G/TRIMS/W/122  
 
29 April 2013  
(13-2249)  Page: 1/3  
Committee on Trade-Related Investment Measures  Original: English  
 
CHINA – CERTAIN INVESTMENT  MEASURES PERTAINING 
TO THE STEEL SECTOR 
REPLIES TO QUESTIONS FROM THE UNITED STATES 
 The following communication, dated 25 April 2013,  is being circulated at the request of the 
Delegation of China.  
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  Question 1 
 
Please explain the purpose of requiring that foreign investors in the steel industry have 
their own proprietary technology. 
 
Reply 
 
Steel industry is a sector featuring high-energy consumption, heavy pollution and resource 
dependence. Currently, China’s steel industry is in the process of structural adjustment with an aim to raising productivity and technology level. The advanced technologies and managerial expertise of leading foreign investors will contribu te and facilitate the reform and adjustment of 
the steel sector, improving level of technology, management and environmental protection, 
achieving sustainable development and securing the interests of foreign investors.    
The 12
th Five Year Steel Plan (the Plan) was issued by the Ministry of Industry and Information 
Technology of the People's Republic of China on 24 October 2011, which sets goals for Steel Industry Development during the 12th Five Year Plan. The Plan encourages “overseas iron and 
steel enterprise groups having international competitive strength to participate in domestic 
merging and reorganization, as well as joint ventures and cooperation”.    This Plan also encourages Chinese steel enterprise s to have international cooperation with foreign 
steel firms on exchange of information, technology and management. In this regard, China has no 
laws or regulations which require foreign investors to have their own proprietary technology in the steel industry. Foreign investors, together with their Chinese counterparts, have the full discretion 
to decide whether to include technology transfer terms in their contract. As for those foreign steel 
enterprises having their own proprietary technologies, they are all well protected by law.    
For further detail of this Plan, please refer to the official website: http://www.gov.cn/zwgk/2011-
11/07/content_1987459.htm.  Question 2 
 
Foreign steel firms’ investment proposals ha ve been reportedly turned down by China 
since 2005 because there was insufficient tec hnology transfer to the Chinese partner. 
Please explain how denial of permission to invest on such a basis is consistent with 
China’s protocol of accession . Please confirm that foreign steel firms may choose to 
invest in China and preserve control over their proprietary rights to key technologies, 
without risk of interference fr om the Chinese government.   
 G/TRIMS/W/122 
 
- 2 - 
 
  Reply 
 
Upon accession to WTO, China has fulfilled its commitments by making its laws and regulations consistent with the obligations in the Accession  Protocol and the TRIMs Agreement, including 
removing requirements on compulsory transfer of technology. As always, the Chinese Government 
welcomes and encourages foreign investment. We can confirm that the terms and conditions of technology transfer and technology cooperation are business behaviors and decided through 
agreement between the parties to the investment, the Chinese Government will not take this as 
preconditions for market access.   Question 3 
 
Is China able to provide examples of where foreign steel firms have made new or increased investments in the steel sector consistent wi th the Chinese government 
policies in the last 5 years?  
 Reply 
 Since 2007, there have been at least five fore ign steel firms that made new or increased 
investment in the steel industry in China, amon g which, four are green field investments and one 
is expansion of investment.   
 
These four steel firms with new investment are as follows: (1) Auto Plate Arcelor Mittal Corporation; (2) Electrical Steel Projects of Arcelor Mittal Corporation in Hunan Province; 
(3)
 Yuhe Yongtong Pellet Project of Anyang Iron and Steel Group in Henan Province; (4) Fuxin 
Special Steel Corporation in Fujian Province.  
 
The steel firm with increased investment is JFE Steel Plate Corporation in Guangdong Province.  
Question 4 
 Does China intend to continue to limit fo reign steel enterprises to 50 percent or less 
equity in steel enterprises in China, while requiring that the fore ign steelmakers have 
proprietary technologies of th eir own? Article 16 of the 11
th Five Year Steel Plan 
provides for tax concessions, lowered intere st rates and scientific research funds for 
enterprises that use Chinese-made equipment. The 12th Five Year Steel Plan does not 
appear to repeal or change this policy, wh ich appears to support the use of domestic 
over imported equipment.   
 
Reply 
 
The 12th Five Year Steel Plan calls for further opening up of the steel industry and encourages 
foreign steel firms to invest and participate with equity in steel enterprises in China. In this regard, 
China has fulfilled its commitments regarding loca l content requirement in the Accession Protocol 
and the TRIMs Agreement.  
Question 5 
 Does China continue to require that, in or der to obtain the tax concessions, lowered 
interest rates and scientific research funds described in Article 16 of the 11
th Five Year 
Steel Plan, investors use Chinese-made equipment? Please explain how such a 
requirement is consistent with the TRIMS Ag reement and China’s Protocol of Accession. 
In the 12th Five Year Steel Plan, China has also has set import substitution targets, 
stating that “large scale production will be realized for products that are imported in 
large quantities, such as high strength and high ductility steel for automobiles, silicon 
steel sheets, etc. Their do mestic market shares will reach above 90%; the self-
sufficiency rate will reach 80% for high end products, including corrosion-resistant steel 
for ships, low temperature and pressure cont ainer plates, wheel and axle steel for high-
speed railway, and high-pressure boiler pipe.  
 G/TRIMS/W/122 
 
- 3 - 
 
  Reply 
 
The purpose of the 12th Five Year Steel Plan is to provide a guideline for the steel industry to 
achieve sustainable development and does not contain any requirement to use Chinese-made 
equipments. The steel firms are free to purchase from any domestic or foreign suppliers on 
commercial term, consistent with the relevant laws and regulations, in which case equal opportunities for competition are guaranteed and th ere is no intervention from the government.  
 
Question 6  Will China approve industrial plans for foreign investors that allow enterprises to freely 
purchase steel from all sources, including im ported steel for high end applications in 
ships, railways, automobiles, power plants, etc.?  
Reply 
 
There is no such restriction. The source of the st eel product supply is not the criteria or basis for 
the Government to approve or deny an investment plan. 
 Question 7  
What will the consequences be to foreign inve sted steel users if they and their Chinese 
partners do not meet the thresholds for the domestically-sourced high-end steel 
products delineated in Section III, 3 of the 12
th Five Year Steel Plan?  
 
Reply 
 
China has fulfilled its commitments regarding trade-related investment measures in the Accession 
Protocol and the TRIMs Agreement. Consistent with laws and regulations, all foreign invested steel 
users and their Chinese partners are free to purchase  any steel products they need, irrespective of 
the sources, domestic or imported.  
 
 
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