
Technology, Cai Qi [2014] No. 38, 11 April 2014. Viewed at: http://www.miit.gov.cn/n11293472/n 11293832/n12843926/n13917012/15956192.html. 
e Ministry of Finance and MOFCOM, Cai Qi [2014] No. 36, 9 April 2014. Viewed at: 
http://www.mof.gov.cn/preview/qiyesi/zhengwuxinxi/zhengcefabu/201404/t20140422_1070187.ht
ml. 
f Ministry of Finance, Cai Jian [2008] No. 709, 24 October 2008. Viewed at: 
http://www.mof.gov.cn/zhengwuxinxi/caizhengw engao/caizhengbuwengao2008/caizhengwengao200
8dishiqi/200901/t20090116_108794.html . 
Source: Information compiled by the WTO Secretariat.  
3.3.2  Competition policy 
3.3.2.1  Legislative and institutional framework 
3.130.  China's competition policy comprises laws, administrative regulations and departmental 
rules. The laws concerning competition policy include the Anti-Monopoly Law (AML), the Anti-Unfair Competition Law, the Rules on Acquisition of Domestic Enterprises, and the Price Law. 
Although it is the most comprehensive piece of legislation regarding competition policy, the AML 
does not take precedence over other competition-related legislation.
154  
3.131.  The AML has jurisdiction over anti-competitive activities that have an effect on the Chinese 
domestic market, whether they take place within  China or abroad. It focuses on preventing, 
analysing and combating three kinds of monopolistic conduct: monopoly agreements; the abuse of a dominant market position; and concentrations of undertakings that have or are likely to have the 
effect of eliminating or restricting competition. The AML applies to all sectors of the economy and 
to all types of enterprises with the exception of associated or concerted conduct by agricultural producers and rural economic organizations in the production, processing, sales, transportation, and storage of agricultural products. The AML, also , allows the exercise of exclusive activities by 
state-owned enterprises (SOEs) or enterprises th at have been granted exclusive production and 
sales rights legally. In accordance with the AML,  the State supervises and regulates these firms' 
operations and the prices of the goods and services they supply. In this respect, China has laws 
and regulations that allow concentrating production in certain sectors into monopolies, near-
monopolies, or authorized oligopolies, such as the Postal Law (1986), the Railroad Law (1991), the Civil Aviation Law (1995), the Electricity Law (1996), the Regulations on Telecommunication 
(2000), and the Commercial Bank Law, as amended.  
3.132.  Since the last Trade Policy Review in 2014, MOFCOM published and implemented new 
regulations with respect to mergers. The Interim Provisions on Standards Applicable to Simple Cases of Concentration of Undertakings , issued in February 2014, specify the standards applicable 
to simple cases of concentration of undertakings and grant MOFCOM the power to revoke the 
determination of simple cases for concentration of undertakings that meet specific conditions.
155 
This allows the competition policy enforcement agen cies to apply simplified procedures to cases 
involving relatively low combined market share and to concentrate on larger cases. The Provisions 
                                               
154 The AML may be viewed at the MOFCOM website: 
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300045909.shtml.  
155 MOFCOM Announcement No. 12 of 11 February 2014. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201402/20140200487038.shtml  (in Chinese only). WT/TPR/S/342 • China 
 
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  on Imposing Restrictive Conditions for Concentration of Undertakings (For Trial Implementation), 
published by MOFCOM (effective since January 2015),  seek to provide a clearer legal basis for the 
determination, evaluation and supervision of restrictive conditions.156  
3.133.  The State Administration for Industry and Commerce (SAIC), on the other hand, issued 
the Provisions on Prohibiting the Abuse of Intellectual Property Rights to Preclude or Restrict 
Competition, SAIC Decree No. 74 of 7 April 2015.157 The Provisions, effective since 1 August 2015, 
are geared to addressing the conflict between  intellectual property (IP) protection and 
enforcement of competition policy. The SAIC IP Rule s specify requirements for an operator with a 
dominant market position to comply with the AML in entering and enforcing IP Agreements related to China. A multi-factor, rule of reason analysis is generally adopted. Under the Provisions, an IP agreement related to China is presumptively considered to be in compliance with the AML if: an 
operator's market share does not exceed 20% of the relevant market, or there are at least four 
alternative and independent technologies on the relevant market; or, an operator's market share does not exceed 30% of the relevant market, or there are at least two alternative and independent 
technologies on the relevant market, unless there is  evidence that the agreement has the effect of 
restricting or excluding competition.  
3.134.  Under SAIC provisions, an operator with a dominant market position is prohibited from 
engaging in any of the following practices that may exclude or restrict competition: a) refusal to 
license IPRs; b) exclusive trading; c) tying or bund ling the sale of additional products; d) providing 
differential treatment to parties in similar conditions; e) being granted the exclusiveness for improvements to the relevant IP; and f) prohibiting the challenge of the validity of the IPR by a 
party to the agreement. With respect to the latter, the SAIC Provisions also restrict recourse to IP 
pooling to impair the ability of a third party not participating in the pooling to challenge the validity of the corresponding IPRs or of the licence relevant to them. The Provisions also forbid entering 
abusive IP standard-setting agreements. The penalties for violation of the provisions consist in 
cease-and-desist orders and the confiscation of 1% -10% of the sales revenue of the previous year 
in cases where an abusive agreement exists, or a fine of no more than RMB 500,000 in cases of 
breaches without an agreement.  
3.135.  Competitive behaviour in public enterprises is regulated by SAIC Decree No. 20 of 2006. In 
accordance with the Decree, public enterprises should refrain from the following practices: 
a) prescribing that users and consumers can only buy and use commodities supplied by them or by 
operators designated by them; b) compelling users and consumers to buy unnecessary 
commodities supplied by them or by operators designated by them; c) preventing users and 
consumers from buying and using commodities conforming to the technological standards provided 
by other operators; and d) refusing, suspending or reducing supplies of relevant commodities or 
charging excessively if the users and consumers refuse to accept their unreasonable conditions. Public enterprises committing any of the offences listed above will be issued cease-and-desist 
orders and imposed a fine of between RMB 50,000  and RMB 200,000 according to the seriousness 
of the case. Allegations against illegal practices are investigated and settled by the administrative authorities for industry and commerce at the provincial level or the level of city with subordinated districts. The number of cases of public enterprises restricting competition in 2014 reached 812, 
while there were 392 cases in the first three quarters of 2015.  
3.136.  MOFCOM, the NDRC and the SAIC are responsible for different aspects of the enforcement 
of anti-monopoly laws and regulations. The Anti-Monopoly Committee of the State Council is 
responsible for organizing, coordinating and guiding anti-monopoly work. The Committee, whose 
General Office is in MOFCOM, also coordinates the work of the three different state agencies 
responsible for competition policy implementation and enforcement. MOFCOM's Anti-Monopoly 
Bureau is in charge of conducting anti-trust reviews of the concentration of undertakings. The 
                                               
156 Mainly, the decree stipulates three kinds of restrictive conditions, including: (1) structural conditions 
requiring the disinvestment of tangible assets, IPRs and other intangible assets, or relevant rights and 
interests; (2) conditions requiring certain actions to be taken, such as those requiring the business operators participating in a concentration transaction to make av ailable their respective ne tworks, platforms and other 
infrastructure, license key technologies (including pate nts, proprietary technologies or other IPRs), or to 
terminate exclusive agreements; and (3) comprehensive co nditions that combine structural conditions with 
conditions requiring actions to be taken. MOFCOM Decree No. 6, 4 December 2014: Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201412/20141200835207.shtml  (in Chinese only).  
157 SAIC Decree No. 74, 7 April 2015. Viewed at: 
http://www.saic.gov.cn/zwgk/zyfb/zjl/fld/201504/t20150413_155103.html  (in Chinese only). WT/TPR/S/342 • China 
 
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  NDRC and the SAIC deal with specific issues rela ted to the surveillance of monopoly agreements, 
abuse of market dominance, and abuse of administrative powers. The Price Supervision and Anti-Monopoly Bureau of the NDRC has responsibility for investigating and punishing price-related violations of the rules in these areas, while th e SAIC's Anti-Monopoly and Anti-Unfair Competition 
Enforcement Bureau deals with non-price issues regarding monopoly agreements, abuse of 
dominant market position, and abuse of administrative power to exclude or restrict competition. Each authority has issued a series of departmental rules in their own area of responsibility. 
3.137.  Violations of the AML are subject to admini strative penalties, including fines, confiscation 
of illegal gains, and cease-and-desist orders. Th ese may be applied by MOFCOM, the SAIC or the 
NDRC, according to the nature of the case. In a ddition to these administrative measures, parties 
injured by violations of anti-monopoly provisions may take their case to the courts. 
3.3.2.2  Monopoly agreements and dominant market positions 
3.138.  The Anti-Monopoly Law (AML) and its implementing regulations
158 provide definitions of 
dominant market positions and include a list of  the types of agreement that are prohibited, 
including in the area of IP. The AML identifies si x types of horizontal and three types of vertical 
agreements as prohibited practices. The prohibition applies to written or verbal monopoly agreements and to concerted behaviour among firms without explicit written or verbal agreement. 
3.139.  Industrial associations are prohibited from  organizing or facilitating monopoly agreements 
among their members.
159 The AML provides for the application of administrative penalties for 
concluding and implementing a monopoly agreemen t, including: issuing a cease-and-desist order 
to discontinue the violation; the confiscation of an y unlawful gains; and, in addition, the imposition 
of a fine of between 1% and 10% of the sales ac hieved in the previous year. If the monopoly 
agreement has not yet been implemented, the fine may be for up to RMB 500,000. Mitigation or exemption from the penalty may be obtained in cases of voluntary collaboration with the 
investigating authority or by providing material evidence for the investigation.  
3.140.  A firm deemed to have a dominant market position is forbidden from engaging in certain 
types of conduct that may lead to abuse of its dominant position. For instance, it is prohibited from 
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 the purchase or sale of products or imposing unreasonable trading conditions.
 The NDRC and the SAIC carry out 
investigations to identify whether an enterprise shall be considered to have a dominant market 
position on a case-by-case basis. Firms found to be dominant are obliged to grant competitors 
access to essential facilities they might hold on reasonable conditions. They may also be subject to fines. For example, in May 2015 the NDRC determ ined that Qualcomm Incorporated, the world's 
largest smartphone chipmaker, had engaged in anti competitive conduct relating to the licensing of 
standard essential patents for wireless communication technology and baseband chip sales. The NDRC ordered Qualcomm to cease certain anticompetitive conduct and pay a fine of 
RMB 6.088 billion (US$975 million), the largest penalty imposed to date under the AML. Qualcomm 
announced that it would not contest the NDRC Decision and agreed to change aspects of its patent licensing and baseband chip sales practices in China. 
3.141.  Price fixing and quantitative restrictions, such as those decided by cartels, are forbidden 
both under the AML and the Price Law. The Pric e Supervision and Anti-Monopoly Bureau of the 
NDRC is responsible for surveillance with respect to activities to fix or attempt to fix either prices or quantities of commodities. In accordance with the NDRC Provisions on Procedures for 
Administrative Enforcement of Prohibition of Price Monopoly (NDRC Decree 2010/8), the NDRC 
may delegate the faculty to act as the anti-price-monopoly enforcement agency within their administrative territories to the relevant provincial-level authorities, including the provincial 
Development and Reform Commissions (DRCs). Like wise, the provincial DRCs may delegate the 
investigation to local price-supervision departments, hierarchically one level below.  
                                               
158 These include the NDRC Provisions on Prohibition of Price Monopoly (NDRC Decree 2010/7), SAIC 
Provisions on the Prohibition of Monopoly Agreements (SAIC Decree 2010/53), SAIC Provisions on the Prohibition of Abuse of Dominant Market Positions (SAIC Decree 2010/54), and SAIC Provisions on Prohibiting 
the Abuse of Intellectual Property Rights to Preclude or Restrict Competition. 
159 The Anti-Monopoly Law, Article 9 of the NDRC Provisions on Prohibition of Price Monopoly, and 
Articles 9 and 10 of the SAIC Provisions on  the Prohibition of Monopoly Agreements. WT/TPR/S/342 • China 
 
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  3.142.  The authorities have stated that, since the last Trade Policy Review, China's competition 
law enforcement bodies have carried out law enforcement activities against price monopoly, and abuse of dominant market positions. The NDRC and the competent provincial anti-price-monopoly 
enforcement authorities have dealt with various price fixing acts in the building materials, 
automobile, machinery making, and international marine transportation industries. In 2014 and 
2015, the NDRC and the relevant provincial-level authorities dealt with five horizontal price-
monopoly cases in which fines reached approximately RMB 1.76 billion were imposed. In 2015, the 
NDRC applied a fine of 8% of sales to several enterprises providing wireless communication 
services. In 2014, the NDRC applied fines for anti-t rust behaviour dealing to several companies in 
the bearings industry (6-8% of the value of sa les fines) and the auto parts industry (6%).
160  
3.143.  The Anti-Monopoly and Anti-Unfair Comp etition Enforcement Bureau of the SAIC is 
responsible for the enforcement of all non-price-related violations resulting from monopoly 
agreements and dominant market position. The practices that may be investigated include the possible formation of monopoly agreements or abus e of dominant position leading to refusal to 
deal, or the imposition of unreasonable conditions. The SAIC may delegate an investigation to the 
provincial Administration for Industry and Commerc e (AIC) on a case-by-case basis, but provincial 
AICs may not delegate the case to a lower level, as is the case with price-related investigations 
and the DRCs. From 1 January 2014 to end-2015, the SAIC investigated 58 alleged monopoly 
cases. By end-2015, 27 of those cases had been concluded, involving areas such as insurance, 
tourism, water supply, electricity, gas supply, tobacco, building materials, as well as a variety of business entities and related industrial associations; five cases were suspended. The 
administrative penalties applied for the concluded cases are available on SAIC's website.  
3.3.2.3  Administrative monopolies  3.144.  Administrative monopolies, defined as the use of administrative powers to exclude or 
restrict competition by administrative agencies and organizations of public affairs management, 
are forbidden under Article 8 and Chapter 5 of the AML.
161 There are six types of prohibited 
administrative monopoly conduct as defined in th e AML: designated dealing; obstruction of free 
circulation of products across regions; restriction in tenders; investment or branch establishment 
restriction; forcing undertakings to pursue monopolistic conduct; and issuing rules with content excluding or restricting competition. SAIC Decree 2011/55 further elaborates on the prohibitions defined in the AML. The NDRC Provisions on Prohibition of Price Monopoly contain similar 
provisions with a focus on price-related violations. Remedies against administrative monopolies 
generally consist of cease-and-desist orders or other measures to eliminate the anti-competitive practices, together with disciplinary penalties for the officials responsible of abusing their powers 
by engaging in activities which exclude and re strict competition. They are applied by the 
administrative authority's superior authority, which can receive suggestions from the anti-monopoly enforcement agencies to this end.  
3.145.  Business operators are also prohibited from implementing monopolistic agreements and 
abusing their dominant position by means of administrative decisions, delegations, or 
regulations.
162 Administrative remedies to this end are prescribed in SAIC Decree No. 2011/53 
(SAIC Provisions on the Prohibition of Monopoly Agreements) and SAIC Decree No. 2011/54 (SAIC 
Provisions on the Prohibition of Abuse of Dominant Market Positions). 
3.146.  In the course of this review, the author ities have noted that the NDRC has intensified 
investigations related to the anticompetitive effects of abuse of administrative power. Between 
2014 and 2015, six cases of abuse of administrative power to exclude and restrict competition 
were published, involving authorities such as the Transportation Department of the Hebei Province, the Transportation Department of the Shandong Province, the Communications Administration of 
the Yunnan Province, the Health and Family Planning Commission of the Bengbu City Anhui 
Province, the Health and Family Planning Commission of the Sichuan Province, and the Health and Family Planning Commission of the Zhejiang Prov ince, and involving conduct such as designated 
dealings, organizing undertakings so as to lead to a monopoly, and imposing discriminatory 
                                               
160 NDRC online information (in Chinese only). Viewed at: http://www.ndrc.gov.cn/ . 
161 SAIC Decree No. 2011/55, SAIC Provisions on the Suppression of Abuse of Administrative Power to 
Eliminate and Restrict Competitive Conduct, which entered into force on 1 February 2011. 
162 SAIC Decree No. 2011/55, Article 5. WT/TPR/S/342 • China 
 
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  qualification requirements on non-local merchandises in bidding. However, no cases have been 
registered in the courts against administrative monopoly.  
3.3.2.4  Mergers and acquisitions 3.147.  In accordance with Chapter 4 of the AML, all concentrations above certain thresholds must 
be notified prior to any activity taking place. The proposed mergers are then subject to a 
pre-merger anti-trust review conducted by MOFCOM, and require its approval to proceed.
163 The 
AML provides a definition of concentration as one of the following cases: a) merger; b) acquisition 
of shares or assets giving control over other business operators; c) control obtained by business 
operators over other operators by way of a contract; or d) the ability to exert a decisive influence over other operators. In the case of a merger, each participant to it must submit a notification. 
3.148.  The thresholds above which concentration must be notified were established by the 
2008 State Council Regulations, and reaffirmed by the 2014 Guiding Opinions on the Application 
for Concentration of Business Operators. They are: a) worldwide turnover of the merged entity of 
more than RMB 10 billion in the year preceding the merger, and turnover in mainland China of at 
least two of the merging operators exceeding RMB 400 million each; and b) combined turnover in 
mainland China of all the operators participating in the concentration exceeding RMB 2 billion in the immediately preceding fiscal year, and turnover in China of at least two operators exceeding 
RMB 400 million each in the preceding fiscal year.
164 Multiple-concentration activities between the 
same entities within a two-year period are considered as a single transaction where the value is the sum of the turnover from the transactions. In th is case, even if each individual action is below 
the threshold, if the total transaction turnov er is above the notification threshold, the 
concentration activities must be notified and are subject to anti-trust reviews.
165  
3.149.  A Registration Form of Anti-Monopoly Declaration Information for Concentration of 
Business Operators is issued by MOFCOM after receipt of the notification and supporting material 
describing the impact of the concentration on competition in the relevant market, including the 
number of competitors and their shares, market access conditions, market shares of the merging companies and effect of the concentration on the industry and consumers, among others. 
3.150.  MOFCOM also has the faculty to conduct investigations of concentrations between 
undertakings which do not reach the notification thresholds, if facts and evidence are found to indicate that the concentrations are likely to have the effect of excluding or restricting competition.
166 Under the Interim Provisions on Investigation of Unnotified Concentrations 
of Undertakings, in effect since 1 February 2012, MOFCOM may initiate investigations to determine 
whether non-notified concentration activities should have been notified and made subject to an anti-trust review. Parties to the concentration found at fault may face a fine of up to RMB 500,000 
if the investigation finds that the non-notified concentration activity would have required clearance 
through anti-trust review. MOFCOM may also order that the concentration be reversed. 
3.151.  MOFCOM must make a preliminary review of the concentration notified and issue a 
decision on whether to conduct a further review within 30 days of the date it receives the complete 
documents or materials.
167 MOFCOM must notify the parties involved in the concentration of its 
decision with respect to the concentration in writing. The concentration may not be implemented before MOFCOM makes such a decision and approves it. If MOFCOM decides not to conduct a 
further review or fails to make a decision at the expiration of the specified time limit, the 
concentration may be implemented. If MOFCOM decides to conduct a further review, it must be completed within 90 days. MOFCOM may approve the concentration, reject it, or approve it with 
conditions. In cases where a decision on prohibiting the concentration is made, the reasons for 
such decision must be given. Under some circum stances, MOFCOM may extend the period for the 
review. However, the extension period must not exceed a maximum of 60 days. 
                                               
163 Apart from MOFCOM, the SAIC and sectoral regu lators may be involved in merger reviews. 
164 MOFCOM (2014), Guiding Opinions on the Application for Concentration of Business Operators, 
effective 6 June 2014. 
165 MOFCOM Decree No. 2009/11, Measures on the Notification of Concentrations of Undertakings. 
166 State Council Regulation on the Notification Thresh olds for Concentrations of Undertakings, art. 4. 
167 Reference to the materials and documents required to  be submitted is made in Article 23 of the AML. WT/TPR/S/342 • China 
 
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  3.152.  MOFCOM's review considers the effect of the merger on market competition, through the 
examination of the following elements: a) the mark et share of the business operators involved in 
the relevant market and their controlling powe r over that market; b) the degree of market 
concentration in the relevant market; c) the effect of the concentration on market access and 
technological progress; d) the influence of the concentration on consumers and other business 
operators; e) the effect of the concentration on national economic development; and f) other elements that may have an effect on market competition. The authorities have noted that 
the same criteria are applied to all businesses,  including SOEs. In cases of acquisition of a 
domestic enterprise by a foreign investor or when a foreign investor participates in concentrations by other means, if the authorities consider that state security is involved, a national security 
review must also be conducted. In cases where a concentration has or may have the effect of 
excluding or restricting competition, the State Council may decide not to prohibit it, if the business 
operators concerned can prove that the gains from concentration outweigh the negative impact on 
competition, or that the concentration is pursuant to the public interest.  
3.153.  During the period under review MOFCOM issued three new pieces of legislation with 
respect to mergers: the Provisions on Imposing Additional Restrictive Conditions for Concentration of Undertakings, MOFCOM Decree No. 6, 2014 (For Trial Implementation); the Guiding Opinions on 
Application of Concentrations of Undertakings (revised in 2014); and the Interim Provisions on 
Standards Applicable to Simple Cases of Concentration of Undertakings (MOFCOM [2014] No. 12).
168  
3.154.  MOFCOM Decree No. 6 of 2014 stipulates that MOFCOM may impose additional restrictive 
conditions to alleviate the adverse impact of a concentration on competition. The Provisions allow 
for three kinds of restrictive conditions to be applied: a) structural conditions requiring the disinvestment of tangible assets, IPRs and other intangible assets, or relevant rights and interests, 
etc.; b) conditions requiring certain actions to be taken, such as those requiring the business 
operators participating in a concentration transaction to make available their respective networks, platforms and other infrastructure, license key technologies (including patents, proprietary 
technologies or other IPRs), terminate exclusive agreements, etc.; and c) comprehensive 
conditions that combine structural conditions with conditions requiring actions to be taken. 
3.155.  The Guiding Opinions revised in 2014 set rules for the pre-merger notification, application 
and examination of concentrations over a certai n threshold. They are a revised version of the 
Guiding Opinions on the Application for Concentration of Business Operators promulgated on 
5 January 2009. The new Guiding Opinions added provisions related to the criteria for notification, methods of turnover calculation, consideration for determining control, and the handling of false 
notifications. 
3.156.  Special review standards are applied to concentrations defined as simple. MOFCOM's 
Interim Provisions of 2014 define a concentration as a simple case when: a) in the same relevant 
market, the total market share of all business operators participating in the concentration is less 
than 15%; b) an upstream-downstream relationship exists among the business operators participating in the concentration, and the market share of such business operators in both the upstream and the downstream markets is less than 25%; c) the business operators participating in 
the concentration are neither in the same relevant market nor have any upstream-downstream 
relationship, and their market share in each market relevant to the concentration is less than 25%; d) the business operators participating in the concentration intend to establish a joint 
venture abroad, which will not engage in any economic activities within the territory of China; 
e) the business operators participating in the concentration intend to acquire the equity or assets of an overseas enterprise which does not engage in  any economic activities within the territory of 
China; or f) a joint venture jointly controlled by two or more business operators will be controlled 
by one or more of the existing business operators after the concentration.  
                                               
168 Other administrative rules dealin g with anti-trust reviews include:  the Measures on the Examination 
of Concentrations of Undertakings (MOFCOM Decree [2009] 12), the Measures on the Notification of Concentrations of Undertakings (MOFCOM Decree [2009] 11) (both in effect since 1 January 2010), the Interim 
Rules on the Implementation of Divestiture of Assets  or Businesses for Concen trations of Undertakings 
(MOFCOM Announcement [2010] 41), and the Interim Provisions on Assessment of the Impact of 
Concentrations of Undertakings on Competition (MOFCOM Announcement [2011] 55). WT/TPR/S/342 • China 
 
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  3.157.  In 2014, MOFCOM received a total of 262 app lications for the approval of the concentration 
of undertakings and accepted and concluded 245 cases. Of these, 240 were unconditionally approved, accounting for about 97% of the total; four were conditionally approved and only one was prohibited. In 2015, MOFCOM received 352 applic ations for the approval of the concentration 
of undertakings, accepted 338 and concluded 312 cases. Among the closed cases, 310 were 
unconditionally approved, accounting for about 99% of the total; and 2 were conditionally approved. From the date of implementation of the AML in August 2008 up to the end of 2015, 
MOFCOM received 1,480 applications for the ap proval of the concentration of undertakings, 
accepted 1,380 and concluded 1,302 cases. Among the closed cases, 1,274 were unconditionally approved, accounting for about 98%; 26 were conditionally approved and 2 were prohibited. 
3.158.  In 2013, 12 State Council departments issued a document (Guiding Opinions) to 
encourage companies operating in some key industries, such as agriculture, automobiles, cement, 
electrolytic aluminium, electronic information, pharmaceuticals, rare earths, shipbuilding, and steel, to increase their capacity through mergers and acquisitions in order to improve their 
efficiency and global competitiveness. In some of  these industries, the Guiding Opinions also set 
targets regarding the degree of concentration to be reached by 2015. The legislation also encourages investors in these industries to go abroad. 
3.3.3  National security review of concentrations 
3.159.  In accordance with Article 31 of the AML, acquisitions by foreign investors of domestic 
enterprises considered to be related to national security must undergo a national security review. 
If, as a result of the review, the proposed merger is not granted national security clearance, 
MOFCOM must, jointly with other relevant authorities, terminate the merger transaction or take 
action to eliminate the negative impact on national security caused by the merger. 
3.160.  The Security Review System for the Mergers and Acquisitions of Domestic Enterprises by 
Foreign Investors was formally implemented in March 2011 through the Notice of the General 
Office of the State Council on Launching the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (Guo Ban Fa [2011] No. 6), which entered into force 
on 5 March 2011. In 2015, the Notice of the Genera l Office of the State Council on Printing and 
Distributing the Trial Measures for the National Security Review of Foreign Investment in Pilot Free Trade Zones (Guo Ban Fa [2015] No. 24) was pu blished and implemented to explore and improve 
the system for national security review of foreign investments which is expected to match the 
negative list management mode. The procedures to  conduct national security reviews conducted 
by MOFCOM are contained in the MOFCOM Rules on  Implementing the National Security Review 
Mechanism for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (MOFCOM 
Announcement No. 2011/53), which entered into force on 1 September 2011. National security 
reviews are conducted by the Inter-Ministerial Join t Conference on National Security Review of 
Acquisitions of Domestic Enterprises by Foreign Investors, led by the NDRC and MOFCOM.  
3.161.  Mergers and acquisitions of domestic enterprises by foreign investors are subject to 
national security review in the following case s: defence-related activities, which include the 
acquisition of defence or defence-affiliated enterprises, as well as the purchase of enterprises located near defence facilities; and the acquisition of, and gaining control over, enterprises related 
to national security engaged in the production of key agricultural products, energy and natural 
resources, as well as key infrastructure, tr ansportation, and machinery manufacturing. The 
prospective investor must apply for the review. 
3.162.  National security reviews can have one or two stages: a general review and a special 
review. The general review is carried out by the Inter-Ministerial Joint Conference to which MOFCOM refers the proposed merger and must be completed within 30 working days and carried 
out by means of written opinion solicitation. The Joint Conference seeks opinions in writing from 
the relevant departments under a strict time frame. If the relevant departments reach a consensus that the concerned transaction will not have any impact on national security, the concentration operation may proceed. However, if the relevant departments determine that the transaction may 
have an impact on national security, the Joint Conference initiates the procedures for a special 
review, issues review opinions within five working days upon the receipt of all the written opinions, and informs MOFCOM of this in writing. Review opinions are issued only when there is a general 
consensus. When there are major different views,  the Joint Conference submits the case to the WT/TPR/S/342 • China 
 
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  State Council for a decision. The Joint Conference must complete the special review within 
60 working days of the launch of the procedures. 
3.163.  The Notice of the General Office of the State Council on Printing and Distributing the Trial 
Measures for the National Security Review of Fo reign Investment in Pilot Free Trade Zones (Guo 
Ban Fa [2015] No. 24), in force since 8 May 2015, governs national security reviews in PFTZs.169 
The rules of the reviews for PFTZs follow the general negative list approach to investment that prevails in the zones. To this end, the Notice defines the scope of the reviews, which covers: 
investment in PFTZs by foreign investors in: the military industry or related supporting industries 
or other fields involving national security; regions near key and sensitive military facilities; fields such as agriculture, energy and resources, key infrastructure, transport services, culture, information technology products and services; and key technologies and equipment 
manufacturing, in which the foreign investors acquire the actual controlling right.
170 The security 
review of foreign investment in the financial sector is not covered by these procedures and is subject to separate ones. For investors from Hong Kong, China; and Macao, China these rules 
apply only as a reference.  
3.164.  The Notice mandates that, when handling the formalities for foreign investment record-
filing, ratification or examination and approval  within their authorities, PFTZ management organs 
must notify, in a timely manner, prospective foreign investors in areas falling within the scope of 
security reviews that they must apply for the revi ew prior to engaging in any investment-related 
formalities. The review will analyse the impact of the foreign investment on: national security, including on domestic manufacturing capacity and domestic service provision capacity; the 
national economy; order, local culture and public  morality; security; and the R&D capacity of key 
technologies related to national security. The NDRC and MOFCOM conduct the review in conjunction with the relevant departments of the fields related to the foreign investment. The 
procedures are similar to those for reviews outside the zones.  
3.165.  If the review determines that the investment will or may affect national security but that 
the effect can be eliminated by imposing additional conditions, the Inter-Ministerial Joint 
Conference may require the foreign investors to issue a written commitment to revise the 
investment plan. After the foreign investors have issued this written commitment, the Conference may impose additional conditions to approve the merger. MOFCOM notifies in writing the foreign investors and the PFTZ management organs of the Conference's review opinions. 
3.3.4  Price controls 
3.166.  China continues to apply price controls to commodities and services deemed to have a 
direct impact on the national economy and people's  livelihoods, when necessary. Price controls are 
set by the NDRC at the central level, and the prov incial DRCs and the Bureau of Commodity Pricing 
in each province.
171  
3.167.  Price controls take two forms: "gover nment prices" or "government-guided prices". 
Government prices (or government-determined prices) are fixed prices set by the authorities, 
while government-guided prices, are prices set within a range. The commodities and services subject to price controls are listed in a Central Government Pricing Catalogue and in Local Government Pricing Catalogues compiled by the provinces, autonomous regions and 
municipalities, but they ar e approved by the NDRC.  
                                               
169 These are: the China (Shanghai) Pilot Free Tr ade Zone, the China (Guangdong) Pilot Free Trade 
Zone, the China (Tianjin) Pilot Free Trade Zone, the China (Fujian) Pilot Free Trade Zone. 
170 Foreign investors are understood to obtain actual controlling rights when: a)  a foreign investor and 
its affiliated investors hold more than 50% of the shares of the enterprise in total; b) several foreign investors 
hold more than 50% of the shares of the enterprise in to tal; c) a foreign investor an d its affiliated investors or 
several foreign investors hold less th an 50% of the shares of the enterprise in total but possess the voting 
rights that are sufficient to materi ally influence the resolutions of the meetings or general meetings of 
shareholders or the board of  directors; and d) under ot her circumstances where foreig n investors have material 
influence on the business decisions, human resource s, and finance and techno logy of the enterprise. 
171 Guided prices or government-set prices can be imposed on commodit ies that have significant bearing 
on national economic deve lopment and people's livelihood, which are rare or are a natural monopoly, or are 
considered key public utilities or public services (Article 18 of the Price Law of 1998). WT/TPR/S/342 • China 
 
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  3.168.  The determination of government prices or government-guided prices varies in accordance 
with the type of product or service. The criteria  used in their formulation include: the market 
situation, average social costs, as well as econ omic, regional and seasonal factors, development 
and social needs. The methodology for setting prices may differ across provinces but takes into 
account the same factors. 
3.169.  Since the last review in 2014, China has liberalized the price of several goods and services. 
The ex-factory price of explosive materials and th e charges for some construction projects were 
liberalized in 2014. In addition, in 2015 the prices of  military goods and the price of tobacco leaves 
were liberalized, even if the product is still subj ect to state monopoly. Government-set prices are 
applied to refined oil products, natural gas, special medicine, and some services (Table 3.15). Products classified as the important central reserv e materials (grain, cotton, sugar, filature silk, 
crude oil, processed oil, and chemical fertilizer s), which were included in the 2001 Catalogue of 
Central Determined Prices, were removed from the 2016 Catalogue.
172 
Table 3.15 Central government set or government-guided prices, 2015  
Product  Coverage/rationale 
Government set prices 
Common salt The ex-factory price and wholesale price of common salt are set by the Government.  
Rationale for maintaining price control: important commodity under state monopoly. 
Electricity powe r Coverage of government pricing includes the prices for power transmission and distribution of the 
power grids at the provincial level or above and feed-in and users' sales tariffs when there is no market competition. The rationale for maintaining a price control is that power transmission and distribution are natural 
monopolies due to the network nature and should be regulated by the Government. In the case of 
feed-in and users' sales tariff not participating in ma rket competition, the price-setting rationale is to 
guarantee the interests of producers and consumers. The authorities expect these prices to be gradually liberalized and shaped by the market when conditions are mature. 
Water supplied by 
conservancy projects The price of water supplied by conservancy projects  directly under the Central Government or cross-
province (cross-district or cross-city) conservancy projects is set by the Government. 
The rationale for maintaining a price control is that water supplied by conservancy projects is a 
scarce resource and a natural monopoly.  
Commercial bank 
basic services and 
credit enquiry service charges, bank card transaction fees  Charges for remittance transfers, cash remittances, cash withdrawals, notes and other basic services 
of commercial banks are set by the Central Government; bank card transaction and credit enquiry 
service fees are subject to prices set or guided by the Government. The rationale of maintaining price control is the lack of effective competition in these types of business which are of a monopolistic nature. 
Charges for 
authenticating 
academic credentials, 
academic degree 
certificates and 
citizen's identity The charges for authenticating academic credentials, academic degree certificates and citizen's 
identity are set by the Government. 
The rationale is that these are public services. 
Important postal business charges The prices of letter mailing, mailing of packages with a single weight of no more than 10 kg, postal 
remittance and postal distribution of newspapers and periodicals are set by the Government. The rationale for maintaining price controls is that the postal business is closely linked to people's livelihoods and is of a public service nature; and some postal enterprises conduct exclusive business 
operations. 
Special medicines and 
blood The maximum ex-factory price and the maximum sales price of narcotic drugs and the first category 
of psychotropic drugs and the price of clinical blood supplied by blood stations are set by the 
Government.  
The rationale for maintaining price controls is that the business is economically important, affects 
people's livelihoods and public interests, and lacks full market competition. 
Government-guided prices  
Refined oil products The retail price of refined oil products is guided by the Government. It is determined based on the 
price of the crude oil in the international market an d a processing fee, taxes and transportation costs 
in China.  
The rationale for maintaining a price contro l is the lack of market competition. 
Natural gas The gate station price of some types of onshore natural gas in all provinces and the price for cross-
province long-distance pipeline transportation are guided or set by the Central Government. The rationale for maintaining a price control is that natural gas is of vital importance to the public and 
that the natural gas system needs to be reformed  comprehensively before prices are liberalized. 
Railway transportation 
prices Railway passenger fares and cargo and baggage transportation prices are mainly guided or set by the 
Government (except when there is competition). 
The rationale is that state railways and railways operated by joint ventures in which the Central 
Government has a controlling stake are under the direction of the China Railway Corporation and 
therefore should be subject to prices regulated by the Government. 
Monopolistic port 
service fees The charges of the monopolistic services at fishing ports and main ports along the coast, the main 
trunk of Yangtze River, and all the other ports open to vessels of foreign nationality are subject to prices guided by the Government. 
                                               
172 GACC Decree [2015] No. 29, 8 October 2015, The 2016 Catalogue of Central Determined Prices, 
which entered into force on 1 January 2016. Viewed at: http://www.sdpc.gov.cn/zcfb/zcfbl/201510/t20151020_755152.html . WT/TPR/S/342 • China 
 
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  Product  Coverage/rationale 
The rationale for maintaining a price control is that ports are  important public utilities and they are a 
monopoly in certain regions. 
Passenger fee rates of 
domestic civil air 
routes and the 
domestic section of 
international civil air 
routes The passenger fares of the domestic civil air routes are subject to prices guided by the Government 
(except for competitive areas). Airlines are permitte d to raise the fare by no more than 25% of a 
benchmark fare, but there is no limit for the bottom fare.  
The rationale for maintaining price control is that competition has not yet developed in some areas of 
the passenger transportation industry in domestic civil air routes. 
Source: Information provided by the Chinese authorities; NDRC online information; and the 2016 Catalogue 
of Central Determined Prices (GACC Decree No. 29 of 2015). 
3.170.  Local governments can also issue regulations to set controlled or guided prices 
(Table 3.16). Minimum procurement prices for (unhusked) rice and wheat remain in place in main 
grain-producing areas (seven provinces for rice, and six provinces for wheat). 
Table 3.16 Local government set or government-guided prices, 2015  
Product  Type of control/rationale  Regulation 
Environment 
protection charges Hazardous wastes disposal charges are subject to local 
government pricing regulation.  
The rationale for maintaining a price control is that they are important public utility prices. Measures for the Administration of 
Collection Standards for Pollutant 
Discharge Fees
a 
Urban household 
garbage disposal 
charges Urban household waste charges are subject to local 
government pricing regulation.  
The rationale for maintaining a price control is that they are 
important public utility prices. Circular on Implementing Urban 
Household Garbage Disposal Charges 
and Promoting Garbage Disposal 
Industrializationb 
Sewage disposal charges Sewage disposal charges are subject to local government 
pricing regulation.  The rationale for maintaining price control is that they are 
important public utility prices. Measures for the Administration of 
Collection Standards for Pollutant Discharge Fees  
Real estate prices and 
charges of related 
services Economic housing prices, low-price house rental and 
property service charges are subject to local government-
guided prices.  
The rationale for maintaining a price control is that such 
prices are important prices of a public service nature. Administrative Measures on Economic 
Housingc 
Administrative Measures on Low-price 
House Rentald 
Entrance to 
sightseeing sites Prices are subject to regulation of local government pricing 
or local government-guided prices.  The rationale for maintaining a price control is that such 
prices are important prices of a public service nature. Tourism Lawe 
a National Development and Plan Co mmittee, Ministry of Finance, State Administration of Environment 
Protection, National Economy and Trade Committee Decree No. 31, 28 February, 2003. Viewed at: http://www.chinalaw.gov.cn/article/fgkd/xfg/gwybmgz/200308/20030800055997.shtml .  
b Ji Jia Ge [2002] No. 872, 7 June 2002. Viewed at: 
http://www.mohurd.gov.cn/zcfg/jsbwj_0/jsbwjcsjs/200611/t20061101_157058.html  .  
c Jian Zhu Fang [2007] No. 258, 19 November 2007. Viewed at: http://www.gov.cn/zwgk/2007-
12/01/content_822414.htm .  
d Fa Gai Jia Ge [2005] No. 405, 14 March 2005. Viewed at: 
http://www.sdpc.gov.cn/zwfwzx/zfdj/jggg/200506/t20050613_128942.html .  
e Chairman Decree No. 3, 25 April 2013. Viewed at: http://www.gov.cn/flfg/2013-
04/25/content_2390945.htm .  
Source: Information provided by the Chinese authorities. 
3.171.  In addition to the changes made to the list of goods and services subject to government 
prices and government-guided prices since th e previous Review, there have been numerous 
adjustments to rates and fees. In 2015, the NDRC issued a total of 46 announcements concerning 
the pricing of commodities and services, 19 of whic h related to increases or decreases in the price 
of fuels.173 
3.3.5  State trading and state-owned enterprises  
3.3.5.1  State trading  3.172.  In 2015 China submitted a new and full notification regarding state trading enterprises to 
the WTO.
174 The legislation regulating state trading has not changed since 2014, nor have the 
                                               
173 National Development and Reform Commission online information. Viewed at: 
http://jgs.ndrc.gov.cn/zcfg/ . 
174 WTO document G/STR/N/10/CHN- G/STR/N/15/CHN, 19 October 2015. WT/TPR/S/342 • China 
 
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  reasons for maintaining this practice or the products subject to it. State trading remains in place 
to: ensure a stable supply and price of the products concerned; safeguard food security; and protect exhaustible and non-recyclable na tural resources, and the environment.  
3.173.  Imports subject to state trading administration comprise: grain (including wheat, maize, 
and rice), sugar, cotton, chemical fertilizers, to bacco, crude oil, and processed oil (Table 3.17). 
They can be imported (and exported) only by auth orized enterprises, in accordance with Article 11 
of the Foreign Trade Law. Tobacco is the only stat e-traded product that can be traded solely by 
state-trading enterprises. Non-state trading enterp rises that have obtained trading rights through 
registration may engage in the importation of part of the quota of products subject to tariff-rate quotas (grain, cotton, sugar, and certain chemical  fertilizers), and of crude and processed oil. 
The NDRC (in the case of grains and cotton) an d MOFCOM (for the other products) issue on a 
yearly basis the criteria for an enterprise to acquire trading rights for these products, the volumes 
they can import and the allocation method. No information was provided on the quantities imported under state trading.
175 
Table 3.17 Imports under state trading, 2013-15  
Product HS Code Percentage of TRQ 
allocated to state-trading 
enterprises 
2013 2014 2015a 
Wheat 1001.11.00; 1001.19.00; 1001.91.00; 1001.99.00; 1101.00.00; 1103.11.00; 
1103.20.10 90 90 90  
Maize 1005.10.00; 1005.90.00; 1102.20.00; 1103.13.00; 1104.23.00  60 60 60 
Rice 1006.10.11; 1006.10.19; 1006.10.91; 1006.10.99; 1006.20.10; 1006.20.90; 
1006.30.10; 1006.30.90; 1006.40.10; 1006.40.90; 1102.90.11; 1102.90.19; 1103.19.21; 1103.19.90 50 50 50
 
Cotton 5201.00.00; 5203.00.00 33 33 33 
Sugar 1701.12.00; 1701.13.00; 1701.14.00; 1701.91.00; 1701.99.10; 1701.99.20; 
1701.99.90 70 70 70  
Urea 3102.10.00 90 90 90 
NPK 3105.20.00 51 51 51  
Diammonium 
phosphate 3105.30.00 51 51 51 
Other 
chemical fertilizers 3102.21.00; 3102.29.00; 3102.30.00; 3102.40.00; 3102.50.00; 3102.60.00; 
3102.80.00; 3102.90.10; 3102.90.90; 3103.10.10; 3103.10.90; 3103.90.00; 3104.20.20; 3104.20.90; 3104.30.00; 3104.90.10; 3104.90.90; 3105.10.00; 
3105.40.00; 3105.51.00; 3105.59.00; 3105.60.00; 3105.90.00 n.a. n.a. n.a.
 
Tobacco 2401.10.10; 2401.10.90; 2401.20.10; 2401.20.90; 2401.30.00; 2402.10.00; 
2402.20.00; 2402.90.00; 2403.11.00; 2403.19.00; 2403.91.00; 2403.99.00; 
4813.10.00; 4813.20.00; 4813.90.00; 5502.00.10; 5601.22.10; 8478.10.00; 
8478.90.00 n.a. n.a. n.a. 
Crude oil 2709.00.00 n.a. n.a. n.a.  
Processed oil 2710.12.10; 2710.12.20; 2710.19.11; 2710.19.12; 2710.19.22; 2710.19.23; 
2710.19.29 n.a. n.a. n.a. 
a Provisional. 
n.a. Not applicable. These products, although subject to import under state trading, are not subject to 
tariff-rate quotas. 
Source: WTO document G/STR/N/10/CHN-G/STR/N/15/CHN, 19 October 2015; and data provided by the 
authorities. 
3.174.  Exports subject to state trading and the en terprises in charge of trading these products 
also remain unchanged since the last Review. In 2015, exports subject to state trading were rice, 
maize, cotton, coal, crude and processed oil, tungsten ore and products, antimony ore and products, silver and tobacco (Table 3.18). Accord ing to the authorities, the volume of exports 
subject to state trading is determined taking into  account market signals and so are export prices; 
there is no government intervention.
176 According to the authorities, export allocation amongst 
state-trading enterprises is also based on market principles. 
                                               
175 WTO document G/STR/N/10/CHN- G/STR/N/15/CHN, 19 October 2015. 
176 WTO document G/STR/N/10/CHN- G/STR/N/15/CHN, 19 October 2015. WT/TPR/S/342 • China 
 
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  Table 3.18 Export products subject to  state-trading arrangements, 2014-15  
Product (HS code) Enterprises  
Rice 
1006.10.11; 1006.10.19; 1006.10.91; 1006.10.99; 1006.20.10; 1006.20.90; 1006.30.10; 1006.30.90; 1006.40.10; 1006.40.90 China National Cereals, Oil and Foodstuffs Import & 
Export Co. (renamed as COFCO in April 2007); Jilin Grain Group Import & Export Co. Ltd; and 
Heilongjiang Beidahuang Agriculture Group 
Corporation.  
Maize 
1005.10.00; 1005.90.00; 1104.23.00 China National Cereals, Oil and Foodstuffs Import & 
Export Co. (renamed as COFCO in April 2007); Jilin 
Grain Group Import & Export Co. Ltd; and 
Heilongjiang Beidahuang Agriculture Group 
Corporation. 
Cotton  5201.00.00; 5203.00.00 Chinatex Cotton Import & Export Corporation; 
Xinjiang Uygur Autonomous Region Cotton and Jute 
Import & Export Co; Xinjiang Yin Long International 
Agricultural Co. Ltd (since 2012); and China National Cotton Reserve Corporation. 
Coal 
2701.11.00; 2701.12.10; 2701.12.90; 2701.19.00; 2702.10.00 China National Coal Group Corporation; Shanxi Coal 
Import & Export Group Co. Ltd; Shenhua Group 
Corporation Ltd; China Minmetals Corporation; and 
Aluminium Corporation of China Ltd. 
Crude oil 2709.00.00 SINOCHEM Corporation; China International United 
Petroleum & Chemicals Co; and China National 
Offshore Oil Co. 
Processed oil 
2710.12.10; 2710.12.20; 2710.12.91; 2710.12.99; 2710.19.11; 
2710.19.12; 2710.19.19; 2710.19.22; 2710.19.23; 2710.19.29; 
2710.19.91; 2710.19.92; 2710.19.93; 2710.19.99; 2711.11.00; 
2710.20.00 SINOCHEM Corporation; China International United 
Petroleum & Chemicals Co; China National United Oil 
Co; China National Offshore Oil Corporation; and 
China National Aviation Fuel Group Corporation. 
Tungsten ore and products  
2611.00.00; 2620.99.10; 2620.90.90; 2841.80.10; 2841.80.40; 
2825.90.11; 2825.90.12; 2825.90.19; 2841.80.20; 2841.80.30; 2849.90.20; 8101.10.00; 8101.94.00; 8101.97.00 STEs are listed in MOFCOM Circular Shang Mao Han 
No. 1012 of 2013
a  
Antimony ore and products  
2617.10.10; 2617.10.90; 2825.80.00; 8110.10.10; 8110.10.20; 
8110.20.00; 8110.90.00 STEs are listed in MOFCOM Circular Shang Mao Han 
No. 1012 of 2013a 
Silver 7106.10.11; 7106.10.19; 7106.10.21; 7016.10.29; 7106.91.10; 
7106.91.90; 7106.92.10; 7106.92.90 STEs are listed in MOFCOM Circular Shang Mao Han 
No. 1012 of 2013
a 
Tobacco and by-products 
2401.10.10; 2401.10.90; 2401.20.10; 2401.20.90; 2401.30.00; 
2402.10.00; 2402.20.00; 2402.90.00; 2403.11.00; 2403.19.00; 
2403.91.00; 2403.99.00; 4813.10.00; 4813.20.00; 4813.90.00; 
5502.00.10; 5601.22.10; 8478.10.00; 8478.90.00 STEs are listed in MOFTEC Announcement No. 44 of 
2001b 
Tea 0902.10.10; 0902.10.90; 0902.20.10; 0902.20.90 According to circular Gua Fa No. 16 of 2004 State 
trading administration on the export was suspended on 19 May 2004
c, d 
Silk 
5001; 5002; 5003; 5004; 5005 According to announcement No. 64 of 2004 of 
MOFCOM and the General Administration of Customs 
of PRC, state trading administration on the export 
was suspended on 1 January 2005d, e 
a MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/article/b/e/201312/20131200424659.shtml .  
b MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/c/200404/20040400210082.html .  
c State Council online information. Viewed at: 
http://www.gov.cn/gongbao/content/2004/content_62767.htm . 
d China reserves the right to use state trading. 
e MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/article/b/e/200411/20041100306546.shtml . 
Source: Information provided by the Chinese authorities and WTO document WT/STR/N/10/CHN-
WT/STR/N/15/CHN, 19 October 2015.  
3.3.5.2  State-owned enterprises 
3.175.  China continues to maintain a basic economic  system in which public ownership is kept as 
the mainstay of the economy while allowing diverse forms of ownership to develop side by side. As a result, the private sector is dominant in industries such as clothing, food, and assembly for 
export, while sectors of strategic importance (e.g. energy; utilities; and transport, financial, 
telecom, education, and health care services) remain only partially open to private investment. These sectors are often dominated by large SOEs. The authorities stated that even though for historic reasons SOEs still hold an important market share in certain sectors of the economy, the 
Government is in the process of reforming SOEs to further develop a mixed ownership economy in WT/TPR/S/342 • China 
 
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  China, as required by the Guiding Opinion on Further Deepening the Reform of State-Owned 
Enterprises. They also noted that SOEs are divide d into for-profit entities and public services 
entities, thus many SOEs function as if they were private enterprises.  
3.176.  State participation in SOEs varies from 100% ownership to the State acting as another 
shareholder (Table 3.19). It was reported that at the end of 2011, there were 144,700 state-
owned and "state holding" enterprises in China (exclu ding financial enterprises) with total assets of 
RMB 85.4 trillion, an equity value of RMB 29.2 trillio n, and profits of RMB 2.6 trillion. Their income, 
profit, and paid taxes accounted for around 40% of all industrial and commercial enterprises of the 
entire economy.177 According to the authorities, in May 2015, there were 1,012 "state-owned 
holding" enterprises listed on the Shanghai and Sh enzhen Stock Exchanges with a total equity of 
2.67 trillion shares. This accounted for 68.14% of the total equity of all the companies listed on 
these two stock exchanges. 
Table 3.19 Definition/Classification of SOEs in China  
State enterprises Ownership  Type of company/control  
State-owned enterprises 
(Pure SOEs)  100% state ownership  Wholly state-funded firms (non-cooperative firms); state-funded 
corporative enterprises, or state-funded jointly operated 
enterprises. 
State-controlled enterprises State-controlled ownership  Absolute state-controlled enterprises (more than 50% state 
ownership), and ("comparative") state-controlled enterprises:  
a. less than 50% state ownership but more than other 
shareholders, or  
b. the estate owns less shares than other shareholders, but the 
State obtains control through agreement. 
State-invested enterprises State owns some of the 
shares of the company Non-state-control enterprises  
Source: National Bureau of Statistics of th e People's Republic of China. Viewed at: 
http://www.stats.gov.cn/statsinfo/auto2072/201311/t20131104_454901.html  (in Chinese only). 
3.177.  The share of output produced by SOEs in the industrial sector has decreased from 28.2% 
in 1998 to 26.6% in 2010 and 22.3% in 2014.178 So has the number of manufacturing subsectors 
in which SOEs had the largest share of revenue. However, SOEs retain a significant share of the 
market in strategic subsectors such as telecommunication and air transport services where they 
effectively control the market by holding an 80%-90% share (Table 3.20).179 There is also a strong 
presence of SOEs in the financial sector, oil exploration, tobacco-related products, publishing, and the supply of electricity and heating. Accord ing the Ministry of Finance (MOF), during 
January-September 2015, the total revenue of the central and local government-owned and 
controlled enterprises (excluding financial institutions) amounted to RMB 33.06 trillion. Profits in the transportation, electronics, electric power and chemical industries increased considerably, 
while profits in the petrochemical, oil and building materials industries decreased somewhat from 
the previous years; iron and steel, coal and nonferrous metals industries to continued show losses.
180  
Table 3.20 SOEs in China's economy, 2009-14  
Sector 2009 2010 2011 2012 2013 2014 
Industrial sectora       
Number of total enterprises 434,364  452,872  325,609  343,769 369,813 377,888  
Number of SOEsb 20,510  20,253  17,052  17,851 18,574 18,808  
% of SOEs 4.7 4.5 5.2 5.2 5.0 5.0 
Total assets (billion RMB)  49,369   59,288    67,580  76,842 87,075 95,678  
Total assets of SOEsb (billion RMB)  21,574   24,776   28,167  31,209 34,399 37,131  
% of SOEs 43.7  41.8 41.7 40.6 39.5 38.8  
Total profits (billion RMB)   3,454   5,305   6,140  6,191 6,838 6,815  
                                               
177 OECD (2015), State-Owned Enterprises in the Development Process , OECD Publishing, Paris. Viewed 
at: http://dx.doi.org/10.1787/9789264229617-en . 
178 The industrial sector in Chin a includes: mining, manufacturing, and production and supply of 
electricity, gas, and water (China Statistical Yearb ook 2012 and information provided by the authorities). 
179 OECD (2015), State-Owned Enterprises in the Development Process , OECD Publishing, Paris. Viewed 
at: http://dx.doi.org/10.1787/9789264229617-en . 
180 MOF, The Operation Status of State-owned Ente rprises and State-controlled Enterprises  (January - 
September 2015). Viewed at: http://qys.mof.gov.cn/zhengwuxinxi/qiyeyunxingdongtai/201510/t20151021_1515332.html  (in Chinese only). WT/TPR/S/342 • China 
 
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  Sector 2009 2010 2011 2012 2013 2014 
Total profits of SOEsb (billion RMB)   929   1,474   1,646  1,518 1,592 1,451  
% of SOEs  26.9   27.8   26.8   24.5 23.3 21.3 
Construction       
Number of enterprises 70,817  71,863  72,280  75,280 78,919 81,141  
Number of SOEs 5,009  4,810  4,642  4,602 3,847 3,753  
% of SOEs 7.1 6.7 6.4 6.1 4.9 4.6 
Gross output  value (billion RMB)  7,681   9,603   11,646  13,722 15,931 17,671  
Gross output value of SOEs (billion RMB)   1,519   1,815   2,044  2,293 2,616 2,207  
% of SOEs  19.8   18.9   17.5  16.7 16.4 12.5  
a Including mining, manufacturing, and production and supply of electricit y, gas, and water.  
b Numbers referring to SOEs including state-holding enterprises. 
Source: National Bureau of Statistics China, Statistical Yearbook (various issues).  
3.178.  The number of Central Government-owned Enterprises (excluding financial institutions) 
under the State-owned Asset Supervision and Administration (SASAC) continued to decline, 
totalling 106 in 2016 (January).181 SASAC, as a representative of the Government, is in charge of 
major decisions such as coordinating investments and appointing top managers in SOEs under its management. The decline in the number of enterprises under SASAC's supervision is due to the 
ongoing restructuring of SOEs. Estimates that use a broader definition of SOEs, and include 
companies where there has been disinvestment bu t the Government still exerts control (for 
example, by appointing CEOs), show that some  40% of China's GDP is generated by SOEs or 
entities indirectly owned and controlled by SOEs and their subsidiaries.
182 The State is a majority 
shareholder in all but one of the 100 largest public ly listed Chinese companies. Of the ten largest 
SOEs, six are under SASAC's supervision (Table 3.21). 
Table 3.21 Ten largest state-owned enterprises, 2013  
Company name Revenue (billion US$) 
1. China Petroleum and Chemical Corporation 428 
2. China National Petroleum Corporation 409 
3. State Grid Corporation of China 289 
4. Industrial and Commercial Bank of Chinaa 133 
5. China Construction Bank Corporationa 113 
6. Agricultural Bank of Chinaa 104 
7. Bank of Chinaa 98 
8. China Mobile Communication Corporation 97 
9. China State Construction Engineering 91 
10. China National Offshore oil  84 
a Not under SASAC.  
Source: Fortune Global 500.  
3.179.  SOEs may receive capital injections from the Government if needed.183 In 2014, 
2,473 companies listed in the Shanghai and the Shenzhen Stock Exchanges received government 
support amounting to RMB 89.421 billion (up from RMB 75.783 billion in 2012).184 Of these 
companies, 154 received more than RMB 100 million in 2014; 105 of which were SOEs. Moreover, amongst the top 10 companies that received supp ort in 2014 (for a total of RMB 17.306 billion) 
nine were SOEs (Table 3.22). 
3.180.  The Anti-Monopoly Law (AML) allows SOEs to exercise exclusive activities in sectors 
considered vital for China's economy and to safeguard national security (Section 3.3.2). Exclusive production and sales rights may also be granted in accordance with Article 7 of the AML.  
3.181.  SOE reform is an ongoing process in China; as a result, some previously protected sectors 
have gradually opened up and increased productivity. Despite this, SOEs continue to play an important role in certain sectors such as technology, natural resources, energy, and transport. 
                                               
181 The number of central-level non-financial SOEs  under SASAC's administration has continued to 
decline from 196 (2003) to 159 (2006), 129 (Dec. 2009), and 112 (Feb. 2015) (For a full list of these enterprises, see: http://www.sasac.gov.cn/n86114/n86137/c1725422/content.html ). 
182 Randau H.R. and Mendiskaya O. (2015), China Business 2.0, Mana gement for Professionals , Springer 
International Publishing, Switzerland.  
183 WTO (2012), Trade Policy Review – China , Geneva. 
184 SINA Corporation online information. Viewed at: 
http://finance.sina.com.cn/stock/s/20150430/005922077076.shtml . WT/TPR/S/342 • China 
 
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  According to the OECD, SOEs are greater contributors to corporate tax collection and social-
security funds than similar private firms.185  
Table 3.22 Top 10 companies listed in SSE/SZSE that received public support in 2014  
 Company Government grant  
(RMB billion) Industry State-owned 
1 PetroChina 3.93  Petroleum  Yes 
2 China Petroleum & Chemical Corp. 3.17 Petroleum  Yes 
3 SAIC Motor Corp. Ltd 2.67  Automobile  Yes 
4 China COSCO Holdings Co Ltd 1.74 Shipping  Yes 
5 Metallurgical Corp. of China Ltd 1.07  Engineering  Yes 
6 Air China Ltd 1.06 Airline  Yes 
7 TCL Corp. 1.01  Electronics  No 
8 Chongqing Iron & Steel Co Ltd 0.92 Steel Yes 
9 Huaneng Power International Inc. 0.9  Power generation  Yes 
10 BOE Technology Group Co Ltd 0.83 Semiconducto r Yes 
Source: WTO Secretariat, based on data from companies' annual reports.  
3.182.  In 2015, new guidelines were issued to reform SOEs.186 The objective is to improve the 
performance of state assets. Both the guidelines, as well as the Recommendations for the Development of the 13
th Five-year Plan, refer to the need to reform SOEs so as to make them 
more profit-oriented and call for a shift to mixed ownership, while keeping government control. 
The Recommendations mention the need to restructure SOEs and to guide state-owned assets 
towards industries linked to national security, and at the same time encourage the private sector to participate in sectors dominated by SOEs and to invest in SOEs.
187  
3.3.6  Government procurement  
3.183.  According to data provided by the Chin ese authorities, the total value of government 
procurement increased to RMB 1.73 trillion in 2014, up from RMB 1.64 trillion in 2013 
(Table 3.23). Procurement by local entities account ed for 95.2% of the total value of government 
procurement in 2014, with procurement by the Central Government accounting for only 4.8%.188 
Government procurement in 2014 accounted for about 2.7% of GDP, down from 2.8% in 2013 and up from 2.6% in 2012 and 2.1% in 2011. These figures cover only procurement by government 
departments, institutions, and public organizations using regular budget funds, for goods, 
construction, and services listed in the Centralized Procurement Catalogue  or above certain 
thresholds for procurement using other financial resources. The figures do not include procurement 
by SOEs, which according to the Government Procurement Law does not fall under the definition 
of government procurement.  
Table 3.23 Government procurement by type of purchase, 2011-14 
(RMB billion)  
 2011 2012 2013 2014 
TOTAL 1,133.3  1,397.8  1,638.1 1,730.5  
Goods 383.0  439.0  492.1 523.0  
Central government entities 35.8  40.1 39.6 35.8
Local government entities 347.2  398.9  452.5 487.2
Construction and engineering services 661.4  837.4  992.6 1,014.1  
Central government entities 23.0 25.5 33 37.9
Local government entities 638.4  811.9  959.6 976.2
Other services 88.9 121.4  153.4 193.4
Central government entities 9.7  13.0 14.3 9.7
Local government entities 79.2 108.4  139.1 183.7
Total procurement by the Central Government  68.5 78.6 86.9 83.4  
Total procurement by local government entities  1,064.8  1,319.2  1,551.2 1,647.1
Source: Information provided by the Chinese authorities.  
                                               
185 OECD (2015), "SOEs in China' s economic development", in State-Owned Enterprises in the 
Development Process , OECD Publishing, Paris. Viewed at: http://dx.doi.org/10.1787/9789264229617-8-en .  
186 The Guiding Opinions of CPC Central Committe e and State Council on Deepening the Reform of 
SOEs. Viewed at: http://www.sasac.gov.cn/n 85881/n85921/c2051975/content.html  (in Chinese only). 
187 The Guiding Opinions on Encouraging and Regulating Introducing Non-national Capital into SOE 
Investment Projects; and EUROBiz , "Balancing Reform and Growth: Chin a's 13th Five-Year Plan", 4 December 
2015. Viewed at: http://www.eurobiz.com.cn/balancing-reform-and-growth-chinas-13th-five-year-plan/ .  
188 The top 10 local procuring entities are the prov inces of Guangdong, Jiangsu, Shandong, Zhejiang, 
Henan, Guangxi, Anhui, Chongqing, Shanghai and Jiangxi. WT/TPR/S/342 • China 
 
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  3.184.  China has introduced some changes to its legislative and regulatory regime for government 
procurement since the last Review. The Government  Procurement Law (Order of the President of 
the People's Republic of China No. 68 of 29 June 2002, in effect since 1 January 2003) was amended on 31 August 2014 (effective 31 October 2014), and the Implementing Regulations of 
the Government Procurement Law (State Council Decree No. 658 of 30 January 2015) came into 
effect in early 2015. New regulations were also introduced in 2014 for both competitive bidding and non-competitive bidding. Other procurement legislation includes the Law of the People's 
Republic of China on Tendering and Bidding and it s Implementation Regulations, which govern the 
procurement of construction projects and related goods and services when the tendering approach 
is used. Laws with a possible impact on government procurement include the Budget Law, the Contract Law, the Product Quality Law, the Price Law, and the AML. 
3.185.  The Government Procurement Law covers purchases undertaken with regular budget funds 
by government departments, institutions and public organizations at all levels, where the goods, construction and services concerned are included in the Centralized Procurement Catalogue, issued 
by the Ministry of Finance, and their value exceeds the respective prescribed procurement 
thresholds.  
3.186.  Procurement at the various levels of government can be centralized or decentralized, 
although the vast majority of procurement is centralized. Purchases of items listed in the  
Centralized Procurement Catalogue must be carried out by centralized procurement agencies. The Procurement Law mandates that centralized procurement agencies procure quality goods and services, at a lower-than-average-for-the-market price.
189 Decentralized procurement of items not 
listed in the Catalogue, but with a value above a certain threshold, which is specified by 
governments at various levels, may be carried out by the procuring agency itself, or by entrusting it to agent procurement bodies. In this case, the procurement standards are stipulated by the 
people's governments at above provincial levels. Centralized procurement accounted for 84.8% of 
government procurement in 2014 (RMB 1.47 trillion ), down from 86% in 2013 (RMB 1.4 trillion). 
3.187.  The Government Procurement Law includes a "buy-domestic" (Article 10) provision, which 
was not modified by the 2014 amendment. As a result, the Government must procure domestic 
goods, construction projects and services, with certain exceptions: i) when the goods, construction, or services required are unavailable in China or, if available, cannot be procured on reasonable commercial terms; ii) when the goods, construction, and services are procured for use 
abroad; or iii) when otherwise provided for by other laws and administrative regulations. There are 
no criteria specified as to what constitutes domestic goods or provisions on local content. To observations made by Members during its last re view, China stated that in practice the Chinese 
government applies non-discriminatory and equal treatment in government procurement to 
products manufactured by domestic-funded and fore ign-funded enterprises within the territory of 
China, and that it is common for the government to purchase foreign products, but that no 
statistics in this respect were available. In addition, article 8 of MOF Order No. 18 of 
11 August 2004 states that the suppliers participatin g in bids to supply goods or services must be 
domestic suppliers who supply domestic goods or services. Domestic-sourcing legal requirements would have to be modified for procurement above GPA thresholds for China to join the 
GPA Agreement. 
3.188.  Despite the references in the Law to "buy -domestic", the Implementing Regulations of the 
Government Procurement Law do not make a distinction between foreign and domestic suppliers. 
Additionally, foreign suppliers may participate in tenders and invitations to bid concerning goods 
and services if other laws and administrative regulations so prescribe. Imports used for procurement purposes continue to require appr oval from the Ministry of Finance, or its 
corresponding departments at the local level. Importation is governed by the Administrative 
Measures for Government Procurement of Imported Products, which set out the conditions for government procurement of imported products. There are no statistics related to the percentage of procured imported goods and services in total procurement.  
3.189.  The Implementing Regulations of the Gove rnment Procurement Law provide the details on 
government procurement procedures. There are currently six methods for the government 
                                               
189 The authorities have indicated that the Centralized Procurement Catalogue comprises items with 
unified technological and service standards. The purpos e of centralized procuremen t is to reduce the cost 
through large-scale procurement. WT/TPR/S/342 • China 
 
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  procurement of goods, services and works, comp ared to five in the previous review: public 
tendering, selective tendering, competitive negotiations, request for quotations (price enquiry), competitive consultations and single-source procurement. The competitive consultation method was introduced in 2014. The six methods may be used both at the central and local levels. The 
regulations for non-bidding procurement measures, that is, competitive negotiations, request for 
quotations and single source procurement, are contained in the Measures for the Administration of Non-Bidding Government Procurement (MOF Order No. 74) implemented on 1 February 2014. 
3.190.  Public tendering is the main procurement method; it is required for procurement of items 
exceeding the prescribed procurement thresholds. The thresholds for central government procurement for 2014-2015 were RMB 1.2 million for goods and services, and RMB 2 million for construction projects. The thresholds for items that come under local budgets are prescribed and 
published by the respective governments of prov inces, autonomous regions or municipalities 
directly under the Central Government or the de partment authorized by them. Approval of the 
Finance Department of the relevant government at or above the level of cities with districts is 
required for procurement exceeding these thresholds by any other method. For procurement below 
the above-mentioned thresholds, the procuring entity may choose to apply another of the remaining five procurement methods specified in the Law. Procuring entities are forbidden from 
breaking procurement up into parts to avoid recourse to public tendering by being below the 
mandatory threshold. If procurement takes place through public tendering, the deadline for the submission of bids must be at least 20 days from  the date of issuance of the tender. The tender 
procedure is cancelled when there are less than th ree suppliers meeting the qualifications required 
or the prices offered exceed the procurement budget.  
3.191.  The selective tendering method may be chosen when the goods or services to be procured 
are special and can only be obtained from a limited number of suppliers or when the cost of 
holding a public tender represents an excessive prop ortion of the total value of the procured items. 
At least three bidders must be invited to participate in a selective tendering process.
190 
3.192.  Recourse to the third bidding method, competitive negotiation, may be made if, after 
attempting a tendering process, no supplier has submitted an offer or the offers have been 
deemed inadequate, or when a second tendering pr ocess has been attempted but has failed. It can 
also be used in cases of urgency, due to the te chnical complexity or special nature of the goods 
and services procured, or when the total value of the goods or services to be procured cannot be 
determined in advance. A negotiation team must choose no fewer than three suppliers from 
among all qualified suppliers to participate in the negotiation. When the negotiation is concluded, the negotiation team shall request all participating suppliers to quote their final offering prices 
within a specified time limit. The supplier meeting the procurement needs at the lowest price 
among the prices quoted for goods of equal quality and for equal services, is chosen. 
3.193.  The new competitive consultations procurement method , regulated by the Interim 
Measures for Administration of Competitive Consultation Procurement Method in Government 
Procurement (promulgated by the MOF on 31 December 2014), consists in the negotiation between a consultation team set up by the procur ing party and qualified suppliers chosen by the 
team upon evaluation. This method can be applie d for: the procurement of services; procurement 
for which detailed specifications or specific requirements cannot be determined due to their 
technical complexity or special nature; procurement for which  the price cannot be calculated in 
advance; the procurement of artistic works, patents, and proprietary technologies; scientific 
research projects for which market competition is not sufficient; or construction projects not 
subject to bidding under the Law on Bid Invitation  and Bidding and its implementing regulations. 
At least three suppliers must be invited to participate in the competitive consultation. Information 
regarding the procurement must be announced via media designated by the relevant finance 
department of the government at or above the provincial level.
191 Offers must be evaluated using 
an overall score method, in which the price sco re has a weight of between 30% and 60%. The 
price score of each offer is calculated taking the lowest price as the benchmark price for the 
                                               
190 MOF Order No. 18, 11 August 2004, Article 3. 
191 CaiKu [2014] No. 214, The Interim Measures for Administration of Competitive Consultation 
Procurement Method in Governme nt Procurement. Viewed at: 
http://gks.mof.gov.cn/zhengfuxinxi/guizhangzhidu/201501/t20150120_1182425.html  (in Chinese Only). WT/TPR/S/342 • China 
 
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  consultation; the price score of this offer is the fu ll score. The scores of the prices offered by other 
suppliers are computed according to a formula.192 
3.194.  The request for quotations or price inquiry method may be used for the procurement of 
goods with specifications and standards that are uniform and which are readily available on the 
spot at prices that fluctuate very little. A price inquiry team with a similar composition as for the 
competitive negotiation method is set up and must issue a price inquiry notice for the procurement of goods to qualified suppliers, requiring them to quote prices that cannot be changed. No less 
than three suppliers from all qualified suppliers must be chosen. The supplier offering the lowest 
price among the prices quoted for goods of equal quality and equal services must be awarded the 
bid. 
3.195.  Recourse to the single-source procurement method may be made when goods or services 
can be procured from only one supplier, when they  cannot be procured from other suppliers due to 
an unforeseeable emergency, or when procurement of additional items or services from the same 
supplier is expected to be required, provided that the total value of the additional procurement 
does not exceed 10% of the value of the base procurement contract. The Law mandates that in 
cases of single-source procurement, the procuring entity carries out the procurement on the basis 
of guaranteed quality and reasonable price. 
3.196.  The procurement method most widely used is public tendering, which accounted for 84.5% 
of total procurement in 2014; requests for quotations accounted for 3.7% of the total; competitive negotiations for 4.2%; selective tendering for 2.6%; and single-source procurement for 3% (Table 3.24). The competitive consultations method was used only starting in 2015; there was no 
available data regarding its use yet as at late 2015. In the context of its previous Review, China 
stated that, in the case of SOEs, procurement is decided solely by them, generally having recourse to public tendering.
193 
Table 3.24 Government procurement by procurement method, 2012-14 
(RMB billion)  
Year Procurement method 
Total Public 
tendering Selective 
tendering Competitive 
negotiations Request for 
quotations Single-source 
procurement 
2012 1,397.8 1,170.6 38.6 72.3 67.9 48.4 
2013 1,638.1 1,364.6 69.4 71.6 76.1 56.5 
2014 1,730.5 1,462.1 45.8 72.1 63.5 52.2 
Source: Information provided by the Chinese authorities.  
3.197.  In accordance with the 2015 Implementi ng Regulations, two different bid evaluation 
methods may be used: the lowest evaluated bid price method and the overall-score method, based 
on evaluation scores of quantitative indicators. If the lowest-evaluated bid price method is used, the supplier whose bid meets all the substantive re quirements specified in the bidding documents 
and whose bid price is the lowest wins the bid. Pr ojects of goods and services subject to unified 
technical, service and other standards must be subject to the evaluated bid price method. Other 
procurement may take place using either of the tw o methods. The overall-score method refers to 
the bid evaluation method where the supplier who meets all the substantive requirements of the 
bidding documents and whose overall evaluation score is the highest is the bid winner, as 
described above for the competitive consultations method. The overall score is calculated using weights for each of the evaluation factors set. 
3.198.  The 2015 Implementing Regulations introduced provisions to step up governance in 
procurement. They require the purchaser to make the budget of the relevant procurement project 
public. Bidding documents must be prepared according to the standard form set by the Finance Department of the State Council. They must include the commercial conditions and needs of the 
procurement project, the qualification conditions for bidders, requirements on bid submission and 
quotation, bid evaluation methods and criteria, and the text of the contract to be signed. If the 
                                               
192 The formula is as follows: score assigned to the quotation for consultation = (benchmark price for 
consultation/ final quotation for consultation) × price we ight × 100 (Interim Measures for the Administration of 
Competitive Consultation in Government Procurement).  
193 WTO document WT/TPR/M/300/Add.1, 9 September 2014, p. 64. WT/TPR/S/342 • China 
 
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  bidding documents of a procurement project require bidders to pay a bid submission bond, this 
must not exceed 2% of the budget of the procurement project.  
3.199.  Procuring entities must announce government procurement and bidding information in 
media designated by the Ministry of Finance in "a timely, comprehensive and standard manner" to 
ensure transparency and fair competition. The Circul ar of the Ministry of Finance on Making Efforts 
to Accomplish the Work of Government Procurement Information Disclosure (Cai Ku [2015] No. 135) sets out the scope, contents and requirem ents for the announcement. The result of the 
bid must also be announced by the purchaser or  procurement agency within two working days 
after determining the result of the bid. A notice of  award of bid or deal closing must be issued.  
3.200.  Bidders may question the procuring agency's decision, complain to the Government 
Procurement Division of the Ministry of Finance, or bring the case to court. In 2014, the finance 
authorities at various levels all over China accepted 1,337 government procurement complaints 
raised by suppliers, up from 1,079 complaints reported in 2013. The authorities noted that the finance authorities at various levels have continued to improve the complaint handling mechanism 
since the last Review, establishing a multi-departmental cooperation and coordination mechanism 
and an offence-disclosing mechanism. 
3.201.  To improve efficiency in government procurement, China promotes the use of information 
technology and the gradual adoption of e-procurem ent, as of procurement. The authorities have 
noted that China is also promoting the standardiz ation of government procurement, as well as 
stepping up efforts to exercise supervision and inspection, so as to reduce the risk of collusion in the process of government procurement. 
3.202.  The Chinese authorities have stated that government procurement has become 
increasingly more transparent since the last review. They noted that, firstly the procurement process has become more open: in 2014, 84.5% of all government procurement adopted the 
approach of public tendering. Secondly, an information disclosure mechanism covering the whole 
process of government procurement has been esta blished, leading to the publishing of over 
930,000 announcements related to government procurement information in 2014, among which 
480,000 were for procurement demands, and 440,000 were for bidding results and successful 
dealmaking. Thirdly, information and records on material offences and dishonesty of procurement agencies, suppliers and review experts has been made public. 
3.203.  China has not signed any bilateral or regional agreements on market access for 
government procurement to date.
194  
3.204.  China is an observer to the GPA. China applied for accession to the GPA on 
28 December 2007 and submitted its initial offer at the same time. Discussions dedicated to 
China's accession took place on multiple occasions during the 2008-2015 period. China's fifth 
revised offer was submitted on 23 December 2014.195 The offer covers entities and projects of all 
types and makes improvements in the areas of key concern to various parties. For example, more 
local entities have been added, all construction projects covered, and SOEs included for the first 
time in the offer. 
3.3.7  Intellectual property rights  3.3.7.1  Overview and in stitutional developments 
3.205.  The responsibility for organizing the impl ementation of the National Intellectual Property 
Strategy lies with the Inter-Ministerial Joint Conference for Implementation of the National Intellectual Property Strategy, established in Oc tober 2008. The Conference is convened by the 
Commissioner of the State Intellectual Property Office (SIPO) and its tasks are executed by the 
Office of the Conference, situated in SIPO.
196 The Conference issues a Promotion Plan for the 
Implementation of the National Intellectual Property Strategy annually, with specific actions to be 
                                               
194 The agreement with Switzerland contains provisions regarding the exchange of information on 
government procurement. 
195 WTO document GPA/ACC/CHN/45, 5 January 2015. 
196 Information (in Chinese only) on China's intellectual  property strategy at th e national, regional, and 
industrial level can be found on the Office's website at: http://www.nipso.cn . WT/TPR/S/342 • China 
 
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  carried out during the year in question to attain  the goals of the strategy. In 2014, the strategic 
themes/actions identified were grouped under seven main goals: 
 Raising Intellectual Property (IP) Creation Quality. The aim is to improve patent 
application quality by strengthening supervision, reinforcing the examination process and 
raising efficiency. To this end, the authorit ies are in the process of implementing the 
Opinions on further improving the Quality of Patent Applications issued in December 2013. With respect to trademarks, the aim is to ensure that the trademark 
examination pendency is below nine months and the disagreement review pendency 
period below 12 months. In copyright, with a view to improving the registration system 
and services in general, the National Copyright Administration has been implementing the Notice on Further Standardizing Works Registration Procedures and Other Relevant 
Work issued in October 2011. 
 Increasing the Effectiveness of IP Utilization. The aims are to strengthen the connection 
between IP policies and industrial and regional  policies and to promote IP in strategic 
emerging industries. 
 Improving IP Management and Public Services. The improvement of public services is to 
be achieved by promoting the establishment of  a public IP information service platform 
and an IP appraisal mechanism, to raise the capabilities of enterprises, universities and 
institutes. 
 Raising the Effectiveness of IP Protection. The aim is to improve IP protection by revising 
the Copyright Law, the Patent Law, and the Implementation Regulations of the 
Trademark Law, completing the drafting of the Interpretation on Several Issues 
Concerning the Application of Law in the Trial of Patent Infringement Disputes, and by issuing regulations improving the long-term mechanism for IP protection. IP 
enforcement is also to be enhanced by improving IP administrative and judicial 
protection and the link between them, as well as by strengthening IP protection in the 
cyber environment, and conducting IP-related anti-trust investigations. 
 Promoting IP International Exchange. This is to be done by perfecting the processing and 
exchange of IP information, participating in the establishment of an international IP system, and promoting cooperation with international organizations and major countries. 
 Promoting Fundamental IP Capabilities . To be done by fostering the development of an 
IP service industry. 
 Achieving Better Organization and Im plementation of the IP strategy. The aim is to 
strengthen overall planning for the implementa tion of an IP strategy and to improve the 
Inter-Ministerial Joint Conference system .
197 
3.206.  During the period under review, China has implemented some changes to its IPR 
regulatory regime. This has been done by amendm ents to regulations, as well as departmental 
rules. Some of the main changes are related to copyright and patent examinations (see below).  
3.207.  China is a member of the World Intellectual Property Organization (WIPO), and 
a contracting party to various international conventions and treaties (Table 3.25). During the period under review, China ratified the Beijing Tr eaty on Audiovisual Performances (9 July 2014). 
The Marrakesh Treaty to Facilitate Access to Pub lished Works for Persons Who Are Blind, Visually 
Impaired, or Otherwise Print Disabled (Marrakesh  VIP Treaty) signed in June 2013, had not yet 
been ratified as at end-2015. China has conti nued to increase the number of IPR protection 
applications through international treaties, partic ularly in the area of patents. In 2014, Chinese 
citizens filed 26,196 applications through the Patent Cooperation Treaty (PCT) system; 
                                               
197 SIPO online information. Viewed at: http://english.sipo.gov.cn/laws/ . WT/TPR/S/342 • China 
 
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  52,101 trademark applications were filed through the Madrid system in 2013 and 60,205 
in 2015.198 
Table 3.25 China's membership of internationa l intellectual property rights conventions, 
2015  
Convention Status Date of accession  
Agreement on Trade-Related Aspects of Intellectual Property Rights  In force 11 December 2001  
Beijing Treaty on Audiovisual Performances Ratified  
Berne Convention for the Protection of Literary and Artistic Works  In force 15 October 1992  
Budapest Treaty on the International Recognition of the Deposit of Microorganisms for 
the Purposes of Patent Procedure In force 1 July 1995 
Convention Establishing WIPO  In force 3 June 1980 
Convention for the Protection of Producers of Phonograms Against Unauthorized 
Duplication of Their Phonograms In force 30 April 1993  
International Convention for the Protection of New Varieties of Plants (UPOV 
Convention) In force 23 April 1999  
Locarno Agreement Establishing an International Classification for Industrial Designs  In force 19 September 1996  
Madrid Agreement Concerning the International Registration of Marks  In force 4 October 1989  
Marrakesh VIP Treaty Signed  
Protocol Relating to the Madrid Agreement co ncerning the International Registration of 
Marks In force 1 December 1995  
Nice Agreement Concerning the International Classification of Goods and Services for 
the Purpose of the Registration of Marks In force 9 August 1994  
Paris Convention for the Protection of Industrial Property  In force 19 March 1985  
Patent Cooperation Treaty In force 1 January 1994  
Singapore Treaty Signed  
Strasbourg Agreement Concerning the International Patent Classification  In force 19 June 1997  
Trademark Law Treaty (TLT)  Signed  
Universal Copyright Convention In force 30 October 1992  
Washington Treaty on Intellectual Property in Respect of Integrated Circuits  Signed  
WIPO Copyright Treaty In force 9 June 2007 
WIPO Performances and Phonograms Treaty (WPPT)  In force 9 June 2007 
Source:  WIPO online information. Viewed at: 
http://www.wipo.int/treaties/en/ShowResults.jsp?country_id=38C . 
3.3.7.2  Industrial property 
3.3.7.2.1  Patents 3.208.  SIPO, under the State Council, is responsible for receiving and processing patent 
applications and granting patents. Local IPR administrative offices deal with hearing and settling 
disputes with respect to patents. 
3.209.  The Patent Law, last amended in 2008, an d the Rules for Implementation of the Patent 
Law, last amended in 2010, regulate patent protection for inventions, utility models, and industrial 
designs.
199 Other regulations dealing with patents include the Measures for the Filing of Patent 
Exploitation Licence Contracts ; the Measures for Compulsory Licensing for Patent Implementation ; 
the SIPO Rules on Administrative Reconsideration ; the Administrative Measures on Prioritized 
Examination of Invention Patent Applications; and the Measures for Patent Administrative 
Enforcement. 
3.210.  The period of patent protection is 20 years from the date of filing for inventions, and 
10 years from filing for utility models and industrial designs. Patent applications are made to SIPO. 
Invention patent applications must be published promptly after the expiration of 18 months from 
the date of filing (or the priority date, if priority is claimed). A request for substantive examination 
must be submitted within three years of the date of  filing (or the priority date), failing which the 
application is considered to have been withdrawn. Invention patent rights are provisionally protected from the date of publication to the date of granting the patent. The average time 
required to complete a substantive examination for an invention patent was 21.8 months in 2014, 
compared with 22.6 months in 2012. 
                                               
198 WIPO online stat istics. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN ; and information provided by the 
authorities. 
199 WTO documents IP/N/1/CHN/3, 15 December  2010; IP/N/1/CHN/P/2, 21 December 2010; 
IP/N/1/CHN/4, 24 August 2011; an d IP/N/1/CHN/P/3, 26 August 2011. WT/TPR/S/342 • China 
 
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  3.211.  Decisions regarding patent applications may be re-examined by the Patent Re-examination 
Board, which consists of technical and legal experts appointed by SIPO and headed by its 
Commissioner. If the Board finds that 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 SIPO 
to continue the patent examination. In 2014, the Patent Re-examination Board accepted 
24,452 applications for re-examination, 20,393 of which were concluded. 
3.212.  Foreign or international patent applications for an invention or utility model in which the 
substantial content of the technical solution was generated within the Chinese territory or resulted 
from R&D activities of major national projects, are subject to a preliminary national-interest clearance.
200 A confidentiality examination must be conducted before an application can be filed. 
The concept of substantial content is defined on a case-by-case basis. There are also some 
limitations regarding the licensing of IPRs obtained from major national projects, which must first 
be non-exclusively licensed within the territory of mainland China. The eventual licensing or 
transfer of these rights to foreign parties is su bject to the provisions of the Regulations on the 
Administration of Technology Import and Export, as revised in December 2010. 
3.213.  Compulsory licences of patents may be gran ted in the public interest, or in the event of a 
national emergency or any extraordinary state of affairs. A compulsory licence may also be 
granted if the patent owner, without justification,  refused the requests for authorization to exploit 
its patents on reasonable conditions, and has failed to sufficiently exploit the patent rights for three years or uses the rights in a manner that eliminates or restricts competition through the abuse of the IPR granted by the pa tent. Insufficient exploitation of a patent is understood to mean 
that the exploitation by the right holder or licensee fails to satisfy the domestic demand for the 
patented product or patented know-how. A compul sory licence may also be granted under certain 
circumstances for patented pharmaceutical products so as to give effect to the WTO Decision on 
Implementation of Paragraph 6 of the Doha De claration on the TRIPS Agreement and Public 
Health.
201 
3.214.  Requests for a compulsory licence must be submitted to SIPO who notifies the patent right 
holders in writing. The latter must respond to SIPO with comments within a specified period. When 
the compulsory licence is requested due to non-expl oitation of the licence or an act of monopoly, 
SIPO may conduct open hearings upon request by on e of the parties. SIPO's decision to grant or 
terminate a compulsory licence may be challenged in court within three months of being received 
by the parties. No compulsory licences were granted from 2013 to 2015. In fact, China has not 
granted any compulsory licences since the entry into force of the Patent Law. Parallel imports of patented goods are allowed, in accordance with Article 69 of the Patent Law. 
3.215.  During the period under review, China introduced some regulatory amendments with 
respect to patents. SIPO amended the Patent Ex amination Guidelines to allow granting design 
patents of graphical user interface products. The amended Patent Examination Guidelines came 
into force on 1 May 2014.
202 SIPO also amended the Measures for the Deposit of Biological 
Materials for the Purposes of Patent Procedures  in order to improve the deposit system of 
biological materials for the purposes of patent procedures and to facilitate technological innovation and the practical application of inventions in the biological field. The amendment came into force 
on 1 March 2015.
203 SIPO amended the Measures for the Administration of the Patent Agency for 
the purposes of improving the patent agency system and strengthening its administrative 
supervision. This amendment came into force on 1 May 2015.204 SIPO also issued the amended 
Measures for Patent Administrative Law Enforcement in order to address outstanding issues in 
patent protection practices in China, better guiding local IP offices to strengthen and standardize 
                                               
200 Major national projects have been identified in  the National Medium- and Long-Term Programme for 
Science and Technology Development (2006) in the areas of information, manufacturing, bio-pharmaceuticals, energy, resources and environment, aimed at promoting social and economic development.
  
201 Articles 22 and 33 of the Measur es for Exercising Patent Comp ulsory Licences regulate the 
administration of compulsory licensing of patented drugs. 
202 Decision on Revising Patent Examination Guidelines, SIPO Decree [2014] No. 68. Viewed at: 
http://www.sipo.gov.cn/zwgg/jl/201403/t20140314_916952.html  (in Chinese only). 
203 Measures for the Deposit of Biological Material, SIPO Decree [2015] No. 69. Viewed at: 
http://www.sipo.gov.cn/zwgg/jl/201501/t20150123_1065907.html  (in Chinese only).  
204 Measures for the Administration of Patent Agency, SIPO Decree [2015] No. 70. Viewed at: 
http://www.sipo.gov.cn/zwgg/jl/201504/t20150430_1111398.html  (in Chinese only). WT/TPR/S/342 • China 
 
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  patent administrative law enforcement. The amended Measures for Patent Administrative Law 
Enforcement came into force on 1 July 2015.205 
3.216.  During the period under review, patent applications and grants continued to increase 
rapidly. In 2015, Chinese citizens filed 968,251 patent applications for inventions, 
1,119,714 applications for utility models and 55 1,481 for industrial designs, compared with 
801,135, 861,053, and 548,428 applications, respec tively, in 2014. In 2015, the number of PCT 
applications submitted by Chinese citizens reached 30,548, up from 26,169 in 2014 (Table 3.26). 
Table 3.26 Intellectual property rights applications and grants, 2013-15  
 2013  2014 2015  
Patent applications (inventions) 
Resident 704,936 801,135 968,251 
Non-resident 120,200 127,042 133,613 
International applications PCT system 22,924 26,169 30,548 
Utility model applications    
Resident 885,226  861,053 1,119,714 
Non-resident 7,136 7,458 7,863 
Industrial design applications 
Resident 644,398 548,428 551,481 
Non-resident 15,165 16,127 17,578 
Patents (invention) granted 
Resident 143,535 162,680 263,436 
Non-resident 64,153 70,548 95,880 
Industrial design registrations 
Resident 398,670 346,751 464,807 
Non-resident 13,797 14,825 17,852 
Trademark applications  
Resident 1,733,361 2,139,973 2,112,353a 
Non-resident 95,177 93,284 94,827a 
Madrid system 53,008 52,101 48,170a 
Trademark registration 
Resident 909,541 1,242,840 1,795,864 
Non-resident 59,496 86,394 85,118 
a October 2015. 
Source: Data provided by the Chinese authorities; and WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html. 
3.217.  According to information from WIPO, there were 1,033,908 patents in force in 2013. With 
respect to patent applications by top fields of technology, the main fields in the 2000-2014 period 
were: digital communication (6.72% of the total); electrical machinery (6.69%), computer 
technology (6.22%); measurement material (5.82%); pharmaceuticals (5.49%); and metallurgy 
(4.49%), among others. Applications were spread widely across the different fields of technology, 
as witnessed by the fact that no individual field reaches 10% of the total an d the category "others" 
represented 47.72% of the total.206 
3.3.7.2.2  Trademarks 
3.218.  The State Trademark Office (TMO), under SAIC, has responsibility for the examination of 
applications, and the registration and administration of trademarks. Local enforcement authorities 
are responsible for the administration of trad emarks at the provincial level and below. 
The settlement of disputes regarding trademarks is  the responsibility of the Trademark Review and 
Adjudication Board, which is also responsible for reviewing decisions made by the TMO and ruling 
on disputed cases on trademarks. The review period of trademark registration was 10 months as 
of mid-2013. 
                                               
205 Decision on Revising the Measures for Patent Administrative Law Enforcement, SIPO Decree [2015] 
71. Viewed at: http://www.sipo.gov.cn/zwgg/jl/201506/t20150601_1125506.html  (in Chinese only). 
206 WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html. WT/TPR/S/342 • China 
 
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  3.219.  The Trademark Law, its Implementing Regulations and various rules issued by SAIC, nform 
the main legislative and regulatory framework re garding trademark registration and protection.207 
The Trademark Law was amended in August 2013  and the amendments entered into force in 
May 2014. They include: the extension of acceptance of protection to sound marks; the adoption 
of a "one-trademark-registered-for-multiple-class" system for registration, and of online electronic 
applications; the protection of well-known tradem arks; the introduction of the principle of good 
faith for the registration and use of trademar ks; the increase of penalties for trademark 
infringements; and the strengthening of the pr otection of exclusive trademark rights. The 
Regulations on the Implementation of the Trademark  Law were also revised, in April 2014. To 
adapt to the amendments to the Trademark Law and its Regulations, the Rules for Trademark Review and Adjudication were revised for the th ird time in accordance with SAIC No. 65 of 
28 May 2014. On 3 July 2014, the SAIC issued the Provisions on the Determination and Protection 
of Well-Known Trademarks (SAIC [2014] Announcement No. 66).  
3.220.  The Trademark Law protects the exclusive right to use a trademark registered in China 
upon TMO approval. An application for trademark registration filed in China by a foreign applicant 
or a foreign enterprise is dealt with in accordan ce with the agreement signed between the native 
country and China or the international treaty accede d to by the native country and China, or with 
the principle of reciprocity. The term of protection for trademarks is 10 years, renewable for 
consecutive periods of 10 years, indefinitely. Fore ign nationals or foreign enterprises with habitual 
residence or places of business in China can submit their applications for trademark registrations either directly or through a legally registered trademark agency; foreign nationals or foreign 
enterprises without habitual residence or places of business in China must entrust their 
applications for trademark registrations to a legally registered trademark agency to apply for trademark registrations. 
3.221.  Prior right holders or relevant stakeholders have a five-year period to contest the 
registration of a trademark and request its revocation to the Trademark Review and Adjudication Board. This timeframe limitation does not apply in cases of abusive registration. If the TMO refuses 
to register a trademark, the applicant has the righ t to appeal the decision before the Board within 
15 days of receipt of the notification of the de cision. If the Board upholds the TMO's decision, 
the applicant may take the case to court within 30 days of notification.  
3.222.  The recent review of the Trademark Law led to the issue of a Judicial Interpretation of the 
Supreme People's Court on the Jurisdiction of Trademark Cases and Application of Laws after 
Implementation of the Amendment Decisions of  Trademark Law, which came into force on 
1 May 2014.
208 The Interpretation identifies 13 types of  cases involving trademarks that can be 
brought to court. These include appeals against review decisions or rulings made by the 
Trademark Review and Adjudication Board, appeals against specific administrative acts relating to trademarks made by the SAIC, and other trademark disputes cases. Depending on their nature, 
cases may be heard by the Beijing Municipal Intermed iate People's Court, by intermediate people's 
courts with regional jurisdiction over the case.  
3.223.  SAIC's Provisions on the Determinat ion and Protection of Well-Known Trademarks
209, 
promulgated on 3 July 2014, define "well-known br ands" as trademarks that are well known to the 
relevant public in China. They replaced SAIC's Provisions on Recognition and Protection of Well-
known Brands, promulgated in April 2003. Well-known trademarks are recognized on a case-by-case basis, and are subject to the principle of passive protection. By the end of 2015, the SAIC 
had recognized 6,942 trademarks as well-known  brands, 237 of which were owned by foreign-
funded enterprises (excluding those of Hong Ko ng, China; Macao, China; and Chinese Taipei). 
3.224.  Non-use of a trademark may lead to its revocation. In accordance with the Trademark 
Law, the TMO has the right to revoke any trademarks that are not used for three consecutive 
years without any justified reasons. 
                                               
207 The rules related to trademark admi nistration in China. Viewed at: http://sbj.saic.gov.cn . The 
Implementing Regulations of the Trademark Law, State Council Decree No. 651. Viewed at: 
http://www.gov.cn/zhengce/2014-04/30/content_2670953.htm  (in Chinese only). 
208 The text of the Judicial Interpretation. Viewed at: 
http://www.chinacourt.org/law/detail/2014/03/id/147702.shtml  (in Chinese only). 
209 SAIC Announcement [2014] No.66. Viewed at: 
http://sbj.saic.gov.cn/sbyw/201407/t20140711_146664.html  (in Chinese only). WT/TPR/S/342 • China 
 
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  3.225.  Trademark protection in e-commerce is granted through a number of circulars or other 
t y p e  o f  m e a s u r e s .  S A I C ' s  C i r c u l a r  o f  O p i n i o n s  on Extending Cross-Provincial Enforcement to 
Commodities Trading on the Internet and its Related Services (Gong Shang Shi Zi 2011/11), issued on 27 May 2011, aims at facilitating the procedures for cross-provincial investigations 
regarding IPR violations through the Internet. The newly-amended Measures on Administration of 
Trading on the Internet, promulgated by SAIC in January 2014, makes the operator of an Internet 
trading platform responsible for trademark infringement, and liable for any damage caused by 
misuse of the platform. A judicial interpretation issued by the Supreme People's Court on the 
liability of Internet intermediaries (Rules of Supreme Court on Several Issues Concerning the Application of Law in Adjudication of Civil Disputes Related to Infringement of the Right of Communication through Information Networks), effective 1 January 2013, clarifies some 
enforcement issues by specifying that that those that facilitate online infringement will be held 
jointly liable for that conduct. 
3.226.  China currently has no rules on parallel impo rts in the fields of trademarks or copyright. 
3.227.  In the course of the previous review, an swering questions posed by Members, China noted 
that SAIC's Trademark Department was working on the release of a trademark registration automated system (Phase III).
210 By the end of 2015, the development of Phase III had been 
completed, and work was ongoing on the optimi zation and improvement of the system and the 
development of additional functions. 
3.3.7.2.3  Geographical indications 3.228.  In the absence of specific legislation fo r geographical indications (GIs) in China, their 
registration and protection are covered by the Trademark Law and its Implementing Regulations, 
and by other laws and regulations. The State Commission Office of Public Sector Reform's Opinions on Improving the Geographical Indications Prot ection System and Mechanism (SCOPSR [2011] 
No. 26), calls for setting up a special GI protection regime and encourages the drafting of GI 
protection laws, regulations and comprehensive policies. The authorities noted that, with a view to implementing the Opinions, in early 2016 the SAIC was soliciting opinions from various 
departments to discuss the establishment of a joint recognition mechanism for GIs. Currently, 
there are three government bodies engaged in work related to GIs: the SAIC; AQSIQ and the 
Ministry of Agriculture. A party seeking GI protection can voluntarily choose under which governmental agency(ies) to register its GIs. The SAIC protects GIs in the form of collective 
trademarks and certification marks registered with the TMO under the same procedure as for 
trademarks. The protection of national GI products accorded by AQSIQ is governed by AQSIQ Decree No. 78 of 2005 (Provisions on the Protection  of Geographical Indication Products). The 
protection accorded to the GIs of agricultural  products is guided by the Measures on the 
Administration of Agricultural Product Geographical Indications (MOA Decree No. 11 of 2008). If infringements of GIs occur, the interests of the affected party are protected pursuant to the 
relevant laws and regulations under which its GIs are registered. If a single GI is registered for 
protection with different agencies, each agency plays its due regulatory role according to its respective mandate.  
3.229.  GIs from foreign countries must be registered in China to be protected. If the right holder 
decides to register its GI with the TMO, the protection period granted will be the same as for other 
trademarks, that is, 10 years, renewable for successive periods of 10 years, indefinitely. Once registered with the MOA and AQSIQ, the GIs are protected permanently.  
3.230.  Under the China-EU Project of Mutual Recognition and Protection of the "10 plus 10" 
geographical indications, launched in 2007, ten GI s of each of the parties are protected in the 
other. During the period under review, AQSIQ promulgated on 25 May 2015 the Guiding Opinions 
on Promoting the International Application of the China-EU "10 plus 10" Internationally Mutually 
Protected Chinese Geographical Indications  (Zhi Jian Ban Ke [2015] No. 482), with the aim of 
pushing forward the international application of GIs and promoting the use of special marks for protected Chinese GIs in overseas markets. AQSIQ also formulated the Measures on the Protection 
of Overseas Geographical Indication Products  in 2015 . 
                                               
210 WTO document WT/TPR/M/300, 9 September 2014. WT/TPR/S/342 • China 
 
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  3.3.7.3  Copyright and related rights 
3.231.  In China, copyright is regulated in acco rdance with the Copyright Law of the People's 
Republic of China (amended in 2010) and relevant regulations, which include the Regulations for the Implementation of Copyright Law of the People's Republic of China (amended on 
30 January 2013), the Regulations for the Protecti on of Computer Software, the Regulations on 
Collective Copyright Management, the Regulations on the Protection of the Right of Dissemination via Information Network, and the Interim Measures for the Payment of Remuneration for the 
Broadcast of Sound Recordings by Radio and Television Stations. Copyright covers: authorship; 
revision; integrity; reproduction; distribution; rental; exhibition; performance; presentation; broadcasting; network communication; cinematography; adaptation; translation; compilation; and other rights held by copyright owners. Copyright ow ners or owners of related rights may authorize 
collective non-profit copyright administration organizations to exercise their rights. 
3.232.  Copyright registration and enforcement ta kes place at both the central and provincial 
levels. The National Copyright Administration  of China (NCAC), under the State Council, 
administers copyright on a national scale. At the provincial level, copyright registration and 
administration is carried out by the respective local copyright administration offices. 
3.233.  The term of copyright protection for natural persons is life plus 50 years.
211 Works of a 
legal entity or other organization, or works create d in the course of employment and the copyright 
of which is held by a legal entity or other or ganization, are also protected by copyright for 
50 years, as well as cinematographic and photographic works. Software copyright exists from the date on which its development is completed. Audio and video productions, broadcasting, and 
public performances are granted protection for 50 years from the first day of production, 
broadcasting, or performance.
212 The term of protection for typographical designs is 10 years. 
3.234.  Registration is voluntary and is not a requirement for copyright protection. The works of 
Chinese citizens, legal entities or other organizations enjoy automatic copyright protection, 
whether published or not. Foreigners whose works are first published in the territory of China also enjoy automatic copyright protection. For works published abroad, those of foreigners who are 
citizens or residents of countries or territories that have signed bilateral copyright protection 
agreements with China and/or are also parties to the same relevant international conventions on copyright as China, are protected under the Copy right Law provided their copyrights have been 
recognized in their own countries. Protection under Chinese law may be granted to works of 
persons who are not citizens or residents of countries or territories as defined above, as long as 
their works are first (or simultaneously) published in country(ies) or territory(ies) party to the same relevant international conventions on copyright as China. 
3.235.  The Law provides for copyright licensing and the transfer of rights. Licensing can be 
exclusive or non-exclusive. Parallel imports are no t covered in the current copyright legislation. 
3.236.  The breaching of copyright is punished with fines, which are calculated based either on the 
illegal operational proceeds or on the value of  products embodying the copyright breach. Where 
the fines are calculated based on the illegal operation proceeds, the fine is less than RMB 250,000 if the illegal operation proceeds are less than RMB 50,000 and it is between 100% and 500% of the illegal operational proceeds if they exceed RMB 50,000. Where the fines are calculated based 
on the value of products, the amount of the fine s will be between 100% and 500% of the value of 
the products. In this case, the ceiling limit of the fines is RMB 250,000, except for computer software, where it is RMB 200,000.
213 
3.237.  The Interim Measures for the Payment of Remuneration by Radio and Television Stations 
for Broadcasting Sound Recordings, implemented on 1 January 2010, mandate that broadcasting organizations pay remuneration to copyright owners for broadcasting musical works. The methods 
                                               
211 In the case of more than one right holder, protec tion is granted for 50 years after the death of the 
last surviving right holder. 
212 Articles 39, 42 and 45 of the Copyright Law (revised in 2010). 
213 State Council Orders No. 632, 633 and 634, 30 January 2013 (Decisions on Amending the 
Regulations for Protection of Computer Software, Deci sion Amending the Implementing Regulations of the 
Copyright Law and Decision Amending the Regulations on the Protection of the Right to Network Dissemination of Information, respectively). WT/TPR/S/342 • China 
 
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  and amounts of such payment must be determined  in agreement with the copyright collective 
administration organization. During the period under review, the NCAC and the NDRC jointly promulgated the Measures for Paying Remuneration for the Use of Written Works on 23 September 2014 (Decree of the National Co pyright Administration and the National 
Development and Reform Commission, No. 11), which were implemented on 1 November 2014.
214 
In addition, the NCAC formulated a number of normative documents such as: the Implementing 
Rules on the Disclosure of the Information about Administrative Penalty Cases Concerning the 
Sales of Fake and Shoddy Products and Infringement  of Intellectual Property Rights by the Press 
and Publication (Copyright) Administration and Law Enforcement Departments in Accordance with the Law (Trial); and the Circular on Standardizing the Application Form and the Certificate for the Filing of Copyright Contracts.
215 The Circular on Standardizing the Copyright Order in Reprinting 
Online was issued on 17 April 2015.216 
3.238.  As of December 2015, there were five collective copyright management organizations in 
China: the Music Copyright Society of China, the China Audio-Video Copyright Association, the 
China Film Copyright Association, the China Written Works Copyright Society, and the Images 
Copyright Society of China. As of end December 2014, China Written Works Copyright Society was the largest copyright association in terms of the number of members, which reached 7,960, with 
remuneration worth RMB 1.62 million. Music Copyright Society of China had 7,701 members and 
an annual revenue of RMB 137 million in the same year; while China Audio-Video Copyright Association, with 123 members, collected about RMB 148 million for the use of copyright in karaoke; the Images Copyright Society of China, with 807 members, collected RMB 1.91 million for 
the use of photographic works; and the China F ilm Copyright Association, with 82 members, had 
an annual revenue of RMB 136,169. 
3.3.7.4  Other IPRs 
3.3.7.4.1  Layout-designs of integrated circuits 
3.239.  SIPO is responsible for the registration of  layout-designs of integrated circuits. Layout-
designs of integrated circuits are protected under  the Regulations on the Protection of Layout-
Designs of Integrated Circuits (promulgated by  Decree No. 300 of the State Council in 2001, and 
effective as of 1 October 2001) and under the Ru les for Implementing the Regulations on the 
Protection of Layout-Designs of Integrated Circuits (promulgated by SIPO Decree No. 11 of 18 September 2001, and effective as of 1 October 2001). The term of protection is of 10 years 
from the date of filing or the date of first commercial exploitation anywhere in the world, 
whichever expires earlier. No matter whether it ha s been registered or commercially exploited, a 
layout-design shall no longer be protected 15 years after the date of the completion of its creation. 
In special circumstances, or to remedy unfair competition practices, a "non-voluntary" licence may 
be issued to exploit a layout-design. No "non-v oluntary" licences have been issued to date. 
3.3.7.4.2  New plant varieties 
3.240.  The Regulations on the Protection of New Varieties of Plants, 1997, amended most recently 
in March 2013, provide for a period of protection of 20 years from the date of authorization in the 
case of vines, forest trees, and ornamental trees, and for 15 years for other plants. The Decision on Amending the Regulations on the Protection of New Varieties of Plants of 31 January 2013, 
which took effect from 1 March 2013, amended the rules on penalties for infringement to make 
them more stringent. The Seed Law of the People's  Republic of China, which came into force on 
1 January 2016, included an additional chapter on  the "Protection of New Varieties of Plants", 
amended the provisions on violation penalties and further increased the compensation and 
penalties for infringements of the rights of new varieties of plants. 
                                               
214 The Measures for Paying Remuneration for the Us e of Written Works, NCAC and NDRC Joint Decree 
[2014] No. 11. Viewed at: http://www.ncac.gov.cn/chinacopyright/contents/483/228049.html  (in Chinese 
only). 
215 The Implementing Rules on the Disclosure of the Information about Administrative Penalty Cases 
Concerning the Sales of Fake and Shoddy Products and Infringement of Intellectual Property Rights by the Press and Publication (Copyright) Administration and Law Enforcement Departments in Accordance with the 
Law (Trial), Xin Guang Chu Fa [2014] No. 56. Viewed at: 
http://www.gapp.gov.cn/chinacopyright/contents/483/201737.html  (in Chinese only). 
216 Circular on Standardizing the Copyright Order in Reprinting Online, Guo Ban Fa [2015] No. 3. Viewed 
at: http://www.ncac.gov.cn/chinacopyright/contents/483/249606.html  (in Chinese only). WT/TPR/S/342 • China 
 
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  3.3.7.4.3  Undisclosed information and trade secrets 
3.241.  In the absence of a specific law or regulations, undisclosed information and trade secrets 
are covered under a number of other laws and regulations, including the Criminal Law, the Anti-Unfair Competition Law, the Labour Law, the Regulations for the Implementation of the Law on 
Drug Control, and the Regulations on Administration of Agricultural Chemicals. Under the 
Regulations for the Implementation of the Law on Dr ug Control, China protects test data and other 
data that are self-obtained, undisclosed, and submitted by manufacturers or sellers to obtain an 
approval for manufacturing or selling a drug that contains new chemical entities. Such undisclosed 
test data and other data may not be used for improper commercial purposes. The protection term for the manufacturer or seller is of six years from the approval for manufacturing or selling the drug. During this period, the authorities are mandated to deny approval to other applications using 
the same data. A similar protection term is granted for undisclosed data on agro-chemicals under 
the Regulations on Administration of Agricultural Chemicals.  
3.242.  The Ministry of Public Security is respon sible for criminal investigations in cases that 
seriously infringe undisclosed information or trade secrets, while the SAIC is in charge of the 
administrative enforcement of the law or regulations in this regard. The People's Courts may try both civil and criminal cases related to undisclosed information and the protection of trade secrets. 
3.3.7.5  Enforcement 
3.3.7.5.1  Overview 3.243.  During the previous Review, it was noted that despite the efforts undertaken by the 
authorities to combat infringement, enforcement of IPRs continued to be a major challenge for 
China. China admitted the difficulty of the situation and provided information on its continued 
efforts to strengthen its capacity to protect and enforce IPRs.
217 In the context of the current 
Review, the authorities have noted that, during the period examined, China has continued to 
strengthen its enforcement system, both at the administrative and judicial levels, and that 
corresponding measures have been adopted. In China's IPR enforcement system, administrative actions are taken by the responsible governmental agencies, while judicial actions are taken 
through the public security authorities, procuratorial organs, and the courts. All public security 
authorities above the prefecture and city levels in China have IPR crime coordinating activities and lead organizations to arrange and coordinate action to crack down on infringement and counterfeiting activities. The Ministry of Public Security has also concluded coordination and 
cooperation agreements with other agencies, including Customs, to facilitate the timely reporting 
of IPR infringements and prompt intervention by the public security authorities. Table 3.27 gives 
an overview of enforcement actions taken by th e authorities during the period under review. 
Table 3.27 Intellectual property enforcement, 2012-15  
 2012  2013  2014 2015  
Cases dealt with by administrative actions     
Patents     
Number of disputes (patent infringement disputes)  2,232  4,684  7,671 14,202  
Copyright     
Number of disputes/administrative penalties 7,908  7,019  4,728 ..  
Imposition of fines (RMB million) 12.83  14.18  8.69 .. 
Cases transferred to judicial agencies 1,893  539 1,350 ..  
Businesses investigated 823 543 366 .. 
Underground dens detected  1,364,783  1,032,721  1,063,061 ..  
Trademarks     
Number of disputes 66,227  56,867  42,450 30,716  
Trademark infringements  59,085  49,971  37,219 27,379  
Other  7,142  6,896  5,231 3,337  
Cases transferred to judicial agencies 576 362 300 164 
Value of fines (RMB million) 525.07  515.07  432.67 361.98  
Cases handled by Customs at the border (shipments)  15,690  20,464  23,860 .. 
Value (RMB million) 60.6  .. .. ..  
Cases dealt with by courts      
First instance civil IPR cases accepted 86,296  87,281  94,100 ..  
First instance civil IPR cases closed 82,758  87,091  93,146 .. 
Patent cases accepted 7,130  6,517  6,654 ..  
Patent cases closed 6,415  6,523  6,375 .. 
                                               
217 WTO document WT/TPR/M/300/Add.1, 9 September 2014, p. 332. WT/TPR/S/342 • China 
 
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   2012  2013  2014 2015  
Trademark cases accepted  9,082  9,833  8,598 ..  
Trademark cases closed 8,555  9,402  8,816 .. 
Copyright cases accepted 27,861  24,250  27,613 ..  
Copyright cases closed 27,134  24,885  27,388 .. 
Technical contract cases accepted 746  949 1,071 ..  
Technical contract cases closed 710 908 1,016 .. 
Unfair competition cases accepted 1,123  1,302  1,422 ..  
Unfair competition cases closed 1,092  1,195  1,355 .. 
Other IPR cases accepted 1,933  2,304  2,355 ..  
Other IPR cases closed 1,715  2,211  2,209 .. 
Second instance civil IPR cases accepted 9,308  11,611  13,361 ..  
Second instance civil IPR cases closed 9,023  11,231  13,316 .. 
.. Not available. 
Source: Information provided by the Chinese authorities. 
3.244.  During the review period, a special camp aign of "convoy" enforcement of IPR laws and 
protection was launched, focusing on carrying out intensive inspections and on the rectification of law enforcement measures with respect to the circulation, production, import and export of patent infringing goods. The authorities have noted that they have focused on investigating and punishing 
group infringement, habitual infringement and patent counterfeit. Also, local IP offices and right 
protection assistance centres have been establishe d to handle a variety of patent infringement and 
counterfeit cases. For example, it was noted that  the Guangdong Provincial Intellectual Property 
Office has handled over 500 patent disputes. 
3.3.7.5.2  Administra tive enforcement  
3.245.  The National Leading Group on the Fight against IPR Infringement and Counterfeiting 
(NLG), founded in 2011, is mainly responsible for organizing the campaign against IPR 
infringement and counterfeit goods, as well as studying and formulating relevant policies and measures. The NLG, chaired by the Vice Premier of the State Council, supervises the implementation of work by various regions and re levant departments, as well as the handling of 
major cases involving IPR infringement and count erfeit goods. The NLG is comprised of the 
Supreme People's Court and Supreme People's Pr ocuratorate and 30 agencies including the State 
Council ministries and organs in charge of IPRs, quality supervision, market regulation and crime 
crackdown. The office of the NLG, located at MOFC OM, is responsible for the daily work of the NLG. 
3.246.  SIPO has issued a number of policy documents with respect to patent administrative law 
enforcement, including the Decisions on Strength ening the Patent Administrative Law Enforcement 
Work and the Guidelines on Patent Administrative  Law Enforcement to standardize the handling by 
local IP offices of patent infringements and patent counterfeiting investigations and penalties. SIPO issued the Guidelines on Patent Infringement Judgment and Counterfeit Patent Determination (on a trial basis) in July 2014. The Guidelines contai n provisions for the determination of invention, 
utility model and design patent infringements, and patent counterfeit. In April 2014, SIPO issued 
the Notice on Specific Matters concerning the Disclosure of Information on Patent Administrative Law Enforcement Cases, requiring local IP offices responsible for patent administrative law 
enforcement to disclose information on patent counterfeit cases subject to an administrative 
penalty decision, as well as of patent infringement dispute cases resulting in a determination of infringement of rights. In May 2014 SIPO issued th e Work Plan for the Special Campaign of Patent 
Law Enforcement and Rights Protection in the E-commerce Field, which, according to the 
authorities has since guided patent law enforcement and rights protection in e-commerce actions of local IP offices. For example, the local IP o ffices in Zhejiang, Beijing, Jiangsu, among others, 
have established cooperation mechanisms with local e-commerce service enterprises to avoid 
patent infringement.  
3.247.  With respect to copyright, the authoritie s noted that China led a number of campaigns and 
actions to strengthen administrative law enforcem ent during the period under review including the 
"Network Sword Campaign", through which cases of online copyright infringements and piracies 
were investigated by the local copyright authorities. The NCAC has also strengthened its proactive supervision over websites during the review period, and, to this end, issued the Opinions on 
Further Strengthening Regulation over the Copyri ght of Works Transmitted via the Internet on 
30 December 2013.  WT/TPR/S/342 • China 
 
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  3.248.  The authorities noted that the NCAC has al so been engaged in cracking down on copyright 
infringement. The NCAC has been doing this through the examination of licensing documents of movies and TV shows provided by audiovisual onlin e services, the publication of pre-warning lists 
for key works and the coordination of the resolution  of copyright disputes with right holders. In 
May 2014, NCAC issued the 2014  National Work Plan of Cracking Down on Copyright Infringement 
and Counterfeiting in the Sector of Press and Publishing (Copyright) with provisions to fight counterfeiting and promote the application of copy righted software, to push forward the disclosure 
of information regarding copyright infringement cases, and establish a long-term law enforcement 
mechanism for copyright. The NCAC has also encouraged government agencies to use copyrighted software, and conducted inspections to ensure this.  
3.249.  In trademarks, apart from the amendments to the Trademark Law to improve trademark 
enforcement, the authorities also issued the Opinions on Further Combating IPR Infringement and 
Manufacturing and Selling Counterfeit and Shoddy Commodities, and the Judicial Interpretation of 
the Supreme People's Court on Jurisdiction of Trademark Cases and Application of Laws after 
Implementation of the Amendment Decisions of Trademark Law, and enhanced the protection of 
the exclusive right to use trademarks. 
3.3.7.5.3  Judicial enforcement 
3.250.  During the period under review, China continued reinforcing the judicial infrastructure 
needed for court enforcement of IPRs, including th rough the creation of specialized IPR courts. On 
31 August 2014, the Standing Committee of the Nati onal People's Congress issued the Decision on 
Establishing Intellectual Property Right Courts in Beijing, Shanghai and Guangzhou, providing a 
legal basis for the establishment and operation of  IPR courts. The Supreme People's Court drafted 
and adopted the Provisions on Case Jurisdiction of  Intellectual Property Right Courts in Beijing, 
Shanghai and Guangzhou after the promulgation of the Decision.
218  
3.251.  The Provisions define the types of cases su bject to the jurisdiction of IPR courts, including 
three categories: a) civil and administrative cases of patents, new varieties of plants, layout-designs of integrated circuit, know-how, computer software and other technologies; 
b) administrative cases filed regarding copyright, trademark, and unfair competition; c) civil cases 
involving well-known trademarks. They also define the jurisdiction of first instance IPR cases in Beijing, Shanghai and Guangzhou. Cases concerning appeals by right holders against the rulings or decisions made by the departments of the State Council with respect to the authorization or 
confirmation of IPRs, and administrative cases relating to the licensing of IPRs, are now exclusively 
governed by the Beijing IPR Court. The Provisions also establish that appeals of IPR cases of first instance should be referred to the corresponding higher level court in the same city where the IPR 
court which made the first ruling is located.  
3.252.  The Beijing Intellectual Property Right Co urt, the Guangzhou Intellectual Property Right 
Court and the Shanghai Intellectual Property Right Court were set up on 6 November 2014, 
16 December 2014 and 28 December 2014, respectively. The authorities consider that the 
establishment of these IPR courts will have a si gnificant influence on the strengthening of IPR 
protection. The Supreme People's Court has further explored the new model of jurisdiction layout 
and approved the Liangjiang New District Intellec tual Property Right Court in Chongqing to hear 
some patent cases. The Supreme People's Court has further defined the IPR jurisdiction of lower 
courts through the  Notice on Issues Concerning Jurisdiction of Intellectual Property Right Cases 
and has adjusted the jurisdiction of grassroots people's courts with jurisdiction over some patent 
cases to make it cross-regional. As of the end of  2014, there were 87 intermediate people's courts 
with right of jurisdiction over civil dispute cases of patents, 46 with jurisdiction over new plant varieties, 46 with authority over layout-designs of integrated circuits and 45 with jurisdiction over 
well-known trademarks cognizance. There were 164 grassroots people's courts with right of 
jurisdiction over general civil IPR cases and six grassroots people's courts with right of jurisdiction over utility model and design patent dispute cases. 
                                               
218 The text of the Provisions may be viewed at: 
http://www.chinacourt.org/law/detail/2014/10/id/147980.shtml  (in Chinese only). WT/TPR/S/342 • China 
 
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  3.3.7.5.4  Customs law enforcement 
3.253.  In accordance with the revised Regulation s on Customs Protection of Intellectual Property, 
which entered into effect on 1 April 2010, China Customs is in charge of IPR enforcement at the border. IPR holders may record their rights with Customs for border protection; recorded rights 
are valid for 10 years, renewable. Despite this, even in cases were rights have not been 
registered, right holders may apply to Customs for the detention of suspected infringing goods. In 
accordance with the Regulations on Customs Protec tion of Intellectual Property, counterfeit goods 
will be seized by Customs, which will destroy them  if the infringing features cannot be removed. 
Except in extraordinary circumstances, imported goods bearing counterfeit trademarks are not allowed to enter into the channel of commerce simply by removing the trademark logo.  
3.254.  In 2014, China Customs stepped up its fight against IPR infringements and counterfeit 
goods, detaining 24,000 batches of goods suspected of IPR infringement and 92 million pieces of 
IPR-infringing commodities. In 2015, China Customs conducted the "QingFeng" special action to intensify risk analysis and control on key commodities, such as food, drugs and automobile parts, 
as well as on key shipping routes and ports, so as to combat IPR infringement in a more focused 
and targeted way. China Customs is also seeking to strengthen international cooperation on IPR protection. 
 WT/TPR/S/342 • China 
 
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  4  TRADE POLICIES BY SECTOR 
4.1  Agriculture 4.1.1  Features and market developments 4.1.  The contribution of agriculture, animal husbandry, forestry and fishing to GDP declined 
slightly, from 9.9% in 2010 to 9.5% in 2014 and 9.3% in 2015 (Table 4.1). At the same time, 
employment in the sector continued to drop from 36.7% in 2010 to 29.5% in 2014 (latest year for which data were available).
1 The contribution of farming in terms of gross output value has 
increased slightly since 2013 from 55.1% to 55.8% of total output in 2015, and so has the 
contribution of livestock, accounting for 30.8% of output in 2015 (30.4% in 2013), while that of fisheries decreased from 10.3% in 2013 to 9.4% in 2015. The increase in the contribution of farming seems to be consistent with China's policies, as several Five-Year Plans have called for 
higher grain production to attain food security and a build-up of stocks to ensure price stability.
2 
China's main agricultural products are: corn, rice and wheat; sugarcane; oilseeds; and cotton, some of which require large-scale operations and mechanization to achieve higher productivity, 
hence, China's main agricultural policy objective in 2015 was to reform the sector through 
innovation and modernization.
3 China continues to be a net importer of agricultural products. 
Table 4.1 Principal indicators for agricultur e, livestock, forestry and fishing, 2011-15 
  2011  2012  2013 2014 2015  
Contribution to current GDP (%) 9.8  9.8 9.7 9.5 9.3  
Real growth rate (%) 4.2 4.5 4.0 4.2 4.6 
Employment (percentage of total employment) 34.8  33.6 31.4 29.5 ..  
Share of gross output value (%)      
Farming 53.5  54.4 55.1 55.7 55.8  
Forestry 4.0 4.0 4.2 4.3 4.0 
Livestoc k 32.9  31.5 30.4 29.5 30.8  
Fishery 9.6 10.1 10.3 10.5 9.4 
Exports      
Agricultural productsa (US$ million)  43,071.6  44,364.8  47,545.6  50,341.0  50,490.9  
Top five exports by HS 4-digit (% of total)      
0712 Dried vegetables 6.1 3.5 4.8 4.8 5.6 
2008 Fruit, nuts, preserved, n.e.s. 5.5  5.9 5.6 5.3 5.1  
0703 Onions and garlic 5.6 3.9 3.8 3.8 4.7 
2005 Other prepared/preserved vegetables 2.7  3.2 3.6 3.7 3.7  
2309 Animal feed preparations, n.e.s. 3.5 4.1 3.5 3.5 3.2 
Agricultural productsa (% of total exports) 2.3 2.2 2.2 2.1 2.2  
Agricultural products (growth rate, %) 20.9 3.0 7.2 5.9 0.3 
Fisherya (US$ million) 17,106.9  18,269.9  19,601.1  21,056.9  19,806.2  
Fishery (% of total exports) 0.9 0.9 0.9 0.9 0.9 
Fishery (growth rate, %) 28.6  6.8 7.3 7.4 -5.9  
Imports      
Agricultural productsa (US$ million) 87,216.5  105,215.6  111,098.0  113,750.3   108,630.7  
Top five imports by HS 4-digit (% of total)      
1201 Soybeans 34.1  33.2 34.2 35.4  32.1  
1511 Palm oil 7.6 6.2 4.4 3.9  3.4  
1007 Grain sorghum 0.0  0.0 0.3 1.4  2.7  
1901 Preparations of cereals, flour, or mil k 1.5 1.4 1.8 1.9 2.7 
1003 Barley 0.7  0.7 0.7 1.4  2.6  
Agricultural productsa (% of total imports) 5.0 5.8 5.7 5.8 6.5 
Agricultural products (growth rate, %) 31.6  20.6 5.6 2.4 -4.5  
Fisherya (US$ million) 7,636.9  7,480.3  8,029.9 8,529.0 8,500.3  
Fishery (% of total imports) 0.4  0.4 0.4 0.4 0.5  
Fishery (growth rate, %) 22.4 -2.1 7.3 6.2 -0.3 
.. Not available. 
a WTO definition. Note: Top five agricultural exports and imports by HS 4-digit are sorted by the year 2015. 
Source: UNSD, Comtrade database and National  Statistics of China online information. 
                                               
1 Data include employment in forestry and fishing. 
2 Average yields of grain products (corn, rice and wheat) have increased continuously since 2012, albeit 
with a slight decrease in 2014. Average yields were 5,824 hectares/kg in 2012, 5,894 hectares/kg in 2013, and 5,892 hectares/kg in 2014. (National Bureau of Statis tics China (2015), National Statistics Year Book 2015.) 
3 CPC Central Committee, State Council, No. 1 Document of 2015, Several Opinions on Enhance Reform 
and Innovation and Accelerating Agri culture Modernization. Viewed at: 
http://english.agri.gov.cn/news/dqnf/201502/t20150203_24952.htm .  WT/TPR/S/342 • China 
 
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  4.1.2  Policy objectives and administration 
4.1.2.1  Policy formulation, institutional and legal framework 4.2.  The broader policy goals stated in the 11
th Five-Year Plan (2006-2010) and the 12th Five-Year 
Plan (2011-2015) of accelerating modernization in  the sector to improve farmers' well-being has 
been reiterated in the CPC Central Committee No. 1 Document of 20154 and in the CPC Proposal 
for Formulating the 13th Five-Year Plan (2016-2020).5 The latter aims at modernizing the sector 
through mechanization and promoting the development of moderate-scale operations to increase 
productivity, deepening the reform of land contra ct rights and finance policies in rural areas, 
protecting the quality of farmland to increase pr oductivity, and ensuring grain self-sufficiency (at 
least 95%) and food safety. This is to be attained through, inter alia , increasing support to the 
sector, providing more benefits to farmers, improving the current subsidy policy (i.e. by 
eliminating some and creating new ones), and reforming the "price forming system" for 
agricultural products.  
4.3.  In 2014, total Central Government expenditure on agriculture, forestry and water increased 
by 6.2% from 2013, to reach RMB 1.4 trillion (RMB 1.3 trillion in 2013). During 2013-2015 
government funding for subsidies granted to farmers increased. The minimum purchase price of wheat and rice increased in 2014 but according to the authorities remained unchanged in 2015. 
4.4.  The Central Government is responsible for establishing the general agricultural policy 
framework and the rules for its implementation. Th e Ministry of Agriculture together with other 
institutions, inter alia , the NDRC, the Ministry of Finance, and the Ministry of Commerce 
(MOFCOM), are in charge of implementing agricultural policy. The legal framework regulating the 
sector has not undergone any major changes since the last Review. 
4.5.  During the period under review, China's land management system has remained unchanged.
6 
Nevertheless, measures have been implemented to provide more flexibility to transfer farmers' 
contract rights.7 In 2015, a pilot programme was introduced to allow farmers to use both their 
right to contract land and their dwelling as collateral to obtain financing.8 
4.1.3  Policy instruments 
4.1.3.1  Border measures 
4.1.3.1.1  Measures affecting imports 4.6.  Agricultural products (WTO definition) ar e, with the exception of some animal products, 
all subject to ad valorem  applied rates.
9 In 2015, the average tariff protection for agricultural 
products (WTO definition), unchanged at 14.8% since 2013, remained higher than the average 
applied MFN rate (9.5%) (Table 3.2). Sugars and confectionary (30.9%), cereals and preparations 
(23.3%), cotton (22.0%), and beverages, spirit s and tobacco (21.8%) benefit from higher than 
average protection; these are amongst China's most important agricultural products (e.g. cereals 
and cotton) or among those considered sensitive (e.g. tobacco). Oilseeds, fats, and oils, which 
                                               
4 State Council Document No. 1 of 2015 indicated that, in 2015, agriculture reform should be through 
innovation and modernization and hi ghlighted the important role of agriculture in China's socioeconomic 
development (CPC Central Committee, State Council, Several Opinions on Enhancing Reform and Innovation and Accelerating Agriculture Modernization. Viewed at: http://www.gov.cn/zhengce/2015-
02/01/content_2813034.htm ; and http://english.agri.gov.cn/news/dqnf/201502/t20150203_24952.htm ). 
5 CPC Proposals on Formulating the 13th Five Year Plan on National Ec onomic and Social Development, 
29 October 2015. Viewed at: http://cpc.people.com.cn/n/2015/1103/c399243-27772351.html .  
6 Farmland is owned by village collectives, which exte nd contracts to individual  households, currently for 
"at least 30 years". Within the period of the contract, individual farmers are guaranteed the rights to occupy, use and profit from the tenure of the land (WTO (2014), Trade Policy Review  – China , Geneva). 
7 General Office of CCCPC and Genera l Office of the State Council, Opinions on Gu iding Rural Areas Land 
Operation Right to Orderly Transfer and Developing Agriculture Moderate Scale Operation, Zhong Ban Fa 
[2014] No. 61. Viewed at: http://news.xinhuanet.com/politics/2014-11/20/c_1113339197.htm  (Xinhua news). 
8 Guo Fa [2015] No. 45. Viewed at: http://www.gov.cn/zhengce/content/2015-/24/content_10121.htm. 
9 These products are six tariff lines of HS Chapter 02 (meat and edible offal of poultry) and one tariff 
line of HS Chapter 05 (products of animal origin). WT/TPR/S/342 • China 
 
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  include soybeans, one of China's major imports, have the lowest tariff protection at 10.5% 
(Table A3.1). 
4.7.  Bound rates for agricultural products (WTO definition) range from 0 to 65% and are higher 
than for non-agricultural products, which range from 0 to 50%. Bound tariff rates for agricultural 
products vary considerably; higher bound rates apply to cereals and preparations, and beverages 
and spirits (Table A3.1). 
4.8.  China makes use of tariff-rate quotas (TRQs). Since the previous Review there have been no 
substantial changes regarding the products subject to TRQs, the tariff rates applied or the system 
to allocate them. In 2015, tariff rate quotas (TRQs) applied to 47 tariff lines included in HS Chapters 10 (wheat and meslin, maize, rice), 11 (cereal flours other than of wheat or meslin, 
cereal groats), 17 (cane or beet sugar), 31 (miner al or chemical fertilizers), 51 (wool, carded or 
combed), and 52 (cotton). In-quota and out-of-q uota rates have not changed; they are both 
ad valorem , with the exception of the out-of-quota rate for a type of cotton (HS 52.01.00.00). 
Out-of-quota imports of this type of cotton may be  subject to a sliding duty that depends upon the 
price of cotton, but that cannot exceed 40% (i.e. the bound rate for cotton). Under this system, 
China fixes a threshold price (RMB 15/kg in 2015). If the price of imports is equal to or higher than 
the threshold price a specific duty of RMB 0.57/kg is levied; if the import price is lower than the 
threshold price, an ad valorem  rate based on the formula applies.
10 Out-of-quota rates for other 
products are in most cases equal to bound rates. 
4.9.  The NDRC is responsible for allocating TRQs  for grains and cotton, and MOFCOM allocates the 
rest. Some products subject to TRQs (i.e. grains, cotton, sugar, and chemical fertilizers) are also 
subject to state trading. In these cases, part of the quota is allocated to state-trading enterprises 
and another part to other enterprises. Historically, th e fill rate of TRQs has been low; however, this 
changed in 2013 and 2014 for products such as sugar, wool and cotton (Table 4.2). 
Table 4.2 Tariff rate quotas and their utilization, 2013-14 
(Tonnes, unless otherwise indicated) 
Products Out-o f-
quota 
rates (%) In-quota 
rates (%) Tariff quota 
quantity In-quota 
imports 
(2013) In-quota 
imports 
(2014) 
Wheat (7 lines)   9,636,000  5,535,000 3,004,000  
Wheat and meslin (4 lines) 65 1    
Wheat or meslin flour (1 line)  65 6    
Groats and meal of wheat ( 1 line) 65 9    
Pellets of wheat (1 line) 65  10    
Corn (5 lines)   7,200,000  3,266,000 2,599,000  
Maize (corn) seed (1 line) 20  1    
Maize (corn) other than seed (1 line) 65 1    
Maize (corn) flour (1 line) 40  9    
Groats and meal of corn (1 line) 65 9    
Pellets of corn (1 line) 65  10    
Rice (14 lines)   5,320,000  2,271,000 2,579,000  
Rice (10 lines) 65  1    
Rice flour (2 lines) 40 9    
Meal of rice (2 lines) 10  9    
Sugar (7 lines) 50 15 1,945,000  1,945,000 1,945,000  
Fertilizers (3 lines) 50  4a .. .. ..  
Wool (9 lines)   287,000  287,000 287,000  
Wool, not carded or combed (6 lines) 38  1    
Wool, carded or combed (3 lines) 38 3    
Cotton (2 lines) 40  1 894,000  894,000 894,000  
.. Not available. 
a Interim duty applied at 1%. Note: Number of tariff lines in brackets refers to the 2015 tariff schedule. Source: WTO document G/AG/N/CHN/30, 2 February 2016; and Ministry of Finance (2015), Customs Tariff of 
Imports and Export of the Pe ople's Republic of China , 2015. 
                                               
10 The variable rate is calculated according to a fo rmula, which may be viewed in: Ministry of Finance 
(2015), Customs Tariff of Import and Export of the People's Republic of China 2015  (The Legal Texts), Beijing, 
p. 442. WT/TPR/S/342 • China 
 
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  4.10.  The VAT on agricultural domestic and imported goods is 13%. However, agricultural goods 
produced and sold directly by small-scale farmer s remain exempt from the VAT. Tobacco leaf (i.e. 
sun-dried leaf tobacco and toasted leaf tobacco) purchased in China are subject to a 20% tobacco leaf tax.
11 The authorities stated that the tobacco leaf tax is not levied on imported tobacco leaf. 
4.11.  In 2015, the number of agricultural products  subject to automatic import licences increased 
slightly as the requirement was imposed on seve n additional products (sugar). Thus, in 2015 
licensing requirements applied to 83 (76 in 2013) ag ricultural products (WTO definition), out of a 
total of 396 (442 in 2013) products subject to automa tic import licensing (17.2% of the total). The 
main products concerned were: meat, dairy products, oilseeds, fats and oils, and tobacco. All agricultural products were subject to non-auto matic import licensing. As of 1 September 2015 
automatic import licences were also applied to four  additional agricultural products (i.e. barley, 
sorghum, cassava and maize for brewing), equivalent to 8 tariff lines at the HS 8-digit level.
12 
4.1.3.1.2  Measures affecting exports 4.12.   In 2014 China made a notification rega rding the application of export subsidies on 
agricultural products; however, it did not cover the period under review (2014-2016).
13 
4.13.  In general, exports of agricultural goods are not subject to export taxes. There are only 
four tariff lines subject to an export tax of 40% (Table 3.10).14 VAT rebates at rates ranging from 
0% to 15% apply to agricultural exports. The most common rebate rate, based on a tariff line 
analysis at HS 8-digit level, is 5%, which applies to 42% of all tariff lines, followed by 0%, which applies to 27% of all tariff lines, and 15%, which applies to 24% of all tariff lines some of which are major exports (e.g. prepared fruits and nuts, and other prepared/preserved vegetables) 
(Table 4.1).
15 The rebate rate of 13% applies to chicken, duck and other meats; while products 
such as: cereals, oilseeds and vegetables have a rebate rate of 0%, and endangered animals or plants, not an encouraged export, are exempt from the rebate. 
4.14.  Exports of cotton, rice, maize, and tobacco  are subject to state trading. These products, 
except for tobacco, are also subject to export  quotas, which are managed by the NDRC and 
allocated only to state trading enterprises. Wheat is also subject to export quotas.  
4.15.  Destination-specific quotas remain in place for exports of live cattle, swine, and chicken to 
Hong Kong, China and Macao, China. These quotas are distributed through an export licensing system. There are other products subject to export quotas and other restrictions, which are also administered through licences (Table 4.3). In 2016, export licensing applied to 73 (71 in 2013) 
tariff lines at the HS 8-digit level covering agri cultural products (WTO definition); these accounted 
for 16.2% (15.8% in 2013) of total goods subject to export licences.
16  
                                               
11 State Council Decree No. 464 [2006], Interim Regulations on Leaf Tobacco Tax. Viewed at: 
http://www.gov.cn/zwgk/2006-05/10/content_277505.htm .  
12 MOFOM GACC Announcement No. 34 [2015]. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201508/20150801078101.shtml .  
13 China's latest notification regarding export subsidies covers 2011 or 2012 (WTO documents 
G/AG/N/CHN/24, 17 December 2012; and G/AG/N/CHN/27, 7 March 2014). 
14 These are all items under HS 0506 (Bones and bo nes and horn-cores, unworked, defatted, simply 
prepared, not cut to shape; treated with acid or de-g elatinized; and powder and waste of these products). 
15 The agricultural products  subject to a rebate rate of 15% are:  certain dairy products (HS Chapter 04) 
(e.g. yogurt and cheese); certain coffees, teas and spices (HS Chapte r 09); vegetable saps and extracts 
(HS 1302); and nearly all tariff lines under HS Chapters 16 to 22 (prepared foodstuff; sugar and sugar confectionary products; cocoa and coco a preparations; preparations of cere als; preparations of vegetables, 
fruit and nuts; miscellaneous edible preparations; beverage s, spirits (State Administration of Taxation online 
information. Viewed at: http://hd.chinatax.gov.cn/ fagui/action/InitChukou.do ). 
16 The Catalogue of Goods Subject to Export Licence of 2015, MOFCOM GACC Decree [2014] No. 94. 
Viewed at: http://www.mofcom.gov.cn/article/b/c/201412/20141200854859.shtml ; and The Catalogue of 
Good http://english.agri.gov.cn/news/dqnf/201502/t20150203_24952.htms  Subject to Export Licence of 2016, 
MOFCOM GACC Announcement [2015] No. 76. Viewed at: 
http://wms.mofcom.gov.cn/article/zcfb/g/201512/20151201225345.shtml . WT/TPR/S/342 • China 
 
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  Table 4.3 Agricultural products subject to export quotas and licensing in 2016 
Products Type of 
licence Comment 
Goods subject to quota and licensing 
Rice, maize, wheat and cotton  Export quota 
licensing The quota is allocated by NDRC 
and the licence issued by 
MOFCOM 
Live cattle, swine and fowl (for export to Hong Kong, China 
and Macao, China); and maize, rice and wheat flour Export quota 
licensing The quota is allocated by MOFCOM  
Goods subject to licensing  
Live cattle, swine and fowl (fo r markets other than Hong  Kong, China 
or Macao, China); and frozen and chilled beef, pork and chicken meat Export licence  A licence is granted if the exporter 
has the relevant export contract 
Source: MOFCOM GACC Decree [2014] No. 94. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201412/20141200854859.shtml . 
4.16.  In 2015, general export prohibitions continue to apply to eight agricultural products17; while 
others may not be exported if pr ocessed "under processing trade".18  
4.1.3.2  Internal measures 4.1.3.2.1  Support measures 4.17.  In 2015, China made a notification to th e WTO Agriculture Committee regarding the support 
given to the agriculture sector; however, it did not cover the period under review (2014-2016).
19 
Several support programmes covering the period 2009 to 2014 were, however, notified by China under the SCM Agreement (Table 4.4).
20 
Table 4.4 Support to agriculture and forestry, 2015 
Description  Starting 
year Form 
of subsidy Legal basis 
Subsidy for promoting superior strains 
and seeds 2002 Financial 
appropriations MOF Circula rs Cai Nong No. 16 and No. 17 of  2004 
MOF Circular Cai Nong No. 440 of 2009 
Subsidy for purchasing agricultural 
machinery and tools 1999 Financial 
appropriations MOF Circular Cai Nong No. 11 of 2005 
Comprehensive subsidies 
for agricultural inputs 2006 Financial 
appropriations General Office of the State Council Circular Guo Ban 
Fa No. 16 of 2006 MOF Circular Cai Jian No. 1 of 2009  
Direct subsidy to farmers 2004 Financial 
appropriations State Council Circular Guo Fa No. 17 of 2004  
Fund for agricultural comprehensive development 1988 Financial 
appropriations MOF Decree No. 60
 
Fund for specialized economic 
cooperatives of farmers 2003 Financial 
appropriations MOF Circular Cai Nong No. 87 of 2004 
MOF Circular Cai Nong No. 156 of 2013 
Fund for subsidizing the training of the 
rural migrant labour force 2004 Financial 
appropriations MOF Circular Cai Nong No. 18 of 2005 
Subsidy fund for transforming 
agricultural scientific achievements and 
promoting technical services 1999 Financial 
appropriations MOST Circular Guo Ke Ban Cai Zi No. 417 of 2001  
MOF Circular Cai Nong No. 81 of 2004 
MOF Circular Cai Nong No. 31 of 2014 
Subsidy fund fo r small farmland water 
conservancy facilities and national key construction projects on water and soil 
conservation 1983 Financial 
appropriations MOF Circular Cai Nong No. 335 of 2009 
MOF Circular Cai Nong Zi No. 54 of 2012 
Subsidy for disaster prevention and 
relief in agricultural production  2001 Financial 
appropriations MOF Circular Cai Nong No. 232 of 2001 
MOF Circular Cai Nong No. 3 of 2013 
Subsidy for prevention from and control of pests and disease in 
forestry 1980 Financial 
appropriations MOF Circular Cai Nong No. 44 of 2005 
Subsidy fund for agricultural resources 
and ecological protection  1984 Financial 
appropriations MOF Circular Cai Nong No. 139 of 2004 
MOF Circular Cai Nong No. 32 of 2014 
                                               
17 These products are: bezoar, blac k moss, bones, ivory, musk, some plants used to make perfumes 
(2 HS tariff lines), and some plants for medicinal use (WTO (2014), Trade Policy Review – China , Geneva). 
18 These products are: some products of animal origin, beverages (e.g. mineral water and alcoholic 
spirits), raw fur skins, and silk-worm cocoons (WTO (2014), Trade Policy Review – China , Geneva). 
19 China's most recent notification regarding do mestic support covers the period 2009-2010 (WTO 
document G/AG/N/CHN/28, 6 May 2015). 
20 WTO document G/SCM/N/220/CHN, G/SCM/N/ 253/CHN and G/SCM/N/284/CHN, 30 October 2015. WT/TPR/S/342 • China 
 
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  Description  Starting 
year Form 
of subsidy Legal basis 
Preferential tax policies for enterprises 
engaged in projects of preliminary processing of agricultural, forestry, animal, and fisheries products 2008 Enterprise 
income tax exemption and reduction Law of the People's Republic of China on Enterprise 
Income Tax (2007) Regulations for the Implementation of the Law of the People's Republic of China on Enterprise Income Tax (2007) 
MOF Circular Cai Shui No. 149 of 2008 
Preferential tax policies for the imports 
of China Grain Reserves Corporation 2009 Import VAT 
exemption MOF Circular Cai Guan Shui No. 16 of 2011 
MOF Circular Cai Guan Shui No. 33 of 2011 
Preferential tax treatment for tea sold 
in the border areas 1994 VAT exemption  MOF Circular Cai Shui No. 60 of 1994 
MOF Circular Cai Shui No. 71 of 2001 
MOF Circular Cai Shui No. 103 of 2006 
MOF Circular Cai Shui No. 141 of 2009 MOF Circular Cai Shui No. 89 of 2011 
Preferential tax treatment for imported 
products for the purpose of replacing 
the planting of poppies 2000 Tariff and 
import VAT 
exemption MOF Circular Cai Shui No. 63 of 2000 
Preferential tax policies on imports of seeds (seedlings), breeding stock (fowl), fish fries (breeds) and wild 
animals and plants kept as breeds 
during the period of the "11
th Five-Year 
Plan" and "12th Five-Year Plan" 2006 Import VAT 
exemption MOF Circular Cai Guan Shui No. 3 of 2006 
MOF Circular Cai Guan Shui No. 9 of 2011  
Source: WTO document G/SCM/N/220/CHN, G/SCM/N/253/CHN and G/SCM/N/284/CHN, 30 October 2015. 
4.18.  Support to agriculture continues to be  granted mainly through the "four subsidies" 
programmes: the Direct Subsidy to Farmers (i.e. rice, wheat and corn); the Comprehensive 
Subsidy for Agricultural Inputs; the Subsidy for Promoting Superior Strains and Seeds; and the 
Subsidy for Purchasing Agricultural Machinery and Tools. According to the authorities, the most important support programme is the Subsidy for Purchasing Agricultural Machinery and Tools 
programme; however, in terms of expenditures th e Comprehensive Subsidy for Agricultural Inputs 
programme is more important (Table 4.5). In 2008 budgetary transfers for this programme more than doubled and have continued to increase each year to reach RMB 107.8 billion by 2012, to 
remain unchanged thereafter.
21 The authorities have noted that the outlays for this programme 
have remained unchanged since 2012 because the price of inputs has remained stable.  
Table 4.5 Outlays for agricultur al support programmes, 2011-15 
(RMB million) 
 2011  2012  2013 2014 2015  
Direct Subsidy to Farmers 15,100  15,100  15,100 15,100 ..  
Comprehensive Subsidy for Agricultural Inputs 83,500  107,800  107,800 107,800 .. 
Subsidy for Promoting Superior Strains and Seeds  21,948  21,903  21,585 21,445 ..  
Subsidy for Purchasing Agricultural Machinery and Tools  17,500  21,500  21,755 23,645 23,645  
Fund for Agricultural Comprehensive Development  23,000  29,000  32,852 36,071 38,767  
Fund for Specialized Economic Cooperatives of Farmers  700 850 1,850 2,000 .. 
Fund for Subsidizing the Training of Rural Migrant Labour Force  1,100  1,100  1,100 1,100 1,186  
Subsidy Fund for Transforming Agricultural Scientific Achievements 
and Promoting Technical Services 6,100  10,100   10,908 12,354 15,354  
Fund for Interest Discount of Loans for the Purpose of Agricultural 
Water-Saving Irrigation 50 n.a. n.a. n.a. n.a.  
Subsidy Fund for Small Fa rmland Water Conservancy Facilities and 
National Key Construction Projects on Water and Soil Conservation 13,000  22,308  19,308 23,108 44,806  
Fund for Disaster Prevention and Relief in Agricultural Production  4,130  4,805  4,220 3,227 3,487  
Subsidy for Prevention from and Control of Pest and Disease in 
Forestry 200 200 200 200 200 
Subsidy Fund for Agricultural Resources and Ecological Protection  13,728  15,428  16,375 18,315 20,325  
.. Not available. 
n.a. Not applicable. Source: WTO document G/SCM/N/220/CHN, G/SCM/N/253/CHN and G/SCM/N/284/CHN, 30 October 2015; 
and information provided by the authorities. 
4.19.  The Direct Subsidy to Farmers programme was introduced in 2004 and is still in place. 
Subsidies are paid at a flat rate per unit of land planted. The payment is provided to the person who holds the contract rights to the land, not to the person who cultivates the land. In general, 
                                               
21 WTO (2014), Trade Policy Review – China , Geneva; and WTO document G/SCM/N/220/CHN, 
G/SCM/N/253/CHN and G/SCM/N/284/CHN, 30 October 2015. WT/TPR/S/342 • China 
 
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  the rate is RMB 10-15 per mu (i.e. 0.06 ha) but it may vary according to the locality.22 The 
programme is administered at the provincial le vel and the amount of the subsidy granted may 
vary. However, government outlays for dire ct payments have remained unchanged at 
RMB 15.1 billion per year since 2012, as according to the authorities the number of beneficiaries 
and the amount of land that they hold, has not changed.  
4.20.  Subsidies remain in place to purchase inputs, improved crop strains, agricultural machinery, 
and tools. These subsidies are centrally funded but the provincial governments formulate the 
implementation procedures, which vary according to local conditions; as a result, there is no 
general rule regarding its application. The objective of the centrally funded Comprehensive Subsidy on Agricultural Inputs, introduced in 2006, is to compensate grain producers for any increase in the price of agricultural inputs, such as fertilizer and diesel fuels; however, it is 
implemented as a payment per unit of land, and it is not linked to the cost of production.
23 
Budgetary transfers for this programme have remained unchanged since 2012 at RMB 107.8 billion. The Subsidy for Promoting Superior Strains and Seeds scheme introduced 
in 2002 to improve the quality of seeds and lives tock covers: cotton, maize, rice and wheat 
throughout China, and soya beans, rapeseed, cotton, potatoes, highland barley and peanuts, in specific areas of the country. Livestock covere d by the scheme includes: pigs, beef cattle and 
sheep. The scheme has been extended continuously  to cover larger areas of the country. The 
application of the subsidy varies according to the type of seed. The cost of this programme has decreased since 2012 from RMB 21.9 billion to RMB 21.4 billion in 2014 (Table 4.5). 
4.21.  The purchase of agricultural machines and tools listed in the Catalogue of State Supported 
and Promoted Products or in the Catalogue of Provincially Supported and Promoted Products is 
subsidized at rates between 20% and 30% of the sale price under the Subsidy for Purchasing Agricultural Machinery and Tools scheme. In 201 5, the number of items eligible for a subsidy 
decreased to 137 from 175 in 2014.
24 The list includes machinery used to produce: grains, cotton, 
oilseeds, and sugar, as one of the goals of the programme is to increase the level of mechanization in the production of these products; as well as, for animal husbandry, fisheries, horticulture, and 
for primary processing of agriculture products. Qualified farmers (including herdsmen and 
fishermen), farm workers, and rural production entities engaged in agriculture can apply for a subsidy when purchasing the listed goods.
25 This scheme applies throughout China, and may vary 
from province to province but not within a province. During the 2011-2014 period annual 
disbursements under this programme increased (Table 4.5). 
4.22.  The authorities noted that none of these programmes have undergone major reforms during 
the period under Review; however, China is in the process of restructuring its overall agricultural 
subsidy policy. The aim of this reform is to protect the land and attain food security. In 2015, a 
pilot programme to reform agricultural subsidies was implemented in five provinces (Anhui, Shandong, Hunan, Sichuan and Zhejiang) (Table 4.6).
26 The reform consists in combining three 
subsidies (i.e. the Direct Subsidy to Farmers, the Subsidy for Promoting Superior Strains and 
Seeds, and the Comprehensive Subsidy for Agricultural Inputs) into one programme, the Agriculture Support and Preservation Subsidy, which will have two separate components and is aimed at using funds in a more efficient manner. The funds that were formerly allocated to the 
three separate subsidy programmes will be allocated to the new programme, which aims at 
protecting the quality of agricultural land and supporting production in moderate-scale operations. The Subsidy for Purchasing Agricultural Machinery and Tools will remain in place. This reform 
seems consistent with China's overall agricultural policy goal of supporting mechanization and 
moderate-scale operations and the ongoing reform of farmers' land contract rights.  
                                               
22 The amount of the subsidy is determined accordin g to the agricultural taxable area, taxable regular 
production, amount of land planted wi th grain (i.e. rice, wheat and corn), or the amount of the grain that 
farmers' sell (State Council Circular, Guo Fa [2004] No. 17, 23 May 2004. Viewed at: http://www.gov.cn/gongbao/content/2004/content_62827.htm .) 
23 WTO (2012), Trade Policy Review - China , Geneva. 
24 MOF and MOA, 2014 Implementation of Farm Mach inery Purchase Subsidy Guidance. Viewed at: 
http://www.moa.gov.cn/govpublic/CWS/201402/t20140213_3757630.htm . 
25 Nong Ban Cai [2015] No. 6, 27 January 2015. Viewed at: 
http://www.moa.gov.cn/govpublic/CWS/201501/t20150129_4356487.htm .  
26 MOF Cai Nong [2015] No. 31, Guiding Opinions on Adjusting and Improving Three Agricultural 
Subsidy Policies. Viewed at: http://www.mof.gov.cn/pub/gansu/lanmudaohang/zhengcefagui/201505/t20150522_1237885.htm. WT/TPR/S/342 • China 
 
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  Table 4.6 Agriculture Support and Preservation Subsidy 
General 
guidelines Farmland subsidy  Moderate-scale operations subsidy  
Beneficiary Resources  Beneficiary  Resources  
MOF MOAa 
Cai Nong [2015] 
No. 31 Farmers who have 
farmland contract 
rights  80% of the funds allocated 
to the Comprehensive 
Subsidy for Agriculture 
Inputs, Direct Subsidy to 
Farmers, and Subsidy for 
Promoting Superior Strains 
and Seeds programmes will 
be allocated to programmes 
to protect farmland Moderate-scale 
operators (grains), 
family farmland, 
farmers' cooperatives, 
and agriculture social 
service organizations 20% of the funds 
allocated to the 
Comprehensive Subsidies 
for Agricultural Inputs 
will be allocated to 
programmes to support 
moderate-scale 
operations 
Pilot 
programmes 
(Provinces) Farmland subsidy  Moderate-scale operations subsidy  
Beneficiary Type of subsidy Beneficiary Type of subsidy 
Anhuib  
Wan Zheng Ban 
[2015] No. 61 Farmers who have 
farmland contract 
rights  Allocation of funds is 
determined by the area of 
land farmed .. .. 
Shandongc  
Lu Cai Nong 
[2015] No. 26 Farmers (wheat) Allocation of funds is 
determined by the area of 
land farmed. Minimum 
grant: RMB 125/mu. Farmers (grains) and 
family farms  Direct payment: 
RMB 60/acre for farms 
between 50-120 acres; 
and RMB 12,000 for 
farms > 120 acres 
Hunand 
Xiang Zheng 
Ban Fa [2015] No. 72
 Farmers who have 
farmland contract 
rights, and who 
farm grains Allocation of funds is 
determined by land farmed 
and type of crop. 
For one season (winter or 
spring) crop the grant is 
RMB 105/mu per year.  
For a winter and spring rice 
the grant is RMB 175/ mu 
per year Moderate-scale 
operation farmers or 
entities (grains), family 
farmland, farmers' 
cooperatives, agriculture 
social service 
organizations Support measures 
include: direct cash 
subsidy; improving 
agriculture financing and 
credit guarantee scheme; 
provision of subsidized 
loans; support to build 
agriculture infrastructure, 
use of technology and 
other services; support to 
family farmland and to 
facilitate land transfer  
Sichuane 
Chuan Nong Ye 
[2015] No. 50 Farmers who have 
farmland contract 
rights, and who 
farm grains Allocation of funds is 
determined by the area of 
land farmed Moderate-scale 
operators: grains (e.g. 
wheat, rice, maize), 
potatoes, soybeans, 
barley, and buckwheat; 
farmers; family 
farmland; farmers' 
cooperatives; agriculture 
social service 
organizations; and 
leading enterprises Subsidies include: grant; 
subsidized loan; and 
subsidies to obtain 
technology or other 
services 
Zhejiangf 
Zhe Cai Nong [2015] No. 149
 Farmers who have 
farmland contract 
rights, and who 
farm grains  Allocation of funds is 
determined by the area of 
land farmed Farmers' associations; 
farmers with farms > 50 
acres (e.g. rice, wheat, 
and barley); family 
farms; and farmers' 
cooperatives Direct subsidy to 
farmers; and support to 
agriculture social service 
institutions 
.. Not available.  
a Ministry of Finance, Ministry of Agriculture, Cai Nong [2015] No. 31, 13 May 2015. Viewed at: 
www.mof.gov.cn/pub/gansu/lanmudaohan g/zhengcefagui/201505/t20150522_1237885.html .  
b General Office of Anhui Province Government, Wan Zheng Ban [2015] No. 61, 7 November 2015. 
Viewed at: http://www.ahsj.gov.cn/views/show/34197.htm .  
c Department of Finance and Department of Agricu lture of Shandong Province, Lu Cai Nong [2015] 
No. 26, 17 June 2015. Viewed at: http://www.zgsxzs.com/a/news/zhaoshangdongtai/shengquzhengce/2015/0626/696465.html . 
d General Office of Hunan Province Government, Xiang Zheng Ban Fa [2015] No. 72, 10 September 
2015. Viewed at: http://www.hunan.gov.cn/2015xxgk/fz/zfwj/szfbgtwj/201509/t20150915_1878034.htm . 
e Department of Agriculture and Department of Finance of Sichuan Province, Chuan Nong Ye [2015] 
No. 50, 25 May 2015. Viewed at: http://www.scagri.gov.cn/scxmgov/auto540/201506/t20150601_3080.html .  
f Department of Finance and Department of Agricu lture of Zhejiang Province, Zhe Cai Nong [2015] 
No. 149, 4 August 2015. Viewed at: http://xcepaper.zjol.com.cn/html/2015-
10/22/content_6_1.htm . 
Source: WTO Secretariat. WT/TPR/S/342 • China 
 
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  4.1.3.2.2  Price controls and marketing 
4.23.  China has gradually liberalized the price of most agricultural products. Agricultural products 
classified as key reserve materials (i.e. grains, cotton, edible vegetable oil (materials), sugar, and silk), and tobacco leaf, whose prices were controlled in the past, have been removed from the new 
Catalogue of Government-set Prices and Government-guided Prices.
27 Despite the removal of price 
controls on tobacco leaf, by law the State continues to hold the monopoly to administer the right to produce, manufacture, sell, transport, and im port and export tobacco and tobacco products.
28 
Imports and exports of tobacco are still subject to  state trading. Private entities may import or 
export these products under a licence issued by the State Tobacco Monopoly Administration/China 
National Tobacco Corporation (Section 3.3, Tables 3.17 and 3.18). The purchase of tobacco leaf is 
also controlled; it is based on plans drawn up by  the planning department of the local people's 
government. Similarly, the allocation of tobacco leaf and re-dried tobacco leaf amongst the 
provinces and other jurisdictions takes place according to a plan designed by the planning department of the State Council. The total annual  production of cigarettes and cigars by each 
province and other jurisdictions is also determined by a plan. 
4.24.  A minimum procurement price scheme remains in place for rice and wheat in major 
producing areas. Minimum prices for grains (i.e. rice and wheat) continue to be set by the NDRC 
on a yearly basis, in consultation with the Ministry of Agriculture and other governmental 
institutions. The minimum price for rice and wheat increased during 2012-2014, due to an increase in production costs, but remained unchanged in 2015. The state-owned company Sinograin, purchases grains when the market price falls be low the established support level. The minimum 
procurement price scheme for grains is linked to the volume of China's grain reserves; the 
minimum-price system is in place to ensure a stable supply of grains. Grain reserves of maize, rice, soya beans and wheat are maintained by centra l and local authorities to ensure food security. 
According to the authorities, the purchase of the reserves is carried out by appointed enterprises 
at market prices or at the minimum procurement prices set by the Government.  
4.25.  In 2014, China stopped its stockholding programme for cotton. This programme resulted in 
an increase in the domestic price of cotton paid to farmers to above international prices, and led 
farmers to sell most of their production to the State.
29 As a result, state reserves increased to 
levels beyond annual domestic demand, which triggered a reform of the policy. The former system was replaced, on a pilot basis in the Xinjiang Autonomous Region, by a mechanism that sets a 
target price for cotton; this price was RMB 19,800 per tonne in 2014 (RMB 19,100 per tonne 
in 2015).
30 Through the new mechanism, if the market  price falls below the target price, the 
central government provides a subsidy to cotton farmers, the amount of which depends on the 
land farmed (which is given a weight of 60% in the calculation of the subsidy) and the amount of 
cotton sold for processing in the domestic market (a weight of 40%).31 In 2015, the cotton subsidy 
was extended to nine other provinces.32 However, it is not clear what form of subsidy applies in 
these provinces, it seems that a target price has also been established.33  
                                               
27 NDRC Document [2015] No. 29, 8 October 2015 (came into effect on 1 January 2016). Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/201510/t20151020_755152.html .  
28 Products subject to this control are the so-called "tobacco monopoly commodities", which include: 
cigarettes, cigars, cut tobacco, redried le af tobacco, leaf tobacco, cigarette pa per, filter rods, cigarette tow, and 
equipment to manufacture cigarettes (Tobacco Monopoly Law (24 April 2015). Viewed at: http://www.tobacco.gov.cn/html/27/2701/270101/4830381_n.html ). 
29 Imports and exports of cotton are subject to state trading. 
30 Cotton Target Price Reform Pi lot in Progress. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbtz/201404/t20140415_607179.html . 
31 The Interim Measures on Administration of Fund  for Xinjiang Cotton Target Price Reform Pilot 
Subsidy. Viewed at: http://www.xjjh.gov.cn/zwgk/xzfxxgkml/czxx/cdxm/f59e4d28_2d31_4af8_8efd_36930fff8166.htm. 
32 These are: Shandong, Henan, Hebei, Hubei, Huna n, Jiangsu, Jiangxi, Gansu, Anhui and Tianjin. 
Viewed at: http://www.cncotton.com/sy_59/gnmh_1388/rdxw/201511/t20151120_554754.html . 
33 Henan online information. Viewed at: http://www.1633.com/policy/zhuanti/view-10680508-1.html ; 
Hebei online information. Viewed at: http://www.tuliu.com/read-11746.html ; Hubei online information. Viewed 
at: http://www.texindex.com.cn/Articles/2015-3-24/330704.html ; Hunan online information. Viewed at: 
http://www.hn315.gov.cn/business/htmlfiles/hnzjj/s42/201510/32546.html ; Jiangsu online information. 
Viewed at: http://www.jscz.gov.cn/pub/jscz/xxgk/gkml/201505/t20150528_75680.html ; and Jiangxi online 
information. Viewed at: 
http://www.jxdpc.gov.cn/departmentsite/jmc/tztg/gztz/201502/t20150205_115865.htm . WT/TPR/S/342 • China 
 
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  4.26.  A similar subsidy programme was put in place, in 2014, for soya beans in four provinces: 
Inner-Mongolia, Liaoning, Jilin and Heilongjiang. In 2014 the target price for soya beans was RMB 4,800/tonne.
34 
4.1.3.2.3  Other measures 
4.27.  China introduced a subsidized agricultural insurance scheme in 2007, which has grown in 
importance since then. Under this programme, insurance premiums are subsidized by the central and local governments so that farmers pay only a balance of 20-30% of the premium.  
4.28.  In addition to the support granted to rura l households through the access to insurance, the 
People's Bank of China (PBOC) has continued to take measures to increase financial deepening in rural areas by promoting innovation of rural financial products and services. The outcome of these and other policies has been that agriculture-related loans have increased. In 2014, agriculture-
related loans accounted for 28% (26.5% in 2015)  of the total loans of the banking system, 
amounting to RMB 23.6 trillion (RMB 26.3 trillion in 2015), an increase of 13% year-on-year.
35 In 
addition, the PBOC has set benchmarks on new deposits granted by financial institutions at the 
county-level. If these benchmarks are reached, the institutions may benefit from lower reserve 
requirement ratios and if the benchmarks are exceeded, fiscal incentives are granted, and more flexibility is allowed to restructure and write off non-performing agro-linked loans. As a result, in 
2014, the PBOC reduced by 0.5 percentage points  the reserve requirement for commercial banks 
that met its prudential requirements and reached a certain ratio in their lending to agriculture, rural areas and farmers.
36 In addition, to further increase the provision of credit to agriculture, 
rural areas and farmers, the PBOC introduced in 2014 and 2015 a new category of "credit policy 
supporting central bank loans", including agriculture-supporting loans (Section 1). 
4.2  Services 4.2.1  Telecommunications services 
4.2.1.1  Statistical overview  
4.29.  The main economic characteristics of th e telecommunications sector in China and their 
recent evolution are described in Box 4.1.  
Box 4.1 Economic characteristics and evol ution of the telecommunications sector 
Penetration rates (2014) 
 
Total telephone subscribers: 1.536 billion (112.8 telephones per 100 inhabitants) 
Mobile phone subscribers (% tot. tel. subscribers): 1.286 billion (83.8%) 
Internet users (per 100 inhabitants): 649 million users (47.9%) 
Broadband internet subscribers (per 100 inhabitants): 200.48 million  
Main players 
 
Number of companies providing value-added telecom services (2014): 24,001, of which 34 Sino-foreign 
equity joint ventures holding telecom business licences. 
 
Names and market shares of the leading companies for fixed telecom services (2014): China Telecom: 
65.2%; China Unicom: 28.3%; China Mobile: 6.5%  
 
Name and market shares of the leading compan ies for mobile telephone services (2014): China 
Mobile: 67.7%; and China Unicom: 17.9%; China Telecom: 14.4% 
 
                                               
34 Guiding Opinions on Soybean Target Price Subsidy, Cai Jian [2014] No. 695. Viewed at: 
http://jjs.mof.gov.cn/zhengwuxinxi/zhengcefagui/201411/t20141128_1161139.html . 
35 Guo, Pei (2015), Agriculture Finance for Sustaining Food Security. Viewed at: 
http://www.fao.org/fsnforum/sites/defa ult/files/files/120_FSN_APEC/Sep_9a.pdf ; and information provided by 
the authorities. 
36 People's Bank of China (2015), Annual Report 2014 . Viewed at: 
http://www.pbc.gov.cn/eportal/fileDir/image_public/UserFiles/english/upload/File/ 人民银行2014英文年报6.15定
稿.pdf. WT/TPR/S/342 • China 
 
- 125 - 
 
  Name and market share of the broadband internet se rvices providers (2014): China Telecom: 63.2%; China 
Unicom: 33.1%; China Mobile: 3.7% 
 
Foreign ownership participation in telecom companies: 
 For basic telecom services, the foreign equity ra tios of China Telecom, China Mobile and China 
Unicom are 17.15%, 25.93% and 25.31% respectively.  
 In value-added telecom services, 34 foreign-invested enterprises obtained telecom business licences, 
with foreign equity ratio ranging from 15% to 100%. Foreign investment was mainly from: Hong 
Kong, China; Chinese Taipei; Republic of Korea; Japan; Singapore; the United States; Germany; 
Ireland; and Finland. 
State ownership: 
In the field of basic telecom services, the state-owned equity ratios of China Telecom, China Mobile and China 
Unicom are 70.89%, 74.07% and 63.33% respectively. 
Establishment of new companies, mergers or closures since the last Review 
 No new entrants for ba sic telecom services 
 3,186 new companies since 2012 (2012: 20,815 companies; 2014: 24,001 (i.e. +15.31%)), 
licensing being open-ended.  
Source: Information provided by the Chinese authorities.  
4.2.1.2  Regulatory framework 
4.30.  The regulatory framework for telecommunication services in China has been described in 
detail in recent Trade Policy Review reports and has only marginally changed since the last Review.
37 The main changes concern the following areas: free trade agreements, interconnection, 
facility sharing, number portability, spectrum  management, pricing and universal service. 
4.31.  The Ministry of Industry and Informat ion Technology (MIIT) and the administrative 
departments in charge of telecommunications in all provinces, autonomous regions and 
municipalities, directly under the Central Government, remain the regulators of the 
telecommunications and information service market. During the period under review, a new regulation was promulgated, the Measures for Administration of Short Message Services (Ministry 
of Industry and Information Technology Order No . 31 of 19 May 2015) which aims at standardizing 
the provision of telecommunication short message services, safeguarding the lawful rights and interests of users, and promoting the healthy de velopment of the short message service market. 
4.32.  The 2015 Investment Catalogue, which entered into force in April 2015, eliminated 
electronic commerce businesses run by foreign-invested telecom companies from its restricted 
category. In addition, the Notice of Liberalization of Foreign Shareholding Ratio in Online Data Processing and Transaction Processing Business (operational electronic commerce) issued by the 
MIIT in June 2015 eliminated the foreign shareholding ratio limit for online data processing and 
transaction processing businesses ("operational electronic commerce") nationwide, which can now be up to 100%. 
4.33.  In order to adapt to technological developments and to the emergence of new 
telecommunications businesses and services, the Catalogue of Telecom Business Classification  was 
revised and a new version was issued in December 2015. The Catalogue of Telecom Business Classification  (2015 version) defines the characteristics and scope of all kinds of 
telecommunications businesses and services and does not deal with foreign ownership ratios. The 
authorities underlined that all the telecommunications businesses included in China's WTO accession commitments have corresponding business classifications in the 2015 version of the 
catalogue.  
4.34.  In the China (Shanghai) Pilot Free Trade Zone (CSPFTZ), one activity, online data 
processing and transaction processing services for e-commerce ("operational electronic 
                                               
37 Notably in 2014: WT/TPR/S/300/Rev.1, paragraphs 4.37 to 4.47; in 2012: WT/TPR/S/264/Rev.1, 
paragraphs 165 to 204; and 2010: WT/TPR/S/230/Rev.1, paragraphs 83 to 98.  WT/TPR/S/342 • China 
 
- 126 - 
 
  commerce"), was further liberalized as the maximum foreign shareholding participation allowed 
previously of 55% was raised to 100% in January 2015. 
4.35.  Regarding preferential agreements, five ou t of the six FTAs signed by China during the 
period under review contain supplementary commitments on telecommunications as compared to 
China's GATS commitments. This is in particular the case for the agreements on Achieving Basic 
Liberalization of Trade in Services in Guangdong and Hong Kong, China on the one hand and Macao, China on the other hand, as well as for the new agreements between mainland China and 
Hong Kong, China and Macao, China on services signed in November 2015. These wide–ranging 
agreements contain substantial further liberalization commitments. That is also the case for the FTA signed with Australia in June 2015, which entered into force on 20 December 2015. This agreement contains two supplementary telecommunications commitments as compared to China's 
GATS commitments regarding: a) the permission to  set up either Australian-Chinese joint ventures 
or wholly owned enterprises in the CSPFTZ in  order to undertake the following value-added 
telecommunication services: information services (a pp store only), store and forward services, call 
centres and domestic multi-party communications; and b) the permission to set up joint ventures 
(with a participation of no more than 55%) to undertake online data and transaction processing for profit e-commerce, a liberalization already available erga omnes  since March 2014 in the context 
of the establishment of the CSPFTZ. The Republic  of Korea-China agreement does not contain any 
supplementary commitments regarding telecommunications as compared to China's GATS commitments.  
4.36.  There were some regulatory changes with respect to interconnection during the period 
under review. The 2000 Regulations on Telecomm unications were amended by the Provisions on 
the Management of Interconnection between Public  Telecom Networks issued on 15 August 2014. 
The amendment to the Regulations eliminates th e filing obligation for network interconnection 
agreements and mandates that the interconnection between telecom networks be based on the 
principles of technological feasibility, economic rationality, equity, cooperation and coordination. In accordance with the Regulations, the leading telecom business operator (i.e. China Telecom in 
Southern China and China Unicom in Northern China) has the obligation to provide other telecom 
business operators with interconnection, and must formulate and submit its Rules of Interconnection to the MIIT for approval before implementation. The direct interconnection between the telecom networks of two non-dominant business operators must be negotiated 
between the two parties. The telecommunications authorities are responsible for the regulation 
and administration of telecom interconnection as well as for the coordination and settlement of disputes. Since the last review, the MIIT has not received any interconnection-related complaints 
from operators. In addition, in 2014, the MIIT optimized the
 architecture for the interconnection of 
telecom networks by setting up seven new backbone direct connection points in addition to the three existing ones in Beijing, Shanghai and Guangzhou.  
4.37.  There were some developments with respect to facility sharing during the review period. 
In 2014, China Telecom, China Mobile and China Unicom deepened their facility-sharing cooperation by jointly sponsoring and establishing China Tower Co., Ltd. to carry out the construction, maintenance and operation of communication towers. 
4.38.  The authorities also took some steps toward the provision of local loop unbundling in the 
review period. The Notification to Open the Br oadband Access Market to Private Capital (MIIT 
Notification No. 577, 2014) issued by MIIT in De cember 2014 provides that pilot wired access 
facilities service providers can engage in the re ntal of access network elements. Internet access 
service providers in China can provide Internet access services to users by renting the network 
resources from basic telecommunications companies and wired access facilities service providers, 
so as to provide local loop unbundling.
38 
4.39.  There were also developments with respect to number portability. As a first step in this 
area, the MIIT had carried out a number portability experiment in Tianjin and Hainan Province in November 2010, and expanded the experiment in  July 2013. In May 2014, the change from one-
way to two-way number portability was completed in the Hainan Province, marking the official 
availability of two-way number portability services to local mobile phone subscribers. Pilot number portability services started to be provided to mobile phone subscribers in Jiangxi, Hubei and 
                                               
38 Local loop unbundling is classified in the  Catalogue of Telecom Business Classification (2015 version), 
under the name of "wired access facilities services". WT/TPR/S/342 • China 
 
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  Yunnan Provinces on 20 September 2014. By th e end of May 2015, number portability services 
had been used by more than 300,000 subscribers in five provinces. 
4.40.  Measures were adopted during the review period to liberalize price determination in 
telecommunications. On 15 August 2014, the State Council issued a Resolution to abolish the 
requirement of examination and approval of tele communications services pricing. The coexistence 
of government-guided prices, government-set prices and market-adjusted prices was entirely replaced by market-adjusted prices taking into consideration factors such as production and 
operation costs and supply and demand on the telecommunications market.  
4.41.  Table 4.7 provides the Internationa l Telecommunication Union price baskets for 
telecommunications in China for 2008-2014. 
Table 4.7 ITU price baskets for China, 2008-14 
(US$) 
 2008 2009  2010  2011  2012 2013 2014  
Fixed-telephone sub-basket 3.74 2.26  4.69 3.9 4.9 4.80 4.85  
Mobile-cellular sub-basket 3.6 3.71 6.02 5.3 2.3 4.04 4.07 
Fixed-broadband sub-basket 18.5 
512 kbit/s 17.62  
512 kbit/s 17.82  
512 kbit/s 17.8 
512 kbit/s 23.2 
1 Mbit/s 19.37 
1 Mbit/s 19.53  
1 Mbit/s 
Source: ITU World Telecommunication/ICT Indicators database. 
4.42.  The regulatory framework applied by the MI IT regarding licensing did not change during the 
period under review. Licensing is regulated by State Council Decree No. 291 on Regulations on 
Telecommunications, State Council Decree No. 534 on the Provisions on the Administration of Foreign-Invested Telecom Enterprises and Ministry of Industry and Information Technology Order 
No. 5 on the Administrative Measures for the Licensing of Telecom Business Operations. By the 
end of 2014, five enterprises had obtained a basi c telecom business licence (China Telecom, China 
Mobile, China Unicom, CITIC Application Services Providers, and China Satellite 
Telecommunications) and 24,001 enterprises had obtained a value-added telecom business 
licence. In May 2015, MIIT launched a trial programme for Mobile Virtual Network Operators (MVNO) licences in order to improve policies and promote competition in the mobile communications market. By the end of 2015, 42 such licences had been issued, with over 
20.5 million users. 
4.43.  Progress was made during the review period with respect to the provision of universal 
services. By the end of 2014, telephone networks  and broadband networks covered all towns in 
rural areas of China while telephone networks covered all administrative villages and 95.8% of 
natural villages, and broadband networks covered 93. 5% of administrative villages. The next goal 
is for the broadband networks to cover 98% of ad ministrative villages by the end of 2020. The 
Government formulates plans for universal services and organizes their implementation according 
to the needs of rural development and the capacity  of telecom enterprises. The three providers of 
basic telecom services (China Telecom, China Mobile and China Unicom) carry out the plans, build the required facilities and provide informatio n on communication services. While the telecom 
service providers bear the costs of construction, operation and maintenance of facilities used for 
universal services, the Government provides thes e enterprises with compensatory subsidies every 
year (RMB 350 million in 2014) according to the work they have completed. On 16 May 2015, the 
General Office of the State Council issued the Guiding Opinions on Speeding up Construction of the 
High-speed Broadband Network, Increasing Internet Speed and Reducing Internet Charges  (Guo 
Ban Fa No. 41, 2015), requiring the acceleration of improvements to the compensation mechanism 
for universal services with a focus on broadband. 
4.2.2  Financial services 4.44.  The financial services regime in China has been described in detail in previous Trade Policy 
Review (TPR) reports, notably in 2014, 2012 and 2010
39, and has remained largely unchanged.  
                                               
39 See WT/TPR/S/300/Rev.1, paragraphs 4.48 to 4. 84; WT/TPR/S/264/Rev.1, paragraphs 96 to 164; 
and WT/TPR/S/230/Rev.1, paragraphs 47 to 82. WT/TPR/S/342 • China 
 
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  4.2.2.1  Market overview 
4.45.  The main economic characteristics of China's financial services sector are described in 
Box 4.2. 
Box 4.2 Financial services: statistical overview 
General 
Share of GDP of financial services in:  
2013: 7%  
2014: 7.4%  
Employment: 
By the end of 2013: 5.38 million employees of which 3. 77 million in the insurance subsector and 308,000 in the 
securities, fund management and futures subsectors (245,000 in securities, 13,600 in fund management excluding 
private funds, and 49,300 in futures) 
Banking services 
Evolution of the number of financial institutions with legal personality: 
2010: 3,764; 2011: 3,798; 2012: 3,747; 2013: 3,948; 2014: 4,088 
Number and type of commercial banks (excluding policy banks and small financial institutions in rural areas):  
856 in 2014, including 5 major commercial banks; 12 joint stock banks; 133 urban commercial banks; 665 rural 
commercial banks; 89 rural cooperative banks; 1 post al savings bank; and 41 foreign-corporate banks. 
In addition, 66 foreign corporate banks from 26 countries and regions had set up 97 branches in China. 
Cumulative share of the top five banks: 
2013: 43.3%; 2014: 41%; 2015: 39.2% 
Balance sheet of foreign banks in China (including foreign corporate banks and branches of foreign corporate banks, 
2015: 
Assets: RMB 2.68 trillion, accounting for 1.35% of the total assets of banking financial institutions 
Liabilities: RMB 2.33 trillion, accounting for 1.27% of the total liabilities of banking financial institutions 
Lending activities: 
2012: RMB 67.29 trillion, of which domestic loans RMB 65.92 trillion (98%) and overseas loans RMB 1.37 trillion (2%) 
2013: RMB 76.63 trillion, of which domestic loans RMB 75.04 trillion (97.9%), and overseas loans RMB 1.59 trillion 
(2.1%) 
Securities activities: (securities, holding bonds, and stocks by commercial banksa: 
2014: RMB 20.52 trillion; 2015: RMB 25.29 trillion 
Insurance 
Number of insurance companies: 
2013: 143 companies of which: 71 life insurance companie s (of which 28 foreign invested insurance companies); 
64 non-life companies (of which 21 foreign invested insura nce companies); 8 reinsurance companies; and no captive 
companies 
2014: 149 companies of which: 74 life (of which 28 foreign insurance companies); 66 non-life (of which 22 foreign 
invested insurance companies); 9 reinsurance; and no captive companies 
Total balance sheet of the insurance sector: 
2013: RMB 8.130 trillion of which 83.95% life insurance; 13.46% non-life; 2.59% reinsurance 
2014: RMB 10.1 trillion of which 82.44% life insurance; 14.05% non-life; 3.51% reinsurance 
Total premiums: (RMB billion): 
2013: RMB 1,722.2 billion of which life insuranc e RMB 942.5 billion; non-life RMB 779.7 billion 
2014: RMB 2,023.5 billion of which life insurance RMB 1,090.2 billion; non-life RMB 933.3 billion 
Insurance density: (premiums per capita in US$): 
2012: 178.9 (of which 102.9 life; 76 non-life) 
2014: 235 (of which 127 life; 109 non-life) 
Insurance penetration premiums: (as % of GDP) 
2012: 2.96% (of which 1.7% life; 1.26% non-life) 
2014: 3.2% (of which 1.7% life; 1.5% non-life) 
Concentration (cumulative market share of the top five companies):  
2012: life insurance 70.16%; non-life 74.69% 
2014: life insurance 62.45%; non-life 74.65% WT/TPR/S/342 • China 
 
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  Pensions funds  
Number of firms providing commercial pension fund services (2012): 68 
Total assets (2012): RMB 131.9 billion 
Stock exchange and securities 
Capitalization of the companies listed: 
2013: RMB 23.91 trillion (i.e. 40.66% of GDP) 
2014: RMB 37.25 trillion (i.e. 58.53% of GDP) 
Gross value of publicly issued bonds: 
2013: RMB 281.38 billion (all issued by domestic borrowers) 
2014: RMB 136.5 billion (all issued by domestic borrowers) 
Gross value of non-publicly offered bonds: 
2013: RMB 120.5 billion 
2014: RMB 248.2 billion 
Market value of bonds under custody: 
2013: RMB 1.98 trillion  
2014: RMB 2.62 trillion 
Securities turnover on the stock exchange (secondary market, 2014): 
Total turnover of the A-share market: RMB 74.39 trillion 
Turnover of exchange-traded bonds (existin g bonds and repurchases): RMB 93.49 trillion 
Turnover of securities investment funds: RMB 1.99 trillion 
a Commercial banks include state-owned commercial  banks, joint-equity ba nks, urban commercial 
banks, rural commercial banks and foreign-invested banks. 
Source: Information provided by the Chinese authorities.  
4.2.2.2  Regulatory framework for banking 
4.46.  During the period under review, the ma in changes with respect to banking concern: 
preferential and bilateral policies, licensing regulations, credit cards and financial leasing regulatory frameworks, consumer finance, the investment catalogue, the Negative Lists that apply 
in Free Trade Zones (FTZ), anti-money launderin g measures, the bank deposit insurance scheme, 
prudential regulations, measures taken to tackle  systemic risks such as non-performing loans, 
local government special purpose vehicles, shadow banking and real estate bubbles.  
4.47.  Regarding preferential and bilateral policies, during the period under review China signed six 
new preferential agreement related to trade in se rvices including banking services. The Agreement 
on Achieving Basic Liberalization of Trade in Services in Guangdong with Hong Kong, China, and the Agreement on Achieving Basic Liberalization of Trade in Services in Guangdong with Macao, 
China. These agreements follow a hybrid approach different from  that of the previous Closer 
Economic Partnership Arrangements (CEPAs) and their supplements: a negative list to regulate restrictions related to commercial presence and a positive list for cross-border commitments in 
financial services. It is difficult to compare these commitments one-by-one with those of China 
under the GATS or under the previous CEPAs.  
4.48.  The FTAs with the Republic of Korea and Australia follow a more classical positive listing, 
GATS - like approach. The agreement with the Republic of Korea does not contain any new 
commitments regarding financial services as compared to GATS commitments. In the case of Australia, improvements include the reduction of the period of operation as a representative office in China required to set up operational foreign-funded banks, such as branches and subsidiaries, 
from three years to one year (in practice this requirement was eliminated on an MFN basis, see 
below); the right for branches established by an Au stralian bank in China to apply to engage in 
RMB business if one branch of the same bank has already obtained this permission; a removal of 
the minimum requirement on the amount of the non-callable operating capital allocated from an 
Australian subsidiary to each of its branches in China; and the right to engage in credit asset securitization on a national treatment basis. These commitments made by China to Australia 
reflect the Regulations of the People's Republic of China on Administration of Foreign-funded 
Banks.  WT/TPR/S/342 • China 
 
- 130 - 
 
  4.49.  The New Agreements on Trade in Services  between mainland China and Hong Kong, China 
and the agreement between the mainland China an d Macao, China, consolidate the concessions 
contained in the previous supplements to the CE PAs and in the agreements with the Guangdong 
Province, and adopt the hybrid structure of the latter agreements. The New Agreements on Trade 
in Services commit to additional liberalization in many sectors, including financial services, notably 
in terms of equity limitation and business scope. In respect to the CEPA 2015, the main 
improvement in banking services is to extend the application of the agreement from Guangdong 
Province to mainland China.  
4.50.  Regarding the licensing criteria for foreign banks, measures were adopted to facilitate 
market access. The provisions governing licensin g are contained in the 1995 Law of the People's 
Republic of China on Commercial Banks, amended in 2003, and are further detailed in the 
Regulations of the People's Republic of China on  Administration of Foreign-funded Banks. On 
20 December 2014, the State Council issued the Decision (Guo Ling) No. 657 on Amending the Regulations on the Administration of Foreign-Invested Banks, which came into effect from 
1 January 2015. The amended regulations, which constitute an autonomous liberalization as 
compared to China's WTO commitments, further ease market access for foreign banks and the requirements for them to conduct RMB business through three measures: a) the elimination of the 
requirement for the establishment of representative offices before setting up operating agencies; 
b) the lowering of the minimum operation period requirement for applying to conduct RMB business from three years to one year and the elimination of the two-year profit-making requirement; and c) the removal of the RMB 100 million minimum  working capital requirement for 
branches of foreign-invested banks with legal personality. 
4.51.  In addition, on 11 September 2014, the China Banking Regulatory Commission (CBRC) 
promulgated the Implementation Measures on Administrative Licensing Items for Foreign-Funded 
Banks (CBRC Order No. 6, 2014). These measures abolish the restriction imposing that a foreign-
funded bank may only apply for the establishment of one sub-branch in the same city at a time, 
and remove the minimum operating capital requirem ent for sub-branches of foreign-funded banks. 
Relevant rules concerning conditions and procedures for the issuance of debt instruments and 
capital supplement instruments by foreign-funded banks are incorporated into the measures in 
order to help these banks boost their capital. The measures narrow the scope of administrative licensing procedures and simplify them. Administrative examination and approval is no longer 
required for the following activities: starting electronic banking and debit card business for foreign-
investment banks, working capital and business  address changes by branches of operational 
institutions, the set-up of a self-service bank, the postponed set-up or opening of foreign-invested 
banks or their branches, the temporary closure and reopening of foreign-invested banks, the 
transfer of credit assets from the head office or affiliated banks to foreign-invested banks, and the 
use of interest-bearing assets by branches of fo reign banks. The measures also enhance prudential 
regulatory requirements by reinforcing reportin g obligations for shareholding transfers and by 
foreseeing regulatory visits, spot checking and inspections. 
4.52.  CBRC Decree No. 4 of 5 June 2014 specified the powers delegated to the local CRBC offices 
regarding the licensing and the monitoring of foreign-funded banks. As a result, most of the 
matters of foreign-invested banks not under direct administration that are subject to examination 
and approval, such as preparation for the establis hment and opening, increase of capital, changes 
of business scope, and establishment and change an d termination of representative offices, were 
delegated to local CBRC offices. 
4.53.  In a decision (Guo Fa No. 22, 2015) released on 22 April 2015, and applicable as of 
1 June 2015, China's State Council sets out the conditions and procedures for the market access of 
bankcard transaction clearing institutions.
40 The decision lists the requirements that need to be 
fulfilled by an application for setting up a bankcard clearing institution and conducting such business in China: 
 Organizations will be able to engage in bankcard clearing business after their 
applications are approved by the authorities and licences issued; 
                                               
40 State Council online information, "China regulates market access for bankcard clearing institutions". 
Viewed at: http://english.gov.cn/policies/latest_releases/2015/04/22/content_281475093816882.htm .  WT/TPR/S/342 • China 
 
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   The application requirements, covering various aspects, include a minimum of 
RMB 1 billion (US$161 million) of registered capital; 
 Applicants shall file applications with the PBOC for preparation of establishment. The 
PBOC will decide whether to approve the application within 90 working days after 
receiving it. Applicants must complete the preparatory work within one year after 
approval and cannot conduct clearing business during the period. Upon completion of the preparatory work, applicants must file an opening application with the PBOC, which will 
decide whether to approve the application within 90 working days of receiving it. 
Bankcard clearing service licences shall be granted upon approval of opening applications; 
 Applicants are required to officially start bankcard clearing services within six months of 
receiving the business permits; 
 Requirements are imposed on the organizations' business, including protecting the 
information they acquire from bankcard clearing services; 
 Overseas institutions that provide bankcard clearing services for clients in China should 
establish foreign-invested enterprises in the country according to law. If bankcard clearing services only take the form of providing foreign currencies for cross-border 
transaction, the establishment of a bankcard clearing service institution is not required; 
 Institutions that had already started business before the implementation of the decision 
were given a year to submit applications for business permits or report their operations to the competent authorities, failing which they lose the right to continue to conduct 
business. 
4.54.  On 13 March 2014, the China Banking Regulatory Commission (CBRC) released the newly 
amended Administrative Measures for Financial Leasing Companies (Order of China Banking 
Regulatory Commission No. 3, 2014), which modify the provisions on market-entry requirements, 
business scope, operation rules, supervision and administration of financial leasing companies. The new measures lower entry barriers for setting up a financial leasing company by abolishing the 
distinction between "chief investor" and "ordinary investor" and by providing that any institution 
that falls within five specific types of institutions (i.e. domestic and overseas commercial banks, domestic large manufacturers, overseas financial leasing companies, other domestic institutions and other overseas finance institutions) can apply to establish a financial leasing company as an 
initiator. Moreover, they require that at least one eligible commercial bank, domestic large 
manufacturer or overseas financial leasing company be among the initiators, with an investment share of no less than 30%. The new measures broaden the permissible business scope of financial 
leasing companies to include: purchasing and transferring financial leasing assets (and not only to 
commercial banks as required under the previous measures), accepting deposits (with terms of no less than three months) from non-bank shareholders, and investing in fixed income securities. The 
measures also allow financial leasing companies to establish branches and subsidiaries with CBRC's 
approval. Since the measures were promulgated an d up to end-October 2015, CBRC had approved 
the establishment of 22 financial leasing companies. 
4.55.  The 2015 version of the Investment Catalogue still places banking services in the 
"restricted" category (with the traditional meaning that investment above RMB 100 million must 
undergo an authorization procedure not implying necessarily an investment limitation). However, unlike the 2011 edition of the Catalogue, and in order to improve transparency, it explicitly spells 
out the pre-existing (2003) maximum foreign ownership limits set by financial services 
regulations, namely: a) that single overseas financial institutions and the affiliated parties under their control or joint control are only allowed to invest in not more than 20% of the shares of a 
single Chinese-funded commercial bank as promoters or strategic investors; b) that multiple 
overseas financial institutions and the affiliated parties under their control or joint control are only allowed to invest in a total of not more than 25% of the shares of a single Chinese-funded commercial bank as promoters or strategic investors; and c) that overseas financial institutions 
investing in rural small and medium-sized financial institutions must be banking financial 
institutions. These limits only apply to investment in pre-existing Chinese financial institutions; in the case of greenfield investment/establishment, institutions can be 100% foreign-owned.  WT/TPR/S/342 • China 
 
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  4.56.  Foreign investment in finance compan ies, currency brokerage companies, and trust 
companies remains in the restricted category. In practice, no investment limitations apply for the first two types of companies, as neither the Measures of the China Banking Regulatory Commission for the Implementation of Administrative Licensing Matters Concerning Non-bank Financial 
Institutions (Order of the China Banking Regu latory Commission No. 13, 2007) nor the amended 
Measures of the China Banking Regulatory Commiss ion for the Implementation of Administrative 
Licensing Matters Concerning Non-bank Financial Institutions (Order of China Banking Regulatory 
Commission No. 6, 2015), issued in June 2015, restri ct foreign investment in finance companies or 
currency brokerage companies. Limits do seem to apply in the case of trusts. Although the CBRC 
Measures for the Implementation of Administrative Licensing Matters Concerning Trust Companies (No. 5, 2015), amended in June 2015, do not explicitly restrict the proportion of a trust company's 
shares than can be held by offshore investors, CBRC Order No. 13, 2007 provides that a single 
offshore institution is allowed to have a maximum of 20% participation in a trust company.  
4.57.  There have been no changes in the scope an d the conditions of banking activities allowed in 
the CSPFTZ and in other free trade zones, but the liberalization of the licensing regime for foreign-
funded banks contained in the State Council Decision (Guo Ling) No. 657 of 20 December 2014 on Amending the Regulations on the Administration of Foreign-Invested Banks, which came into effect 
on 1 January 2015, also applies in the CSPFTZ. 
4.58.  The CBRC issued a number of regulations to strengthen prudential regulation in the second 
half of 2014 and kept improving its framework in a ccordance with the Core Principles of Effective 
Banking Regulation and based on the actual situation of the banking industry in China. For 
example, the CBRC organized stress tests for 19 banks in 2014, and issued the revised Guideline 
for Stress Tests of Commercial Banks in December 2014. CBRC also issued the Guidelines for the Consolidated Management and Regulation of Commercial Banks in December 2014 to further 
improve the framework for consolidated regulation.  
4.59.  Other recently issued prudential regulations include the revised CBRC Measures for the 
Administration of the Leverage Ratio of Commercial Banks (16 March 2015), the Circular on 
Matters Relevant to the Strengthening of the Administration of the Deposit Deviation Ratio of 
Commercial Banks by the CBRC, the CBRC Circular on Revising the Basis for Calculating the Loan 
to Deposit Ratios of Commercial Banks (30 J une 2014), and the CBRC 2014 Guidelines on the 
Internal Control of Commercial Banks.  
4.60.  During the period under review, China co ntinued to issue measures aimed at preventing 
systemic risks such as those arising from non–pe rforming loans, shadow banking, excessive debts 
for local government financing platforms and risk s of real estate bubbles. Those risks have a 
certain degree of interlinkage.
41 The non–performing loans (NPL) ratio, albeit still low at 1.4% at 
the end of 2014, has been rising over the last two years. There has also been a significant increase 
in disposal (26% of the gross stock of NPL in 2014 compared to 18% in 2013). To tackle those 
risks,  in 2014, the CBRC issued the Guiding Opinions  on Prevention of Non-Performing Loans 
(No. 60, 2014), which strengthens the risk monitoring and early warning system, establishes a more comprehensive credit risk monitoring indica tor, strengthens risk-checking for key fields and 
key clients, and requires banking financial institutions to improve their credit management system 
and to establish a long-term mechanism for the prevention and control of non-performing loans. 
4.61.   Shadow banking emerged as an important source of funding for sectors benefitting from 
the post-crisis stimulus (real estate, local governments' infrastructure projects and state-owned 
enterprises) and became the fastest growing segment of the financial service sector in recent 
years. By March 2014, the stock of shadow bankin g had risen to nearly 53% of GDP, with annual 
growth rates averaging around 30% during 2012-2 013. However, following a series of measures 
strengthening the regulatory framework taken by  the authorities in April and May 2014, credit 
growth has decelerated significantly and shifte d towards conventional loans. Some of the 
                                               
41 As described by the 2015 IMF country report, firms and local government financing vehicles have 
borrowed from both the banks and shadow banks, while banks and shadow banks are exposed to real estate 
directly through credit to developers  and household mortgages and indirectly  through the use of real estate as 
collateral for other loans. Furthermor e, local government spending is also  linked to the real estate sector 
directly through land sales revenues and indirectly thro ugh the tax revenue generated by real estate-related 
activity. See: IMF (2015), Country Report No. 15/234: People's Republic of China, 2015 Article IV Consultation , 
August 2015, paragraph 18, page 9. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf .  WT/TPR/S/342 • China 
 
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  measures adopted were targeted at reining in inte rbank activity as a channel for fuelling shadow 
banking by restricting the ways to fund off-balance sheet credit through the interbank market. The regulation of non-standard products has also been tightened and trusts have been forbidden from funding cash pay-outs on maturing products with the proceeds of new wealth management 
products (WMP).
42 In addition, a trust protection fund ha s been established and a registry system 
for trust products is under preparation, and the standardized operation of financing guarantee companies, small-loan companies, and network credit business has been promoted.
43 
4.62.  Real estate has been a significant engine of the economy but it has shown growing signs of 
imbalances: while several regions and most tier 3 and 4 cities (small and middle-size cities) are in a situation of oversupply of residential real es tate, and most regions have an oversupply of 
commercial real estate, price pressure remains high in the coastal areas. In 2014-2015, activity 
has softened and the sector has entered an adjustment and correction phase to which the 
authorities have responded with a fine-tuned and differentiated approach depending on the regions and the markets. The aim of this policy is to al low adjustment to take place while preventing a 
sharp correction, by supporting the market if nece ssary, in order to ensure its stable development 
and supplying enough housing for the low-income population.  
4.63.  At the end of 2014, some restrictions on home purchases were relaxed, but in March 2015 
the authorities introduced a package of measures to tackle oversupply, including reducing land 
supply in cities with excess housing inventory, and shortening the minimum period for housing sales tax exemption from five to two years of residency. This was later accompanied by measures to adjust the amount required as a down payment to obtain a loan. In March 2015, the PBOC, the 
Ministry of Housing and the CBRC jointly released  the Notice on the Matters of Personal Housing 
Loan Policies (Yin Fa No. 98, 2015), increasing the minimum down payment to 40% for loans to households that already own one residential house, wish to improve their residential conditions 
and still have outstanding payments. In Septembe r 2015, the PBOC and CBRC jointly released the 
Notice on Matters to Further Improve Differentiation Housing Credit Policies (Yin Fa No. 305, 2015), adjusting the minimum down-payment ratio to 25% for households applying for personal 
housing loans for the first time in cities without purchase-limiting measures. At the same time, 
social housing investment and old-town reconstruction projects increased. According to the IMF, these policies have helped cushion the adjustment as evidenced by the recent stabilization of prices and floor space sold.
44 
4.64.  During the 2014 Article IV IMF consultations, the Chinese authorities acknowledged that 
local government debt had become a pressing issue in some jurisdictions and that it was being addressed by a further strengthening of local debt management, including the creation of a 
monitoring system to contain risks.
45 The 2013 Third Plenum Blueprint for reform set the 
improvement of local government finances as a priority. This includes better aligning local revenue with expenditure responsibilities, as well as stre ngthening the oversight and management of local 
government borrowing. The Blueprint stresses that a plan to put in place a new framework to limit 
local borrowing, improve reporting and establish an  early warning system, should be implemented 
as soon as possible.  
4.65.  According to the authorities, the adoption of the National Budget in late 2014 was the first 
step in this direction as it created a local government borrowing framework, improved 
transparency, strengthened medium-term fiscal planning and clarified that all spending that is fiscal in nature should be brought into the bu dget and be financed transparently, and that 
commercial investment projects of local governments do not have an explicit or implicit 
government guarantee. Measures have also been taken to: replace existing debts with local governments' bonds, in order to solve local governments' problems with respect to the repayment 
                                               
42 WMPs offered by China are investme nt products with fixed returns an d a set maturity (usually short). 
They are marketed to retail and corporate investors and sold by both banks and non-bank financial institutions 
and sometimes have explicit principal or interest gu arantees. Proceedings from the marketing of WMPs are 
invested in a range of loans and securities and the retu rns offered have traditionally largely exceeded regulated 
deposit rates.  
43 IMF (2014), Article IV Consultation – Staff Report , Country Report No. 14/235 , July, Box 4, page 28. 
Viewed at: https://www.imf.org/external/pubs/ft/scr/2014/cr14235.pdf . 
44 IMF (2015), A rticle IV Consultation – Press Release,  Staff Report, Country Report No. 15/234 , August. 
Viewed at: https://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf .  
45 IMF (2014), Article IV Consultation – Staff Report, Country Report No. 14/235, July, paragraph 16, 
page 11. Viewed at: https://www.imf.org/external/pubs/ft/scr/2014/cr14235.pdf .  WT/TPR/S/342 • China 
 
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  of matured debts; ease the interest burden of local governments; optimize the debt maturity 
structure; and avoid the risk of significant default.  According to the authorities, currently, the loan 
quality of the platforms is fairly high, and the overall risk is manageable.  
4.66.  Provisions against money laundering have been reinforced by two recent legal texts. First, 
on 10 January 2014, the PBOC, the Ministry of Public  Security and the Ministry of State Security 
jointly released the Measures for the Administrati on of Freezing of Assets Relating to Terrorist 
Activities (People's Bank of China, Ministry of Public Security, and Ministry of State Security Order 
No. 1, 2014), providing a regime and a legal basis for financial institutions and certain 
non-financial institutions to freeze assets relating to terrorist activities in legal procedures. In addition, to implement the risk-based management  principle and promote the implementation of 
corporate monitoring, the Measures for Supervision and Regulation of Anti-Money Laundering by 
Financial Institutions for Trial Implementation (Yin Fa No. 344, 2014) were released by the PBOC 
and took effect in November 2014. They regulate notably issues dealing with anti-money laundering, off-site supervision, on-site inspection and other regulatory measures as required. 
4.2.2.3  Regulatory framework for insurance 
4.67.  During the period under review, there were no significant changes as compared to the 
situation described in previous TPR reports regarding supervisory authorities and prudential 
regulations in the insurance subsector. The ma in changes concern the rules of ownership of 
insurance companies and preferential policies.  
4.68.  Regarding ownership, since April 2013, China has allowed private equity investment in 
insurance companies. More precisely, on 24 April 2013, China's Insurance Regulatory Commission 
(CIRC) released the Circular on Relevant Issues regarding the Investment and Shareholding of 
Limited Partnership Equity Investment Enterprises in Insurance Companies (Baojianfa No. 36, 2013), allowing domestic and foreign investment by limited partners of private equity funds in 
domestic Chinese insurance companies, i.e. all Chinese insurance companies in which the 
shareholding of all foreign investors is less than 25%. According to the Circular, which aims to broaden the sources of capital available to insurance companies, individual qualified private equity 
investors can invest in up to 5% of the equity of domestic insurance companies, and the total 
capital contribution or shareholding of all private equity investors in an insurance company shall not exceed 15%. Private equity investors are proh ibited from participating in the management of 
insurance companies and from being the largest single or controlling shareholder.  
4.69.  The 2015 Investment Catalogue does not contain any changes regarding insurance services, 
except for "insurance brokerage companies", which were removed from the restricted category. Thus, according to the authorities investments above RMB 100 are no longer subject to 
authorization. This seems to be in line with China's WTO commitments (i.e. foreign insurance 
brokers have been allowed to set up wholly-owned subsidiaries since 2006.) 
4.70.  Compared with China's GATS commitments , the six preferential agreements signed by 
China during the review period additional commitments regarding insurance services The 
Agreement on Achieving Basic Liberalization of Tr ade in Services in Guangdong with Hong Kong, 
China, and the Agreement on Achieving Basic Liberali zation of Trade in Services in Guangdong with 
Macao, China, as well as, the new Agreements on Services between mainland China and 
Hong Kong, China, and between mainland China and Macao, China have a negative list to regulate 
restrictions related to commercial presence and a supplementary positive list for cross-border commitments. 
4.71.  The FTA with Australia also contains su pplementary commitments. Under this agreement, 
China has undertaken commitments in the form of a positive list.
46 The main supplementary 
commitment regarding insurance, as compared to  China's GATS commitments, is the binding of 
motor vehicle accident liability compulsory insurance, which had previously been autonomously 
liberalized erga omnes . 
                                               
46 The agreement with Austra lia offers the choice between positive  and negative listing and Australia, 
unlike China, made the latter choice for its commitments. WT/TPR/S/342 • China 
 
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  4.2.2.4  Regulatory regime for securities and stock exchanges 
4.72.  No significant changes regarding the supervisory authorities and licensing regime for 
securities and stock exchanges have taken place as compared to the situation described in previous TPR reports. New developments during the review period essentially concern the 
numerous measures taken by the Chinese authorities in order to stabilize the stock markets 
following the 2014 downturn, the partial opening of  the stock market to foreign operators and 
increased convergence with international financ ial reporting standards, and preferential and 
bilateral policies. 
4.73.  The 2015 version of the Investment Catalogue maintains securities companies in the 
"restricted category" but it broadens their business scope and partially liberalizes partially foreign ownership by raising the limit from 33% to 49%.
47 
4.74.  Prior to the first stock market fall in June 2015, the authorities took a number of regulatory 
measures to promote equity investment, includ ing: easing the rules for margin borrowing 
(April 2013), liberalizing mutual funds (August 2014), and allowing investors to open multiple 
brokerage accounts (April 2015). However, in May 2015, the authorities tightened the rules on 
margin trading by banning margin-trading businesses of brokerages from using "umbrella trust" lending.
48 "Umbrella trusts" are structured products which are allowed to have leverage margins 
higher than brokerage accounts.49 
4.75.  Table 4.8 recapitulates the regulatory measures taken by the Chinese authorities up to 
December 2015 to stabilize the stock market.  
Table 4.8 Policy measures taken by China to stabilize the stock market 
Date Specific measures 
29/06/2015 MOF posted draft regulati ons that would allow pension funds to invest in the stock market.  
1/07/2015 Fee cut for A-share trading and settlement. 
Administrative Measures for the Margin Trading Business of Securities Firms released in advance; 
mandatory liquidation no longer the only way for securities firms to dispose of clients' collateral.  
2/07/2015 The China Securities Regulatory Commission (CSRC) states it would severely crack down on market 
manipulations.  
4/07/2015 Stabilization fund: 21 securities firms committed to invest the equivalent of 15% of their net assets as 
of end-June, or no less than RMB 120 billion in total,  to set up a stabilization fund for investment in 
blue chip exchange-traded funds (ETFs). They also  committed not to sell any of their proprietary 
holdings, and increase their holdings when appropriate. 
New IPOs suspended. IPOs postponed for the 28 companies already approved.  
25 fund managers committed not to sell shares until the market stabilized.  
5/07/2015 IPOs suspended. No new IPOs in the near future.  
PBOC announced that it would inject liquidity into China Securities Finance Corp (CSF).  
8/07/2015 CSF pledged to buy more sm all and medium-cap stocks. 
Measures taken to support major shareholders and directors of listed companies to increase the 
shareholding of their own companies.  
CSF gave secured credit line of RMB 260 billion to brokers that needed liquidity.  
9/07/2015 CSRC banned directors and major shareholders  of listed companies from selling any shares for 
six months.  
CBRC allowed bank roll-over loans backed by shares.  
28/07/2015 CSRC investigated into huge stock sell-offs.  
                                               
47 In the 2011 edition of the Catalogue, the activities of foreign securities companies were: "limited to 
underwriting of A-Shares, underwriting and transaction of B-Shares, H-Shares, and government and corporate 
bonds". In the 2015 edition, "a securities company is lim ited to engaging in the underwriting and sponsorship 
of ordinary RMB-denominated shares, foreign shares, treasury bonds and corporate bonds, the brokerage of 
foreign shares, and the brokerage and proprietary tr ading of treasury bonds and corporate bonds upon 
establishment, and may apply for expa nding its business scope two years after establishment if it satisfies 
relevant conditions". 
48 China officially launched margin trading by securities brokerages as a pilot project in 2010, expanded 
it in 2012 and created the China Securities Finance Corporation, established by the Chinese stock exchanges to provide funds for brokerages to lend to clients. Offi cial margin lending was estimated at RMB 2.2 trillion 
(US$350 billion) in mid-2015. Leverage is capped at a 2:1 proportion, that is, investors can get loans for no more than twice their own funds to be invested in certain shares. 
49 An umbrella trust fund is a collective investment scheme that exists as a single legal entity but has 
several distinct sub-funds which are traded as individual investment funds. Umbrella trusts have been 
engaging in margin trading in China at leverage marg ins that are much higher (5:1 or above) than those 
allowed for brokerage accounts, with no limits on the type of shares in which they can invest.  WT/TPR/S/342 • China 
 
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  Date Specific measures 
31/07/2015 CSRC, Shanghai Stock Ex change (SSE) and Shenzhen Stock Exchange (SZSE) targeted high-
frequency traders in "spoofing" probe; trading of 24 suspicious securities accounts suspended.  
21/08/2015 Announcement of severe crack down on the illegal reduction in shareholdings by major shareholders 
and actual controllers of listed companies.  
9/10/2015 Public opinions solicited on the Administrative Measures on the Algorithmic Trading on Securities and 
Futures Markets.  
6/11/2015 Relaunch of IPOs. 
7/1/2016 CSRC released new rules for stock selling, providing guidance for transparent and orderly stock 
selling. 
Source: Information provided by the Chinese authorities. 
4.76.  With respect to market access, the general principle is that foreign individual investors and 
foreign-based companies cannot directly engage in securities trading. However, foreign-capital 
firms established in China as Chinese companies may provide these services. Article 166 of the Securities Law of the People's Republic of China (its last amendment was promulgated by 
Presidential Decree No. 14 and entered into force on 13 August 2014) states that to engage in 
securities trading, and open the required securities account, and investor must be either a Chinese citizen or qualified as a Chinese legal person, unless otherwise provided for by the State. The concept of Chinese legal person includes Chinese-foreign contractual joint ventures and wholly 
foreign-owned enterprises established and registered within the PRC in accordance with the law. 
However, recently, the China Securities Regulatory Commission (CSRC) has intensified efforts to open up capital markets, and qualified foreign investors may participate in the domestic securities 
market. In accordance with the 1995 Stipulations of  the State Council on the Domestic Listing of 
Foreign-oriented Stocks by Share-holding Companies and the Provisions on the Shanghai-Hong Kong Stock Connect Pilot Programme (CSRC Decree No. 101, 13 June 2014), foreign investors 
may now engage in a number of activities on the secondary securities market, as listed below.  
4.77.  First, they can directly engage in the B-share business.
50 Second, they can partially engage 
in the trading of A-shares via the Shanghai-Hong Kong Stock Connect Programme.51 Under this 
programme, launched through a Joint Announcement by CSRC and Hong Kong China's Securities 
and Futures Commission (SFC) on 10 April 2014, the Shanghai Stock Exchange and the Hong Kong 
Stock Exchange enable investors to trade eligible shares listed on the other's market through local securities firms or brokers.
52 The Shanghai-Hong Kong Stock Connect comprises a Northbound 
Trading Link (Hong Kong, China-Shanghai) and a Southbound Trading Link (Shanghai-Hong Kong, 
China). According to the regulations, trading under the Shanghai-Hong Kong Stock Connect will, initially, be subject to a maximum cross-boundary investment quota, together with a daily quota 
that will be monitored on a "real time" basis, bo th according to their trading link. Trading in the 
Northbound Trading Link will be limited to an aggregate quota of RMB 300 billion and a daily quota 
of RMB 13 billion, and trading in the Southbo und Trading Link to an aggregate quota of 
RMB 250 billion and a daily quota of RMB 10.5 billion. Quotas may be adjusted in the future. The 
Provisions also set some limitations for foreign investors investing in stocks in China, namely that 
the shareholding ratio of an individual foreign investor in a Chinese listed company must not exceed 10% of the shares of this company and that  the shareholding ratio of all foreign investors 
must not exceed 30%. Certain restrictions a pply on margin trading in both directions. 
4.78.  Third, foreign investors can engage in the Chinese securities market via the Qualified 
Foreign Institutional Investors (QFII) or the RMB Qualified Foreign Institutional Investors (RQFII) 
programmes which have been described in detail in the previous TPR report.
53 The conditions to 
                                               
50 B-shares are shares in companies based in mainla nd China that trade on either the Shanghai or 
Shenzhen stock exchanges. B-Shares ar e eligible for foreign investment prov ided the investment account is in 
the proper currency (Shanghai B-shares trade in U.S. dollars, while Shenzhen B-shares trade in Hong Kong 
dollars). A-shares are shares in mainland China-based companies that trade on Chinese stock exchanges such as the Shanghai Stock Exchange and the Shenzhen Stoc k Exchange. A-shares are generally only available for 
purchase by mainland China citizens; foreign investment is only allowed through a tightly-regulated structure known as the Qualified Foreign Institutional Investor (QFII) system.  
51 Detailed information on this programme may be found in: Hong Kong Exchanges and Clearing (2016), 
Shanghai-Hong Kong Stock Connect Information Book for Investors . Viewed at: 
http://www.hkex.com.hk/eng/market/sec_tradin fra/chinaconnect/Documents/Investor_Book_En.pdf . 
52 All Hong Kong, China and overseas investors are allo wed to trade eligible shar es listed in Shanghai. 
However, only mainland institutional investors and individual investors who have RMB 500,000 in their 
investment and cash accounts are eligible to trade Ho ng Kong-listed shares. With  respect to China, only 
A-shares listed in Shanghai will be included in the initial stage. 
53 See WT/PR/S/300/Rev.1, paragraphs 4.78 to 4.83. WT/TPR/S/342 • China 
 
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  engage in these programmes have not changed since the previous Review. By 
end-September 2015, 290 financial institutions had been qualified as QFIIs, and the total approved quota had reached US$78.77 billion; by the same date, 178 financial institutions had been qualified as RQFIIs, and their total investment quota had reached RMB 411.5 billion.  
4.79.  Fourth, foreigners who are strategic investors may acquire shares of listed companies 
through an agreement-based transfer, the privat e placement of new shares and other channels 
stipulated by laws and regulations, and they may trade securities in accordance with the law. 
Foreigners who have been granted permanent re sidency in China can be regarded as Chinese 
citizens, and they may trade on China's securities markets without additional limitations. 
4.80.  Additional reforms have been undertaken during the period under review in the area of 
accounting and disclosure standards. In particular, the revision by the Ministry of Finance of 
eight enterprise accounting standards in 2014 has made China's System of Enterprise Accounting 
Standards more consistent with the International Financial Reporting Standards (IFRS). 
4.81.  The six FTAs signed by China during the period under review contain supplementary 
commitments with respect to securities as compared to China's GATS Schedule. The Agreements 
on Achieving Basic Liberalization of Trade in Services in Guangdong and Hong Kong, China, and with Macao, China, as well as the 2015 New Agreements on Services between mainland China and 
Hong Kong, China, and mainland China and Macao, China, imply a substantial liberalization in 
terms of equity limitations and business scope. These agreements have particular characteristics, since national treatment obligations are widely defined, a negative list applies to commercial presence reservations, and a positive list applies to supplementary commitments for cross-border 
trade. 
4.82.  The FTAs with the Republic of Korea and Australia have also resulted in additional 
liberalization. Under these agreements, China has adopted a positive list approach regarding its 
commitments.
54 They contain improvements as compared  to China's GATS commitments, basically 
linked to market access, by increasing from 33%  (as specified in China's GATS commitments) to 
49% the minority ownership allowed in joint ventures of companies engaged in the underwriting of 
A-shares and in the underwriting and trading of B-shares and H-shares, and to the right to provide 
trading, advisory and portfolio management and custody services to Chinese Qualified Institutional Investors (QDII). Additionally, under the agreement with Australia, Australian financial services institutions in China may, subject to approval, be granted permission to participate in the 
securitization business on a national treatment basis. 
4.2.2.5  Regulatory framework for mutual  funds and asset management companies 
4.83.  The CSRC is the supervisory authority fo r mutual funds and asset management companies. 
Overseas institutions are not permitted to directly conduct publicly offered securities investment 
fund business in China for the time being. Foreign suppliers may only provide these services in China if they establish joint ventures with local firms, where the foreign investor's share does not 
exceed 49%.  
4.2.2.6  Regulatory framework for pension funds 4.84.  Enterprise annuity funds are the main form  of pension funds in China. Their supervisory 
authority is the Department for Social Insurance Fund Supervision within the Ministry of Human 
Resources and Social Security.
 The licensing conditions for annuity funds are stipulated in the 
Interim Measures for Qualification Accreditation of Enterprise Annuity Fund Management Institutions (Bu Ling No. 24 issued by the Ministry of Labour and Social Security on 
31 December 2004) and are centred on qualifications and prudential considerations. Currently, 
there are 34 institutions qualified to engage in the management of enterprise annuity funds, 20 of 
which with a certain degree of foreign investment participation. 
                                               
54 The agreement with Austra lia offers the choice between positive  and negative listing and Australia, 
unlike China, made the latter choice for its commitments. WT/TPR/S/342 • China 
 
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  4.2.3  Health and social services  
4.85.  Table 4.9 contains the main economic indicators for health services in China.  Table 4.9 National health ex penses, 1995, 2000, 2005, 2010-14 
Selected indicators 1995  2000  2005  2010  2011  2012 2013 2014  
Total expenditure on health (% of GDP) 3.5  4.6 4.7 4.9 5.0 5.3 5.4 5.6  
General government expenditure on 
health as % of total health expenditure  50.5 38.3 38.8 54.3 55.9 56.0 55.8 55.8 
Social security funds as % of gene ral 
government expenditure on health 64.2 57.2 54.1 64.2 67.0 67.9 69.3 67.6  
Private expenditure on health as % of 
total expenditure on health 49.5 61.7 61.2 45.7 44.1 44.0 44.2 44.2 
Private insurance as % of private 
expenditure on health 0.0 1.0 5.8 7.4 6.4 7.0 8.0 10.2  
Private out-of-pocket payment as % of 
private expenditure on health 96.3 95.6 85.3 77.2 78.8 78.0 76.7 72.4 
Total expenditure on hospitals as % of 
total expenditure on health 61.9 64.9 66.3 60.8 61.1 62.2 62.3 62.5  
Total expenditure on health/capita (US$) 21.3 43.7 80.9 220.1  279.8  329.0 375.8 420.3  
Source: Ministry of Health (2015), Research Report of National Health Expenses of China 2015, based on the 
WHO statistical framework.  
4.2.3.1  Hospital and medical services 
4.86.  China's GATS commitments relate to the a pplied regulatory regime regarding market access 
and national treatment. They contain three limitatio ns: a) "foreign service suppliers are allowed to 
establish joint venture hospitals or clinics … with quantitative limitations in line with China's needs, with foreign majority ownership permitted" (market access mode 3); b) "foreign doctors with professional certificates issued by their home country shall be permitted to provide short-term 
medical services in China after they obtain licences  from the Ministry of Public Health; the term of 
service is six months and may be extended to one year" (market access mode 4); and c) "the majority of doctors and medical personnel of the joint venture hospitals and clinics must be of 
Chinese nationality" (national treatment mode 3). 
4.87.  The 2015 Foreign Investment Catalogue classifies medical institutions in the restricted 
category. In addition, articles 8 and 17 of the Interim Measures for the Administration of 
Sino-Foreign Equity/Cooperative Joint Venture Medi cal Institutions, require that the establishment 
of a Sino-foreign equity/cooperative joint venture medical institution comply with the following conditions: a) it must be an independent legal person; b) total investment must be at least RMB 20 million; c) the proportion of shares or equity of the Chinese party must be at least 30%; 
and d) foreign institutions cannot establish branches.
55  
4.88.  The Interim Measures stipulate that Sino-foreign equity/cooperative joint ventures must 
comply with the local regional health and establishment plans for medical institutions, and be 
governed by the Basic Standards for Medical Instit utions, formulated by the Ministry of Health. 
This appears to be consistent with China's GATS commitment which indicates that "quantitative limitations in line with China's needs to establish joint hospital or clinics." The establishment plans 
for medical institutions are formulated by the health administrative departments at the county 
level or above, pursuing specific Guiding Principles which are currently under review.
56 These plans 
are thereafter examined and verified by the health  administrative departments at a higher level, 
and approved by the people's government at that  same level to be implemented within their own 
administrative jurisdictions. The plans are approved, and thereafter revised every five years, 
taking into account the following criteria: social and economic development level, pre-existing medical equipment, locally prevalent diseases, and demand for medical services and population 
needs. It appears that all medical institutions, re gardless of ownership, are approved according to 
what the plan stipulates. Prior to their establ ishment, Sino-foreign equity/cooperative joint 
ventures require: i) a preliminary examination by the health administrative department (at the 
                                               
55 Order No. 11 of the Ministry of Health and the Mi nistry of Foreign Trade and Economic Cooperation, 
15 May 2000. 
56 Order [1994] No. 35 of the Ministry of Health, Implementing Rules for the Regulations on the 
Administration of Medical Institutions, 29 August 1994; and Weiyifa [1994] No. 25, Guiding Principles for the Establishment Plans for Medical Institutions.  WT/TPR/S/342 • China 
 
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  level of the municipality divided into districts) where it is located; and ii) the examination and 
approval by the provincial health administrative department.  
4.89.  The second limitation listed in China's GATS commitments indicates that foreign doctors 
with professional certificates issued by their home  country shall be permitted to provide short-term 
(six months to one year) medical services in China after they obtain licences from the Ministry of 
Public Health. This would seem to apply in practice only to doctors employed by health institutions given that, due to other requirements, it does not seem to be possible for a foreign doctor to 
exercise medicine as a self-employed person or open a private practice. To obtain a licence, 
foreign doctors require a certificate and agreement from the inviting or employing institutions (one or more), or a declaration, to bear the corresponding civil liabilities.
57 In principle, registrations for 
a foreign doctor to provide short-term medical services in China cannot exceed one year. However, 
if required, foreign doctors may re-register. The he alth administrative departments at the level of 
municipality divided into districts are in charge of  registering foreign doctors. An application must 
be examined and verified within 30 days of receipt, and applicants or their entrusted institutions 
must be informed in writing.   
4.90.  The CSPFTZ's 2013 negative list allowed (on a pilot basis) wholly foreign-owned medical 
institutions to operate for a period of a ma ximum of 20 years and a minimum investment of 
RMB 20 million; however, they were not allowed to open branches. Two operators, one from 
Germany and one from Japan, invested in the CSPF TZ. As a result of the evaluation of the pilot 
project, the 2015 negative list for the CSPFTZ and other pilot FTZs was amended to indicate that medical institutions in the FTZs could operate as joint ventures with foreign majority ownership.
58 
One of the operators that had been established as a wholly foreign-owned operation was 
transformed into a joint-venture; the other is still considering its options. 
4.91.  The free trade agreements signed by Chin a do not contain any supplementary/preferential 
concessions as compared to the GATS commitments  e x c e p t  i n  f o u r  c a s e s .  F i r s t ,  b o t h  C h i n e s e  
Taipei's and Australia's qualified services suppliers are allowed to establish wholly owned hospitals in specific areas of the mainland.
59 Second, the CEPA agreements between mainland China and 
Hong Kong, China and Macao, China contain numerous supplementary commitments to allow Hong 
Kong, China's and Macao, China's providers to, for instance: have a majority of Hong Kong, China/Macao, China permanent residents among the medical staff in joint ventures; prolonging the duration of short-term medical services from six months to three years; allowing Hong Kong, 
China and Macao, China practitioners to sit in mainland China's examinations. The supplements of 
the CEPAs have improved those concessions by : lowering the minimum capital required to 
establish a joint venture from RMB 20 million to  RMB 10 million (Supplement IV); abolishing the 
domestic minimum requirement in joint-ventur es for some provinces (Supplement VII); and 
allowing the establishment of wholly owned hospitals in the Shanghai and Chong Ching Municipalities, the Provinces of Guangdong, Fujian and Hainan, and in all the municipalities directly 
under the Central Government and provincial capitals in the mainland (Supplement VII); this 
concession was thereafter extended to the whole territory of the mainland (Supplement IX).
60 The 
services agreements with Hong Kong, China and Macao, China, which contain a negative list for 
commercial presence and positive list for supplementary commitments related to cross-border 
trade, abolished the minimum investment requirements for Chinese nationals in joint-ventures 
throughout mainland China.  
                                               
57 Order 24 of the Ministry of Health, 7 October 1992. 
58 Guo Ban Fa [2015] No. 23, Special Administrative Measures on Access of Foreign Investment to the 
Pilot Free Trade Zones (Negative List). 
59 Chinese Taipei may establish service suppliers in  Shanghai Municipality, and in four provinces: 
Jiangsu, Fujian, Guangdong and Hain an. Australian providers may establish service suppliers in Shanghai 
Municipality, in four prov inces: Jiangsu, Fujian, Guangdong and Ha inan and also in Beijing and Tianjin. 
60 For more information on these co mmitments, see: Trade and Industry  Department of the Government 
of the Hong Kong Special Administrati ve Region online information, "Mainl and and Hong Kong Closer Economic 
Partnership Arrangement (CEPA)". Viewed at: http://www.tid.gov.hk/english/cepa/index.html ; and Macao 
Special Administrative Region Economic Services online information, "CEPA". Viewed at: 
http://www.cepa.gov.mo/cepaweb/front/eng/index_en.htm . WT/TPR/S/342 • China 
 
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  4.2.3.2  Retirement home services61 
4.92.  China did not undertake any GATS commitmen ts regarding retirement homes, but has done 
so in the China-Australia FTA, the CEPAs and th e subsequent agreements with Hong Kong, China 
and Macao, China.  
4.93.  Retirement home services are regulated by the Measures for the Licensing of the 
Establishment of Retirement Homes for the Aged, which defines: conditions for licensing, the licensing authority, and the procedures to establish retirement homes.
62 According to the 
Measures, both domestic and foreign investors ma y establish retirement homes; however, foreign 
providers have to be licensed by authorities at the provincial or municipal level. Retirement homes can be established as: a) wholly invested by foreign organizations or persons; b) invested jointly or cooperatively by foreign organizations and persons, and Chinese organizations and persons; 
c) wholly invested by organizations and persons of Hong Kong, China; Macao, China; and Chinese 
Taipei; d) wholly invested by overseas Chinese persons; and e) invested jointly or cooperatively by overseas Chinese and domestic organizations and Chinese nationals.
63 However, if there were 
other legal investment provisions regarding investment in retirement homes that would contradict 
the aforementioned, such provisions should prevail.  
4.94.  As of 2014, foreign investors have been encouraged to establish profit-making retirement 
homes on their own (i.e. wholly owned), through equity and contractual joint ventures with 
Chinese companies, enterprises and other economic organizations.64 The 2014 Announcement sets 
out the procedures and the requirements, which are essentially based on qualifications, to 
establish such institutions. Foreign investors have also been encouraged to participate in the 
transformation of public retirement homes, and to establish chains and create brands. National 
treatment will apply regarding taxes. In addi tion, the 2015 Investment Catalogue classifies 
"services institutions for the elderly, the disa bled and children" in the encouraged category. 
4.2.3.3  Heath insurance services 
4.95.  The volume of private health insurance premiums more than doubled since 2010, increasing 
from RMB 67.75 billion in 2010 to RMB 158.72 billion in 2014. 
4.96.  Private health insurance activities are regu lated by the general regulatory framework for the 
insurance sector. 
4.97.  Costs incurred by patients, covered by Chin a's basic medical insurance, are reimbursed if 
patients undergo treatment in a "designated" medica l institution. According to the authorities, the 
same criteria (i.e. the provision of basic healthcare services at prices similar to the local average) 
to determine which are the "designated" medical institutions are used regardless of the source of the invested capital. The level of reimbursement will not vary according to the ownership of the 
"designated" medical institution. 
4.2.4  Audiovisual services 4.2.4.1  Overview 
4.98.  For consistency purposes the following section describes the audiovisual services trade 
regulatory regime using the MTN.GNS/W/120-CPC provisional nomenclature's classification and definitions, as has been the case in other Trade Policy Review reports, rather than the sui generis  
classification used by China in its GATS commitments. This section does not therefore contain a 
description of China's commitments in the GATS nor in the various FTAs in which it has engaged. 
However, in the description of the status of foreign investment in audiovisual services in the Investment Catalogue, and for consistency with other sectors described in the present report, the 
Chinese national regulations'  categories will be used. 
                                               
61 Retirement home services are part of CPC 93311 - Welfare services delivered through residential 
institutions to old persons and the handicapped. 
62 Order of the Ministry of Civil Affairs No. 48 of 28 June 2013. 
63 Article 10 of Measures for the Licensing of the Establishment of Retirement Homes for the Aged.  
64 Ministry of Commerce and the Ministry of Civ il Affairs Announcement No. 81, of 28 November 2014. WT/TPR/S/342 • China 
 
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  4.99.  The main economic indicators of China's audiovisual sector and their recent evolution are 
contained in Table 4.10. Growth in China's audiov isual/entertainment sector has been considerable 
over the recent years. The compounded annual growth  rate of gross box office receipts of feature 
films exhibited is estimated at 34% for the period 2010-2015, while the number of cinema tickets 
sold increased 3.5 times and the number of movie theatres by 2.2 times during the period. Despite 
this, on a per-capita basis, China is still nine times less screen-equipped than the US market. 
Table 4.10 Main indicators for audiovisual services in China, 2010-15 
 2010  2011  2012  2013 2014 2015  
Gross box office per indoor screen (RMB '000) 1,626 1,412  1,301  1,196  1,256  1,393  
Number of indoor screens 6,256 9,286  13,118  18,195  23,592  31,627  
Number of indoor screens per capita (per million 
inhabitants) 4.6 6.8  9.5  13.1  17.2  23.0  
Feature films being 100% nationally produced (%) 92.0  89.6  93.8  93.4  92.9  91.0  
Feature films being internationally coproduced (%) 8.0  10.4  6.2  6.6  7.1  9.0  
Number of admissions of all feature films exhibited 
(million) 281  355  466  617  837  1,262  
Gross box office receipts of feature films exhibited 
(RMB million) 10,172  13,115  17,073  21,769  29,639  44,069  
Number of indoor cinemas 2,000  2,803  3,095  4,143  5,158  6,399  
Number of national feature films produced 526  558  745  638  618  686  
Number of radio channels 2,726  2,774  2,803  2,863  2,923  2,930  
Number of television channels 1,327  1,330  1,340  1,336  1,335  1,337  
Source: UNESCO Institute for Statistics (UIS) online information. Viewed at: www.uis.unesco.org ; and data 
provided by the authorities.  
4.100.   One of the goals stated in the 12th Five Year Plan (2010-2015) was that cultural 
industries, including audiovisual services, should in the medium to long term become a "pillar" industry and that access to TV and radio pr ogrammes should be provided to 99% of the 
population.
65 In order to achieve this goal the Governme nt encouraged banks to provide credit and 
financing to the entertainment industry (Table 4.11). The China Development Bank (CDB) actively supported cultural and creative industries during  the period under review. By end-2015, the loans 
provided by the CDB amounted to RMB 176.1 billion. 
Table 4.11 Outstanding credit from 21 majo r banks to cultural industries, 2013-15 
(RMB million) 
Date Dec. 2013  June 2014  Dec. 2014  June 2015 Dec. 2015  
Cultural industries 474,460.1 535,765.1 532,812.1 598,249.3 620,230.3 
Source: Information provided by the authorities.  
4.101.  Other sources of financing for the audiovisua l industry stem from two major funds. Firstly, 
the China Culture Industrial Investment Fund, which is a government-sponsored private equity 
fund with a capital of RMB 4.1 billion. The Fund conducts market-based operations, and finances 
cultural and creative activities, film production, publishing, printing and duplicating, advertising,  
performances and entertainment, animation, internet culture, cultural leisure and related 
industries. Secondly, the National Film Industry Development Fund, which supports the 
development of the film industry including the cons truction of theatres and key production bases, 
the renovation of equipment, and the translation of films into minority languages, and provides 
incentives for the production, distribution and projection of outstanding domestic films. It also 
funds the distribution and projection of films with cultural and artistic characteristics. The Fund is 
regulated by the Measures of Collection and Alloca tion of National Film Industry Development Fund 
(Cai Shui, 2015) and financed by a 5% tax on tickets sold.  
4.102.  The Chinese authorities have also recently put in place a series of tax incentives for the 
film industry. The Notice on Economic Policies to Support the Development of the Film Industry (Cai Jiao No. 56, 2014), jointly released by the Mini stry of Finance, the NDRC , the Ministry of Land 
and Resources, the Ministry of Housing, the PBOC, the State Administration of Taxation, and the 
                                               
65 Cultural industries in China incl ude news and press, broadcasting, te levision, film and video recording 
production and culture and arts. WT/TPR/S/342 • China 
 
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  State Administration of Press, Publication, Radio, Film and Television (SAPPRFT66), exempts from 
VAT, from 1 January 2014 to 31 December 2018, the sale of films (including digital versions) and 
proceeds from copyright transfers,  film distribution and the screening of films in rural areas. The 
Circular on Several Issues Concerning Tax Policies for Continuously Supporting the Development of 
Cultural Industries (Cai Shui (2014) No. 85) i ssued by the Ministry of Finance, the General 
Administration of Customs, and the State Administration of Taxation provides that R&D expenses incurred by cultural enterprises for the development of new technologies, new products and new 
processes may be income-tax deductible. The same Circular grants an import duty exemption for 
equipment and related components and parts import ed for use in cultural projects promoted by 
the State and which cannot be manufactured domestically. The Circular to Incorporate Railway Transportation and Postal Services into the Pilot Programme to Replace the Business Tax for the 
VAT (Cai Shui (2013) No. 106) specifically provides that overseas film production, distribution and 
projection shall be VAT exempted. The Circular to Apply Zero VAT Tax Policy to Exported Services such as Films and Television Programmes (Cai Shui (2015) No. 118) replaced this tax exemption 
with a zero-rated VAT policy.  
4.103.  Table 4.12 recapitulates the status of audiovisual activities in the Foreign Investment 
Catalogue (2011 and 2015 versions) both for the whole of mainland China's territory and for the 
CSPFTZ, as defined by the various Chinese regulations on foreign investment and their recent 
changes.  
Table 4.12 Foreign investment catalogue stat us of audiovisual activities, 2011 and 2015 
 2011 Catalogue 2015 Catalogue 2015 CSPFTZ Negative 
List 
Radio, television and film production Limited to contractual 
joint-ventures Limited to contractual 
joint-ventures Limited to contractual joint-
ventures 
Film production and distribution 
companies Prohibited  Prohibited  Prohibited 
Construction and operation of movie 
theatres Restricted to joint 
ventures with the 
Chinese party as the controlling shareholder, except Hong Kong, China; 
and Macao, China Limited to equity joint 
ventures with the Chinese 
party as the controlling shareholder, except for Hong Kong, China; and Macao, China Limited to equity joint 
ventures with the Chinese 
party as the controlling shareholder, except for Hong Kong, China; and Macao, China 
Production of audiovisual and electronic 
publications Prohibited  Prohibited  Prohibited 
Radio and television production and 
operation companies Prohibited  Prohibited  Prohibited 
Theatre chain companies Prohibited  Prohibited  Prohibited 
Broadcasting stations, TV stations, radio 
and television channels (frequencies), radio and television transmission 
networks (including launching pads, 
rebroadcasting stations, radio and television satellites, satellite uplink stations, satellite transfer stations, microwave relay stations, monitoring 
stations, cable radio and television 
transmission networks) at all levels  Prohibited
 Prohibited  Prohibited 
Survey of radio and television listening 
and viewing  Limited to 
equity/cooperative 
joint ventures  Limited to equity joint 
ventures with the Chinese 
party as the controlling 
shareholder  Limited to equity/cooperative 
joint ventures, with the 
Chinese party as the 
controlling shareholder  
Note: Pursuant to the Circular of the General Office of the State Council on Issuing the Special 
Administrative Measures for Access of Foreign Inve stment to Pilot Free Trade Zones (the "Negative 
List") (Guo Ban Fa No. 23, 2015), the non-compliant measures in the Negative List of the CSPFTZ 
apply to the four free trade zones in Shanghai, Guangdong, Tianjin and Fujian. 
Source: Information provided by the Chinese authorities.  
4.2.4.2  Motion picture and videotape production and distribution services 
4.104.  These services correspond to item 2.D.a of the MTN.GNS/W/120 nomenclature, and 
include CPC provisional items 96111 (promotion or advertising services), 96112 (motion picture or 
video tape production services), 96113 (motion picture or videotape distribution services to other 
                                               
66 The SAPPRFT is a new agency resulting from the merger in 2015 of the State Administration of Radio, 
Film and Television (SARFT) and of the General Administration of Press and Publications. WT/TPR/S/342 • China 
 
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  industries) and 96114 (other services in connection with motion picture and video tape production 
and distribution). 
4.105.  The establishment of foreign motion pict ure production and distribution companies is 
prohibited, with the exception of film distribution companies of Hong Kong, China, and Macao, 
China investors, which are permitted to establish wholly owned subsidiaries in China for the 
distribution of Chinese-made films, as stipulated by the Supplementary Provisions to the Film Market Entry Rules issued by the State Administration of Radio, Film and Television (SARFT) 
on 7 March 2005. In addition, wholly foreign-owned enterprises or equity joint ventures from 
Hong Kong, China and Macao, China are allowed to  produce and distribute audiovisual (including 
post-movie) products in accordance with SA RFT and MOFCOM Order No. 50, 7 March 2005 and 
SARFT and MOFCOM Order No. 52, 25 March 2011, respectively. Limitations on foreign investment 
for the distribution of videotapes were eliminated in the 2015 Investment Catalogue.  
4.106.  This general prohibition stems not only from the foreign investment regimes defined by 
the 2011, 2015 and CSPFTZ Investment Catalogues but also from legislation specific to the sector, 
namely the Circular on Opinions on Foreign Investment in Culture Related Areas, jointly issued by 
the SARFT and the Ministry of Culture, the Genera l Administration of Press and Publication, the 
National Development and Reform Commission, and the Ministry of Commerce in July 2005. This 
regulation superseded the earlier Provisional Rules on Operation Qualifications for Entry into Film 
Production, Distribution and Ad Exhibition of 29 October 2003, revised in November 2004, which 
authorized, for a brief period, foreign investors to incorporate in China a film production company in the form of an equity joint venture or cooperative joint venture with a majority of Chinese 
controlling interests.  
4.107.  While the establishment of foreign-owne d production and distribution companies is 
prohibited, co-productions are allowed either in th e framework of a State-to-State agreement or in 
the absence thereof under the rules set by SARFT Decree No. 31 of 6 July 2004. The Decree 
distinguishes three types of coproduction: joint production, assisted production, and contracted production.  In the case of a joint production, the Chinese and foreign investors jointly participate 
in the funding and production of a film in China, and in the sharing of rewards and risks associated 
with the exploitation of the rights over the film . A joint production project is not considered a 
separate legal person in China. In the case of an assisted production, the foreign investor is solely responsible for providing the capital and carrying ou t the production of a film in China, enjoys 
exclusively the rewards, and bears the risks associat ed with the exploitation of the rights over the 
film. The Chinese participant provides assistance by way of equipment, instruments, and labour, 
and is compensated by the foreign investor for the assistance provided. In the case of a contracted 
production, the rights and benefits for the foreign investor are the same as those for an assisted 
production; however, a Chinese contractor is engaged to carry out certain production or filming in China, and compensated accordingly.  
4.108.   The number of films coproduced each year has varied between 42 and 58 in the 2010 
to 2014 period, and has involved partners such as: Australia; Canada; France; Germany; Hong Kong, China; Japan; the Democratic People's Republic of Korea; the Republic of Korea; Macao, China; Malaysia; Poland; Samoa; Singapore; Chinese Taipei; the United Kingdom; and the 
United States. 
4.109.  The production, distribution, importation, release and projection of films in China are 
subject to approval by the relevant authorities, mainly the SAPPRFT. Foreign films can be shown 
on a revenue–sharing basis or on an outright purchase basis. There are limitations on the number 
of foreign films that can be shown in China on a revenue–sharing basis. China undertook in its GATS commitments to allow the importation and theatrical release of 20 foreign films a year on a 
revenue–sharing basis. This number was raised to 34, following negotiations with the 
United States. Between 2010 and 2015, China imported 288 foreign films on an outright purchase basis (i.e. flat fee).
67 Foreign films accounted for 45.5% of box office revenues in 2014. 
Additionally, the various Chinese TV channels imported 537 films in 2010, 378 in 2011, 
444 in 2012, 401 in 2013 and 404 in 2014. 
                                               
67 The annual figures are: 41 in 2010, 44 in 2011, 70 in 2012, 43 in 2013, 38 in 2014 and 52 in 2015. WT/TPR/S/342 • China 
 
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  4.2.4.3  Motion picture projection services 
4.110.  This subsection covers item 2.D.b of the MTN.GNS/W/120 nomenclature and CPC 
provisional item 9612 (motion picture projection services). 
4.111.  The Interim Provisions on Foreign-Invest ed Cinemas (SAFRT, Ministry of Commerce, and 
Ministry of Culture Order No. 21, 25 November 2003), the Supplement to the Interim Provisions on 
Foreign-Invested Cinemas (SAFRT, Ministry of Commerce, Ministry of Culture Order No. 49, 8 April 2005), and the Second Supplement to the Interim Provisions on Foreign-Invested Cinemas 
(SAFRT, Ministry of Commerce, Ministry of Cu lture Order No. 5149, 18 January 2006) contain the 
industry's main regulatory framework. As show n in Table 4.12, in accordance with the three 
foreign investment catalogue regimes (2011, 2015 and CSPFTZ) establishment in this subsector is only allowed in the form of joint ventures with the Chinese party as the controlling shareholder. 
There is an exception for Hong Kong, China and Macao, China investors who can establish wholly 
foreign owned companies after obtaining a Licence for Film Projection Operation from the commerce administration authorities and the film administrative authorities at provincial level. This 
requires previously obtaining an Approval Certificate for Foreign-Invested Enterprises and a 
Licence for Film Projection. Domestic-invested cinemas may apply for film projection licences directly from film administrative authorities at county level. The Decision on Revising Some Rules 
and Normative Documents, SAFRT Order No. 3, 8 August 2015, removed the minimum 
RMB 6 million investment requirement for a cinema applicable until then. As at February 2016, there were 308 foreign-invested cinemas out of a total of 6,576 cinemas.  
4.2.4.4  Radio and television prod uction and transmission services 
4.112.  This subsector corresponds to MTN.GNS/W/120 nomenclature items 2.D.c (radio and 
television services) and 2.D.d (radio and television transmission services), which resulted from adding CPC provisional items 96131 (radio [product ion] services), 96132 (television [production] 
services), 96133 (combined programme making and broadcasting services), 75241 (television 
broadcast transmission services), and 75242 (radio broadcast transmission services). 
4.113.  Under the foreign investment regimes defined by the 2011, 2015 and CSPFTZ Investment 
Catalogues, foreign investment in companies producing, operating and transmitting radio and 
television programmes is prohibited. Furthermore, radio channels emitting from abroad are not allowed to broadcast within the Chinese territory. In accordance with the Administrative Measures for the Landing of Foreign Satellite Television Channels (SARFT Order No. 27, 18 June 2004), the 
landing of foreign satellite television channels is subject to approval, and approved channels can 
be broadcasted only in foreign-related hotels above the 3 star-level, in foreign-related apartments provided exclusively to foreigners as offices or residences, and in other specific areas. A permit is 
required for the provision of this service; the du ration of the permit is one year, renewable under 
approval. News-oriented channels are not allowed in principle, nor are satellite television channels launched or jointly operated abroad by any domestic radio or television institution or any other 
department, group, enterprise or individual. Major corporate or programme orientation changes 
are subject to authorization.  
4.2.4.5  Sound recording services 4.114.  Sound recording services
68 are regulated in China as a kind of audio and video product. In 
accordance with the 2015 Catalogue for the Guidance of Foreign Investment Industries, foreign 
investment is completely prohibited in the production and publication of audio and video products. 
 
                                               
68 Sound recording services refer to item 2.D.e of the MTN.GNS nomenclature and have no CPC 
provisional correspondence. WT/TPR/S/342 • China 
 
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  5  APPENDIX TABLES 
Table A1.1 Status of Selected Reforms Announced in the Third Plenum of the 18th CCP 
Central Committee Communiqué (12 November  2013), and the Decisions on Major 
Issues Concerning Comprehensively Deepening Reform (15 November 2013), April 2016 
Announced reform initiatives  Progress  
• Allow markets to play a greater role in resource allocation.  Aim to achieve results in core reform areas by 2020.  
• Set up a reform leading group to oversee reform 
implementation.  
• Improve budget transparency through spending controls, multi-
year budget adoption, and strengthening transfer system mandates; limit off-budget borrowing; and integrate government and LGFV investment spending. Efforts
 made  to implement mid-term fiscal planning and 
management, promote standardized management of local government debts, and establish an accrual reporting system. 
• Better align local government revenue and spending 
responsibilities. Guiding Opinions for Pushing Forward the Demarcation of 
Central and Local Governments' Revenue and Spending 
Responsibilities submitted to the State Council. 
• Move towards a basic pension insurance system and basic medical insurance on a national basis.  
• Improve the coverage of basic urban social services; consolidate 
the social security system.  
• Lower social contributions when deemed appropriate.  Ministry of Finance work report. 
• Continue tax reforms by gradually raising the share of direct 
taxes; adjust the scope of consumption taxes; broaden 
environmental taxes; roll-out the VAT reform and simplify tax 
rates; speed up reform on real estate tax and resource taxes; 
gradually establish a personal income tax system that combines 
both the all-inclusive and type-specific taxes. In August 2013, a pilot programme to replace the 
business tax with the VAT in some services (i.e. 
transportation; the production, broadcasting and 
distribution of radio, film and television products), was 
implemented. The programme was extended to railway 
transport and postal services in January 2014 and to 
telecommunications in June 2014. 
The consumption tax on motorcycles with cylinder 
capacities below 250 ml, tyres, alcohol, and leaded motor 
gasoline was eliminated, but it was increased for refined 
oil products and wholesale cigarettes. 
• Require SOEs to submit 30% of profits to the budget; establish state asset management companies to manage SOEs. Aim to achieve results by
 2020. 
• Allocate some SOE capital to social security funds.  Aim to achieve results in core reform areas by 2020.  
• Expedite inte rest rate liberalization, while removing deposit rate 
controls.  Liberalized lending rates; deposit interest rate cap 
removed.  
• Better define supervisory responsibilities and continue to 
strengthen regulation and supervision. New regulations issued in Q2 that covered trust 
companies, interbank activity, banks, and other areas. 
• Reopen IPO market and move from an approval to a registration (disclosure) system.  IPO restarted and transition to registration system 
ongoing. 
• Establish a deposit insurance system. Insurance deposit system  established in May 2015.  
• Use interest rates as the primary tool for monetary policy and 
establish a more market-oriented interest rate framework.  
• Gradually expand the RMB trading band and encourage 
flexibility in both directions eventually leading to a flexible 
exchange system.  Trading band was widened to 2% in March 2014.  
• Reduce the approval procedures fo r QFII eligibility and quotas in 
a timely manner. The RQFII and RQDII quotas were expanded.  The RQFII 
quota is subject to filing for management, but there is no 
quota control. 
• Gradually liberalize cross-border capital and financial flows; 
establish a macro prudential framework on external debt and 
capital flow management. The Shanghai-Hong Kong Stock Connect Pilot Programme  
approved in April 2014, and officially launched in 
November 2014. 
• Allow qualified private capital to set up commercial banks.  The Guiding Opinions on Promoting the Development of 
Private Banks were issued in 2015. As of January 2016, 5 private banks, 8 private financial leasing companies and 2 private consumer finance companies had opened business. 
• Eliminate investment approvals in all areas except those 
involving national security and strategic resources. Modifications to the investment approval regime. 
• Advance the Shanghai Pilot Free Trade Zone and explore other 
free-trade areas. Three more FTZs opened by  late 2015. Separate 
accounting system established. 
• Strengthen intellectual property rights protection.  Enforcement programmes in 2014 and 2015. On 31 
August 2014, the Standing Committee of the NPC 
adopted a decision on establishing IPR courts in Beijing, 
Shanghai and Guangzhou. On 6 November and 16 and 28 
December 2014, IPR courts were established in Beijing, 
Guangzhou and Shanghai. 
• Introduce a market-based pricing mechanism in the utilities, transport, and telecommunication sector.  WT/TPR/S/342 • China 
 
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  Announced reform initiatives  Progress  
• Reform resource prices. Local authorities were guided to adjust water resource, 
pollution discharge, and sewage treatment fees and other 
environmental protection charging standards. 
• Increase emphasis on environmental protection in assessing 
local officials' performance. Law amended in April 2014; targets of 15 ‒25% reduction 
in air pollutants announced. 
Source: WTO Secretariat, based on information provided by the authorities and on IMF (2015), Country 
Report No. 14/235: People's Republic of China, 2014 Article IV Consultation , July 2014.  
 WT/TPR/S/342 • China 
 
- 147 - 
 
  Table A1.2 Summary of the Outline of the 13th Five-Year Plan for National Economic and 
Social Development (2016-2020), as endorsed by the NPC 
Advice in 13th 
FYP Outline Reforms announced by the authorities 
Main goals  
 Keep the economy growing a medium and high speed level  
 Improve people's standard of living 
 Improve the environment 
Innovation  
New motivation  Emphasis on the role of consumption, investment and export on economic growth: expand services 
consumption and promote public-private partnership investment 
New space  Regional development: "One Belt,  One Road", Development  of Jin Jing Ji, and Changjiang River 
Economic Belt 
 Industry development: upgrade traditional industries and facilitate the development of emerging 
industries in energy-saving and environmenta l protection areas, bio-technology, and IT 
 Expand infrastructure investment 
 Internet economy 
Innovation and 
development 
strategy  Encourage research and implement technology programmes  
 Promote the leading role of enterprises 
 Deepen the reform in science and technology, establish an IP trade platform 
 Give more autonomy to universities and scientific institutions 
Agriculture 
modernization  Review land contracts, separate land ownership, contract rights and operation rights 
 Farmland protection 
 Improve agriculture product quality and safety, increase agriculture inputs, improve subsidy policy 
Industry 
modernization  Manufacture reform "Made in China 2025"  
 Improve brand quality and improve enterprise exit mechanism 
 Support the development of strategic emerging industries 
 Modernize services: open market access, move to the high-end of value chain, and develop tourism 
New administrative 
system  Administration management reform  
 Public ownership will still be the main ownership, while other forms of ownership will be developed 
 SOE reform: establish a modern corporate system, improve national asset administration, guide 
national capital to invest in key industries, encourage private enterprises to enter into more fields 
 Improve the business environment, reduce government intervention and simplify administrative 
approval procedures 
 Market system: fair competition, break up regional and industry monopolies 
 Fiscal reform: separate central and local government power; set a comprehensive and transparent 
budget; deal with local government financing; prioritize the use of innovative and green products in government procurement 
 Financial reform: promote private investment in banking, enhance financial service provision to 
SMEs and rural areas; promote a transparent ca pital market; introduce new financial services; 
liberalize exchange and interest rates; regulate internet finance; establish a system of insurance for 
major disasters 
Macro control  Expand employment, stabilize prices, structural adjustment, protection of the environment 
 Reduce government intervention 
 Establish risk recognition and early warning mechanism 
Coordination  
Regional 
coordination  Development of Western China; pioneer development of East China  
 Development of the Jing Jin Ji, and Changjiang River Economic Belt 
Green development 
Clean production  Support green and clean production, improve education  
Low carbon cycle 
development  Energy reform: establish clean, low carbon, safe and efficient new energy system, increase the use 
of non-fossil energy and promote the clean an d efficient use of foss il energy like coal 
 Promote public transportation, encourage bicycle use and promote new energy automobiles 
 Control carbon emission 
Save and 
efficiently use 
resources  Management of use of energy and other resources  
 Water resource management and farmland protection 
 Contract energy management and co ntract water saving management 
 Promote reasonable consumption 
Environment 
protection  Air, water and soil protection, control contamination and reform monitoring and regulation system  
Open development  
New layout  Two-way open, cross-border economic cooperation, upgrade overseas investment, open more fields 
and relax access limitations 
New business 
environment 
system  Improve business environment, establish new system for cross-border electronic commerce, 
improve service trade system and simplify customs clearance 
 Pre-establishment national treatment and negative list management system 
 Two-way opening in finance, RMB convertibility for capital account, Negative List for foreign 
exchange management, relax foreign investment limitations, monitor international balance 
"One Belt, One 
Road"  Improve bilateral and multilateral cooperation mechanism, international infrastructure 
establishment, cooperation between international financial institutions 
Global Governance  Promote international economic governance and multilateral trade negotiations, implement FTA 
strategy 
International 
obligations  Respond to climate change, support developing countries, and protect international safety and  
security 
Source: WTO Secretariat, based on the Outline of the 13th Five-Year Plan for National Economic and Social 
Development (2016-2020).  WT/TPR/S/342 • China 
 
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  Table A1.3 China's merchandise exports by product group, 2011-15 
 2011  2012  2013 2014 2015  
Total exports (US$ billion)  1,898.4  2,048.8  2,209.0 2,342.3 2,281.9  
 (% of total) 
Exports under processing trade 44.0  42.1 39.0 37.8 35.0  
Total primary products 6.5 6.0 5.9 5.9 5.6 
Agriculture 3.4 3.2 3.2 3.2 3.2  
Food 2.9 2.7 2.7 2.7 2.8 
Agricultural raw material 0.6  0.5 0.5 0.5 0.4  
Mining 3.1 2.7 2.7 2.7 2.4 
Ores and other minerals 0.2  0.2 0.2 0.2 0.1  
Non-ferrous metals 1.2 1.1 1.0 1.1 1.0 
Fuels 1.7 1.5 1.5 1.5 1.2  
Manufactures 93.3 94.0 94.0 94.0 94.3 
Iron and steel 2.9  2.6 2.5 3.1 2.8  
Chemicals 6.0 5.5 5.4 5.7 5.7 
Other semi-manufactures 7.7  8.0 8.1 8.2 8.7  
Machinery and transport equipment 47.5 47.1 47.1 45.8 46.8 
Power generating machines  1.3 1.2 1.2 1.2 1.2  
Other non-electrical machinery 6.2 6.2 6.2 6.4 6.4 
Office machines & telecommunication equipment  26.2 26.3 26.9 25.4 25.9  
7643 Radio or television transmission apparatus  3.3 4.0 4.3 5.0 5.5 
7522 Data processing machines, 5.8  5.8 5.2 4.8 4.1  
7764 Electronic integrated circuits and microassemblies  1.8 2.7 4.0 2.7 3.1 
7649 Parts and accessories for apparatus of division 76  2.9 2.7 2.8 2.6 2.8  
7763 Diodes, transistors, etc. 1.8 1.2 1.1 1.2 1.4 
7599 Parts and accessories of 751.1, 751.2, 751.9, 752  1.6 1.5 1.3 1.3 1.3  
7611 Color television receivers 1.2 1.1 1.0 1.1 1.1 
Other electrical machines 7.7  7.5 7.7 7.7 8.0  
7712 Other electric power machinery; parts of 771  1.0 1.0 1.2 1.0 1.0 
7731 Insulated wire, cable etc.; optical fibre cables  0.8 0.9 0.9 0.9 0.9  
7758 Electro-thermic appliances, n.e.s. 0.8 0.8 0.8 0.8 0.8 
Automotive products 2.0  2.1 2.1 2.2 2.2  
7843 Other motor vehicle parts and accessories  1.1 1.1 1.2 1.2 1.2 
Other transport equipment  4.3 3.7 3.0 2.9 3.1  
 7932 Ships, boats, and other vessels 2.0 1.6 1.0 0.8 0.9 
Textiles 5.0 4.7 4.8 4.8 4.8  
Clothing 8.1 7.8 8.0 8.0 7.7 
8453 Jerseys, pullovers, cardigans, etc., knitted/c rocheted  1.1 1.0 0.9 0.9 0.9  
8442 Suits, ensembes, jackets, dresses, etc. 1.0 1.2 1.3 1.0 0.9 
Other consumer goods 16.0  18.3 18.2 18.5 18.0  
8719 Liquid crystal devices, n.e.s.; lasers (excl. laser diodes)  1.7 1.9 1.7 1.5 1.5 
8131 Lamps and light fittings, n.e.s. 0.6  0.7 0.9 1.3 1.5  
8513 Footwear, n.e.s., rubber or plastic soles and uppers  0.9 0.9 1.0 1.1 1.1 
8211 Seats (excl. of 872.4), and parts 0.9  1.1 1.0 1.0 1.0  
8973 Jewellery of gold, silver or platinum metals  0.9 1.2 1.4 2.2 0.9 
Other 0.1 0.1 0.1 0.1 0.1  
Source: UNSD, Comtrade database (SITC Rev.3). WT/TPR/S/342 • China 
 
- 149 - 
 
  Table A1.4 China's merchandise imports by product group, 2011-15 
 2011  2012  2013 2014 2015  
Total imports (US$ billion)  1,743.4  1,818.2  1,950.0 1,958.0 1,681.7  
 (% of total) 
Imports under processing trade 26.9  26.5 25.5 26.8 26.6  
Total primary products 37.9 38.0 36.4 35.6 30.8 
Agriculture 8.3  8.6 8.5 8.7 9.5  
Food 4.3 5.0 5.1 5.4 6.1 
2222 Soya beans 1.7  1.9 1.9 2.1 2.1  
Agricultural raw material 4.0 3.6 3.4 3.3 3.4 
Mining 29.6 29.4 27.9 26.9 21.3  
Ores and other minerals 10.6 9.1 9.1 8.2 6.9 
2815 Iron ores and concentrates, not agglomerated  6.1 5.0 5.2 4.6 3.3  
2831 Copper ores and concentrates 0.9 0.9 1.0 1.1 1.2 
2882 Other non-ferrous base metal waste 1.2  1.0 0.9 0.7 0.7  
Non-ferrous metals 3.2 3.0 2.6 2.5 2.6 
6821 Copper anodes; alloys; unwrought 1.7  1.8 1.5 1.5 1.4  
Fuels 15.8 17.2 16.2 16.2 11.8 
3330 Crude oils of petroleum and bituminous minerals  11.3 12.1 11.3 11.7 8.0  
Manufactures 59.2 58.2 58.2 60.2 64.4 
Iron and steel 1.6  1.3 1.1 1.1 1.2  
Chemicals 10.4 9.8 9.7 9.8 10.2 
5112 Cyclic hydrocarbons 0.9  0.9 1.2 1.1 1.0  
Other semi-manufactures 2.8 2.7 2.8 4.1 3.2 
Machinery and transport equipment 36.2  35.9 36.4 37.0 40.9  
Power generating machines  0.8 0.8 0.7 0.8 0.8 
Other non-electrical machinery 7.1  5.7 5.1 5.4 5.6  
7284 Machinery and appliances for particular industries, n.e.s.  1.7 1.0 1.0 1.2 1.3 
Office machines & telecommunication equipment  17.5 19.1 20.2 19.3 22.9  
7764 Electronic integrated circuits and microassemblies  9.8 10.6 11.9 11.1 13.7 
7649 Parts and accessories for apparatus of division 76  2.0 2.3 2.5 2.4 2.9  
7763 Diodes, transistors, etc. 1.0 1.0 1.1 1.2 1.4 
7527 Storage units for data processing 1.3  1.4 1.0 1.0 1.0  
7599 Parts and accessories of 751.1, 751.2, 751.9 and 752  1.0 1.0 0.9 1.0 1.0 
Other electrical machines 5.1  4.7 4.8 4.8 5.1  
7725 Switches, relays, etc. for a voltage not exceeding 1000 V  0.8 0.8 0.7 0.8 0.8 
7722 Printed circuits 0.8  0.8 0.7 0.7 0.7  
Automotive products 4.0 4.1 4.0 4.8 4.3 
7812 Motor vehicles for the tr ansport of persons, n.e.s.  2.3 2.5 2.4 3.0 2.6  
7843 Other motor vehicle parts and accessories of 722, 781 to 
783 1.2 1.2 1.2 1.4 1.4 
Other transport equipment  1.6 1.6 1.7 2.0 2.2  
7924 Aeroplanes, etc. (excl. helicopters), >15,000 kg unladen  0.6 0.8 1.0 1.3 1.5 
Textiles 1.1 1.1 1.1 1.0 1.1  
Clothing 0.2 0.2 0.3 0.3 0.4 
Other consumer goods 7.1  7.2 6.8 6.7 7.5  
8719 Liquid crystal devices, n.e.s.; lasers (excl. laser diodes)  3.0 3.1 2.8 2.6 2.8 
Other 2.8 3.8 5.4 4.2 4.8  
Source: UNSD, Comtrade database (SITC Rev.3). WT/TPR/S/342 • China 
 
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  Table A1.5 China's merchandise exports by destination, 2011-15 
 2011  2012  2013 2014 2015  
Total exports (US$ billion) 1,898.4  2,048.8  2,209.0 2,342.3 2,281.9  
 (% of total) 
America 24.8 25.1 24.1 24.0 25.1 
United States 17.1 17.2 16.7 17.0 18.0 
Other America 7.7 7.9 7.4 7.1 7.1 
Mexico 1.3 1.3 1.3 1.4 1.5 
Canada 1.3 1.4 1.3 1.3 1.3 
Brazil 1.7 1.6 1.6 1.5 1.2 
Europe 20.1 17.5 16.5 17.0 16.8 
EU-28 18.8 16.4 15.4 15.8 15.6 
Germany 4.0 3.4 3.0 3.1 3.0 
United Kingdom 2.3 2.3 2.3 2.4 2.6 
The Netherlands 3.1 2.9 2.7 2.8 2.6 
Italy 1.8 1.3 1.2 1.2 1.2 
France 1.6 1.3 1.2 1.2 1.2 
EFTA 0.4 0.3 0.3 0.3 0.3 
Other Europe 0.9 0.8 0.8 0.9 0.9 
Commonwealth of Independent States (CIS) 3.5 3.7 3.8 3.7 2.5 
Russian Federation 2.0 2.2 2.2 2.3 1.5 
Africa 3.8 4.2 4.2 4.5 4.6 
Middle East 4.2 4.2 4.4 5.0 4.8 
United Arab Emirates 1.4 1.4 1.5 1.7 1.6 
Asia 43.5 45.3 47.1 45.8 46.0 
Hong Kong, China 14.1 15.8 17.4 15.5 14.6 
Japan 7.8 7.4 6.8 6.4 6.0 
Korea, Rep. of 4.4 4.3 4.1 4.3 4.4 
Viet Nam 1.5 1.7 2.2 2.7 2.9 
India 2.7 2.3 2.2 2.3 2.6 
Singapore 1.9 2.0 2.1 2.1 2.3 
Chinese Taipei 1.8 1.8 1.8 2.0 2.0 
Malaysia 1.5 1.8 0.0 2.0 1.9 
Australia 1.8 1.8 1.7 1.7 1.8 
Thailand 1.4 1.5 1.5 1.5 1.7 
Indonesia 1.5 1.7 1.7 1.7 1.5 
Memorandum:      
APEC 61.3 63.8 65.0 63.8 63.8 
ASEAN 9.0 10.0 11.0 11.6 12.2 
Source: UNSD, Comtrade database. WT/TPR/S/342 • China 
 
- 151 - 
 
  Table A1.6 China's merchandise imports by origin, 2011-15 
 2011  2012  2013  2014 2015  
Total imports (US$ billion) 1,743.4  1,818.2  1,950.0  1,958.0 1,681.7  
 (% of total) 
America 15.1 15.5 15.6 15.9 16.7 
United States 7.1 7.4 7.9 8.2 9.0 
Other America 8.1 8.2 7.8 7.7 7.7 
Brazil 3.0 2.9 2.8 2.6 2.6 
Canada 1.3 1.3 1.3 1.3 1.6 
Chile 1.2 1.1 1.1 1.1 1.1 
Europe 14.1 13.3 14.6 14.9 15.4 
EU-28 12.1 11.7 11.3 12.4 12.4 
Germany 5.3 5.1 4.8 5.4 5.2 
France 1.3 1.3 1.2 1.4 1.5 
United Kingdom 0.8 0.9 1.0 1.2 1.1 
Italy 1.0 0.9 0.9 1.0 1.0 
EFTA 1.8 1.4 3.1 2.3 2.7 
Switzerland 1.6 1.3 2.9 2.1 2.5 
Other Europe 0.2 0.2 0.3 0.2 0.2 
Commonwealth of Independent States (CIS) 3.8 4.0 3.6 3.4 3.2 
Russian Federation 2.3 2.4 2.0 2.1 2.0 
Africa 5.3 6.2 6.0 5.9 4.0 
South Africa 1.8 2.5 2.5 2.3 1.8 
Middle East 7.7 8.0 8.0 8.2 6.0 
Saudi Arabia 2.8 3.0 2.7 2.5 1.8 
Asia 46.6 44.7 43.8 44.1 45.9 
Korea, Rep. of 9.3 9.3 9.4 9.7 10.4 
Chinese Taipei 7.2 7.3 8.0 7.8 8.6 
Japan 11.2 9.8 8.3 8.3 8.5 
Australia 4.7 4.7 5.1 5.0 4.4 
Malaysia 3.6 3.2 3.1 2.8 3.2 
Thailand 2.2 2.1 2.0 2.0 2.2 
Singapore 1.6 1.6 1.5 1.6 1.6 
Viet Nam 0.6 0.9 0.9 1.0 1.5 
Indonesia 1.8 1.8 1.6 1.3 1.2 
Philippines 1.0 1.1 0.9 1.1 1.1 
Other 7.4 8.2 8.3 7.5 8.7 
Free Zone Chinaa 7.0 7.9 8.1 7.4 8.6 
Memorandum:      
APEC 64.4 64.0 63.4 62.7 67.3 
ASEAN 11.1 10.8 10.2 10.6 11.3 
a Includes goods that have been  exported from China and thereaft er re-imported into China.  
Source: UNSD, Comtrade database. 
 WT/TPR/S/342 • China 
 
- 152 - 
 
  Table A2.1 Main notifications under WTO Ag reements (1 January 2014-1 March 2016, 
(or last notification if applicable)   
Agreement Requirement/content Document symbol and date o f latest 
notification 
Agreement on Agriculture  
Articles 10 and 18.2 Table ES:1 – Export subsidies for 2012  G/AG/N/CHN/29, 02/02/2016 
Article 18.2 Table MA:2 – Tariff quotas  G/AG/N/CHN/26, 07/03/2014 
Article 18.2 Table MA:1 – Administration of tariff quotas  G/AG/N/CHN/2, 25/09/2003 
Article 18.2 Table DS:1 and appropriate supporting tables –  
Domestic support G/AG/N/CHN/21, 13/10/2011  
Article 18.2 Table DS:1 – Domestic support  G/AG/N/CHN/28, 06/05/2015  
Article 18.3 Table DS:2 – Domestic support  G/AG/N/CHN/18, 25/03/2010  
Article XXIV of GATT 1994  
Article XXIV:7(a) of GATT 
1994 and Article V:7(a) of GATS Free Trade Agreement between Switzerland 
and China WT/REG351/N/1-S/C/N/742, 
02/07/2014  
Article XXIV:7(a) of GATT 
1994 and Article V:7(a) 
of GATS Free Trade Agreement between Iceland 
and China WT/REG355/N/1-S/C/N/771, 
13/10/2014 
Article XXIV:7(a) of GATT 1994 and Article V:7(a) 
of GATS Free Trade Agreement between Australia 
and China WT/REG369/N/1-S/C/N/858, 
27/01/2016 
Article XXIV:7(a) of GATT 
1994 and Article V:7(a) 
of GATS Free Trade Agreement between Republic of 
Korea and China WT/REG370/N/1-S/C/N/854, 
02/03/2016 
Enabling Clause  
Enabling Clause – LDCs Duty-free treatment for LDCs  WT/COMTD/N/39/Add.1/Rev.1, 
01/12/2011  
Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping)  
Article 5.8 Time-period for determination of negligible 
import volumes G/ADP/N/100/CHN, 20/10/2004  
Article 16.4 Semi-annual reports of anti-dumping actions 
(taken within the preceding six months) G/ADP/N/252/CHN, 05/02/2014 
G/ADP/N/259/CHN, 18/09/2014 G/ADP/N/265/CHN, 23/01/2015 G/ADP/N/272/CHN, 09/10/2015 
Article 18.5, and Article 32.6 
of the Agreement on Subsidies 
and Countervailing Measures Regulations on anti-dumping  G/ADP/N/1/CHN/2/Suppl.3, 20/10/2004  
 Rules on anti-dumping investigations 
and determinations of industry injury; 
rules on public hearings with regard 
to investigations of injury to industry G/ADP/N/1/CHN/2/Suppl.2, 14/04/2003  
Article 16.5, and Article 25.12 
of the Agreement on Subsidies 
and Countervailing Measures Notification of competent authority  G/ADP/N/14/Add.38 -
G/SCM/N/18/Add.38, 7 October 2014 
Agreement on Implementation of Article VII of the  GATT 1994 (Customs Valuation)  
Article 22.2 Administrative measure regarding 
customs valuation G/VAL/N/1/CHN/5, 11/04/2008  
 Regulations on import and export duties  G/VAL/N/1/CHN/4, 07/06/2004  
 Notification of the customs regulations regarding 
determination of customs value of royalties 
and licence fees related to imports G/VAL/N/1/CHN/3, 24/09/2003  
 Customs law  G/VAL/N/1/CHN/2, 16/06/2003  
 Customs administration regarding determination 
of customs valuation of imports and exports G/VAL/N/1/CHN/1, 05/07/2002  
Decision on the checklist 
of issues Checklist of issues  G/VAL/N/2/CHN/1, 05/07/2002  
General Agreement on Tariffs and Trade (GATT) 1994  
Article XVII:4(a) Notification under the Understanding on the 
Interpretation of Article XVII, on state trading 
for the period 2003-2014 G/STR/N/10/CHN-G/STR/N/11/CHN-
G/STR/N/12/CHN-G/STR/N/13/CHN-
G/STR/N/14/CHN-G/STR/N/15/CHN, 19/10/2015 
Article VII  Notifications on the valuation of carrier 
media-bearing software for data processing 
equipment, and on the treatment of interest 
charges in customs value of imported goods G/VAL/N/3/CHN/1, 27/02/2004 
General Agreement on Trade in Services  
Articles III:4 and IV:2 Contact and enquiry points  S/ENQ/78/Rev.15, 04/02/2015 
Article V:7(a) of GATS  
(already referred to) Notification of RTA –  Switzerland and China  S/C/N/742, 02/07/2014 
Article V:7(a) of GATS  
(already referred to) Notification of RTA –  Iceland and China  S/C/N/771, 13/10/2014 
Paragraph 14 of the 
Transparency Mechanism for 
Regional Trade Agreements (WT/L/671) and Article V:7(a) of GATS  Supplement VII to the Closer Economic 
Partnership Arrangement between China 
and Hong Kong, China and Supplement VII to the Closer Economic Partnership Arrangement between China and Macao, China S/C/N/264/Add.8, 17/03/2015 
S/C/N/265/Add.7, 13/11/2013  
S/C/N/265/Add.8, 31/03/2015  
Article VII:4 Existing Article VII:1 recognition measures  None WT/TPR/S/342 • China 
 
- 153 - 
 
  Agreement Requirement/content Document symbol and date o f latest 
notification 
Agreement on Preshipment Inspection  
Article 5  Notification of laws and regulations related 
to the Agreement None 
Agreement on Import Licensing Procedures  
Articles 1.4(a) and 8.2(b) Rules and measures on import licensing 
and import quotas  G/LIC/N/1/CHN/1, 20/09/2002 
G/LIC/N/1/CHN/1/Add.1, 23/09/2002 
G/MA/W/41, 23/09/2002 
Article 8.2(b) Notification of rules and measures on import  
quotas for various products G/LIC/N/1/CHN/2, 25/09/2002 
 Products subject to import licence (2004)  G/LIC/N/1/CHN/4, 17/01/2005 
 Notification of regulations and rules on import 
licensing G/LIC/N/1/CHN/6, 24/03/2010  
Article 7.3 Responses to questionnai re on import licensing 
procedures G/LIC/N/3/CHN/13, 22/01/2015  
Quantitative Restrictions  
QR - (G/L/59) - biennial  Notification of quantitative restrictions  G/MA/NTM/QR/1/Add.13, 24/04/2015  
Committee on Market Access Notification pursuant to the Decision on 
Notification Procedures for Quantitative Restrictions (G/L/59/Rev.1) G/MA/QR/N/CHN/1-3, 24/04/2015
 
Agreement on Rules of Origin  
Article 5 and Paragraph 4 of 
Annex II Preferential and non-preferential rules of origin  G/RO/N/132, 07/09/2015  
Agreement on Safeguards  
Article 12.1(a)-(c), and 
Article 9.1 footnote 2 Safeguard investigations, findings, and decisions  G/SG/N/10/CHN/1/Suppl.1, 04/02/2004  
Article 12.6 Notification of laws, regulations 
and administrative procedures relating 
to safeguard measures  G/SG/N/1/CHN/1, 07/06/2002 
 Regulations on Safeguards  G/SG/N/1/CHN/2/Suppl.3, 20/10/2004  
 Rules on investigations and determinations 
of industry injury for safeguards; rules on public 
hearings with regard to investigations of injury 
to industry G/SG/N/1/CHN/2/Suppl.2, 15/04/2003  
Agreement on the Application of Sanitary and Phytosanitary Measures  
Article 7 and Annex B Notifications in 2016 = 44 (21.01.2016)  G/SPS/N/CHN/1021-1050 
Article 7 and Annex B Notifications in 2015 = 305  G/SPS/N/CHN/703-1006 
Article 7 and Annex B Notifications in 2014 = 68  G/SPS/N/CHN/635-749  
Article 7 and Annex B Enquiry points  G/SPS/ENQ/26, 11/03/2011  
Agreement on Subsidies and Countervailing Measures  
Article 25.1  Programmes granted or maintained at the 
central government level during the period from 2009 to 2014 G/SCM/N/220/CHN -
G/SCM/N/253/CHN- G/SCM/N/284/CHN, 30/10/2015 
Article 25.11 Semi-annual report on countervailing 
duty actions G/SCM/N/281/CHN, 28/01/2015 
Article 32.6 Notification of the amended Foreign Trade Law  G/SCM/N/1/CHN/1/Suppl.4, 01/12/2004  
 Regulations on countervailing measures  G/SCM/N/1/CHN/1/Suppl.3, 
20/10/2004  
 Rules on investigations and determinations 
of industry injury for countervailing measures; rules on public hearings with regard to investigations of injury to industry G/SCM/N/1/CHN/1/Suppl.2, 
14/04/2003  
 Provisional rules on countervailing investigations  G/SCM/N/1/CHN/1/Suppl.1, 
18/02/2003 
Agreement on Technical Barriers to Trade (TBT)  
Annex 3C Acceptance of code of good practice  G/TBT/CS/N/143, 21/05/2002 
G/TBT/CS/N/138, 12/12/2001 and 
Corr.1, 30/01/2002 
Article 15.2 Laws and regulations on the implementation 
and administration of the TBT Agreement G/TBT/2/Add.65, 29/01/2002 
Article 2.10 Coal 
Fireworks and firecrackers G/TBT/N/CHN/1057, 18/09/2014  
G/TBT/N/CHN/1071-1074,  
24/03/2015 
Article 2.9 Notification of technical regulations:   
 Notifications in 2014 = 50  G/TBT/N/CHN/1018-1064, 31/01/2014-
12/12/2014 
G/TBT/N/CHN/78/Add.1, 06/10/2014 
G/TBT/N/CHN/806/Add.1, 03/06/2014; 
G/TBT/N/CHN/983/Suppl.1, 21/01/2014 
 Notifications in 2015 = 101  G/TBT/N/CHN/1065-1161, 05/01/2015-
17/12/2015; 
G/TBT/N/CHN/145/Rev.2, 17/12/2015; 
G/TBT/N/CHN/248/Rev.1, 17/12/2015; G/TBT/N/CHN/256/Rev.1, 29/10.2015; G/TBT/N/CHN/327/Rev.1, 29/10/2015; G/TBT/N/CHN/261/Add.1, 13/02/2015; 
G/TBT/N/CHN/724/Add.1, 13/02/2015; 
G/TBT/N/CHN/783/Add.1, 02/06/2015; WT/TPR/S/342 • China 
 
- 154 - 
 
  Agreement Requirement/content Document symbol and date o f latest 
notification 
G/TBT/N/CHN/253/Rev.1, 01/10/2015;  
G/TBT/N/CHN/216/Rev.1, 13/02/2015  
 Notifications in 2016 = 10  G/TBT/N/CHN/1162-1170, 07.01.2016-
08.03.2016 
G/TBT/N/CHN/1152/Rev.1, 08/01/2016 
Article 5.6  G/TBT/N/CHN/1130, 25/08/2015  
Article 5.7  None during the period 
Agreement on Trade-Related Aspect s of Intellectual Property Rights   
Article 63.2 Revised Rules for the Implementation of the 
Patent Law  IP/N/1/CHN/4, 24/08/2011 
IP/N/1/CHN/P/3, 26/08/2011 
 Revised Patent Law  IP/N/1/CHN/3, 15/12/2010 
IP/N/1/CHN/P/2, 21/12/2010 
 Laws and regulations  IP/N/1/CHN/2, 10/10/2003 
IP/N/1/CHN/2/Add.1, 25/08/2004 
 Checklist of issues on enforcement  IP/N/6/CHN/1, 19/07/2002 
 Regulations on computer software protection  IP/N/1/CHN/C/2/Rev.1, 13/10/2003  
 Regulations on protection of new varieties 
of plants IP/N/1/CHN/P/1, 08/07/2002 
Article 69 Contact points IP/N/3/Rev.9/Add.1, 31/01/2006  
Agreement on Trade-Related Investment Measures   
Article 6.2 Publications G/TRIMS/N/2/Rev.19, 30/09/2009 
Source: WTO Secretariat.  WT/TPR/S/342 • China 
 
- 155 - 
 
  Table A2.2 WTO dispute settlement cases in volving China, 1 January 2014-1 March 2016 
(In reverse chronological order) 
Subject Respondent/ 
complainant/ 
appellant Request for 
consultation 
received  Status (as at 
31 Dec. 2015) WTO 
document 
series 
China as respondent     
Tax Measures Concerning Certain 
Domestically Produced Aircraft  China/ 
United States  8/12/2015 Panel not 
established  WT/DS501  
Measures Related to Demonstration Bases 
and Common Service Platforms Programmes China/ 
United States 11/02/2015 Panel established,  
but not yet 
composed WT/DS489 
Anti-Dumping Measures on Imports of 
Cellulose Pulp from Canada China/Canada 15/10/2014 Panel composed WT/DS483 
China as complainant      
Measures Affecting Tariff Concessions on 
Certain Poultry Meat Products European Union/ 
China 08/04/2015 Panel established,  
but not yet 
composed WT/DS492 
China as a third party      
Certain Measures Concerning Taxation and 
Charges Brazil/Japan 02/07/2015 Panel composed WT/DS497 
Safeguard on Certain Iron or Steel Products Indonesia/Viet 
Nam 01/06/2015 Panel composed WT/DS496 
Import Bans, and Testing and Certification 
Requirements for Radionuclides Korea, Republic 
of/Japan 21/05/2015 Panel composed WT/DS495 
Anti-Dumping and Countervailing Measures 
on Certain Coated Paper from Indonesia United States/ 
Indonesia 13/03/2015 Panel composed WT/DS491  
Safeguard on Certain Iron or Steel Products Indonesia/ Chinese 
Taipei 12/02/2015 Panel composed WT/DS490 
Anti-Dumping Measures on Certain Oil 
Country Tubular Goods from Korea United States/ 
Korea, Republic of 22/12/2014 Panel composed WT/DS488 
Conditional Tax Incentives for Large Civil 
Aircraft United States/ 
European Union 19/12/2014 Panel composed WT/DS487 
Countervailing Measures on Certain 
Polyethylene Terephthalate from Pakistan European Union/ 
Pakistan 05/11/2014 Panel composed WT/DS486 
Tariff Treatment of Certain Agricultural and 
Manufacturing Products Russian 
Federation/ 
European Union 31/10/2014 Panel Composed WT/DS485 
Measures Concerning the Importation of 
Chicken Meat and Chicken Products  Indonesia/Brazil 16/10/2014 Panel established, 
but not yet 
composed WT/DS484 
Anti-Dumping Measures on Imports of 
Certain Carbon Steel Welded Pipe from the 
Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu Canada/ 
Chinese Taipei 25/06/2014 Panel composed WT/DS482 
Anti-Dumping Measures on Biodiesel from 
Indonesia European Union/ 
Indonesia 10/06/2014 Panel established,  
but not yet 
composed WT/DS480 
Anti-Dumping Duties on Light Commercial 
Vehicles from Germany and Italy Russian 
Federation/ 
European Union 21/05/2014 Panel composed WT/DS479 
Importation of Horticultural Products, 
Animals and Animal Products United States/ 
Indonesia 08/05/2014 Panel established,  
but not yet 
composed WT/DS478 
Importation of Horticultural Products, 
Animals and Animal Products New Zealand/ 
Indonesia 08/05/2014 Panel established,  
but not yet 
composed WT/DS477 
Certain Measures Relating to the Energy 
Sector European Union/ 
Russian Federation 30/04/2014 Panel established,  
but not yet 
composed WT/DS476 
Measures on the Importation of Live Pigs, 
Pork and Other Pig Products from the 
European Union European Union/ 
Russian Federation 08/04/2014 Panel composed WT/DS475 
Source: WTO Secretariat.  WT/TPR/S/342 • China 
 
- 156 - 
 
  Table A2.3 Industries in which FDI was/is restricted, 2011 and/or 2015 
(The shaded areas refer to activities that are different in either Catalogue. Each Catalogue assigns different 
numbering for the same activity) 
2011 2015  
I. Agricultural, Forestry, Livestock and Fishery 
Industries  I. Agricultural, Forestry, Livestock and Fishery 
Industries  
1. Selection and cultivation of new varieties of crops, and 
production of seeds (with Chinese parties as the controlling 
shareholders) 1. Selection and cultivation of new varieties of crops, and 
production of seeds (with Chinese parties as the controlling 
shareholders) 
2. Processing of the lumber of precious varieties of trees 
(limited to Sino-foreign equity/cooperative joint venture 
operations) Not listed in the 2015 Catalogue  
3. Processing of cotton (seed cotton) Not listed in the 2015 Catalogue  
II. Mining Industry  II. Mining Industry  
1. Exploration and mining of special and rare kinds of coal 
(with Chinese parties as the controlling shareholders) 2. Exploration and mining of special and rare kinds of coal 
(with Chinese parties as the controlling shareholders)  
2. Exploration and mining of barites (limited to Sino-foreign 
equity/cooperative joint venture operations) Not listed in the 2015 Catalogue  
3. Exploration and mining of noble metals (gold, silver and 
platinum group) 3. Exploration and mining of noble metals (gold, silver and 
platinum group) 
4. Exploration and mining of diamonds, high-aluminium 
fireclay, wollastonite, graphite and other important non-
metallic metals 4. Exploration and mining of graphite 
5. Mining and mine selection of phosphorus mines,  lithium 
mines and iron sulphur mines, extraction of brine resources 
from salt lake 5. Mining and mine selection of lithium mines 
6. Mining of szaibelyite and ludwigite Not listed in the 2015 Catalogue  
7. Mining of celestite Not listed in the 2015 Catalogue  
8. Mining of marine manganese nodule and sea sand (with 
Chinese parties as the controlling shareholders) Not listed in the 2015 Catalogue  
III. Manufacturing Industry  III. Manufacturing Industries  
(I) Agricultural Products, By-products and Food 
Processing Industry Not listed in the 2015 Catalogue  
1. Processing of edible oils and fats from soybean, rapeseed, 
peanut, cottonseed, camellia seed, sunflower seed, palm 
(with Chinese parties as the controlling shareholders), 
processing of rice, flour, and deep processing of corn  6. Processing of edible oils and fats from soybean, rapeseed, 
peanut, cottonseed, camellia seed, sunflower seed, palm 
(with Chinese parties as the controlling shareholders), 
processing of rice, flour and crude sugar, and deep processing 
of corn 
2. Production of biological liquid fuels (fuel ethanol and 
biodiesel) (with Chinese parties as the controlling 
shareholders)  7. Production of biological liquid fuels (fuel ethanol and 
biodiesel) (with Chinese parties as the controlling 
shareholders) 
(II) Beverage Manufacturing Industry Not listed in the 2015 Catalogue  
1. Production of rice wine and famous-brand spirits (with 
Chinese parties as the controlling shareholders) Not listed in the 2015 Catalogue  
(III) Tobacco Products Industry Not listed in the 2015 Catalogue  
1. Processing and production of threshed and re-dried 
tobacco leaves Not listed in the 2015 Catalogue  
(IV) Printing Industry and Reproduction of Recording 
Media Not listed in the 2015 Catalogue  
1. Printing of publications (with Chinese parties as the 
controlling shareholders) 8. Printing of publications (with Chinese parties as the 
controlling shareholders)  
(V) Petroleum Processing, Coking and Nuclear Fuel 
Processing Industries Not listed in the 2015 Catalogue  
1. Atmospheric and vacuum refinery with the annual output 
below 10 million tons, catalytic cracking with an annual 
output below 1.5 million tons, continuous reforming (including 
aromatics extraction) with an annual output below 1 million 
tons, hydrogen cracking production with an annual output 
below 1.5 million tons Not listed in the 2015 Catalogue  
(VI) Manufacturing of Chemical Raw Materials and 
Chemical Products  Not listed in the 2015 Catalogue  
1. Production of calcined soda and caustic soda, as well as 
sulphuric acid, nitric acid and potassium carbonate of limited 
output or with an obsolete process Not listed in the 2015 Catalogue  
2. Production of photosensitive materials Not listed in the 2015 Catalogue  
3. Production of benzidine Not listed in the 2015 Catalogue  
4. Production of precursor chemicals (ephedrine, 
3,4-methylenedioxyphenyl-2-propanone, phenylacetic acid, 1-
phenyl-2-propanone, piperonal, safrole, iso-safrole and acetic 
oxide) Not listed in the 2015 Catalogue  
5. Production of hydrogen fluoride and other low-end 
chlorofluorocarbons or chlorofluoro-compounds Not listed in the 2015 Catalogue  
6. Production of butadiene rubber (excluding high 
cis-butadiene rubber), emulsion polymerized styrene 
butadiene rubber (E-SBR) and thermoplastic 
styrene-butadiene-styrene (SBS) rubber Not listed in the 2015 Catalogue  WT/TPR/S/342 • China 
 
- 157 - 
 
  2011 2015  
7. Production of PVC through the acetylene method, and 
production of ethene of limited output and post-processing 
products Not listed in the 2015 Catalogue  
8. Production of dyes and paints using an obsolete process, 
containing hazardous substances, and of limited output Not listed in the 2015 Catalogue  
9. Processing of ludwigite Not listed in the 2015 Catalogue  
10. Production of inorganic salt which uses large amounts of 
resources, causes serious environment pollution, and uses 
obsolete processes Not listed in the 2015 Catalogue  
(VII) Medical and Pharmaceutical Products 
Manufacturing Not listed in the 2015 Catalogue  
1. Production of chloramphenicol, penicillin G, jiemycin, 
gentamicin, dihydrostreptomycin, amikacin, totomycin, 
oxytetracycline, mydecamycin, leucomycin (stereomycin), 
ciprofloxacin, norfloxacin and ofloxacin Not listed in the 2015 Catalogue  
2. Production of analgin, paracetamol, Vitamin B1, Vitamin 
B2, Vitamin C, Vitamin E, multiplex vitamin preparations and 
oral calcium preparations Not listed in the 2015  Catalogue  
3. Production of varieties of vaccines which have been 
incorporated into the national immunity planning Not listed in the 2015 Catalogue  
4. Production of active pharmaceutical ingredients (APIs) for 
anaesthetics and Category I psychotropic drugs (with Chinese 
parties as the controlling shareholders) Not listed in the 2015 Catalogue  
5. Production of blood products  Not listed in the 2015 Catalogue  
(VIII) Chemical Fibre Manufacturing Not listed in the 2015 Catalogue  
1. Production of chemical fibre drawn-work of conventional 
copolyester (CoPET) 
2. Production of viscose fibres Not listed in the 2015 Catalogue  
(IX) Smelting and Rolling of Non-ferrous Metals  Not listed in the 2015 Catalogue  
1. Smelting of rare metals including tungsten, molybdenum, 
tin (excluding tin compounds) antimony (including antimony 
oxides and antimony sulphides) 9. Smelting of rare metals including tungsten, molybdenum, 
tin (excluding tin compounds), antimony (including antimony 
oxides and antimony sulphides) 
2. Smelting of non-ferrous metals including electrolytic 
aluminium, copper, lead and zinc Not listed in the 2015 Catalogue  
3. Smelting and separation of rare earth elements (limited to 
Sino-foreign equity/cooperative joint venture operations) 10. Smelting and separation of rare earth (limited to Sino-
foreign equity/cooperative joint venture operations) 
(X) General-Purpose Equipment Manufacturing  Not listed in the 2015 Catalogue  
1. Manufacture of various types of general grade (P0) 
bearings and their components (steel balls and cages) and 
roughcasts Not listed in the 2015 Catalogue  
2. Manufacture of wheeled, caterpillar hoisting machinery 
with a lifting capacity of less than 400 tons (limited to Sino-
foreign equity/cooperative joint venture operations) Not listed in the 2015 Catalogue  
(XI) Special-Purpose Equipment Manufacturing  Not listed in the 2015 Catalogue  
1. Manufacture of equipment for ordinary dacron filament and 
short fibre Not listed in the 2015 Catalogue  
2. Manufacture of bulldozers of 320 horsepower or less, 
hydraulic excavators of 30 tons or less, wheeled loaders of 6 
tons or less, graders, road rollers, and forklifts of 220 
horsepower or less, electrically driven off-highway dump 
trucks of 135 tons or less, hydro-mechanically driven off-
highway dump trucks of 60 tons or less, asphalt concrete 
mixing and paving equipment and high-altitude operation 
machinery, garden machinery and tools and ready-mixed 
concrete machinery (pilot pumps, agitating lorries, mixing 
stations and pump trucks) Not listed in the 2015 Catalogue  
(XII) Manufacturing of Transportation and 
Communication Equipment  Not listed in the 2015 Catalogue  
Not listed in the 2011 Catalogue 11. Manufacturing of automobile whole vehicles, special-use 
vehicles and motorcycles: Chinese parties shall hold at least 
50% of the shares. One foreign investor may establish two or 
less equity joint ventures in mainland China to manufacture 
the same category of whole vehicle products (i.e. the 
category of passenger cars, the category of commercial 
vehicles or the category of motorcycles), provided that the 
foregoing restrictions on the maximum of two joint ventures 
are not applicable if the same foreign investor engages in the 
merger of other domestic auto manufacturers jointly with its 
Chinese joint venture partners 
1. Repair, design and manufacture of vessels (including 
sections) (with Chinese parties as the controlling 
shareholders) 12. Repair, design and manufacture of vessels (including 
sections) (with Chinese parties as the controlling 
shareholders) 
(XIII) Manufacturing of Co mmunication Equipment, 
Computers and Other Electronic Equipment Not listed in the 2015 Catalogue  
1. Production of satellite telecasting ground receiving facilities 
and key components 13. Production of satellite telecasting ground receiving 
facilities and key components WT/TPR/S/342 • China 
 
- 158 - 
 
  2011 2015  
IV. Industries of Production and Supply of Power, Gas 
and Water IV. Industries of Production and Supply of Power, 
Thermal Power, Gas and Water 
1. Construction and operation, in small grids, of power plants 
using coal-fired and steam condensation thermal generator 
sets with a single generator capacity of 300,000 kW or less, 
and thermoelectric power stations using coal-fired, steam 
condensation and extraction thermal generator sets with a 
single generator capacity of 100,000 kW or less 14. Construction and operation, in small grids, of power 
plants using coal-fired and steam condensation thermal 
generator sets with a single generator capacity of 300,000 
kW or less, and thermoelectric power stations using coal-
fired, steam condensation and extraction thermal generator 
sets with a single generator capacity of 100,000 kW or less  
2. Construction and operation of grids (with Chinese parties 
as the controlling shareholders) Not listed in the 2015 Catalogue  
3. Construction and operation of pipeline networks for gas, 
heat, water supply and sewage in cities with a population 
over 0.5 million (with Chinese parties as the controlling 
shareholders) 15. Construction and operation of pipeline networks for gas, 
heat, water supply and sewage in cities with a population 
over 0.5 million (with Chinese parties as the controlling 
shareholders) 
V. Transportation, Storage & Warehousing and Postal 
Services Industries V. Transportation, Storage & Warehousing and Postal 
Services Industries  
1. Railway freight transport companies Not listed in the 2015 Catalogue  
2. Railway passenger transport companies (with Chinese 
parties as the controlling shareholders) 16. Railway passenger transport companies (with Chinese 
parties as the controlling shareholders) 
3. Highway passenger transport companies 17. Highway passenger transport companies 
4. Cross-boundary automobile transport companies  Not listed in the 2015 Catalogue  
5. Water transport companies (with Chinese parties as the 
controlling shareholders) 18. Water transport companies (with Chinese parties as the 
controlling shareholders) 
6. General aviation companies for photography, prospecting 
and industrial purposes (with Chinese parties as the 
controlling shareholders) 19. General aviation companies for business flights, air 
sightseeing tours, photography, prospecting and industrial 
purposes (with Chinese parties as the controlling 
shareholders) 
Not listed in the 2011 Catalogue VI. Information Transm ission, Software and 
Information Technology  Service Industries 
7. Telecommunication companies: value-added 
telecommunication services (with the proportion of foreign 
investment not exceeding 50%); basic telecommunication 
services (with the proportion of foreign capital not exceeding 
49%) 20. Telecommunications companies: value-added 
telecommunications services (with the proportion of foreign 
investment not exceeding 50%, excluding e-commerce); 
basic telecommunications services (with the proportion of 
foreign capital not exceeding 49%) 
VI. Wholesale and Retail Industries VII. Wholesale and Retail Industries  
1. Direct sales, mail orders, and online sales Not listed in the 2015 Catalogue  
2. Purchase of grains; wholesale, retail, and distribution of 
grains, cotton, vegetable oil, sugar, tobacco, crude oil, 
agricultural chemicals, agricultural plastic film and fertilizers 
(in the case of chain stores having established more than 30 
stores and selling products of different varieties and brands 
from multiple suppliers, the Chinese parties shall be the 
controlling shareholders) 21. Purchase of grains, wholesale of grains and cotton, and 
construction and operation of large-scale agricultural products 
wholesale markets 
3. Construction and operation of large-scale agricultural 
products wholesale market Not listed in  the 2015 Catalogue  
4. Distribution of audio-video products (excluding movies) 
(limited to Sino-foreign cooperative joint venture operations) Not listed in the 2015 Catalogue  
5. Vessel agencies (with Chinese parties as the controlling 
shareholders) and ocean shipping tally companies (limited to 
Sino-foreign equity/cooperative joint venture operations) 22. Vessel agencies (with Chinese parties as the controlling 
shareholders) and ocean shipping tally companies (limited to 
Sino-foreign equity/cooperative joint venture operations) 
6. Wholesale of product oil, and construction and operation of 
gas stations (in the case of those having established more 
than 30 chain gas stations funded by the same foreign 
investors and selling product oil of different varieties and 
brands from multiple suppliers, the Chinese parties shall be 
the controlling shareholders) 23. Construction and operation of gas stations (in the case of 
those having established more than 30 chain gas stations 
funded by the same foreign investors and selling product oil 
of different varieties and brands from multiple suppliers, the 
Chinese parties shall be the controlling shareholders) 
VII. Finance Industry VIII. Finance Industry  
1. Banks, financial companies, trust companies, and currency 
brokerage companies 24. Banks (a single overseas financial institution and the 
affiliated parties under its control or joint control are only 
allowed to invest in not more than 20% of the shares of a 
single Chinese-funded commercial bank as promoters or 
strategic investors; multiple overseas financial institutions 
and the affiliated parties under their control or joint control 
are only allowed to invest in a total of not more than 25% of 
the shares of a single Chinese-funded commercial bank as 
promoters or strategic investors; and, overseas financial 
institutions investing in rural small and medium-sized 
financial institutions shall be banking financial institutions) 
2. Insurance companies (in the case of life insurance 
companies, the proportion of foreign investment shall not 
exceed 50%) 25. Insurance companies (in the case of life insurance 
companies, the proportion of foreign investment shall not 
exceed 50%) WT/TPR/S/342 • China 
 
- 159 - 
 
  2011 2015  
3. Securities companies (limited to underwriting of A  Shares, 
underwriting and transaction of B Shares, H Shares, and 
government and corporate bonds, with the proportion of 
foreign investment not exceeding one third), and securities 
investment fund management companies (with the proportion 
of foreign investment not exceeding 49%) 26. Securities companies (a securities company is limited to 
engaging in the underwriting and sponsorship of ordinary 
RMB-denominated shares, foreign shares, treasury bonds and 
corporate bonds, the brokerage of foreign shares, and the 
brokerage and proprietary trading of treasury bonds and 
corporate bonds upon establishment, and may apply for 
expanding its business scope two years after establishment if 
it satisfies relevant conditions. The proportion of foreign 
investment in a securities company shall not exceed 49%), 
and securities investment fund management companies (with 
the proportion of foreign investment not exceeding 49%) 
4. Insurance brokerage companies Not listed in the 2015 Catalogue  
5. Futures companies (with Chinese parties as the controlling 
shareholders) 27. Futures companies (with Chinese parties as the 
controlling shareholders) 
VIII. Real Estate Industry Not listed in the 2015 Catalogue  
1. Development of tracts of land (limited to Sino-foreign 
equity/cooperative joint venture operations) Not listed in the 2015 Catalogue  
2. Construction and operation of high-class hotels, high-class 
office buildings and international exhibition centres Not listed in the 2015 Catalogue  
3. Real estate secondary market transactions and real estate 
intermediary or brokerage companies Not listed in the 2015 Catalogue  
IX. Leasing and Commerci al Services Industries  IX. Leasing and Commerci al Services Industries  
1. Legal consulting Not listed in the 2015 Catalogue  
2. Market investigations (limited to Sino-foreign 
equity/cooperative joint venture operations) 28. Market investigations (limited to Sino-foreign 
equity/cooperative joint venture operations; specifically, 
Chinese parties shall be the controlling shareholders for 
survey of television and radio programme ratings) 
3. Credit investigation and rating service companies  29. Credit investigation and rating service companies 
X. Scientific Research, Technological Services and 
Geological Exploration Industries X. Scientific Research and Technological Services 
Industries  
1. Surveying and mapping companies (with Chinese parties 
as the controlling shareholders) 30. Surveying and mapping companies (with Chinese parties 
as the controlling shareholders) 
2. Import and export goods inspection, appraisal and 
certification companies Not listed in the 2015 Catalogue  
3. Photography services (including aerial photography and 
other trick photography services but excluding aerial 
photography for survey and mapping purposes; limited to 
Sino-foreign equity joint venture operations) Not listed in the 2015 Catalogue  
XI. Education XI. Educationa 
Not listed in the 2011 Catalogue 31. Institutions of higher learning (limited to Sino-foreign 
cooperative joint venture operations led by Chinese parties) 
1. Ordinary senior high schools (limited to Sino-foreign 
cooperative joint venture operations) 32. Ordinary senior high schools (limited to Sino-foreign 
cooperative joint venture operations led by Chinese parties) 
Not listed in the 2011 Catalogue 33. Pre-school education institutions (limited to Sino-foreign 
cooperative joint venture operations led by Chinese parties) 
Not listed in the 2011 Catalogue  XII. Health and Social Work  
Not listed in the 2011 Catalogue  34. Medical institutions (limited to Sino-foreign 
equity/cooperative joint venture operations) 
XII. Cultural, Sports an d Entertainment Industries  XIII. Cultural, Sports an d Entertainment Industries  
1. Production of radio and television programmes and movies 
(limited to Sino-foreign cooperative joint venture operations) 35. Production of radio and television programmes and 
movies (limited to Sino-foreign cooperative joint venture 
operations) 
2. Construction and operation of movie theatres (with Chinese 
parties as the controlling shareholders) 36. Construction and operation of cinemas (with Chinese 
parties as the controlling shareholders) 
3. Construction and operation of large theme parks  37. Construction and operation of large theme parks 
4. Performance brokerage agencies (with Chinese parties as 
the controlling shareholders) 38. Performance agency institutions (with Chinese parties as 
the controlling shareholders) 
5. Operation of recreation places (limited to Sino-foreign 
equity/cooperative joint venture operations) Not listed in the 2015 Catalogue  
XIII. Other Industries Restrict ed by the State or by the 
International Treaties that China Has Concluded or 
Acceded to XIV. Other Industries Rest ricted by State Laws and 
Regulations or by the Intern ational Treaties that China 
Has Concluded or Acceded to 
a Led by Chinese parties mean s: (i) that those in char ge of the administrative matters in an institution 
of higher learning must be Chinese nationals; and (ii) that at least half of the members of the council, board of directors or joint management  committee of an institution run with foreign 
cooperation must be Chinese nationals. 
Source: WTO Secretariat, based on the Catalogue of Industries for the Guidance  of Foreign Investment 
(2011 Revision) and Catalogue of Industries for the Guidance of Foreign Investment 
(2015 Revision).  WT/TPR/S/342 • China 
 
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  Table A2.4 Industries in which FDI was/is prohibited, 2011 and/or 2015 
(The shaded areas refer to activities that are different in either Catalogue. Each Catalogue assigns different 
numbering for the same activity) 
2011 2015 
I. Agricultural, Forestry, Livestock and Fishery 
Industries  I. Agricultural, Forestry, Livestock and Fishery 
Industries  
1. Research and development, breeding and planting of 
China's rare and special varieties, and production of relevant 
breeding materials (including quality genes in planting 
industry, husbandry and aquaculture) 1. Research and development, breeding and planting of 
China's rare and special varieties, and production of relevant 
breeding materials (including quality genes in planting 
industry, husbandry and aquaculture)  
2. Research and development of genetically modified 
varieties, and production of genetically modified crop seeds, 
breeding livestock and poultry, and aquatic fingerlings 2. Seed selection  of the genetically modified varieties of crop 
seeds, breeding livestock and poultry, and aquatic fingerlings, 
and the production of their genetically modified seeds 
(seedlings) 
3. Fishing in the sea area and inland waters under China's 
jurisdiction 3. Fishing in the sea area and inland waters under China's 
jurisdiction 
II. Mining Industry  II. Mining Industry  
1. Exploration and mining of tungsten, molybdenum, tin, 
stibonium and fluorite 4. Exploration and mining of tungsten, molybdenum, tin, 
stibonium and fluorite  
2. Exploration, mining and selection of rare earth elements  5. Exploration, mining and selection of rare earth elements  
3. Exploration, mining and selection of radioactive minerals  6. Exploration, mining and selection of radioactive minerals  
III. Manufacturing Industry  III. Manufacturing Industries  
1. Beverage Industry Not listed in the 2015 Catalogue 
(1) Processing of green tea and special tea with China's 
traditional crafts (famous tea, dark tea, etc.)  Not listed in the 2015 Catalogue  
2. Medical and Pharmaceutical Products Manufacturing 
Industry (I) Medical and Pharmaceutical Products 
Manufacturing Industry 
(1) Processing of traditional Chinese medicinal materials listed 
in the Regulations on the Administration for Protection of Wild 
Medicinal Resources and the Catalogue of China's Rare and 
Endangered Plants under Protection  7. Processing of traditional Chinese medicinal materials listed 
in the Regulations on the Administration for Protection of Wild 
Medicinal Resources and the Catalogue of China's Rare and 
Endangered Plants under Protection  
(2) Application of such processing techniques as steaming, 
stir-frying, moxibustion, and calcination for making small 
pieces of ready-for-use traditional Chinese medicines; and 
production of traditional Chinese patent medicine of secret 
prescriptions 8. Application of such  processing techniques as steaming, 
stir-frying, moxibustion, and calcination for making small 
pieces of ready-for-use traditional Chinese medicines; and 
production of traditional Chinese patent medicine of secret 
prescriptions 
3. Non-Ferrous Metal Smelting and Rolling Processing 
Industry (II) Petroleum Processing, Coking and Nuclear Fuel 
Processing 
(1) Radioactive mineral smelting and processing  9. Radioactive mineral smelting and processing, and nuclear 
fuel production  
4. Special-Purpose Equipment Manufacturing Industry  (III) Special-Purpose Eq uipment Manufacturing 
Industry 
(1) Manufacturing of weapons and ammunition 10. Manufacturing of weapons and ammunition  
5. Electric Machinery and Equipment Manufacture 
Industry  Not listed in the 2015 Catalogue  
(1) Manufacture of open-lead-acid cells, mercury button-type 
silver oxide cells, paste dioxide-zinc battery and nickel 
cadmium cells  Not listed in the 2015 Catalogue  
6. Industry Products and Other Manufacturing 
Industries  (IV) Other Manufacturing Industries 
(1) Ivory carving  11. Ivory carving  
(2) Tiger bone processing  12. Tiger bone processing  
(3) Production of bodiless lacquerware  Not listed in the 2015 Catalogue  
(4) Production of enamel products  Not listed in the 2015 Catalogue  
(5) Production of Xuan paper and Chinese ink ingot  13. Production of Xuan paper and Chinese ink ingot 
(6) Production of carcinogenic, teratogenic, mutagenesis and 
persistent organic pollutant products Not listed in the 2015 Catalogue  
IV. Power, Gas and Water Production and Supply 
Industries IV. Power, Thermal Power, Gas and Water Production 
and Supply Industries 
1. Construction and operation, outside small grids, of power 
plants using coal-fired and steam condensation thermal 
generator sets with a single generator capacity of 
300,000 kW or less, and thermoelectric power stations using 
coal-fired, steam condensation and extraction thermal 
generator sets with a single generator capacity of 
100,000 kW or less 14. Construction and operation, within large grids, of power 
plants using coal-fired and steam condensation thermal 
generator sets with a single generator capacity of 
300,000 kW or less, and thermoelectric power stations using 
coal-fired, steam condensation and extraction thermal 
generator sets with a single generator capacity of 
200,000 kW or less  
V. Transportation, Storage & Warehousing and Postal 
Services Industries V. Transportation, Storage & Warehousing and Postal 
Services Industries  
1. Companies of air traffic control  15. Air traffic control  
2. Postal companies; domestic express delivery service of 
mail 16. Postal companies; domestic express delivery service of 
mail 
Not listed in the 2011 Catalogue VI. Wholesale and Retail Industries 
Not listed in the 2011 Catalogue 17. Wholesale and retail of tobacco leaves, cigarettes, re-
dried tobacco leaves and other tobacco products 
VI. Leasing and Commercial Service Industry  VII. Leasing and Commerci al Services Industries  
1. Social investigation 18. Social investigations  WT/TPR/S/342 • China 
 
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  2011 2015 
Not listed in the 2011 Catalogue 19. Consulting on Chinese legal affairs (excluding the 
provision of information on the environmental impact of 
Chinese laws) 
VII. Scientific Research and Technical Services 
Industries, Geological Prospecting  VIII. Scientific Research and Technological Services 
Industries  
1. Development and application of human stem cells and 
gene diagnosis and treatment technology 20. Development and application of human stem cell and 
genetic diagnosis and treatment technology 
2. Geodetic surveying, marine charting, aerial photography 
for surveying and mapping purposes, administrative boundary 
surveying and mapping, compilation of topographic maps and 
general map compilations, and compilations of electronic 
maps for navigation purposes 21. Geodetic surveying, marine charting, aerial photography 
for surveying and mapping purposes, administrative boundary 
surveying and mapping, compilation of topographic maps, 
maps of world political zones, national administrative 
divisions and administrative divisions at and below the 
provincial level, national teaching maps, local teaching maps 
and true three-dimensional maps, compilation of electronic 
maps for navigation purposes, regional geological mapping, 
mineral geology, geophysics, geochemistry, hydrogeology, 
environmental geology, geological disasters, geological 
remote sensing and other surveys 
VIII. Water Conservancy, En vironmental, and Public 
Facilities Management Industries IX. Water Conservancy, Environmental, and Public 
Facilities Management Industries  
1. Construction and operation of natural reserves and 
internationally important wetlands 
2. Development of wild animal and plant resources originated 
in and protected by China 22. Construction and operation of natural reserves and 
internationally important wetlands 
23. Development of wild animal and plant resources 
originated in and protected by China 
IX. Education  X. Education  
1. Compulsory education institutions, education institutions in 
military affairs, police, politics and other special fields, and 
Party schools 24. Compulsory education institutions, education institutions 
in military affairs, police, politics and other special fields, and 
Party schools 
X. Cultural, Sports and Entertainment Industries  XI. Cultural, Sports and Entertainment Industries  
1. News agencies  25. News agencies  
2. Publishing of books, newspapers, and periodicals and 
importing of books, newspapers and periodicals 26. Publishing of books, newspapers, and periodicals 
3. Publishing and production of audio-visual products and 
electronic publications 27. Publishing and production of audio-visual products and 
electronic publications 
4. All radio stations, television stations, radio and television 
channels (frequencies), radio and television transmission and 
coverage networks (transmitting stations, relay stations, 
radio and television satellites, satellite uplink stations, 
satellite receiving and transmitting stations, microwave 
stations, monitoring stations, and cable radio and television 
transmission and coverage networks) 28. All radio stations, television stations, radio and television 
channels (frequencies), radio and television transmission and 
coverage networks (transmitting stations, relay stations, 
radio and television satellites, satellite uplink stations, 
satellite receiving and transmitting stations, microwave 
stations, monitoring stations, and cable radio and television 
transmission and coverage networks) at all levels 
5. Radio and television programme production and operating 
companies 29. Radio and television programme production and operating 
companies 
6. Movie production companies, distribution companies and 
cinema companies 30. Movie production companies, distribution companies and 
cinema chains 
7. Operation of news websites, online audio and video 
programme streaming services, business premises for 
Internet access services, and Internet cultural business 
(excluding music) 31. Operation of news websites, online publication services, 
online audio and video programme streaming services, 
business premises for Internet access services, and Internet 
cultural business (excluding music) 
Not listed in the 2011 Catalogue 32. Auction houses and cultural relics shops engaging in the 
auction of cultural relics 
8. Construction and management of golf courses and villas  33. Construction of golf courses and villas 
9. Gambling and lottery industry (including horse race tracks 
for gambling purposes) Not listed in the 2015 Catalogue  
10. Pornography industry Not listed in the 2015 Catalogue  
XI. Other Industries  XII. Other Industries  
1. Projects endangering the safety and performance of 
military facilities 34. Projects endangering the safety and performance of 
military facilities 
Not listed in the 2011 Catalogue  35. Gambling and lottery industry (including horse race tracks 
for gambling purposes) 
Not listed in the 2011 Catalogue  36. Pornography industry  
XII. Other Industries Proh ibited by the State or 
International Treaties Chin a has Concluded or Acceded 
to XIII. Other Industries Proh ibited by State Laws and 
Regulations or by Internat ional Treaties China Has 
Concluded or Acceded to  
Source: WTO Secretariat, based on the Catalogue of Industries for the Guidance  of Foreign Investment 
(2011 Revision) and Catalogue of Industries for the Guidance of Foreign Investment 
(2015 Revision). WT/TPR/S/342 • China 
 
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  Table A3.1 China's MFN applied tariff summary, 2015  
 Number 
of lines Average 
(%) Range (%)  Standard 
deviation Duty 
free 
(%) MFN 
applied Bound 
Total 8,285  9.5 0-65  0-65  7.5 9.7  
HS 01-24 1,361  13.8 0-65 0-65 10.6 9.0 
HS 25-97 6,924  8.6 0-50 0-50 6.4 9.9  
By WTO category       
WTO agricultural products 1,164  14.8 0-65 0-65 11.3 8.1  
  Animals and products thereof  170 12.7 0-25 0-25 7.5 18.2 
  Dairy products 21  12.1 2-20 6-20 3.8 0.0  
  Fruit, vegetables, and plants  387 13.9 0-30 0-30 7.6 6.2 
  Coffee and tea 31  14.9 2-32 8-32 7.2 0.0  
  Cereals and preparations 127 23.3 0-65 0-65 20.6 7.9 
  Oils seeds, fats, oil and their products 108  10.5 0-30 0-30 7.0 12.0  
  Sugars and confectionary 19 30.9 8-50 8-50 16.7 0.0 
  Beverages, spirits and tobacco 63  21.8 0-65 0-65 14.9 1.6  
  Cotton 5 22.0 10-40  10-40  14.7 0.0 
  Other agricultural products, n.e.s. 233  12.1 0-38 0-38 7.8 6.4  
WTO non-agricultural products  7,121  8.6 0-50 0-50 6.2 10.0 
  Fish and fishery products 306  10.1 0-23 0-23 4.4 9.2  
  Minerals and metals 1,247  7.4 0-50 0-50 6.3 8.9 
  Chemicals and photographic supplies 1,362  6.3 0-47 0-47 3.9 5.1  
  Wood, pulp, paper and furniture 392 4.2 0-20 0-20 3.9 37.2 
  Textiles 845  9.7 2-38 2-38 4.0 0.0  
  Clothing 299 16.0 14-25  14-25  2.1 0.0 
  Leather, rubber, footwear and travel goods 224  12.7 0-25 0-25 6.2 0.4  
  Non-electric machinery 1,016  7.5 0-35 0-35 5.1 13.9 
  Electric machinery 461  8.4 0-35 0-35 7.9 27.1  
  Transport equipment 336 13.3 0-45 0-45 9.5 0.3 
  Non-agricultural products, n.e.s. 613  11.0 0-35 0-35 7.6 14.2  
  Petroleum 20 4.8 0-9 0-9 3.0 15.0 
By HS section       
 01 Live animals and products  488 11.5 0-25 0-25 6.1 13.3 
 02 Vegetable products 511  14.1 0-65 0-65 12.9 11.0  
 03 Fats and oils 56 12.6 4-30 5-30 5.8 0.0 
 04 Prepared food, beverages and tobacco 306  17.4 0-65 0-65 11.5 0.3  
 05 Mineral products 201 3.0 0-11 0-12 2.7 27.4 
 06 Chemicals and products thereof 1,289  6.4 0-50 0-50 4.8 5.4  
 07 Plastics, rubber, and articles thereof 274 9.2 0-25 0-25 4.4 0.4 
 08 Raw hides and skins, leather, and its 
products 106 12.0 3-23 5-23 5.5 0.0  
 09 Wood and articles of wood  208 4.4 0-20 0-20 4.3 36.5 
 10 Pulp of wood, paper and paperboard 162  5.2 0-7.5  0-7.5  3.1 21.6  
 11 Textiles and textile articles  1,141  11.4 1-40 3-40 5.0 0.0 
 12 Footwear, headgear, etc. 71  17.9 10-25  10-25  5.8 0.0  
 13 Articles of stone, plaster, cement 197 12.8 0-28 0-28 5.3 0.5 
 14 Precious stones and metals, pearls 90  10.0 0-35 0-35 12.8 38.9  
 15 Base metals and articles thereof 770 7.0 0-30 0-30 4.3 3.1 
 16 Machinery, electrical equipment, etc. 1,512  7.9 0-35 0-35 6.4 18.9  
 17 Transport equipment 351 13.1 0-45 0-45 9.4 0.3 
 18 Precision equipment 335  9.4 0-30 0-30 6.4 10.1  
 19 Arms and ammunition 21 13.0 13-13  13-15  0.0 0.0 
 20 Miscellaneous manufactured articles 186  10.7 0-25 0-25 8.9 34.9  
 21 Works of art, etc. 10 8.0 0-14 0-14 5.1 20.0 
Note: Calculations are based on national tariff line level (8-digit); excluding in-quota rates and including 
AVEs for non- ad valorem  rates provided by the authorities. 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.  WT/TPR/S/342 • China 
 
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  Table A3.2 Tax preferences at the central level, 2015 
Government tax preference policies 
A. Enterprise income tax (the income tax is 25%)  
1. Enterprises that plant flowers, spices, teas and other beverages should pay income tax of  12.5% (half the actual rate).  
Sea farming and inland farming should pay income tax of 12.5% (half the actual rate). 
Enterprises engaged in agriculture, forestry, animal husbandry and fisheries are exempt from income tax or are granted a 
preferential income tax rate. 
2. Enterprises engaged in projects stipulated in the "Catalogue of Public infrastructure projects eligible for preferential 
enterprise income tax treatment", including ports and harbours, airports, railways, highways, public transportation, electric power and water conservancy, are exempt from income tax from the first to the third year that income starts to be generated, 
and the income tax from the fourth to the sixth year would be 12.5% (half of the actual rate). 
3. Enterprises that undertake environmental and energy conservation projects, including public sewage treatment, public 
garbage disposal, methane comprehensive exploitation and desalination of sea water, are exempt from income tax from the 
first to the third year that income starts to be generated, an d the income tax from the fourth to the sixth year would be 12.5%  
(half the actual rate). 
4. Income generated by enterprises that transfer qualified technology i.e. patented technologies transferred by resident 
enterprises, copyrights of computer software, integrated circuit layout-design rights, new plant varieties, new biological 
medicinal products, and other technologies determined by the Ministry of Finance and the State Administration of Taxation. The first RMB 5 million of income generated is exempt from income tax and income that exceeds RMB 5 million will be taxed at the rate of 12.5% (half the actual rate). 
5. Small-scale enterprises with minimal profitsa that conduct business in the non-restricted industries and satisfy the following 
conditions are subject to the applicable enterprise income tax rate of 20%: 
(i) Industrial enterprises with an annual taxable income not exceeding RMB 300,000, fewer than 100 employees, and total 
assets not exceeding RMB 30 million. 
(ii) Other enterprises, with annual taxable income not exceeding RMB 300,000, with fewer than 80 employees, and total assets 
not exceeding RMB 10 million. 
6. High and new technology enterprises that have been registered in China for one or more years which require key state support and possess core proprietary intellectual property rights, engage in business involving products (services) that fall i nto 
the scope specified in the Advanced and New Technology Area s Eligible for the Key Support of the State, and with R&D 
expenses, income of high and new technological products and number of R&D personnel reaching a certain proportion, can be 
recognized as high and new technology enterprises and are subject to an enterprise income tax rate of 15%. 
7. Key software enterprises and integrated circuit enterprises within the "national layout plan" are subject to an enterprise 
income tax rate of 10%. 
8. Where non-resident enterprises have not set up institutions or establishments in China, or where institutions or establishments are set up but there is no actual relationship with the income obtained by the institutions or establishments se t 
up by such enterprises, they pay a preferential enterprise income tax of 10% on income originating in China. 
9. Research and development fees incurred by enterprises in the development of new technology, new products and new skills 
can be deducted from the taxable income at 150% of the intang ible assets cost; 100% of the wages paid by enterprises for 
hiring disabled and other personnel can be deducted from the taxable income. 
10. Venture investment enterprises that engage in equity investment in medium and small high-tech enterprises (not listed in 
domestic or foreign stock markets) for more than two years, may deduct 70% of the invested capital from the taxable income in the second year. If the taxable income is less than 70% of the invested capital, the deduction may take place in the followi ng 
tax year. 
11. The income obtained by enterprises from the production of  products in line with state industrial policies through 
comprehensive use of materials stipulated in the "Category of  comprehensive use of resources for preferential enterprise 
income tax treatment" may be deducted from the taxable income by 90%. 
12. 10% of cost of the investment made by enterprises in special facilities for environmental protection, energy and water 
conservation and safe production which are listed in the: "environmental special facilities enterprise income tax preferential category", "water and energy conservation special facilities en terprise income tax preferential category" and "safety productio n 
special facilities enterprise income tax preferential category" can be deducted from the taxable income. If the taxable income is 
not sufficient, the deduction can be made in the next five fiscal years. 
B. Other tax exemptions 
1. Imported items to be used in: the encouraged industries li sted in the "Catalogues for the Guidance of Foreign Investment 
Industries", the foreign investment projects that meet the requirement of the "Category of Priority Industries for Foreign 
Investment in the Mid-Western Region", and the domestic funded projects supported by the county, are exempt from import duties. An exception applies for the commodities listed in th e "Category of non-tax-exempted imported items under foreign 
investment projects"
b and the "Category of non-tax-exempted import ed items under domestically funded projects".c 
2. For encouraged industries (including those that meet the requirement of the "Category of  Priority Industries for Foreign 
Investment in the Mid-Western Region"), foreign investment enterprises, foreign-invested research centres, advanced technical 
and export product type of foreign investment enterprises, the import of the equipment to be used in the project and 
technology, components and spare parts are exempt from import duties if imports are within the originally approved business 
scope and the purchase is funded by the project, and the equipment and the supported technology, components and spare 
parts cannot be produced in China. 
3. Imports of equipment to be used by foreign-invested enterprises for the production of  items listed in the "National high-tech 
products category", along with the imported technology and supporting components and spare parts, are exempt from import duties and other related import taxes.
d 
4. For the advanced technology listed in the "National high-tech products category"d imported by foreign investment 
enterprises, the software fees paid overseas are exempted from import duties and other import-related tax.e 
5. The VAT on the products and services produced with "integrated" utilization of resources (e.g. electric power generated from  
urban waste and renewable water) is subject to such preferential  taxation policies as exemption, refund upon collection or 
refund after collection. 
C. Several polices on softw are and integrated circuits  
1. Certified domestic new software enterprises and integrated circuit design enterprises, from  the first profit earning year, are 
exempted from enterprise income tax in the first and second year; the tax is collected at 50% from the third to the fifth year.  
2. For an integrated circuit enterprise with investment of more than RMB 8 billion or a  bandwidth of an integrated circuit of less 
than 0.25 µm, if the business period exceeds 15 years, from the fi rst profit earning year, it is exempted from enterprise incom e 
tax from the first to the fifth year and 50% of the tax is collected from the sixth to the tenth year. 
3. For an integrated circuit enterprise with bandwidth of integrated circuit equal to or less than 0.8 µm, after certification,  from 
the first profit earning year, it is exempted from enterprise income tax in the first and the second year and 50% tax is collec ted WT/TPR/S/342 • China 
 
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  Government tax preference policies 
from the third to the fifth year.  
4. For software purchased by enterprises and public institutions with the approval of the tax authorities, its depreciation yea rs 
may be shortened to a minimum of 2 years, if software is deemed  a fixed or intangible asset from an accounting point of view. 
5. For the production equipment of enterprises manufacturing integrated circuits, with the approval of the tax authorities, its  
depreciation years may be shortened appropriately and the minimum is 3 years. 
6. Qualifying software and integrated circuit manufacturing enterprises can deduct the cost of  training their staff from the 
taxable income. 
a The definition of small-scale enterprises with minimal profits can be found in Article 92 of the 
Implementing Regulations of the PRC Enterprise Income Tax Law. 
b Customs Notice No. 65 of 5 September 2008. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info125825.htm . 
c Ministry of Finance Notice No. 83 of 24 December 2012. Viewed at: 
http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201212/t20121231_723618.html . 
d For the list of products under the "national high-tech products category" please refer to: 
http://www.most.gov.cn/tztg/200612/t20061220_38987.htm . 
e These polices are based on: "Regulation of the State Council on the adjustment of the imported and 
exported equipment tax policy" (No. [1997] 37); "Views of the Committee of Economic Trade for Foreign Countries on further Encourag ing Foreign Investment" (No. [1999] 73); 
"National medium- and long-term planning for science and technology development outline (2006-2020)" (No. [2005] 44). 
Source: Online information. Viewed at: http://en.xasourcing.gov.cn/swj/policys/localpolicy/local0013.html; 
and information provided by the Chinese authorities. 
 
 
  
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