G/SCM/Q2/CHN/48  
 
19 April 2013  
(13-2094)  Page: 1/11  
Committee on Subsidies 
and Countervailing Measures 
 Original: English  
 
 SUBSIDIES 
REPLIES TO QUESTIONS POSED BY CANADA1 REGARDING THE  
NEW AND FULL SUBSIDIES NOTIFICATION OF CHINA2 
The following communication, dated 19 April 2013, is being circulated at the request of the 
Delegation of China. 
 
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Question 1  This notification covers the period for 200 5 to 2008. Could China indicate when its 2011 
new and full subsidy notification will be provided?  
 Reply 
 As to China's next notification, it will not be too difficult if covering only central programmes. However, if local programmes are to be incorporat ed, it will be very much different. In any case, 
China will accelerate its efforts for submission of a new notification. 
 Question 2  
Article 25 of the ASCM requires members notify any subsidy granted or maintained 
within their territories. Could China explain why only central government level programmes have been notified? Could Ch ina please indicate when sub-central 
government level programmes will be notified? 
 Reply 
 Subsidy notification entails huge amount of technical work on information gathering and analysis and this is particularly a challenge for China as a large developing country. China since its WTO accession has concentrated its efforts on notifying comprehensively central programmes as a first 
step. Now based on the experiences gathered, China will work towards incorporating those at the 
sub-central level. At this stage it is still difficult for China to propose a specific timetable.    
Question 3 
 Article 25.3 of the ASCM requires that subsidy notifications include information on 
subsidy per unit or, in cases where this is not possible, the total amount or the annual 
amount budgeted for that subsidy. For many of the notified programmes, there are no 
figures on the amount of support provided. Could China please indicate why, in many 
cases, information on subsidy per unit or on the total amount or the annual amount 
budgeted was not provided? 
 
                                               
1 G/SCM/Q2/CHN/44.   
2 G/SCM/N/155/CHN-G/SCM/N/186/CHN. G/SCM/Q2/CHN/48 
 
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  Reply 
 
The statistics system for tax expenditure in China is being established. Therefore, the amount of 
tax forgone as a result of the implementation of preferential tax policies is not available at present. 
This explains the lack of information on subsidy per unit or on the total amount or the annual 
amount of certain notified programmes in China's subsidy notification, mostly those in form of preferential tax treatment. 
 
1. Preferential tax policies for foreign-invested enterprises   Question 4 
 
According to the description of this programm e, one of the eligibility criteria is "the 
establishment or expansion of export-oriente d enterprises". Could China please explain 
how this programme complies with China's obligations under Article 3 of the ASCM, 
specifically, the prohibition on subsidies cont ingent on export perf ormance? Could China 
also provide information regarding the amount of tax forgone under this programme and 
the industries that have been the largest users of this programme? 
 Reply 
 
This programme providing preferential tax policies for foreign investors dated back to early years 
of China's opening up and reform policy. WTO members having investment in China all benefited from this programme and were fully aware of this programme and its relationship with the SCM 
Agreement at the time of the negotiations for China's accession into the WTO. After China's WTO 
accession, China further pushed ahead its reform process, and with the Law of the People's Republic of China on Enterprise Income Tax coming into effect on 1 January 2008, this programme 
was terminated at the end of 2007.  
 As to the information on the amount of tax forgone under this programme, as explained earlier, the statistics system for tax expenditure in China is being established. Therefore, the amount of 
tax forgone as a result of the implementation of preferential tax policies is not available at present. 
 On the question regarding largest users of the programme, China also is not able to provide 
information because the policy is not specific to any particular industry or sector. It is applicable to 
all foreign invested enterprises regardless of the industries of sectors that they are in.   
2. Preferential tax policies for fo reign-invested export enterprises 
 Question 5  
According to the description of this prog ramme, one of the eligibility criteria is 
"Export-oriented foreign-invested enterprise wh ich in any year has an output value of all 
export products amounting to 70% or more of  the total output value of the products of 
the enterprise for that year". Could China please explain how this programme complies 
with China's obligations under Article 3 of the ASCM, specifically, the prohibition on 
subsidies contingent on export performa nce? Could China also provide information 
regarding the amount of tax forgone under this programme and the industries that have 
been the largest users of this programme?  Reply 
 This programme providing preferential tax policies for foreign investors dated back to early years 
of China's opening up and reform policy. WTO members having investment in China all benefited 
from this programme and were fully aware of this programme and its relationship with the SCM 
Agreement at the time of the negotiations for China's accession into the WTO. After China's WTO accession, China further pushed ahead its reform process, and with the Law of the People's 
Republic of China on Enterprise Income Tax coming into effect on 1 January 2008, this programme 
was terminated at the end of 2007.  G/SCM/Q2/CHN/48 
 
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  As to the information on the amount of tax forgone under this programme, as explained earlier, 
the statistics system for tax expenditure in China is being established. Therefore, the amount of 
tax forgone as a result of the implementation of preferential tax policies is not available at present.  
On the question regarding largest users of the programme, China also is not able to provide 
information because the policy is not specific to any particular industry or sector. It is applicable to all foreign invested enterprises regardless of the industries of sectors that they are in.  
 
6. Preferential tax policies for advanced  technology enterprises with foreign 
investment  
Question 6 
 Could China please explain how "advanced te chnology enterprises" are defined under 
this programme? 
 Reply 
 "Advanced technology enterprises" is defined in "Notice on Revising and Issuing the Implementing 
Measures for Confirmation and Assessment of Fo reign Invested Export-Oriented Enterprises and 
Foreign Invested Advanced Technology Enterpri ses" (former Ministry of Foreign Trade and 
Economic Co-operation (MOFTEC) Circular Wai Jing Mao Zi Fa No. 822 of 1996). 
 7. Preferential tax policies for foreign-inve sted enterprises engaged in agriculture, 
forestry or animal husbandry and foreign-invested enterprises established in remote 
underdeveloped areas  
Question 7 
 According to the description of this programme, foreign-invested enterprises established in remote underdeveloped areas may be allowed a 15% to 30% reduction of the amount 
of enterprise income tax payable. Could China please provide more detail on how 
eligibility for the tax reduction and the size of the tax reduction (i.e. from 15 to 30%) are determined? 
 
Reply 
 
It seems that this question of Canada is related to programme 3 in China's notification rather than 
programme 7. Programme 3 was terminated at th e end of 2007. There had been no more detailed 
rules on the tax reduction for foreign invested enterprises in remote underdeveloped areas in addition to Article 8 of the Income Tax Law of th e People's Republic of China for Enterprises with 
Foreign Investment and Foreign Enterprises (1991) and Article 9 of the Rules for the 
Implementation of the Income Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign Enterprises (1991).  
 
8. Preferential tax policies for enterprises wi th foreign investment recognized as high 
or new technology enterprises established in the State high or new technology industrial 
development zones 
 Question 8  
According to the description of this progra mme, Chinese foreign equity joint ventures 
are exempt from enterprise income tax in th e first and second years, starting from the 
year when they begin to make profit. Could Ch ina please indicate whether to be eligible 
to receive support under this programme, there are any ownership requirements for 
joint ventures (e.g. 50/50?). Could China pl ease specify which companies or types of 
companies have received support under this programme? 
 
Reply 
 Programme 8 was notified according to Article 73(5) and 75(6) of the Rules for the 
Implementation of the Income Tax Law of the People's Republic of China for Enterprises with G/SCM/Q2/CHN/48 
 
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  Foreign Investment and Foreign Enterprises (1991). There have been no ownership requirements 
for joint ventures to receive support under this programme. Before 1 January 2008 enterprises with foreign investment that had been recognized  as high or new technology enterprises in the 
State high or new technology industrial development zones were eligible for the tax benefits. After 
1 January 2008, Programme 8 and 9 together have been adjusted to be Programme 10 in the 
notification.   
9. Preferential tax policies for enterprise s recognized as high or new technology 
enterprises established in the State high or new technology industrial development 
zones  
Question 9 
 Could China please explain how "enterprises  recognized as high or new technology 
enterprises" are defined under this prog ramme? How do they differ from "advanced 
technology enterprises" under the preferen tial tax policies for advanced technology 
enterprises with foreign investment programme? 
 
Reply 
 "High or new technology enterprises" is defined in Article 2 of the Notice on Issuing the 
Administrative Measures for Certifying High or Ne w Technology Enterprises (Guo Ke Fa Huo [2008] 
No. 172) issued jointly by the Ministry of Scienc e and Technology, the Ministry of Finance and the 
State Administration of Taxation. 
 
According to Article 2 of the Measures, high or new technology enterprises are resident enterprises that have been registered within China (excluding Hong Kong, China; Macao China and Chinese 
Taipei) for at least one year, that conduct research and development activities within the scope of 
the Catalogue of High and New Technology Having  Primary Support of the State, possess core 
intellectual property rights, turn scientific research achievements into productive forces and have business operations accordingly. 
 
Article 10 of the Notice specifies the following requ irements to be met for certification of high or 
new technology enterprises. 
 
1. Registered in China (excluding Hong Kong, China; Macao China and Chinese Taipei), 
having proprietary intellectual property rights for their major products or services through in-
house research and development, transfer, endowment, merger and acquisition and other means 
within the last three years, or through excl usive license for more than five years;  
 
2. Products or services covered within th e scope of the Catalogue of High and New 
Technology Having Primary Support of the State; 
 3. Technical staff with college degrees or above accounting for over 30% of the total 
employees on the payroll, with research and development personnel accounting for over 10%; 
 4. Engaging in research and development activities continuously to acquire new scientific 
knowledge (excluding the fields of humanities and social sciences), to apply creatively new science 
and technologies or to substantially improve techniques, products or services. The proportion of total research and development expenses to total amount of sales revenue within the last three accounting years being: 
 
6% or more for enterprises with sales revenue less than 50 million in the last year; 4% or more for enterprises with sales revenue totalling between 50 million to 200 million; 
3% or more for enterprises with  sales revenue beyond 200 million. 
 
Also, the research and development expenses incurre d in China of an enterprise being no less than 
60% of its total research and development expenses. Research and development expenses of 
enterprises that have been registered for less than three years will be calculated according to its actual years in operation;  G/SCM/Q2/CHN/48 
 
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  5. Revenues from high or new technology produc ts or services of the enterprises accounting 
for 60% or more of its total revenues in the year;  
6. Enterprises should also meet requirements  contained in the Working Guidelines on the 
Administrative Measures for Certifying High  or New Technology Enterprises (formulated 
separately) in terms of its organization and mana gement of research and development activities, 
capacity for turning research and development ac hievements into productive forces, number of 
proprietary intellectual property rights, the growth of sales and total assets and other indicators. 
 For "Advanced technology enterprises", as explained earlier, it is defined in "Notice on Revising and Issuing the Implementing Measures for Conf irmation and Assessment of Foreign Invested 
Export-Oriented Enterprises and Foreign Invested  Advanced Technology Enterprises" (former 
Ministry of Foreign Trade and Economic Co-operation (MOFTEC) Circular Wai Jing Mao Zi Fa No. 822 of 1996). 
 
10. Preferential tax policies for hi gh or new technology enterprises 
 
Question 10  
 Could China identify the criteria that a company must satisfy to be considered a high or new technology enterprise? Could China spec ify which companies or types of companies 
have received or would be eligible to re ceive support under this programme? Could 
China confirm whether this programme is on-going?    
Reply 
 
Please refer to the answer to question 9. This programme is on-going.  
 
19. Preferential tax treatment for public infr astructure projects supported by the State 
 Question 11 
 
 Could China specify which companies or ty pes of companies have received or were 
eligible to receive support und er this programme (i.e. dome stic firms, foreign firms, 
joint ventures, etc.)? Could China please prov ide a list of projects that received support 
under this programme?  Could China conf irm whether this programme is on-going? 
 
Reply 
 
Enterprises undertaking projects of harbours, whar ves, airports, railways, highways, urban public 
transportation, electric power and water conservancy as specified in the Catalogue of Public 
Infrastructure Projects for Preferential Enterprise Income Tax Treatment are eligible to receive the 
tax benefits under this programme.  This programme is on-going.  
 
20. Preferential tax treatment for projects  for environmental protection, water and 
energy conservation  
Question 12 
 According to the description of this prog ramme, support is provided to domestic 
industrial enterprises, regardless of the ow nership, on research and development of new 
products, new technologies and new crafts which have increased 10% (included) or 
more from the previous year. Could China pl ease indicate whether there are any further 
conditions for research and development to be eligible to receive support under this 
programme? Could China specify which compan ies or types of companies have received 
or would be eligible to receiv e support under this programme? 
 
Reply 
 
We cannot understand this question. Programme 20 of China's notification contains no such wording of "support is provided to domestic indust rial enterprises, regardless of the ownership, on G/SCM/Q2/CHN/48 
 
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  research and development of new products, new te chnologies and new crafts which have increased 
10% (included) or more from the previous year" as mentioned in Canada's question.  
 45. Research and development fund  for industrial technologies 
 
Question 13  
Could China explain how "industrial technolo gies" are defined under this programme?  
Could China specify which companies or types of companies have received or would be 
eligible to receive support under this prog ramme? Regarding the form of the subsidy, 
could China also explain what is meant by "Financial Appropriations"? Could China 
confirm whether this programme is on-going?   
 Reply 
 "Financial appropriations" is used in China's subsidy notification to indicate that the fund of a programme is from fiscal funds covered by the budget management system. "Financial 
Appropriations" under this programme are in the form of grants and venture capital investment to 
support common major technological research and development projects.  All legal persons including enterprises are eligible to receive support under this programme as long as they meet the criteria specified in the Measures for the Administration of Research and Development Fund for 
Industrial Technology (MOF Circular Cai Jian No. 30 of 2002) and related reference papers. This 
programme is on-going.  
49. Fund for international market exploration by SMEs 
 Question 14 
 
Could China identify the criteria that a co mpany must satisfy to be considered a SME 
under this programme? Could China specify wh ether SMEs from all industries can qualify 
for support under this programme? Are th ere any export performance or import 
substitution requirements associated wi th this programme? Could China confirm 
whether this programme is on-going?    
Reply 
 
The current effective criteria for SMEs in China are found in the Notice on Issuing Criteria for 
Categorizing SMEs (GXBLQY [2011] No. 300) issued by the Ministry of Industry and Information 
Technology with the National Bureau of Statistics, the National Development and Reform Commission and the Ministry of Finance. Un der this programme, small and medium-sized 
enterprises should have registered as foreign tr ade operators and their total import and export 
value of the previous year should be no more than US$45 million. The programme is in force. 
There is no restriction in terms of the industry or sector in which enterprises are engaged. Nor is there any requirement concerning export performance or import substitution. 
 
50. Fund for optimizing the import and expo rt structure of mechanical and electrical 
products as well as high-tech products 
 
Question 15  According to the description of the programme,  this fund is provided for enterprises or 
industrial associations engaged in projects of technology research and development, 
public information service and personnel tr aining, etc. Could China please provide 
additional information on the eligibility requ irements for receivin g support under this 
programme? Are there any export performanc e or import substitution requirements 
associated with this programme? Could Ch ina specify which companies or types of 
companies have received or wo uld be eligible to receive support under this programme? 
 
Reply 
 This fund is provided to support projects for co nstruction of general platforms of common services 
that are related to mechanical and electrical products and hi-tech products, such as those G/SCM/Q2/CHN/48 
 
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  concerning personnel training, certification serv ices, and test centre. The support under this 
programme is to compensate partially the expenses for the purchase of related equipment, technology and common resources, for system tech nology development and for rent expenses for 
public demonstration and training. There are no  export performance or import substitution 
requirements under this programme. Besides, this programme was terminated in 2010.   
 52. Fund for promotion of coordinated de velopment of foreign trade and economic 
relations among regions 
 Question 16  
According to the description of the programme, this fund is provided for projects aiming 
at exploration of international market, scie ntific innovation and information system 
construction in the central, western and north-eastern areas of China. Could China 
please provide additional information on the eligibility requirements for receiving 
support under this programme? Are there any ex port performance or import substitution 
requirements associated with these progra mmes? Could China specify which companies 
or types of companies have received or woul d be eligible to rece ive support under this 
programme?  Reply 
 Support from the fund is project-based. It is not contingent upon export performance or import substitution requirements. Projects eligible for support under this programme should be those of 
international market exploration, those promoting innovation and those of information system 
construction aiming at developing international trade and economic relations in underdeveloped areas.  
 
53. Preferential tax policies for key lead ing enterprises engaged in agricultural 
industrialization   
Question 17 
 Could China please explain the criteria used to  determine if an enterprise is considered a 
"key leading enterprises in ag riculture industrialization" for the purpose administering 
this tax exemption? Could China also explain th e rationale for specifically targeting such 
enterprises with preferential tax policies? 
 
Reply 
 Criteria for identification of key leading enterprises in agricultural industrialization are found in the 
Interim Administrative Measures on Identifying and Monitoring National Key Leading Enterprises 
for Agricultural Industrialization (Nong Jing Fa [2 001] No.4) prior to 2010 and the Administrative 
Measures on Identifying and Monitoring National Key Leading Enterprises for Agricultural 
Industrialization (Nong Jing Fa [2010] No.11) after 2010, both issued by the Ministry of 
Agriculture. The two rules in Chinese language are available through the Permanent Mission of 
China to the World Trade Organization. Preferential Tax treatments for these enterprises are aimed 
at increasing the added value of primary agricultural produce and farmers' incomes so as to 
facilitate structural adjustment of agriculture and rural economy. The programme was terminated at the end of 2007.  
54. Preferential tax policies for enterpri ses engaged in projects of preliminary 
processing of agricultural, forest , animal and fishery products  
 
Question 18 
 Could China indicate if this programme is  a successor to the programme "Preferential 
tax policies for key leading enterprises en gaged in agricultural industrialization 
(Section 53)"? Could China provide an esti mate of the number companies or types of 
companies that have received support under this programme? China notes that "enterprise income tax on the income derived by an enterprise from stipulated projects 
of preliminary processing related to farmin g, forestry, animal husbandry and fisheries G/SCM/Q2/CHN/48 
 
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  may be exempted or reduced." Could China pr ovide examples of "stipulated projects" for 
each of the different activities?  Reply 
 This programme is not a successor to programme 53. For "stipulated projects", please refer to Article 86 of the Regulations for the Implementation  of Law of the People's Republic of China on 
Enterprise Income Tax (2007).  
 Further, could China clarify what kind of  preferential tax treatment is given to 
enterprises engaged in projects of prelimin ary processing for fisheries products? Could 
China provide an estimate of how many ente rprises in the fish processing industry 
received this subsidy? Could China confirm whether this programme on-going? Are there 
any other subsidies given to the fisheries industry in China? 
 
Reply 
 
Paragraphs 1 and 2 of Article 86 of the Regulation s for Implementation of the Enterprise Income 
Tax Law specify respectively situations where exem ption and half-deduction of enterprise income 
tax would apply. Enterprises in the fisheries industry meeting the criteria are eligible for corresponding preferential tax treatment. The programme is in force. 
 
55. Fund for specialized economic cooperatives of farmers  
Question 19 
 Could China please explain what is me ant by the term "qualified specialized 
cooperatives of farmers" and indicate th e number of these cooperatives? Could China 
elaborate as to the types of activities that ar e eligible to receive support from this fund?   
 Reply 
 "Specialized cooperatives of farmers" are economic organizations established in accordance with the Law of People's Republic of China on Specialized Farmers Cooperatives. The central 
government provides the fund for specialized ec onomic cooperatives of farmers to the local 
governments. Local governments are responsible for reviewing and selecting projects and giving the support.  
 
"Qualified specialized cooperatives of farmers" should meet the following criteria: (1) it should be registered in accordance with the requirement of  law and has a charter embodying the principles 
of "established by the farmers, managed by the fa rmers with the benefits shared by the farmers"; 
(2) it should have sound financial management system and is managed in a democratic manner; 
(3) it should have a sound service network, which could provide professional agricultural services 
for members of the cooperative; (4) the members of the cooperative should not be less than 100, 
and the cooperative should have certain industrial capacity.  
 The following types of activities are eligible to receive support from this fund: (1) to introduce new 
varieties and promote new technologies; (2) to hire technical experts and professionals to provide 
management and technical services; (3) to provide technical and management training or information services for cooperative members; (4) to promote standardized production; (5) to promote primary processing, storage and preservation of agricultural products; (6) to obtain 
services related to certification, brand developmen t, marketing and protection of members' rights; 
(7) obtain services aiming at improving services to members and management of the cooperative, and etc. 
 
Statistics show that by the end of 2011, the numb er of farmers cooperatives registered with 
industry and commerce administrations nationwide has reached 522,000. Any farmer cooperative 
meeting the above criteria could submit application to local finance authorities. Local governments 
will review and decide on those to receive th e support depending on specific situations.   
 G/SCM/Q2/CHN/48 
 
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  58. Fund for popularization of  agricultural technologies  
 Question 20  
Could China elaborate on the criteria for pr ojects "that embody geographic advantage"? 
Do these projects include both crops and livestock? What types of projects have 
received support under this fund and where are these projects located in China?   
 
Reply 
 "Geographic advantage" here refers to those region s that have advantages in respect of resources, 
ecological environment, technology and market for production of certain kind of agricultural 
products. Projects supported include both crops and livestock. The central government provides the fund to the 31 provinces (autonomous region s and municipalities directly under the central 
government). The provinces are responsible for reviewing and selecting projects and giving the 
support taking into account their local conditions and economic development situation.   
60. Subsidy for promoting superior strains and seeds  
 Question 21  
Could China specify which superior strain s and seeds of which crops have been 
identified by local authorities for planting?    
Reply 
 
The central government provides direct subsidy to farmers under this programme. Farmers are 
free to purchase the superior strains and seeds, which include rice, wheat, corn, soybeans, cotton 
and canola.   
63. Direct subsidy to farmers 
 Question 22 
 
Could China elaborate on the eligibility criteria for this subsidy?  Is there a limit on the 
amount of subsidy per farmer?   
 
Reply 
 As China has a vast territory with notable differences in agricultural production among different 
regions, the eligibility criteria and implementation methods for this programme are determined by 
local governments according to their own situations. There are no nationwide unified criteria or caps on the amount of subsidy per farmer.   
 
64. Fund for agricultural comprehensive development  
Question 23 
 Could China please explain what is meant by the term agricultural comprehensive 
development projects and provide some exampl es of the types of projects that have 
received support from this fund?   
 Reply 
 "Agricultural comprehensive development projects" could be divided into two categories. One category refers to projects of land management, which intend to improve production conditions 
and consolidate production capacity of land by taking comprehensive measures such as water 
conservancy, agriculture and forestry measures. The other refers to projects of industrialized operation. Support will be provided in the form of grants or interest subsidy to leading agricultural enterprises or farmer cooperatives that have great potential for growth and will contribute to the 
increase of farmers' income. Some examples are as follows. G/SCM/Q2/CHN/48 
 
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A. Land management project   (a) Project to improve low-yielding farmland  
 
11,000 mu (0.067 hectare) low-yielding land of X county in X city of X province was improved with a total investment of RMB 10.769 million in X year. The central government granted 4.895 million 
for this project focusing on the construction of irrigation and drainage stations, excavation of 
irrigation and drainage channels, building powe r transmission lines and tractor roads etc. to 
enhance the resistance of the piece of land against droughts and floods and make it more 
accessible for agricultural machinery. Such problems of a piece of land cannot be resolved merely 
by Chinese farmers themselves whose per capita contracted land is only one mu. China believes 
that the support belongs to "green box" as defined in the WTO.  
 (b) Comprehensive ecological management project 
 In X year, a small watershed of 5,000 mu in X count y of X City in X Province was improved with a 
total investment of RMB 4.61 million. The central government granted 2.9 million with the focus on 
constructing dam, lining canals, laying pipelines, building a small reservoir and drainage system, planting forest for water conservation, building terraced fields and digging fish-scale pit in order to solve the problem of water loss and soil er osion and improve the ecological system. 
 
B. Project of industrialized operation   
 (a) Project with loan interest subsidy  
 In X year, a flour company in X city of X province received RMB 38.59 million bank loans for plant 
and warehouse construction and production capacity expansion. Since the expansion of the 
production capacity of this company will help to  increase farmers' income in the neighbourhood, 
the central government provided RMB 1.43 million interest subsidies to the company.   
 (b) Project with financial grants  
 In X year, a specialized vegetable cooperative in X County of X Province invested RMB 1.85 million 
for greenhouse construction and purchase of related equipment. Since this vegetable cooperative 
will help to stabilize the supply of vegetables in some large and medium-sized cities in northern China in extreme climate and increase the income of  farmers who participate in the cooperative, 
the central government granted RMB 0.59 million to the cooperative. 
 81. Preferential tax policies for foreign-invested enterprises and foreign enterprises which have establishments or place in China and are engaged in production or business 
operations purchasing domestically produced equipment  
 82. (Preferential tax policies for domest ic enterprises purchasing domestically 
produced equipment for technology upgrading purpose 
 Question 24 
 
Based on the description of these programm es, it appears that some enterprises are 
provided preferential tax treatment to purc hase domestically produced equipment.  
Please explain how these programmes comply with China's obligations under Article 3 of 
the ASCM. Could China also provide informat ion regarding the amount of tax forgone 
under these programmes and the industries which have been the largest users of these programmes? 
 
Reply 
 
Programmes 81 and 82 were terminated at the end of 2007 with the reform of China's income tax 
regime.   G/SCM/Q2/CHN/48 
 
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  For information on the amount of tax forgone under these programmes, as explained earlier, the 
statistics system for tax expenditure in China is being established. Therefore, the amount of tax forgone as a result of the implementation of pref erential tax policies is not available at present. 
On the question regarding largest users of the policy, China also is not able to provide information 
because the policy is not specific to any particular industry.  
 89. Preferential tax treatment for raw copper materials 
 
Question 25  Could China indicate what if any conditions exist as to where the 'upgrading equipment' 
is manufactured?   
 Reply 
 This question seems to have nothing to do with programme 89 in China subsidy notification. Could Canada please double check? 
 
90. Preferential tax treatment for casting and forging products 91. Preferential tax treatment to dies products  
Question 26 
 According to the notification, these programm es provided subsidies for the upgrading of 
technology. Could China please indicate if  the enterprises listed in the respective 
circulars for each programme are exclus ively domestic-invested enterprises? 
 
Reply 
 
Enterprises listed are not exclusively domestic-invested enterprises.   
 
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