WT/TPR/S/342/Rev.1  
12 October 2016  
(16-5483) Page: 1/164 
Trade Policy Review Body   
 
TRADE POLICY REVIEW  
REPORT BY THE SECRET ARIAT  
CHINA 
Revision  
This report, prepared for the sixth Trade Policy Review of China, has been drawn up by the WTO 
Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishin g the Trade Policy Review Mechanism (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 was drafte d in English.  WT/TPR/S/342 /Rev.1  • China  
 
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  CONTENTS  
SUMMARY  ................................ ................................ ................................ ........................  8 
1   ECONOMIC ENVIRONMENT  ................................ ................................ ........................  15 
1.1   Recent Economic 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 rate policy  ................................ ................................ ............ 22 
1.2.3.1    Monetary policy  ................................ ................................ ................................ ....22 
1.2.3.2    Exchange rate policy  ................................ ................................ ............................. 23 
1.2.4    Balance of payments  ................................ ................................ ................................ 24 
1.3   Developments in Trade and Foreign Direct Investment  ................................ .................... 26 
1.3.1    Merchandise trade  ................................ ................................ ................................ ...26 
1.3.2    Trade in services  ................................ ................................ ................................ .....28 
1.3.3    Foreign direct investment  ................................ ................................ ......................... 29 
1.3.4    Outlook  ................................ ................................ ................................ .................. 31 
2   TRADE AND INVESTMENT  REGIME  ................................ ................................ ............  32 
2.1   Institutional and Legal Framework  ................................ ................................ ................ 32 
2.2   Trade Policy Framewor k and Objectives  ................................ ................................ ......... 35 
2.2.1    Institutional framework  ................................ ................................ ............................ 35 
2.2.2    Trade policy formulation and objectives  ................................ ................................ ......35 
2.3   Participation in the World Trade Organization  ................................ ................................ .36 
2.4   Regional Trade Agreements  ................................ ................................ ......................... 37 
2.5   Foreign Investment Regime  ................................ ................................ ......................... 37 
2.5.1    Regulatory framework and market access  ................................ ................................ ...37 
2.5.2    Examination and approval proced ures ................................ ................................ ........ 40 
2.5.3    Incentives for foreign investment  ................................ ................................ ............... 43 
3   TRADE POLICIES AND P RACTICES BY MEASURE  ................................ ........................  46 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 46 
3.1.1    Customs procedures and requirements  ................................ ................................ .......46 
3.1.2    Customs valuation  ................................ ................................ ................................ ...48 
3.1.3    Rules of origin  ................................ ................................ ................................ ......... 49 
3.1.4    Tariffs  ................................ ................................ ................................ .................... 49 
3.1.4.1    Applied tariffs and tariff structure  ................................ ................................ ............ 49 
3.1.4.2    Bound tariffs  ................................ ................................ ................................ ........ 51 
3.1.4.3    Bilateral and regional prefere nces ................................ ................................ ........... 51 
3.1.4.4    Tariff-rate quotas (TRQs)  ................................ ................................ ....................... 52 
3.1.4.5    Tariff concessions  ................................ ................................ ................................ .52 
3.1.5    Other charges affecting imports  ................................ ................................ ................. 53 
3.1.6    Import prohibitions, restrictions, and licensing  ................................ ............................ 54 WT/TPR/S/342 /Rev.1  • China  
 
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  3.1.7    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 57 
3.1.7.1    Anti-dumping measures  ................................ ................................ ......................... 57 
3.1.7.2    Countervailing measures  ................................ ................................ ........................ 60 
3.1.7.3    Safeguards  ................................ ................................ ................................ ........... 61 
3.1.8    Standards and other 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 phytosanitary requirements  ................................ ................................ ....67 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............. 72 
3.2.1    Export procedures and requirements  ................................ ................................ .......... 72 
3.2.2    Export taxes, charges, and levies  ................................ ................................ ............... 73 
3.2.3    Export  prohibitions, restrictions, and licensing  ................................ ............................. 74 
3.2.4    Export support and promotion  ................................ ................................ ................... 76 
3.2.5    Export finance, insurance, and gua rantees  ................................ ................................ ..77 
3.3   Measures Affecting Production and Trade  ................................ ................................ .......80 
3.3.1    Incentives  ................................ ................................ ................................ ............... 80 
3.3.2    Competition policy  ................................ ................................ ................................ ...84 
3.3.2.1    Legislative and institutional framework  ................................ ................................ ....84 
3.3.2.2    Monopoly agreemen ts and dominant market positions  ................................ ............... 86 
3.3.2.3    Administrative monopolies  ................................ ................................ ..................... 87 
3.3.2.4    Mergers and acquisitions  ................................ ................................ ........................ 88 
3.3.3    National security review of concentrations  ................................ ................................ ..90 
3.3.4    Price controls  ................................ ................................ ................................ .......... 91 
3.3.5    State trading and state -owned enterprises  ................................ ................................ ..93 
3.3.5.1    State trading  ................................ ................................ ................................ ........ 93 
3.3.5.2    State -owned enterprises  ................................ ................................ ........................ 95 
3.3.6    Government procurement  ................................ ................................ ......................... 98 
3.3.7    Intellectual property rights  ................................ ................................ ......................  102 
3.3.7.1    Overview and institutional developments  ................................ ...............................  102 
3.3.7.2    Industrial property  ................................ ................................ ..............................  104 
3.3.7.2.1    Patents  ................................ ................................ ................................ ...........  104 
3.3.7.2.2    Trademarks  ................................ ................................ ................................ ..... 106 
3.3.7.2.3    Geographical indications  ................................ ................................ ...................  108 
3.3.7.3    Copyright and related rights  ................................ ................................ .................  108 
3.3.7.4    Other IPRs  ................................ ................................ ................................ .........  110 
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 information and trade secrets  ................................ ...........................  110 
3.3.7.5    Enforcement  ................................ ................................ ................................ ....... 111 WT/TPR/S/342 /Rev.1  • China  
 
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  3.3.7.5.1    Overview  ................................ ................................ ................................ ........  111 
3.3.7.5.2    Administrative enforcement  ................................ ................................ ...............  112 
3.3.7.5.3    Judicial enforcement  ................................ ................................ .........................  113 
3.3.7.5.4    Customs law enforcement  ................................ ................................ .................  113 
4   TRAD E POLICIES BY SECTOR  ................................ ................................ ...................  115  
4.1   Agriculture  ................................ ................................ ................................ ...............  115 
4.1.1    Features and market developments  ................................ ................................ .........  115 
4.1.2    Policy objectives and administration  ................................ ................................ .........  116 
4.1.2.1    Policy formulation, institutional and legal framework  ................................ ...............  116 
4.1.3    Policy instruments  ................................ ................................ ................................ . 116 
4.1.3.1    Border measures  ................................ ................................ ................................  116 
4.1.3.1.1    Measures affecting imports  ................................ ................................ ................  116 
4.1.3.1.2    Measures affecting exports  ................................ ................................ ................  118 
4.1.3.2    Internal measures  ................................ ................................ ...............................  119 
4.1.3.2.1    Support measures  ................................ ................................ ............................  119 
4.1.3.2.2    Price controls and marketing  ................................ ................................ .............  123 
4.1.3.2.3    Other measures  ................................ ................................ ...............................  124 
4.2   Services  ................................ ................................ ................................ ..................  124 
4.2.1    Telecommunications services  ................................ ................................ ..................  124 
4.2.1.1    Statistica l overview  ................................ ................................ .............................  124 
4.2.1.2    Regulatory framework  ................................ ................................ .........................  125 
4.2.2    Financial services  ................................ ................................ ................................ ... 127 
4.2.2.1    Market overview  ................................ ................................ ................................ . 128 
4.2.2.2    Regulatory framework for banking  ................................ ................................ ........  129 
4.2.2.3    Regulatory framework for  insurance  ................................ ................................ ...... 134 
4.2.2.4    Regulatory regime for securities and stock exchanges  ................................ .............  135 
4.2.2.5    Regulatory framework for mutual fund s and asset management companies  ...............  137 
4.2.2.6    Regulatory framework for pension funds  ................................ ................................  137 
4.2.3    Health and social services  ................................ ................................ .......................  138 
4.2.3.1    Hospital and 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  ................................ ................................ ................................ ...........  140 
4.2.4.2    Motion picture and videotape production and distribution services  .............................  142 
4.2.4.3    Motion picture projection services  ................................ ................................ .........  144 
4.2.4.4    Radio and television production and transmission services  ................................ ....... 144 
4.2.4.5    Sound recording services  ................................ ................................ .....................  144 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 145  
 WT/TPR/S/342 /Rev.1  • China  
 
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  CHARTS  
 
Chart 1.1 Product composition of merchandise trade, 2013 and 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 Section, 2015  ................................ ................................ .....56 
Chart 3.3 Distribution of export rebate rates, by HS Section, 2015  ................................ ........... 77 
Chart 3.4 Eximbank operations, 2010 -14 ................................ ................................ .............. 79 
 
TABLES  
 
Table 1.1 Selected macroeconomic indicators, 2011 -15 ................................ .......................... 15 
Table 1.2 GDP by sector, 2011 -15 ................................ ................................ ........................ 17 
Table 1.3 Government operations, 2011 -15 ................................ ................................ .......... 18 
Table 1.4 Ba lance of payments, 2011 -15 ................................ ................................ .............. 24 
Table 1.5 Composition of trade in services, 2011 -15 (balance -of-payments basis)  ..................... 29 
Table 1.6 Inwar d foreign direct investment by sector, 2012 -14 ................................ ................ 30 
Table 1.7 Inward foreign direct investment by origin , 2012 -15 ................................ ................ 30 
Table 1.8 Mai n destinations of outward foreign direct investment, 2014  ................................ ....30 
Table 2.1 Foreign direct investment 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 structure, 2011, 2013 and 2015  ................................ .......................... 50 
Table 3.3 Summary analysis of the Chinese preferential tariff, 2015  ................................ ......... 51 
Table 3.4 Excise (or consumption) tax, 2013 -15 ................................ ................................ ....53 
Table 3.5 Anti -dumping measures by product and by origin  (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 related to China's SPS regime  ................................ ................. 67 
Table 3.9 Institutions in charge of the SPS system, 2015  ................................ ........................ 69 
Table 3.10 Export duty types of by HS Chapter, 2015 (May)  ................................ ................... 73 
Table 3.11 Products subject to export quotas and licensing, 2015 -16 ................................ .......75 
Table 3.12 New support programmes notified to the WTO in 2015  ................................ ........... 81 
Table 3.13 Selected catalogues  ................................ ................................ ............................ 82 
Table 3.14 Various support measures, 2015  ................................ ................................ .......... 83 
Table 3.15 Central government set or government -guided prices, 2015  ................................ ....92 
Table 3.16  Local government set or government -guided prices, 2015  ................................ .......93 
Table 3.17 Imports under state trading, 2013 -15 ................................ ................................ ...94 
Table 3.18 Export products subject to state -trading arrangements, 2014 -15 ............................. 94 
Table 3.19 Definition/Classification of SOEs in China  ................................ .............................. 96 WT/TPR/S/342 /Rev.1  • China  
 
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  Table 3.20 S OEs in China's economy, 2009 -13 ................................ ................................ ......96 
Table 3.21 Ten largest state -owned enterprises, 2013  ................................ ............................ 97 
Table 3.22 Top 10 companies listed in  SSE/SZSE that received public support in 2014  ............... 97 
Table 3.23 Government procurement by type of purchase, 2011 -14 ................................ ......... 98 
Table 3.24 G overnment procurement by procurement method, 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 property enforcement, 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 utilization, 2013 -14 ................................ .....................  117 
Table 4.3 Agricultural products subject to export quotas and licensing in 2016  ........................  119 
Table 4.4 Support to agriculture and forestry , 2015  ................................ .............................  119 
Table 4.5 Outlays for agricultural support programmes, 2011 -15 ................................ ...........  120 
Table 4.6 Agriculture Support and Preservation Sub sidy ................................ .......................  122 
Table 4.7 ITU price baskets for China, 2008 -14 ................................ ................................ ... 127 
Table 4.8 Policy measures taken by China to stabilize the stock mark et ................................ .. 135 
Table 4.9 National health expenses, 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 inve stment catalogue status of audiovisual activities, 2011 and 2015  ..........  142 
 
BOXES  
 
Box 2.1 Procedures to approve 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 evolution of the telecommunications sector  ....................  124 
Box 4.2 Financial services: statistical overview  ................................ ................................ .... 128 
 
APPEND IX 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 Compre hensively Deepening Reform (15 November 2013), 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 exports by product group, 2011 -15 ................................ ...... 148 
Table A1.4 China's merchandise imports by p roduct group, 2011 -15 ................................ ...... 149 
Table A1.5 China's merchandise exports by destination, 2011 -15................................ ...........  150 
Table A1.6 China's merchandise impo rts by origin, 2011 -15 ................................ ..................  151 
 
 WT/TPR/S/342 /Rev.1  • China  
 
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  Table A2.1 Main notifications under WTO Agreements (1 January 2014 -1 March 2016, (or 
last notification if applicable)  ................................ ................................ .............................  152 
Table A2.2 WTO dispute settlement cases involving China, 1 January 2014 -1 March 2016 .........  155 
Table A2.3 Industries in which FDI was/is restricte d, 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 applied tariff summary, 2015 ................................ ...........................  162 
Table A3.2 Tax preferences at the central level, 2015  ................................ ...........................  163 
 WT/TPR/S/342 /Rev.1  • China  
 
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  SUMMARY  
1. During the period under review (20 14-2016), 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 both 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 contribut ed 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. Consumer price inflation has remained moderate during 
the review period , increasing by  just 2% in 2014 and 1. 4% in 2015 , as pressure s stemming from 
strong domestic demand and higher wages w ere countered by the decline in world prices of 
primary commodities.  
2. As stated in the Outline of the 13th 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 pr eponderance of public ownership. Othe r measures mentioned in the Plan 
include the promotion of co mpetition, 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 inter est rat e more market -oriented . The authorities have also recently taken 
steps aimed at dealing with overcapacity in certain industries. M easures were introduced to 
discourage or reduce production in industries such as iron and steel, electrolytic aluminium, 
cemen t, plate glasses and vessels. Local authorities and central departments are not allowed to 
approve any new capacity -expanding project s in those areas.  
3. China's current account surplus saw an upward trend  during the review period . It totalled 
US$330.6 billio n 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. T he merchandise trade surplus 
increased sharply in 2014 and 2015, when it reached US$567  billion  or the equiva lent 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 cu rrent 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. The 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 e xpenditure, unless approved by the Standing 
Committee of the People 's Congress at the same level 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 20 14 and 2015 , China initially  adjusted its monetary policy to support the real economy 
and later to adjust it to the " New Normal". The People's Bank of China (PBOC ) continued its  
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 limit s 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. T he PBOC has also guided  financial institutions to raise the proportion of 
credit granted to r ural projects an d to small and 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 14 0% of GDP , while 
outstanding deposits represented just over 200% of GDP.  WT/TPR/S/342 /Rev.1  • China  
 
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  6. The PBOC continues to main tain a managed floating  exchange rate regime, which takes a 
basket of  currencies as a reference.  Since 2013, the PBOC has push ed forward reform s to let the 
market pla y 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 elimination of  the control over the spread between 
US$ selling and RMB buying prices , and the subsequent introduction of market -based daily 
intermediate price s (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, s ince the second half of 2014, the RMB has depreciated 
somewhat . 
7. Although China remains the world's largest tr ader (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 comm odity 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.  Manufactur ed products 
remain ed the dominant componen t of exports, accounting 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 . Manufactured products account ed for 64.4% of imports i n 
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 f or merch andise 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 sources 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 exports and 22.9% of its imports.  Exports of travel, 
construction, telecommunications, financial and business services were the most dynamic in the 
review period, while, a mong 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% o f 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 t hrough its process of structural reform, C hina aims to attain a 
"New N ormal " which is to be characterized by  a somewhat lower, and increasingly more service - 
and technology -oriented, economic growth. Given China's role as a major player in global  trade, 
this will have implications for the rest of the world  due to the possible effect on trade patterns . The 
shift to a production pattern based on  greater innovative capacity will need to be supported by a 
more skilled labour force , and a ccess to the latest technology. This will require further adjustment 
efforts and an increasingly more market -oriented approach to in vestment, with the market playing 
the main role in the allocation of resources. The authorities are aware that some risks 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. They have identified a roadmap to deal with risks 
and achieve stable medium -term growth through a number of measures to strengthen the role o f 
the market, such as: tax reform, an improvement of local government debt financing mechanisms, 
the reduc tion of  overcapacity , the promoti on of  market -based pricing and more market -
determined interest and exchange rates. Other proposed measures, on the ot her hand, such as 
increasing financial support to the real economy, especially credit support to key and weak areas , WT/TPR/S/342 /Rev.1  • China  
 
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  and supporting the development of strategic emerging 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), ha s 
agreed to its expansion . China submitted its notification of Category A commitments under the 
Agreement on Trade Facil itation and, on 4 September 2015, it ratified  the Agreement. During the 
review period, it  was involved in three cases under the WTO disp ute 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 with 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, Chin a and with Macao, China through the 
signature of supplementary agreements to the ir respective  Closer Economic Partnership 
Arrangements (CEPA s). China continues to grant unilateral preferences to LDCs.  As 
of December  2015, duty -free treatment on 97% of tari ff 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, f oreign investment projects are classified as 
encouraged, restricted or prohibited. Proje cts 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 p rojects 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 authoritie s 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 the content of each category is somewhat different 
and the description s/name s of some activities were updated to reflect technological changes.  
14. During the period und er 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 industrie s, 
service industries, new energy , and energy -saving environmental  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 ente rprises 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. P rojects 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 numb er 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 
establ ishment 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 acc ess 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 examination 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 Co uncil 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. T he use of these lists will be gradually implemented; it  is not clea r 
as yet how the y will relate to the I nvestment 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 /Rev.1  • 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 the CSPFTZ, was expanded to Tianjin, Fujian, 
Guangdong, Ningbo and Suzhou.  
17. China's applied MFN tariff  in 201 5 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 201 5 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 (TR Qs); i n 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 g oods a re listed in the Catalogue of Goods subject to 
Automatic Licensing,  which is issued an nually, 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); how ever, 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 requirement s were removed for certain machinery and equipm ent, 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 equ ipment. 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 Decembe r 2015, down from 
113 measures as at December 2013. Imports from 13 countries or territories were af fected, three 
less than at the time of the last R eview. By end -December 2015, imports from the United States 
and Japan were subject to the l argest number of  AD duty orders, followed by those from the EU , 
the Republic  of Korea, and Chinese  Taipei. M easures continued to be concentrated in a few areas, 
in particular chemical products, which accounted for over 60% of the total number of AD order s in 
place as of 3 1 December 2015. Although the number of measures in pl ace was lower than at the 
time of the last R eview, 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 fro m the EU and 
the United  States were in place. As at end -2015, the l ongest existing CV measure had been in 
place for slightly over five years. China did not initi ate 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 changes  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 Exports (BOFT) and of the Inves tigation 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 s tandards are 
developed  by the Standardization Administration of China (SAC), through a process th at comprises 
a number of steps in which the respective industries play  a supportive role . They are reviewed 
after five years of implementation to confirm wheth er 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 /Rev.1  • 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 certificat ion 
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 mach inery and mechanical appliances, electrical 
machinery and equipment, and vehicles . Food safety and quality c ontrol 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 , impos ing 
greater responsibility for food safety on producers , traders, and local governments; it imposes 
severe punishments on those violat ing 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 export taxes is issued every year. Exports paying  
interim taxes may also be su bject to special export duties, which are applied seasonally and may 
be substantially highe r 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 i ron and steel articles,  tungsten , and molybdenum; however, statutory 
export rates remain ed in place for all these items. 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 201 5. Exporters are entitled to VAT rebates on all exported good s. 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 r egarding competition policy regulations s ince the last Review. 
New regulations with respect to mergers were introdu ced 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 determin ation, evaluation and supervision of restrictive conditions  attached to the approval 
of mergers. P rovisions, effective 1 August 2015, geared to avoiding conflict between intellectual 
property (IP) protection and competition policy enforcement , were also in troduced . 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 t rading , or tying or bundling the  sale of additional products. 
They also forbid entering into abusive IP standard -setting agreements.  
24. China applies  price controls , at both the central and provincial  levels,  on commodities and 
services deemed to have a direc t 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 R eview, China has liberalized the price of several goods and services , 
such as t he ex -factory price of explosive materials , the charges  for some con struction projects, 
and the prices of military goods and of tobacco leaves. Government -set prices are currently 
applied to refined oil products, natural gas, certain  medicine s, 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 econ omic 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 agricult ure. 
26. Public ownership remains the mainstay of the Chinese economy , while diverse forms of 
ownership are allowed  to develop along side it. The private sector is dominant in industries such as WT/TPR/S/342 /Rev.1  • China  
 
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  clothing, food, and assembly for export, while sectors of strategi c 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 th eir activity. During this Review, t he 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 Deepening the Reform of State -Owned Enterprises.  
27. China's Government Procurement Law was amended in 2014 and the i mplementing 
regulations came into effect in early 2015. New regulations were also introduced in 2014 for both 
competitive and non -competitive bidding . Under the 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 c entralized procurement agencies; 
centralized procurement accounted for 8 6% of total procurement in 201 4. 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 m ost 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 f or construction projects . Public te ndering account ed 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; m easures to improve the 
patent agency system ; and p rocedures to standardize 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 o f multiple -class registration, the 
protection of exclusive trademark rights , the increase of penalt ies for trademark infringement,  and 
the responsibility for trademark infringement  of the operator of an Internet trading platform.  
29. China has continued to str engthen its IPR enforcement system, both at the admi nistrative 
and judicial levels. However, d espite 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 reinforc e 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 a dministrative cases relating to the licensing of IPRs, 
are now exclusively dealt with  by the Beijing IPR Court . 
30. The Chinese authorities aim  to moderniz e the agricultural sector through mechanization and 
by promoting the development of moderate -scale operat ions to increase productivity, ensur e 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 facilitat ing 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 largest in terms of outlays; in 2014, it accounted 
for some 41% of the RMB 262 billion granted as suppor t outlays for agricultural programmes. The 
authorities are planning to eventually merge three of the programmes into one. To this end, 
in 2015, a pilot programme to reform agricultural subsidies was implemented in five provinces 
(Anhui, Hunan, Shandon g, Sichuan and Zhejiang), which 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 Tool s will 
remain in place . WT/TPR/S/342 /Rev.1  • China  
 
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  31. During the period under review, a number of  measures 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 increa se capital market transparen cy 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, consumer finance, anti -money laundering measures, 
prudential regulations, and measures to address systemic risks such as non -performing loans, 
shadow banking and real estate bubbles . Am ended regulations on the a dministration of 
foreign-invested banks, in effect since January  2015, further ease market access for foreign banks 
by: eliminatin g the requirement for the establishment of representative offices before setting up 
operating agencies; lowering the minimum operation period requir ement for applying to conduct 
RMB business from three years to one year and eliminati ng the two -year profit -making 
requirement; and remov ing the RMB  100 million minimum  working capital requirement for 
branches of foreign -invested banks . Some liberalization  measures had previously been introduced 
in 2014, when restriction s regarding sub-branch es of foreign -funded bank s were removed.  
32. Some liberalization measures were adopted in telecommunications during the review period, 
as investment in electronic commerce businesses by foreign -invested telecom munication 
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, t he establishment of foreign motion picture 
production and distribution companies remains prohibited, with the exception of film distribution 
companies owned by  investors from Hong Kong, China ; and Macao, Chi na, which ar e 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, f oreign 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 Chi nese party must be at least 
30%. Furthermore,  foreign institutions cannot establish branches . Foreign doctors with 
professional certificates issued by their home country 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 respec t 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 the previous two -year period, the driving force 
behind growth was strong domestic demand, triggered by domestic cr edit 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 contai ned, 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 nomina l 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 (U S$ 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 effecti ve 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 fro m 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 (R MB 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 expo rts 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 trad e 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 /Rev.1  • 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 and reserve position in the Fund.  
g Excluding gold, SDRs and reserve position in the Fund.  
h Debt service ratio r efers to the ratio of the payment of principal and interest of foreign debts 
to the foreign exchange receipts from foreign trade 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 data base.   
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 moderate 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 exports to GDP growth was slightly positive in both 
2014 and 2015, mainl y on account of lower imports. 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, 
contrib uting 2.5 percentage points to GDP expansion. Final consumption expenditure explained 
52.8% of GDP growth in 2015. As was the case in the previous review, domestic demand was 
supported by fast domestic credit growth in both years: credit expanded by 16.2% in nominal 
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 income; promoting the consumption of services, in 
particular, elderly c are services, healthcare services, tourism services, and cultural services; 
implementing a paid leave system; 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/130736/2946072/20150906162814808 16.pdf . 
3 National Bureau of Statistics of China, Press Release,  "China’s Economy Had a Good Start i n 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 /Rev.1  • China  
 
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  of the income distribution system and supporting measures, and by increasing farmers' income 
through various channels; releasing resources for consumption by improvin g 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 consumer 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 201 4. However, in 2015, the savings -investment gap increased 
again, to 3.4% of GDP, on account of the higher external current account surplus , falling from 
3.7% of GDP in 2010, to 2.5% in 2013 and 2.7% in 2014. Savings represented 4 7.2% of GDP by 
expenditure in 201 5, while investment was 4 3.8% 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 which 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 due 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 growth 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 
constan t 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, t he value added of the primary sector expanded by 2.9% year -on-year; that 
of industry and construction was up by 5.8%; and th at 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 attributable 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 /Rev.1  • China  
 
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    2011  2012  2013  2014  2015  
Share of main s ectors 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 price s (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 intermed iation  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 Dat a: Quarterly Data".  Viewed at: 
http://data.stats.gov.cn/english/easyquery.htm?cn=B01 . 
1.9.  At the end of 2014, the number of employed 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 secondary 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 Structu ral 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 g rowth 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 develo pment. 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, w hile 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 bala nce (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  (2016), "National Data: Quarterly Data" . Viewed at: 
http://d ata.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.im f.org/external/pubs/ft/scr/2015/cr15234.pdf . WT/TPR/S/342 /Rev.1  • 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 revenu e (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 
Vehic le 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 completed w hen 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 replenishment of, the Budget Stabilization Fund and 
the use of carry -over or balance fu nds, 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 deficit is not a good indicator of the fiscal s tance 
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 inc luding off -budget activity rose to 
some 57% of GDP as of end -2014.9  
1.12.   Partly in response to the need to control 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 budg et 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 t o 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 implementation of the VAT reform and the elimination of 
double taxation. They estimate that the replaceme nt 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: C entral Government; provinces, autonomous regions and municipalities directly 
under the Central Government; cities divided into districts 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 Nationa l People's Congress on 31 August 2014.  WT/TPR/S/342 /Rev.1  • 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 th e last Review, changes have also been introduced to the central -local government 
income allocation system. For example, the Central Government increased the allowance to local 
governments for incremental export tax rebates borne by them in 2014, and stipul ated 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) mo del. 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 s eeking 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 Resources 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 transfer of funds, the col lection 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 c hanges which China intends to implement in the near future 
are included in the Outline of the 13th Five-Year Plan (2016 -2020) as endorsed by the National 
People 's Congress , which calls for: an administration management reform; the promotion of 
private sect or 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 n umber of private 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 capital per enterprise or household has also been 
increas ing. By end -2015, 19.1 million private enterprises 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 individual industrial and comm ercial 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 mor e 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 enterpr ises 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 bu rden for enterprises and individuals 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 /Rev.1  • China  
 
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  1.19.   The Communiqué  of the  Third Plenum of the 18th CPC Central Committee, 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 Majo r Issues 
Concerning the Comprehensive Deepening of Reform, a 60 -point reform blueprint, which expanded 
on most of the issues mentioned in the Communiqué. The Decision calls for a number of reforms in 
the financial system including: promoting  qualified priv ate 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 appro val-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, en courages 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 ecologic al construction and 
infrastructure.14 To promote public -private projects, the Nationa l Development and Reform 
Commission (NDRC ) issued the Guiding Opinions on Conducting Public -Private  Partnership 
in 201415, 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 de legated 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 i ncome 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 s ince 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 undertaking fees collected by the central government . 
                                                
14 Guo Fa [2014] No.  60, 16 November 2014. V iewed at: http://www.gov.cn/zhengce/content/2014 -
11/26/content_9260.ht m (in Chinese only).  
15 Fa Gai Tou Zi [ 2014] No. 2742, 2 December 2014. V iewed at: 
http://www.sdpc.gov.cn/gzdt/201412/t20141204_651014.html  (in Chinese only).  
16 The Guiding Opinions o n 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. V iewed 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 the State Administration of Taxation (SAT) on the 
Preferential Policy of Corporate Income Tax of Small and Low -profit Enterprises (Cai Shui [2015] No. 34) . 
19 Notice of the M OF and the SAT  on further Expanding the Scope of the Preferential Policy of Corpo rate 
Income Tax of Small and Low -profit Enterprises (Cai Shui [2015]  No. 99) . 
20 Notice of the M OF and the SAT  on Continuing to Implement the Value -added Tax and Business Tax 
Policies for Small and Micro Enterp rises (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 /Rev.1  • China  
 
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  1.22.   The authorities have noted that China continues to carry out measures conc erning 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 re sulted 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 new 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 loan facility to offer credit to agricultu re. 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 overca pacity. 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 strictly subject to the Guiding Opinions of the State 
Council on Resolving Ov ercapacity (Guo Fa [2013] No. 41)24, under which local authorities and 
central departments are not allowed to approve any new capacity expanding project s in those 
areas . 
1.24.   A major change during the period under review is the introduction of a deposit guarante e 
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 inst itutions: the deposit insurance funds are mainly 
comprised of insurance premiums paid by deposit financial institutions; e) maintenance of a 
surveillance system, including collecting and checking 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 lib eralization, 
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 PBO C 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 Standi ng Lending Facility (SLF), the 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 st ance 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 th e "New Normal". The 
PBOC implemented targeted cuts in the reserve 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 /Rev.1  • China  
 
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  used differentiated RRRs to promote counter -cyclical adjustment.26 The PBOC also lowered in an 
asymmetric manner deposit and loan benchmark inte rest 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 offer ed 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 t he 
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 credit struc ture 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 provi de 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 note s 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 e nd-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 mont hly weighted average interest rate on bond pledged repo at 
1.94%. There was also a steep increase in lending, 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 t rillion, 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, the PBOC has pushed forward reform to let the 
market play a more dec isive role in exchange rate formation. The floating range of the 
RMB exchange rate has gradually been expanded, and the flexibility of the RMB exchange rate has 
increased. In April 2012, the  trading band of the 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 closing rate of inter-bank foreign exchange o f 
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 launched. The PB OC 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 guid e 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 /Rev.1  • China  
 
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  1.31.   From the launching of the exchange rate reform in 2005 to th e 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 consid er 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 sh own 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 economic restructuring, including a redistribution of 
sectoral weights i n 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 redu ce 
foreign trade and payments imbalances; (e) it has 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 an d the foreign exchange 
market has played a greater role in allocating resources. Total trading on the inter -bank foreign 
exchange reached  US$13.2 trillion in 2015, up 51.7% from 2014.   
1.33.   In a recent evaluation of China's exchange rate, IMF staff considered that a  more flexible, 
market -determined exchange rate is needed to allow the market to play a more decisive role in 
the economy, rebalancing toward consumption, and maintaining an independent monetary policy 
as the capital account opens. They recommend a f urther widening of the fluctuation band and 
changes to how the central parity is set.29 The authorities have noted that improving the exchange 
rate formation mechanism and opening up the capital account are among China 's reform 
objectives. In this respect, since August 2015, the PBOC reformed the way in which the central 
parity of the RMB against the US$ 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 de mand 
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 th e 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 secon dary 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 surplus rose to 2.7% of GDP.  The merchandise trade 
surplus increased sharply again in 2015, to US$567  billion, this time mainly on account of a sharp 
decrease in imports. The current account surplus reached US$330.6 bill ion which represented a 
19.2% increase over the previous year, and was equivalent to 3% of GDP.  
Table 1.4 Balance of payments, 2011 -15 
(US$ 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 Art icle IV Consultation , 
August 2015. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr15234.pdf . WT/TPR/S/342 /Rev.1  • 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 Exchange 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 ac count transactions. Since 2011 , all residents and non -residents have 
been able to use RMB for FDI; in the following years, several measures were adopted towards 
convertibility.30 However, portfolio investment continues to be controlled by quotas and can onl y 
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 i n 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 settleme nt transactions; and allowing discretional foreign exchange sales for 
foreign -invested enterprises. The authorities also sought to facilitate cross -border investment.  
1.37.   Another step towards capital account convertibility was the decision to further expand th e 
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 authori ties have also 
                                                
30 In 2011, access to RMB loans was extended to Chinese -invested enterprises wit h their foreign 
exchange earnings as guarantee. In 2012, restrictions on the opening of foreign exchange accounts and the 
use of capital were removed, while i n 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 investment 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  then, 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 Kingdom; Singapore; France ; WT/TPR/S/342 /Rev.1  • China  
 
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  continued to push forward the Qualified  Domestic Institutional  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, the 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 f ocus 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 
13th 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 payments 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 au thorities noted that 
the PBOC should further expand the scope and number of RQFIIs, increase investment types and 
quotas, and improve the convertibility of cross -border 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 
program mes 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 201 5, 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 expo rts. The share of imports in GDP fell to 15.5% in 2015. In the 
context of the current Review, the authorities reiterated that China is implementing policies to 
promote the  balanced development of foreign trade through consumption -friendly policies to 
expan d domestic demand and hence imports, while stabilizing exports.  
1.41.   In 201 5, manufactured products remained the dominant component of China's exports, 
accounting for 94 .3% of the total, slightly higher than in the previous year ( Chart 1.1 and 
Table  A1.3). Amon g 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 6 4.4% of China's imports in 201 5 (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 201 5 compared to 2 6.9% 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; Australia; Switzerland; Luxemb ourg; 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 /Rev.1  • China  
 
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  (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 201 5 
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 billion 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%
Source :  UNSD, Comtrade database (SITC Rev.3).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 /Rev.1  • China  
 
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  Chart 1.2 Direction of merchandise trade, 2013 and 2015  
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%
Source :  UNSD, Comtrade database.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 thereafter re -imported into China.
 
a Includes goods that have been exported from China and thereafter 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 in creased 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 /Rev.1  • China  
 
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  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 services, 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 intellectual 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 
informat ion 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 Foreign Exchange, Time Series of the Balance of Payments of China. V iewed 
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 restrictions ( sections 2.5.1 and 2.5.2). It has al so 
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 recipients of FDI during the period under r eview. 
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 an d business services (10.4%), 
and wholesale and retail trade (7.9%) (Table 1.6).  WT/TPR/S/342 /Rev.1  • China  
 
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  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  
Manufactu ring 48,866.5  45,555.0  39,938.7  33.4  
Electricity, gas and water  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 201 5. 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 direc t investment by origin , 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  78.39 85.74  92.67  73.4 
Singapore  6.54 7.33 5.93 6.97 5.5 
Chinese Taipei  6.18 5.29 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 3.36 2.67 2.59 2.1 
Germany  1.47 2.10 2.07 1.56 1.2 
France  0.77 0.76 0.71 1.22 1.0 
United Kingdom  1.03 1.06 1.35 1.08 0.9 
Macao, China  0.51 0.47 0.59 0.89 0.7 
Netherlands  1.14 1.28 0.64 .. 0.60 
Other  9.20 7.43 6.38 6.88 5.4 
.. Not among the 10 main in vestors in that year.  
Note:  Figures refer to f oreign capital actually used . 
Source:  MOFCOM online information . 
1.47.   During the period under review, China continued to step up outward FD I, 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 commercial services, wholesale and retailing,  mining, 
finance, manufacturing, real estate , transport, construction, software and IT technology and 
services . 
Table 1.8 Main destinations of o utward foreign direct investment, 2014  
Country /Region  Value (US$ billion)  
Total  111.13  
Hong Kong, China  70.87 
United States  7.60 
Luxemb ourg 4.58 
British Virgin Islands  4.57 
Cayman Islands  4.19 
Australia  4.05 
Singapore  2.81 WT/TPR/S/342 /Rev.1  • 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 supply side, the authorities have stated that they 
are intent on cutting surplus producti on capacity and inventories. They consider that, as China has 
entered a "New Normal ", growth drivers have become 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 autho rities are aware that some risks 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, an d structural 
bottlenecks. The authorities have identified a roadmap 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 ta rgeted 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 suppor t 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% i n 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 infl ationary pressures. The current account surplus  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 at: 
http://www.PBOC.gov.cn/eporta l/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/inde x.htm . WT/TPR/S/342 /Rev.1  • 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 
Commi ttee exercise the legislative power in China. The NPC is composed of deputies elected from 
the provinces, the autonomous regions, the municipalities directly under the Central Government, 
the Special Administrative Regions, and the armed forces. Deputies a re 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 depu ties 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 Standing Committee of the NPC also has the faculty of 
ratifyin g 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 national economic and so cial 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 China are el ected 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 executi ve 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, located 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 S tate 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 provincia l, 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 regulations may vary across regions, reflecting 
local differences. In  this respect, 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 Electoral 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 Stand ing 
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 Congresses at all Levels and the Law 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 convened at any time if the Standing Committee of 
the NPC deems it necessary or if one fifth 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 Prop erty 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 clarify the application of laws, administrative regulations, decisions or 
orders  of the State Council.  WT/TPR/S/342 /Rev.1  • 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 Constit ution. 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, f or instance those concerning criminal offences, civil affairs, 
and state organs. The NPC Standing Committee 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 partiall y 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 Cour t, the Supreme 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, the 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 discus sed 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 co mments 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 membership of the Standing Committee.  
A law adopted by the NPC or its Standing Committee is promulgated by a presidential 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 circulated at the national level.  
Administrative Regulationsc 
The State Council formulates administrative regulations. Draft administrative regulations must be published 
for public comment, unless the State Council decides that it is not necessary.b 
Administrative regu lations are promulgated by a decree of the State Council signed by the Premier of the 
State Council. Once signed and promulgated, 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 congresses or the ir 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 protection of historic and cultural 
sights. The people's congresses or their standing committees of the provinces and cities where special 
economic zones are located may formulate r egulations to be enforced within the limits of the special 
economic zones. The people's congresses of the autonomous regions have the power to formulate 
autonomous regulations and 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 directly 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 autonomous prefecture are, upon approval, promulgated by its 
standing committee through an announcement. Autonomous regulation s or separate regulations are, upon 
approval, promulgated by the standing committee of the local people's congress of the autonomous region, 
autonomous prefecture or autonomous county through an announcement.  
Upon promulgation, local regulations and the au tonomous 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.g ov.cn ), on the website of the local people's 
congress, and in newspapers circulated within the local administrative region.  
                                                
7 The Office review s local regulations, local government rules and departmental rules, so that they do 
not contradict the Constitution, laws or administrative regulations or each other. Viewed at: 
http://www.chinalaw.gov.cn/article/jgzn/zyzn/ .  WT/TPR/S/342 /Rev.1  • China  
 
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  Departmental Rulese 
The ministries and commissions of the State Council, the People's Bank of China, the State Audit 
Administratio n, and other organs endowed 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 autonomous prefecture may formulate rules.  
Local government rules are approved at the executive 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 t he relevant city with districts, or the governor of 
the relevant autonomous prefecture. Thereafter, they are 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, foreig n exchange and 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/content/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 policy, 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 when , 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 document s 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 prope rty 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 Chi nese.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 20 08, 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.go v.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 Cooperation 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 /Rev.1  • 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 Ent erprises, 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 Commission (NDRC) is in charge of designing China's 
overall national economic and social development policy. The NDRC is also responsible for: 
conducting research and setting objectives and policies on economic reform, such as those 
included in the Five -Year Plans; and for designing the foreign dire ct investment (FDI) policy. 
MOFCOM is mainly responsible for the coordination and implementation of trade -related, 
investment and economic cooperation policies. The Ministries of: Agriculture, Environmental 
Protection, Finance, Industry and Information Tec hnology, 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 outlinin g 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 a nd 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 o n 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 existin g 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 protection of the environment. In this resp ect, 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 in vestment 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 -establishment national treatment (i.e. no app roval 
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 Initi ative 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 decision 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) economic reform and envi ronmental protection; (ii) democracy and rule of 
law; (iii) cultural issues; (iv) social issues; (v) reform of the Party's building system; and (vi) disciplinary 
inspection (anti -corruption).  WT/TPR/S/342 /Rev.1  • 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 Ch inese companies, 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 18th National Congress of the CPC in 2013, has also shape d 
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 refo rm 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 o f 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 "op inions" 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  Parti cipation 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 t he 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 September 2015 China ratifie d 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 multilate ral 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 submitted a large number of notifications to the 
WTO, which c over 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 a nd 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 notified as  an update or amendment to former WTO 
notifications.  
                                                
15 The goal is to: create a law -based business environment, remov e market access barriers, improve 
resource allocation, and foster and facilitate domestic 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 decades, 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 /Rev.1  • China  
 
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  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 Agreement o n Trade in Goods of the Framew ork Agreement 
on Comprehensive Economic Corportation between China and 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 signatur e 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 prefe rences to 40 LDCs. The preferences granted to them vary: 24 LDCs 
were granted duty -free treatment on 97% of their tariff lines; 14 LDCs on 95% of their tariff lines; 
and the remaining 2 LDCs on 62% of their tariff lines. As of December 2015, duty -free trea tment 
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 t he Company Law23, last amended 
in 2013, and  the three laws specifically rela ted 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 administrative regulations and rules. MOFCOM 
is revising these three la ws to combine them into one statute, t he 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, restricted 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) a re those that use improved technology 
and are less polluting, while "restricted" industries are those deemed to employ outdated 
technologies, over -exploit scarce natural resources or harm the environment. The "prohibited" 
category includes projects that po llute the environment, destroy natural resources or go against 
social and public interests. The NDRC and MOFCOM jointly issued a revised Catalogue for the 
Guidance of Foreign Investment Industries 2015 (the 2015 Investment Catalogue).26 The 2015 
                                                
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 Partnership 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; a nd 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%20Investment%20Law%20of%20the
%20People%27s%20Republic%20of%20China_JonesDay_0.pdf  (in English).  
25 Provisions on Guiding Foreign Investment of 11 February 2002 . Viewe d 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 /Rev.1  • China  
 
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  Catalogue h as been in force since April 2015 and replaced the 2011 Investment Catalogue. A 
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 Stat e Council's 
provisions and policies would prevail, was eliminated. In this regard, the 2015 Catalogue only 
states that the provisions stipulated in any of the preferential and free trade agreements signed by 
China shall prevail over the Catalogue.  
2.26.   The auth orities 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 Catalogue includes a total o f 423 entries, 48 less 
than the 2011 Catalogue. The authorities also noted 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 th e 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 encouraged category in the 2015 Catalogue : 
Agriculture : planting of trees or bamboo 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 encouraged category in the 2015 Catalogue:  
Manufacturing : petroleum processing; manufacturing of raw chemi cal materials and chemical products; manufacturing 
of special -purpose equipment; manufacturing of computers, telecommunications and other electronic equipment.  
Mining and energy : exploration; mining and ore dressing 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 ser vices (e.g. care centres for the elderly).  
Industries that are no longer restricted to Sino -foreign equity/cooperative joint venture operations or 
equity shareholding requirements (i.e. Chinese parties 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; manufactur ing of electric machinery and of key auxiliary equipment for power 
transmission.  
Mining and energy : development and application of enhanced oil recovery and other relevant new technologies; 
development and application of new technologies for oil exploratio n 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 prohibited category); printing and reproduction of recording 
media; petroleum processing, coking and n uclear 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; manufacturing 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 institut ions. 
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 the 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 /Rev.1  • China  
 
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 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 Chi nese-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 (famous 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 periodicals; 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 tob acco 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. F or instance, 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 re vision of the Investment Catalogue appears to be consistent with the goals of the 
12th 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 Catalogues is difficult, as the content of each 
category is some what 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, telec ommunications 
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 (restrictiv e) conditions as domestic industries. 
Furthermore, the Investment Catalogue is very specific, which makes comparing the two 
catalogues difficult. For instance, an activity encouraged in the 2011 Catalogue was the 
"manufacturing of large -scale digital integ rated circuits 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  nanometres  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 a n Opinion that calls for the design of two 
negative lists – one for market access, applying to both domestic and foreign companies, and 
                                                
27 Chapter 52 of the 12th Five-Year Plan. Viewed at: http://dangshi.people.com.cn/GB/151935/204121/  
(in Chinese only).  WT/TPR/S/342 /Rev.1  • China  
 
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  another for foreign investment – the use of these lists will be gradually implemented.28 The 
Opinion states that the deve lopment and implementation of the market access and foreign 
investment negative lists will adhere to the general 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 reviews29, 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 authorit ies 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 are 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 fore ign investment partnerships, 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 o f 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 t o 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 requirements 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 authorities (taxation, customs, foreign exchange and 
                                                
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 . 
29 The administrative regulations with regard to FDI 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 Concen tration 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 Domestic E nterprises by Foreign 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 Co ncentrations 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 Conc entrations 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 Securit y 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 Chines e 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 2 011. 
32 The Administrative Measures for the Approval and Record -Filing of Foreign -Invested Projects (FIPs), 
NDRC [2014] No. 12. Viewed at: http://www.sdpc.gov.cn/zcfb/zcfbl/2 01405/W020140521524444536751.pdf ; 
and Decision on Revising Certain Articles of the Administrative Measures for the Verification and Approval and 
Record -Filing of Outbound Investment Projects and the Administrative Measures for the Verification and 
Approva l 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 t he Administration of Examination and Verification of Foreign Investment 
Projects, NDRC Decree [2004] No. 22. Viewed at: 
http://www.gov.cn/gongbao/content/2005/content_64246.htm  (in Ch inese 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 /Rev.1  • China  
 
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  the pertinent regulatory bodies)  and submit the required documents to the local government 
authorities.36 
2.34.   The Catalogue of Investment Projects Subject to Government Verification lists s pecific 
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 instan ces 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). The agencies in charge of approval, as well as the 
requirements to obtain approval, are listed in the 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 equi ty 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 Cen tral-Western 
Regions of China; and the national development 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 department  of industry  and commerce (prior 
approval from the commerce department) , and with the State Administration of Foreign Exchange 
(SAFE). Foreign investment partnerships need only to register with the department of industry and 
commerce; no approval is required. Registra tion requirements are the same as those that apply to 
domestic enterprises, but may vary slightly depending on the activity. Corporations are registered 
in accordance with the Company Law, while partnerships are registered in accordance with the 
Partnershi p 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 registration system with a subscribed capital 
registration system. For instance, the general minimum capi tal 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 
                                                
36 These documents include: the description of the project, the supporting documents to register an 
enterprise; the letter of investment 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 requirements for outward investment (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 Con flicts, Guo Fa  [2013] No.  41. 
39 Article 16 of NDRC Notice [2014] No.  12. 
40 The Measures for the Administration of the Establishment 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 /Rev.1  • China  
 
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  contributed in cash or in kind. T he revised Company Law also abolished the requirement for a 
minimum 30% cash contribution of the registered capital, as well as other requirements in terms 
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 pi lot 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 examination and ap proval. 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 Lis t, 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 requiremen ts and process. This means 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 industri es 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 manufact uring of weapons 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 inves tors. Weapons and ammunition are not allowed to be produced by regular Chinese 
                                                
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 Distributing the "Overall Plan for the China (Guangdo ng) 
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 Print ing 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.ht m (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 Trad e 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 Foreign 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 Entry of Foreign Investment in the Chin a (Shanghai) 
Pilot Free Trade Zone (Negative List) (2014 Revision), Shanghai 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 /Rev.1  • China  
 
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  entities either, hence their removal from the List. Thus, the Negative List needs to be read in 
conjunction with other laws and regulations.  
2.42.   In 2015, the State Council also rele ased 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, r einvestment 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 f or 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 In vestment 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 Equ ipment and Products Not Eligible for Tax Exemption (last revised 
in 2014),  are excluded from this treatment .48  
2.44.   Projects 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 1 5%; 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 wa s 
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 Th ings", and mobile 
Internet).  
                                                
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 Fore ign Investment 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 not 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 revised 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 . WT/TPR/S/342 /Rev.1  • China  
 
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  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 exemption for "qualified" imported R&D equipment.52 
2.46.   Incentives are also granted to companies imp orting technologies or products included in the 
Catalogue of Encouraged Technology and Product 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 a dvanced 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 
manuf acture. The 2009 Catalogue stipulated that companies that import technologies or products 
included in the Catalogue will benefit from a preferential interest rate.54 However, it does not 
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 a ccelerated depreciation 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 aut horities.  
Table 2.2 Incentives in the form of preferential 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 n ew technological 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 conser vation  
 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  
                                                
52 SAT Announcement [2011] No. 73 on Manage ment Measures on VAT refund for domestic equipment 
purchased by R&D centr es. Viewed at: 
http://www.chinatax.gov.cn/n810341/n810765/n812156/n812454/c1185476/cont ent.html  ; and Circular 
Caishui [2011] No. 88. V iewed at: 
http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201110/t20111019_600479.html . 
53 Catalogue of Encouraged Te chnology 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_29 9031.html . 
55 Administrative Measures for Special Fund of Foreign Economy and Trade Development, Cai Qi [2014] 
No. 36. Viewed at : 
http://www.mof.g ov.cn/zhengwuxinxi/caizhengwengao/wg2014/201408wg/201503/t20150327_1208373.html  
(in Chinese only).  WT/TPR/S/342 /Rev.1  • China  
 
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  Type of 
enterprise  Conditions for eligibility  Form of the incentive  
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, energ y 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.  
2.48.   In order to attract investment, especially foreign investment, and promote economic 
development, Chi na 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; Coasta l 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 enter prises 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 th e 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 R egions 
continue to enjoy a preferential enterprise income tax (EIT) of 15% instead of the statutory EIT 
of 25%.  
 
 WT/TPR/S/342 /Rev.1  • China  
 
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  3  TRADE POLICIES AND P RACTICES 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: improving 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 Legislatio n related 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/201 3-
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 b odies before 
filing customs declarations. Foreign -invested enterprises (FIEs) may also register as foreign trade 
operators; FIEs require a copy of the certificate 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 General 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/p ortal0/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 Registra tion of Foreign Trade Operators. Viewed at: 
http://www.mofcom.gov.c n/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/info70207 5.htm . WT/TPR/S/342 /Rev.1  • China  
 
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  were amended.10 According to the Chinese authorities, as a result the new provisions simplify the 
licensing requirements and the establishment procedures for declaration enterprise s. 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 an d quarantine requirements 
of Customs and the General Administration of Quality Supervision, Inspection and Quarantine 
(AQSIQ), as stipulated by law and by the Catalogue of Import and Export Commodities Subject to 
Compulsory Inspection.11 The Catalogue is am ended 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 cus toms 
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 si nce been classified, mainly based on their credit rating, as: authorized 
enterprises, enterprises of general integrity, and "dishonest" enterprises.14 Customs clearance 
continues to depend upon the enterprise's classification and on four other aspects: inte rnal 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 inte grity, 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 enterprise s every three years, and recertifies enterprises of general integrity on an 
ad hoc basis. "Dishonest" enterprises may be reclassified as an enterprise of general integrity after 
one year of "good behaviour"; and they may apply for reclassification, as an a uthorized enterprise, 
one year after becoming an enterprise 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/inf o700322.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/t2015 0106_429636.htm  (in Chinese 
only).  
12 Implementing Regulations for the Law on Inspectio n 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 Chin ese 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 Promotion 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.cu stoms.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://w ww.customs.gov.cn/publish/portal27/tab61724/info762104.htm  (in Chinese only).  WT/TPR/S/342 /Rev.1  • China  
 
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  Suzhou.18 The pilot scheme covers  all goods subject to automatic import licensing, excluding those 
for which a licence can be used 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 substan tial changes since 2014. Goods entering (and  exiting) bonded zones, export  
processing zones and other special customs supervision areas, as well as border trade imports 
(and exports) , are subject to different customs procedures formulated by GACC, and to d ifferent 
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 supervision areas", which ar e 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 area s, in some instances 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 cla rified 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 Supervision Area s. 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 o f 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 Decr ee [2013] No. 213 , Amendment to the Customs Measures for Assessing and Determi ning 
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 /Rev.1  • China  
 
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  3.1.3   Rules of origin  
3.9.  China applies preferential and non-preferential 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 use d 
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 purc hased by the government.28 
3.10.   Preferential rules of origin apply in accordance with the specifications of the various 
preferential agreements signed by China. They are also used to grant preferential treatment to 
imports from LDCs.29 In general, the criteria us ed 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 an d 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 f or 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 t o 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 Member s; 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 a nnually 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 a nd 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, 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 under the preferential agreements signed prior to the 
period under review, see: WTO documents WT/TPR/S/264/Re v.1, 20 July 2012; and WT/TPR/S/300/Rev.1, 
7 October 2014 . 
30 Afghanistan;  Angola ; Bangladesh ; Benin ; Burundi ; 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 ; Sierra Leone ; Senegal; Somalia ; South Sudan ; Sudan; Tanzania ; Togo; 
Uganda ; Vanuatu ; Yemen and Zambia ( Ministry of Finance P.R.C . (2015), Custom s Tariffs on Import s and 
Export s of the People's Republic of China, 201 5, Beijing, China ). WT/TPR/S/342 /Rev.1  • China  
 
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  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 ag ricultural 
products (WTO  definition), at 1 4.8%, showing no change for 2013 and a slight decline from the 
average calculated for  2011 (Table 3.2). The average 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 structure, 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 o nly 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 tariff 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 interim rates is 9.8% for all three years.  
c Domestic tariff peaks are defined as those exceeding three times the overall average applied rate.  
d International tariff peaks are defined a s 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 ta riff schedule is based on HS07 nomenclature; 2013 and 2015 tariff schedules are based on 
HS12 nomenclature. 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 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 since 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 8525.8 0.13 (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), including in HS Chapters 10 (wheat and meslin, maize, rice), 
11 (cereal flours other than of wheat and meslin, cereal groats), 17 (cane or beet sugar), 31 (mineral or 
chemical fertilizers), 51 (wool, carded o r combed), and 52 (cotton).  WT/TPR/S/342 /Rev.1  • China  
 
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  Chart 3.1 Distribution of MFN applied tariff rates, 201 1, 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 >25
Note:      Figures in parentheses denote the share of total lines.  
Source:  WTO Secretariat calculations, based on data provided by the authorities .Number of tariff linesChart 3.1   Distribution of MFN applied tariff rates, 2011, 2013 and 2015
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 tariff s 
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 tariff s were bound at ad valor em 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 treat ment 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 appl ied to 37 LDCs, 
which stood at 5% in 2013, has declined substantially. 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 the 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 FTA  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 FT A 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 /Rev.1  • 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 tari ff 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 
Myanmar  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 
Myanmari 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 the 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 Arrangement .  
f Based on lowest ra tes taken from 2 LDC countries, 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 special 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 applied 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 data 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, maize, 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 i n-quota 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). A ccording to the authorities, the 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 c ertain 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 o r 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 /Rev.1  • China  
 
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  imported goods are exempt fr om payment of import 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 international 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 i n 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 import s 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 sold directly by the producer continue to be 
exempted from VAT, while imported goods are not.40 
3.21.   A number of imported and domestically -produ ced 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 no n-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% plu s 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 10.05.2015a 
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/ta b2746/info4198.htm . 
38 Rules for the Implementation of the Interim Regulation on Consumption Tax , Decree No.  51 of the 
MOF and the S TA. Viewed at: http://www.gov.cn/gongbao/content/2 009/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, liquefied petroleum gas, natural gas, biogas and dimethyl ester; coal; 
books, newspapers and magazines; and feedstuffs, fertilizers, pesticides, agricultural machinery 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/n810765/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 /Rev.1  • China  
 
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  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 sto ne 
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 litre , as of 13 
December 2014  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 litre , as of 13 
December 2014  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 1,00 0 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 o r 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/n1 466042/c1754889/content.htm l. 
b SAT Announcement No.  65 of 2014, Announcement on Issues of Refined Oil Exercise Tax. Viewed at: 
http://www.chinatax.gov.cn/n810341/n810755/c135 0768/content.htm l; 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/z hengcefabu/201412/t20141212_1166868.htm l.  
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.htm l. 
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 ma intained 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 Government 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 /Rev.1  • China  
 
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  licences and tariff -rate quota certificates. According to China's last notification, the licensing 
regime has not cha nged 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 Import Licensing43, which is issued annually by MOFCOM and  the GACC, and in the 
Catalogue  of Automatic L icensing 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 201 5 (46 products less than in 2013); and 1 7 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 Automatic 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, t here 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 -transfe rable.  
3.25.   Restricted goods are administered through non -automatic licen ces 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 Licensing, 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 t he Catalogue of Restricted Imports for Solid Waste.48 
In 2015, the Catalogue of Import Goods Subject to Licensing  listed 89 tariff lines (87 in 20 13) 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 201 5 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 previou s 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  Import  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 automatic import licences please refer to China's last 
notification under Article 7.3 of the Agreement on Import Lice nsing Procedures (WTO document 
G/LIC/N/3/CHN/13, 22 January 2015).  
47 Catalogue of Import Goods Subject to Licensing  (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 /Rev.1  • China  
 
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  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 20Chart 3.[M licensing]  Import licensing by HS section, 2015
% of HS section
Note:   Calculations are based  on the 2015 tariff schedule at 8 -digit level.  
Source:  WTO calculations, based on data provided by the authorities; Ministry of Environment Protection online information. 
Viewed at: http://www.zhb.gov.cn/.Automatic import licensing
Non-automatic import licensingHS section
01  Live animals and products
02  Vegetable products
03  Animal/vegetable fats and oils
04Prepared food products
05  Mineral products
06  Chemicals and products thereof
07  Plastic/rubber products thereof
08  Raw hides and skins, leather
09  Wood and articles thereof
10  Pulp, paper and paperboard
11  Textiles and clothing
14  Precious stones and metals
15  Base metals
16  Machinery and electrical equipment
17  Transport equipment
18  Precision material
20  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 Environment al 
Protection online information. Viewed at: http://www.zhb.gov.cn/ . 
3.27.   Prohibited products are listed in the Catalogue of  Commo dities Subject to Import 
Prohibitions, issued by MOFCOM and other relevant 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) co mpared 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 uncha nged 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, i mports 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 im ported 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 proces sing trade, imported inputs are processed and exported within a specific period of time . 
Catalogue of Commodities Prohibited under Processing 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 vegetable fertilizers other than guano) ; new 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 /Rev.1  • China  
 
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  to prot ect 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, countervailing, 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 decline. Measures continued to be concentrated 
in a few areas, in particular chemical products, which account ed 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  application was longer, with an average of six 
and a half years, compared t o 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 du ring 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 fo r 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 the former Bureau of Fair Trade for Impo rts 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 trad e remedy measures. The exception s 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 effic iency 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 organizations, representing the domestic industry. MOFCOM 
must decide within 60 days of the date of receipt of a petition whether t here 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 t reat 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 whet her 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 
                                                
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 1 9 October 2007.  
60 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003.  WT/TPR/S/342 /Rev.1  • China  
 
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  provisional AD duties is made b y the State Council Tariff Commission (SCTC) on 
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 appli ed 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 o r 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, MOFCOM is authorized to make use of a sampling 
method in investigations where the number of e xporters  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 dum ping for each individual exporter and producer selected in it. The margin 
of dumping for responding exporters and producers not subject to individual examination is 
determined on the basis of the weighted average margin of dumping determined for the sample d 
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 sampli ng. The authorities have indicated that sampling of 
products has not been used in any investigation s. 
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 circu mstances. 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 duties and the basis for applying the measure.62 
3.40.   AD duties ma y 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 au thorities 
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 interested parties, which, if not satisfied, may 
request an administrative reconsideration by the Departm ent 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 con vinced 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 Rus sian 
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 Duty63, importers may apply for a  refund within 
three  months of p ayment of the duty if they can provide evidence that the AD duty paid was 
                                                
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 /Rev.1  • China  
 
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  higher than the margin of dumping. Applications are examined by MOFCOM, which makes a 
proposal for decision to the SCTC. MOFCOM calculates an updated margin of  dumping for the 
produc t 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 request s 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 repeated ly stated that these provisions have not been used. In the course of 
China's last Review, Members asked whether Art icle 56 contradicted Art icle 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 rules 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 provisio ns 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 includ ing 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 authorities 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 not 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 perio d 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 du e 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 on e was 
terminated due to the withdrawal of the complaint, 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 initiat ed in 2015 were still under investigation 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 i n 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 Rep ublic 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/T PR/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 Preliminary Ruling of A nti-dumping Investigation against 
Imports of Methyl Methacrylate Originated in Singapore, Thailand and Japan. Viewed at: 
http://english.mofcom.gov.cn/articl e/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 /Rev.1  • China  
 
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  Table 3.5 Anti-dumping measures by product and by origin (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. o f 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) Re sins, plastics , and articles thereof; rubber and articles thereof.  
 (c) Base metals and articles thereof.  
 (d) Paper, paperboard , and articles thereof.  
 (e) Machine ry 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 substant ial 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 investigations subject to a sunset review represented so me 
35.1% of the AD measures expiring during the period (20 out of 57), compared to 62.5% reported 
in the previ ous R eview. 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 initiated 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 measur es following sunset reviews addresses worries 
expressed in the past with respect to the results 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 
specific ally and clearly the review procedures. China replied that it conducted a fair an d 
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 200 1 and amended on 31 March 2004, and a number of provisional rules69, 
comprise the main legal framework for the application of countervailing measures in China. Th e 
main laws and regulations have not changed during the review period.  
3.50.   Countervailing (CV) inve stigations 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 MOFCO M 
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 publis hed 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 Investigatio ns; 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 Investigatio ns. WT/TPR/S/342 /Rev.1  • 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, includ ing 
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 concer n 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 2804.61.9 0) 
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 link 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 States 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 State s.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  Solar-grade polysili con 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 the period under review, and as was 
the case for the previous review, China did not initiate any safeguard investigation s pursuant to 
the W TO 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 impose d between 
20 November  2002 and 26 December 2003.  
                                                
70 WTO document s G/SCM/N/ 274/CHN/,  15 September 2014; and G/SCM /N/281/CHN, 28 January  2015. 
71 WTO document G/SCM/N/2 89/CHN, 22 October  2015. 
72 WTO document G/SCM/N/29 8/CHN, 17 March  2016. WT/TPR/S/342 /Rev.1  • 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 the Regulations on Safeguards (SG Regulations). 
Other legislation with proce dures relating to safeguard investigations include: the Provisional Rules 
for Initiation of Safeguards Investigations; the Provisional Rules for Conduct of Public Hearing s in 
Safeguards Investigations; the Rules on Investigations and Determinations of Indu stry 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, whi ch 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 join tly 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 
quant ities 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  investigatio n 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 meas ure 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 y ears, 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 undergoi ng 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 me asure 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 a ppeals 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 Switzerland 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 h as four kinds of standards: national, 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 industr y/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 s tandards) 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 /Rev.1  • China  
 
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  replace local and industry/sectoral standards. The exception to this is in cases where the local 
standards are stri cter 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 China (SAC), under the General Administration of 
Quality Supervision, I nspection, 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 standardization system, as well as of th e development 
of national policies and strategies with respect to standardization. The SAC is also in charge of 
approving, numbering and issuing national standards, 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 standardizatio n 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 
coope ration, 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 t he 
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, ferrous metallurgy, non-ferrous metals, rare earths, 
gold, building materials, machinery, automotives, shipping, aviation, light industry, textiles, 
packaging, aerospace, ordnance products for civilian use, nuclear products, electronics and 
communications. The China Electroni cs 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 and registered with the Ministry of Civil Affairs, 
engag es 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, certi fication, 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 the Regulations for the Implementation of the 
Standardization Law  (1990) continue to constitute the main legislation with respect to standards in 
China. Other pieces of le gislation 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 dome stic and registered foreign -funded enterprises may participate in China's national 
standardization activities. They must file 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 t he Ministry of Civil Affairs 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 n on-profit national 
research body affiliated with AQSIQ and engaged in standardization research , whose  main responsibilities are 
to conduct strategic and comprehensive research on standardization, 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/eng lish/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 /Rev.1  • China  
 
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  approval or filing system for product registration and production, whic h 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, sta ndardization 
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 or ganized 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 are 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 a nnulled, 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 pl ans and approving the corresponding standards. Most 
national and industry/sectoral standards are filed and stored at the National Library of Standards, 
but this is not mandatory. Local standards are formulated by  the standardization authorities of 
province s, autonomous regions and municipalities 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 for mulation 
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 mainly related to the protection of hum an 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 a nd 
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. Volun tary 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 mand atory.  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 en d-2014 some 74.3% of mandatory 
standards and some 75.2% of voluntary standards 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 standard s 
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 documen t G/TBT/M/300/A dd.1, 9 September 2014.  WT/TPR/S/342 /Rev.1  • China  
 
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  Table 3.7 Standards a pproved, 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  
Mandat ory 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 subm itted 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, e lectronic 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 loc al 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 autho rities 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 Standardization Reform on 15 March 2015 and work has b een 
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 
certificati on 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 Insp ection Law; 
the Regulations on Certification and Accreditation; the Regulations on Compulsory Product 
Certification82, 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 ap plies 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 Catal ogue); 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 
compuls ory 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 Information 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 /Rev.1  • China  
 
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  required. Responsibility for the general administration of the compulsory product certification 
system and its implementation lies 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 promulgating certification marks, defining the 
requirements for CCCs, designating certification bodies, 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 m ay 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 con formity 
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 a pparatus, 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, fir e-fighting equipment, safety protection products, wireless 
LAN (local area network) products, home d ecor, 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 must 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 the CCC. In the context of the present Review, the 
authorities have indicated that there are 22 mandatory certification bodies.85 The application must 
be acco mpanied 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 inve stigation 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, which  must make a decision within 10 days or 15 days under special 
circumstances. If a product meets the certification 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 p ublished 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 the expiry of the certificate. CCCs are valid for 
five years from the date of approval of the application.  
3.76.   In 2014, the CNCA reformed the issuance and record -filing of CCCs and c ancelled the 
annual examination requirement of the printing and mould pressing of CCC marks  (Announcement 
No. 36 of 2014). Along with the reform of the compulsive product certification system, the CNCA 
adopted various measures to facilitate certification p rocedures 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 a nd 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 
integra ted 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 
HS201 5 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 /Rev.1  • 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 capaci ty to shorten the time period of 
the certification.  
3.77.   Under certain circumstances, 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 te chnology, and to maintain equipment; goods used to complement factory 
production lines (excluding office supplies); and goods imported temporarily, spare parts or 
materials imported under processing trade,  parts of machines to be processed and then exporte d 
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 dev ices, 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 Licen ce (AQSIQ [2010] 
Announcement No. 34). The revised Food Safety Law adopted in April 2015 introduced more 
specific and detailed labelling and p ackaging requirements 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 Dr ug Administration Law (State Council Decree No. 360), adopted in March 2014, and the 
Regulations for the Hygiene Supervision of Cosmetics (Ministry of Health Decree No. 3). Articles 34 
and 35 of the revised Seeds Law specify the labelling and packaging req uirements 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 legislation 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 their inspection, quarantine and supervision.  
Table 3.8 Laws and regula tions 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 complet ed the reform measures include d: China 
Quality Certification Centre (CQC), China Certification Centre for Automotive Products (CCAP), China Quality 
Mark Certification Group (CQM) and Beijing Zhong Hua Combination Certification Co., L td. Other  certification 
bodies were in the process of implementing the reform measures . WT/TPR/S/342 /Rev.1  • China  
 
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  Legal instrument  Promulgated/Amended  
Rules and administrative measures   
Measures for the Supervision and Administration of Inspection 
and Qu arantine 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 Tre atment 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 D airy 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 Prod ucts 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 streng thening 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 a mendments introduced by the Food Safety Law in 2015 are as follows:  
 it adjusts the duties of food safety regulatory 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 s afety 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 s tandards 
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 li mits 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 th e State Council;  
 establishes a registration system for infant formula powder and formula s for special 
medical purposes;  
 increases the responsibility of food producers and traders for the implementation of food 
safety management rules;  WT/TPR/S/342 /Rev.1  • 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 resp onsibility 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 regulation s; 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 an d 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), AQSIQ, the State Administration for Industry and 
Commerce (SAIC), MOFCOM, and the State Food and Drug 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 Plannin g Commission were 
replaced by the newly established National Health 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 measures, were merged, to create the China Food 
and Drug Administratio n (Table 3.9).  The authorities 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  
Insti tution  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, regu lations 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 Anima l 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 /Rev.1  • 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 scientific 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 th e application, 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 and international organizations. Thereafter the MOA 
and A QSIQ 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 sa nitary 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 201 3. 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 author ities 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 2013. The last amendment to the 
Catalogue, which took place on 31  Decemb er 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 were 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 revie w 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 imported (and exported)  food must be subject to 
the supervision and administration of state entry -exit inspection and quarantine authorities both at 
the central and sub -central level. In general, imported food, food additives and other food -related 
products must meet China's nat ional 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 interna tional standard. Importers (of food, food additives and food -related products) must 
establish a "review system" for overseas exporters and/or overseas producers. If the imported 
food fails to meet China's national food safety standards, or may harm human h ealth as proved by 
                                                
89 WTO docum ents 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 Supervision, Inspection and Quarantine, P.R. China (AQSIQ) . 2015 Changes to t he 
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 motorcycles (HS Chapter 87) ; 
15 tariff lines  related to electronic kitchen equipment (HS Chapter 85) ; 12 lines related to refrigerators, 
freezers and equipment thereof  (HS Chapter 84 ); and the rest of the lines related to table, kitchen or other 
household articles  made of aluminium, ceramic, paper, pla stic or steel.  
93 Entry and Exit Quarantine Inspection  information . Viewed at: 
http://english.dg.gov.cn/Entry%20&%20Exit%20Quarantine%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 /Rev.1  • 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 manu al (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 i mport and sales record system to record, inter 
alia: the name of the product, its specifications, quantity, date of production, and production and 
import batch number; the shelf life of the product and food additives; and the name, address and 
contact deta ils 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 indicated t hat 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 (foreign 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). Overseas enterprises that produce food and/or export 
food into China must be registered by the state entry -exit inspection and qu arantine 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 ent erprise 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 en terprises that manufacture, import, 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 ac cording to the product.  
3.91.   China's national enquiry point for SPS continues to be the AQSIQ.99 Between 201 3 and 
January  2016, China made some 417 notifications regarding adopted SPS measures or measures 
that they were to adopt. Most of the measures notified a re not based on international standards. 
Three of the notifications were related to emergency measures: two were put in place on grounds 
of plant protection and imposed import prohibitions 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 
implemen ted 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 include d: China's measures  on bovine 
meat101; the Chinese import regime, including quarantine and testing procedures for fish;  China's 
                                                
95 WTO documents G/SPS/R/64, 17 Jan uary 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 Foreign 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_Catalog ue.pdf . 
97 Importers of supplements imported for the first time must register  with the CFDA . Importers of 
vitamins or minerals do not require 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 SPS Information Management System : 
http://spsims.wto.org/web/pages/settings/country/Settings.aspx .  
100 WTO document s G/SPS/N/CHN/601, 27 March 2013; G/SPS/N/ CHN/ 632, 29  November 2013 ; and 
G/SPS/N/ CHN/ 686, 4 November 201 4. 
101 WTO document G/SPS/R/78, 21 May 2015.  WT/TPR/S/342 /Rev.1  • 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 agricul tural 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 arri ve 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 requirements 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 export growth and adjust the export stru cture.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 inspection 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 they are produced. The packaging of 
exports of dangerous chemic als 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 group s 
based on risk analysis.109 Customs inspection and supervision depended upon the enterprise's 
rating. Goods exported by high -risk enterprises were 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), enterprises of general integrity (former category B), and 
dishonest enterprises.111 The R eform 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 
docum ents 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 Declaration s 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 -Exit Ins pection and Quarantine Organ s. 
105 Central People's Government  online information. Viewed at: http://www.gov.cn/jrzg/2013 -
08/01/content_2459772.htm . 
106 GACC and AQSIQ [2014] Announcement N o. 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  online information. Viewed at: http://www.gov.cn/jrzg/2013 -
08/01/content_2459772.htm . 
108 Central People's Government  online 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/tab39 9/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 infor mation 
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 C lassification 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 Further P romoting Paperless Customs Clearance. 
Viewed at: http://www.customs.gov.cn/publish/portal0/tab49564/info702038.htm  (in Chinese only).  WT/TPR/S/342 /Rev.1  • 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 when Customs accepts th e 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 Duty reductions or exemptions may also be 
granted under specific circumstances.117 
3.97.   Between 2 013 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 duties. 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 wo od 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 200 3. 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 Determin ing 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: i mported goods that are exported from t he 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 f uels, stores, beverages and provisions to be used en route  by 
vessels which are in transit in China ( Regulations on Import 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 purpo ses 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; and base metals (iron, steel, copper, nickel and aluminium).  WT/TPR/S/342 /Rev.1  • 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 d uties" 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 affect 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 includ ed 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 dutie s 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 w ere 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 exception of VAT on exports of restricted goods.124  
3.2.3   Export prohibitions, restrictions, and licensing  
3.102.   As in th e 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 "effe ctive 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 r are-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 d atabase ). 
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.m of.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 (HS  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 mixt ures 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/n8138877/n8139027/8357269.html  (in Chinese  only). WT/TPR/S/342 /Rev.1  • China  
 
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  3.103.   MOFCOM, in collaboration with other relevant departments, for mulates 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, halogenated derivatives of hydrocarbons, organic 
chemicals (HS Chapter 29), fertilizers (not chemically 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 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 product s (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 export 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  and 
MOFCOM  
The licence is issued 
by MOFCOM  
Wheat flour; maize flour; rice flour; sawn l umber; 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 o n the management of the export quotas, refer to Articles 38 -41 of the Regulation 
on the Administration of the Import 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 earths are Tia njin Customs, 
Shanghai Customs, Qingdao Customs, Huangpu Customs, Customs Hohhot, Nanchang Customs, Ningbo 
Customs, Nanjing and Xiamen Customs.  WT/TPR/S/342 /Rev.1  • 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); som e metals and metal products; molybdenum 
and molybdenum products; 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 subject 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 H S 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 WTO regarding export subsidies, in which China 
indicated that it did not maintain nor had it, introduced a ny 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 animals and plants may not ben efit 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 environmental protection, energy saving and emission 
reduction. They noted that the rebate is used to disc ourage 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/2 7, 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 -consum ing products , high -pollutin g 
products , and those related to the use of resource s; and endangered species of fauna and flora  (information 
provided by the  Chinese authorities) . WT/TPR/S/342 /Rev.1  • China  
 
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  Chart 3.3 Distribution of export rebate rates, by HS Section, 2015  
0% 20% 40% 60% 80% 100%212019181716151413121110090807060504030201
Source:  WTO Secretariat calculations, based on onlined information from State Administration of Taxation. Viewed at:  
http://hd.chinatax.gov.cn/fagui/action/InitChukou.do.Chart 3.[rebate x]   Distribution of  export rebate rates, by HS section, 2015
01   Live animals & products        
02   Vegetable products
03   Fats & oils      
04   Prepared food, etc.
05   Mineral products
06   Chemicals & products
07   Plastic & rubber
08   Hides & skins
09   Wood & articles
10   Pulp, paper, etc.
11   Textiles & articles
12   Footwear, headgear
13   Articles of stones
14   Precious stones, etc.
15   Base metals and products
16   Machinery
17   Transport equipment
18   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 e xport 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 service s. 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 buyer s' 
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 expo rting 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 instru ments 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 /Rev.1  • China  
 
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  loans and preferential export buyers ' credit. Eximbank 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 prod ucts (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 agency is the state -owned China Export and Credit 
Insurance Corporation (SINOSURE), which  offers, inter alia,  long- and m edium -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 pr omotion 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 kinds 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 
commerc ial and political risk; b) the specific  buyer 's or specific contract insurance policies, which 
cover in addition risks originated by measures 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 c over 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 
Program me 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 Program me, which insures against the bankruptcy or default o f 
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. The 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 information. Viewed at: http://english.eximbank.gov.cn/tm/en -
TCN/index_640.html .  
135 Financial Repor t 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.sinos ure.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 onlin e information.   WT/TPR/S/342 /Rev.1  • China  
 
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  Chart 3.4 Eximbank ope rations, 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 201405101520253035404550
2010 2011 2012 2013 2014Chart 3.4  Eximbank operations, 2010 -14
Source:  The Export -Import Bank of China online information.Actual 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 hundr eds 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 /Rev.1  • 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 method s in industries that use obsolete technologies; promoting development in 
remote areas and narrowing the income gap between regions139; and attracting FDI (Section  2).140 
Support also continues to be granted to, inter alia , specific strategic industries with th e 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 t he sub -central level. However, the 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) (S ection 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, protec t the 
sector, develop rural areas, and ensure food security (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 identificati on 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 12th 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 devel opment 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 Investment 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 progr amme is called the Preferential tax policies for the relief of grain producers  and disaster 
relief for grain producers , compensation to grain producers for returning cultivated land to forests and to 
grassland, and grain rations for migrants from the reser voir areas.  
143 For incentives to attract foreign direct investment at the provincial level, 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 industries listed in the 12th Five-Year Plan are: equipment, shipbuilding, 
automobiles, iron and steel, non -ferrous metals, building materials, petrochemicals, light industry and text iles. 
The strategic emerging industries mentioned in the Plan are: energy conservation and environmental 
protection ; new -generation IT ; biological  products ; high -end equipment manufacturing; new energy 
(development of new -generation nuclear energy and sola r utilization, photovoltaic and photo -thermal power 
generation, and intelligent power grids and biomass energy ); new material s; and new -energy automobile s. WT/TPR/S/342 /Rev.1  • China  
 
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  administrative re gulation 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 13th Five-Year Plan, China will continue to encou rage the 
development of SEIs through the design of appropriate industrial policies, which should promote 
their competitiveness, and through the guidance of investment towards these emerging 
industries.147 However details of the specific measures are as yet u nknown.  
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 r esidues 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 effec t 
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 mate rials 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  Financia l 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 river  Financial appropriations  1.10.2013 to 31.12.2015  
Special fund for the development of circular economy  Financial appropriations  In effect  
Subsid y 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 produc ing 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  Financ ial 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 S ecretariat based on document s 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 of China.  
3.126.   In addition to the Central Government Five -Year Plans, there are also five -year plans for 
the sector s, provincial five -year plans, and different catalogues that guide implementation of the 
overall policies (Table 3.13). Although the sectoral five -year plans and the provincial plans set 
policy guidelines and establish industrial policies, they do not outl ine 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 me ntions "the innovative 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 Recommendation s 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 /Rev.1  • 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 Pub lic Infrastructure Projects Eligible for Preferential 
Corporate Income Tax Treatment (2008 edition), Notice" (Cai Shui [2008] No. 116). Viewed 
at: http://www.chinatax.gov.cn/n8 10341/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/article/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 Inves tment 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 economy and disadvantaged sectors, and to extend 
credit to key sectors and emerging industries, such as railways, clean energy and environmental 
protection. Since 2014, a new category of "credit policy supporting central bank loans" was 
introd uced, 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 guid ed 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 instrumental 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 Pl an 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 ene rgy 
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 (Products) 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 (201 4), 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 /Rev.1  • China  
 
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  issued an Action Plan on the Energy Development Strategy ( 2014-2020) to improve the policies 
regulating the energy sector, support scientific research 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 deta ils 
with respect to the types of energy to be supported 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 technologies that save energy a nd 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 we re 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 gener ated 
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 
Automobilesb 
Exemption from the Vehicle Tax  Announcement on Vehicle Purchase Tax 
Exempti on for New Energy Automobilesc 
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 approp riations  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 th e 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/zhengc e/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 /Rev.1  • 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, Ministr y of Science and Technology, Ministry 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/n11293832/n12845605/n13916898/16091756.html.   
d Ministry of Finance, Ministry of Industry and Information Technology, Ministry of Science and 
Technology, Cai Qi [2014] No. 38, 11 April 2014. Viewed at: 
http://www.miit.gov.cn /n11293472/n11293832/n12843926/n13917012/15956192.html.  
e Ministry of Finance and MOFCOM, Cai Qi [2014] No.  36, 9 April 2014. Viewed at: 
http://www.m of.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/caizhengwengao/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 -competiti ve 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 pos ition; 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 cond uct 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 enter prises that 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 re gulations 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 spe cific conditions.155 
This allows the competition policy enforcement agencies 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 /Rev.1  • China  
 
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  on Imposing Restrictive Conditions for Conc entration 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 Indu stry 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 Rules specify requirements for an operator with a 
dominant market position to comply with the AML in entering and enforcing IP Agree ments 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 o n 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 tha t may exclude or restrict competition: (a) refusal to 
license IPRs; (b) exclusive trading; (c) tying or bundling 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 part icipating 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 designate d 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 oth er 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 b e 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 commer ce 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 SA IC 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 Off ice 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 underta kings. 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 available their respective networks,  platforms and other 
infrastructure, license key technologies (including patents, proprietary technologies or other IPRs), or to 
terminate exclusive agreements; and  (3) comprehensive conditions that combine structural conditions with 
conditions requiring a ctions 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 /Rev.1  • China  
 
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  NDRC and the SAIC deal with specific issues related 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 inve stigating and punishing price -related 
violations of the rules in these areas, while the SAIC's Anti -Monopoly and Anti -Unfair Competition 
Enforcement Bureau deals with non -price issues regarding monopoly agreements, abuse of 
dominant market position, and ab use 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 administrative penalties, including fines, confiscation 
of illegal gains, and cease -and-desist orders. These may be applied by MOFCOM, the SAIC or the 
NDRC, according to the nature of the case. In addition 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 regulations158 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 six 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 v erbal 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 agreement, includi ng: issuing a cease -and-desist order 
to discontinue the violation; the confiscation of any unlawful gains; and, in addition, the imposition 
of a fine of between 1% and 10% of the sales achieved in the previous year. If the monopoly 
agreement has not yet be en 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 d ominant 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 M ay 2015 the NDRC determined that Qualcomm Incorporated, the world 's 
largest smartphone chipmaker, had engaged in anticompetitive 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 Price 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 (N DRC 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 (DR Cs). Likewise, the provincial DRCs may delegate the 
investigation to local price -supervision departments, hierarchically one level below.  
                                                
158 These includ e the NDRC Provisions on Prohibition of P rice 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 Abus e of Intellectual Property Rights to Preclude or Restrict Competition . 
159 The Anti-Monopoly L aw, 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 /Rev.1  • 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 -trust behaviour dealing to 
several companies in the bearings industry (6 -8% of the valu e of sales fines) and the auto parts 
industry (6%).160  
3.143.   The Anti -Monopoly and Anti -Unfair Competition 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 abuse 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 Commerce (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 invest igated 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 indus trial 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 the AML: designated deali ng; 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 restrict competition. T hey 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 authorities 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 Com munications 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  Province, 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 /Rev.1  • China  
 
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  qualification requirements on non -local merchandises in bidding. However, no cases have been 
registered in the co urts 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 s 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) con trol 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 con centration 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 R MB 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 exce eding 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 this case, even if each individual action is below 
the threshold, if the total transaction turnover is above the notification threshold, the 
concen tration 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 con sumers, 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 ef fect 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 a ctivities 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 clear ance 
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 ma y 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 circumstances, MOFCOM may extend the period for the 
review. H owever, the extension period must not exceed a maximum of 60 days.  
                                                
163 Apart from MOFCOM, the SAIC and sectoral regulators 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 Thresholds for Concentrations of  Undertakings, Article 4. 
167 Reference to the materials and documents required to be submi tted is made in Article 23 of the AML.  WT/TPR/S/342 /Rev.1  • 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 market share of the business operators involved in 
the r elevant market and their controlling power 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, incl uding 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 b e 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 ne gative 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 Concentr ation 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 restr ictive 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 requiri ng 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 exclusiv e 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 concentrat ions over a certain 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 simpl e 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 concentrati on, 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 with in 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 dealing 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 Concentrations 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 /Rev.1  • China  
 
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  3.157.   In 2014, MOFCOM received a total of 262 applications 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 applications for the approval of the concen tration 
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 approval 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 conditio nally 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 informati on, 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 regar ding 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 do mestic 
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, t erminate 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 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) was published and implemented to expl ore 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 Implem enting 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 Joint 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 cases: 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, enterp rises related 
to national security engaged in the production of key agricultural products, energy and natural 
resources, as well as key infrastructure, transportation, and machinery manufacturing. The 
prospective investor must apply for the review.  
3.162.   Nationa l 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 ca rried 
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 impac t on national security, no special review is 
necessary . 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 
within five working days  upon the receipt of all the written opinions. 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 State Council for a decision. The Joint Conference must 
complete the special review within 60  working days of the launch of the procedures.  WT/TPR/S/342 /Rev.1  • China  
 
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  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 Foreign Investment in Pilot Free Trad e 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 defin es 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 a griculture, 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 sec urity 
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 hand ling 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 
securit y reviews that they must apply for the review 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 pro vision 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 fie lds 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 condit ions, 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 th e national economy and people's livelihoods, when necessary. Price controls are 
set by the NDRC at the central level, and the provincial DRCs and the Bureau of Commodity Pricing 
in each province.171  
3.167.   Price controls take two forms: "government prices" or "gov ernment -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 Centr al Government Pricing Catalogue and in 
Local Government Pricing Catalogues compiled by the provinces, autonomous regions and 
municipalities, but they are approved by the NDRC.  
3.168.   The determination of government prices or government -guided prices varies in ac cordance 
with the type of product or service. The criteria used in their formulation include: the market 
situation, average social costs, as well as economic, regional and seasonal factors, development 
                                                
169 These are: the China (Shanghai) Pilot Free Trade Zone, the China (Guangdong) Pilot Free Trade 
Zone, the China (Tianjin) Pilot Free Trade Zone, the C hina (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 total; c) a foreign investor and its affiliated investors or 
several foreign investors hold less than 50% of the shares of the enterprise in total but possess the voting 
rights that are sufficient to mat erially influence the resolutions of the meetings or general meetings of 
shareholders or the board of directors; and d) under other circumstances where foreign investors have material 
influence on the business decisions, human resources, and finance and te chnology of the enterprise.  
171 Guided prices or govern ment-set prices can be imposed on commodities that have significant bearing 
on national economic development and people's livelihood, which are rare or are a natural monopoly, or are 
considered key publi c utilities or public services (Article 18 of the Price Law of 1998).  WT/TPR/S/342 /Rev.1  • China  
 
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  and social needs. The methodology for setting prices m ay 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 the charges for some construction projects wer e 
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 subject to state monopoly. Government -guided  prices 
are applied to refined oil products, natural gas, sp ecial medicine, and some services (Table  3.15). 
Products classified as the important central reserve materials (grain, cotton, sugar, filature silk, 
crude oil, processed oil, and chemical fertilizers), which were included in the 2001 Catalogue of 
Central D etermined 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 power  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 netwo rk nature and should be regulated by the Government. In the case of 
feed-in and users' sales tariff not participating in market 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 c ross-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 subje ct 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 p rices 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 busi ness 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 p ublic 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 and a  processing fee, taxes and transportation costs 
in China.  
The rationale for maintaining a price control 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 comprehens ively 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.  
The rationale for maintain ing 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 The passenger fares of the domestic ci vil air routes are subject to prices guided by the Government 
(except for competitive areas). Airlines are permitted to raise the fare by no more than 25% of a 
                                                
172 GACC Decree [ 2015] No. 29 , 8 October 2015 , The 2016 Catalogue of Central Determined Price s, 
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 /Rev.1  • China  
 
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  Product  Coverage/rationale  
routes and the 
domestic section of 
international civil air 
routes  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 Dete rmined 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 province s 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 dispo sal 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 Feesa 
Urban ho usehold 
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 Gar bage 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 util ity 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 governmen t-
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 si tes 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 Committee, 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 the previous Review, there have been numerous 
adjustments to rates and fees. In 201 5, the NDRC issued a total of 46 announcements concerning 
the pricing of commodities and services, 19 of which 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 no t changed since 2014, nor have the 
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 natural resources, and the environment.  
                                                
173 National Development and Reform Commission  online information. Viewed at: 
http://jgs.ndrc.gov.cn/zcfg/ . 
174 WTO document s G/STR/N/10/CHN -G/STR/N/15/CHN, 19 October 2015 . WT/TPR/S/342 /Rev.1  • China  
 
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  3.173.   Imports subject to state trading administration comprise: grain (including wheat, maize, 
and rice), sugar, cotton, chemical fertilizers, tobacco, crude oil, and processed oil (Table  3.17). 
They can be imp orted (and  exported) only by authorized enterprises, in accordance with Article 11 
of the Foreign Trade Law. Tobacco is the only state -traded product that can be traded solely by 
state-trading enterprises. Non -state trading enterprises that have obtained t rading 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 co tton) and 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 und er 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; 1102.9 0.11; 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; 481 3.20.00; 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 s 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 tradin g and the enterprises 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) . According 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, exp ort allocation amongst 
state-trading enterprises is also based on market principles.  
Table 3.18 Export products subject to state -trading arrangements, 2014 -15 
Product  (HS code)  Enterprises  
Rice 
1006.10.11; 10 06.10.19; 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 
Heilong jiang 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 
                                                
175 WTO document s G/STR/N/10/CHN -G/STR/N/15/CHN, 19 October 2015 . 
176 WTO documents G/STR/N/10/CHN -G/STR/N/15/CHN, 19 October 2015.  WT/TPR/S/342 /Rev.1  • China  
 
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  Product  (HS code)  Enterprises  
Heilongjiang Beidahua ng 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 
Alumini um 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. 975 of 2014  
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. 975 of 2014 
Silver  
7106.10.11; 710 6.10.19; 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. 975 of 2014 
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; 24 02.90.00; 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 
2001a 
Tea 
0902.10.10; 0902.10.90; 0902.20.10; 0902.20.90  Accordin g to circular Gua Fa No. 16 of 2004 State 
trading administration on the export was suspended 
on 19 May 2004b, c 
Silk 
5001; 5002; 5003; 5004; 5005  According to announcement No. 64 of 2004 of 
MOFCOM and the General Administration of Customs 
of PRC, state tr ading administration on the export 
was suspended on 1 January 2005c, d 
a MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/c/200404/20040400210082.html .  
b State Council online information. Viewed at: 
http://www.gov.cn/gongbao/content/2004/content_62767.htm . 
c China reserves the right to use state trading.  
d MOFCOM online informati on. Viewed at: 
http://www.mofcom.gov.cn/article/b/e/200411/20041100306546.shtml . 
Source:  Information provided by the Chinese authorities and WTO document s WT/STR/N/10/CHN -
WT/S TR/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 p rivate 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 
China, as required by the Guiding Opinion on Further Deepening the Reform of State -Owned 
Enterprises. They also noted that SOEs are divided into for -profit entities and public services 
entities, thus many SO Es 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 a t the end of 2011, there were 144,700 
state-owned and "state holding" en terprises in China (excluding financial enterprises) with total 
assets of RMB 85.4 trillion, an equity value of RMB 29.2 trillion, and profits of RMB 2.6 trillion. 
Their income, profit, and paid taxes accounted for around 40% of all industrial and commerci al WT/TPR/S/342 /Rev.1  • China  
 
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  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 Shenzhen 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 ente rprises (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 the 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. According 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 chemic al 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 -13 
Sector  2009  2010  2011  2012 2013 
Industrial sectora      
Number of total enterprises  434,364  452,872  325,609  369,813  377,888  
Number of SOEsb 20,510  20,253  17,052  18,574  18,808  
% of SOEs  4.7 4.5 5.2 5.0 5.0 
Total assets (billion RMB)   49,369   59,288   67,580  87,075  95,678  
Total assets of SOEsb (billion RMB)   21,574   24,776   28,167  34,399  37,131  
% of SOEs  43.7 41.8 41.7 39.5 38.8 
Total profits (billion RMB)    3,454   5,305   6,140  6,838  6,815  
Total profits of SOEsb (billion RMB)    929   1,474   1,646  1,592  1,451  
% of SOEs   26.9   27.8   26.8  23.3 21.3 
Construction       
Number of enterprises  70,817  71,863  72,280  78,919  81,141  
Number of SOEs  5,009  4,810  4,642  3,847  3,753  
% of SOEs  7.1 6.7 6.4 4.9 4.6 
Gross output  value (billion RMB)   7,681   9,603   11,646  15,931  17,671  
Gross output value of SOEs (billion RMB)    1,519   1,815   2,044  2,616  2,207  
% of SOEs   19.8   18.9   17.5  16.4 12.5 
a Including minin g, manufacturing, and production and supply of electricity, gas, and water.   
b Numbers referring to SOEs including state -holding enterprises.  
Source:  National Bureau of Statistics China, Statistical Yearbook (various issues).  
                                                
177 OECD (2015), State -Owned Enterprises in the Development Proce ss, OECD Publishing, Paris. Viewed 
at: http://dx.doi.org/10.1787/9789264229617 -en. 
178 The industrial sector in China includes: mining, manufacturing, and production and supply of 
electricity, gas, a nd water (China Statistical Yearbook 2012 and information provided by the authorities).  
179 OECD (2015), State -Owned Enterprises in the Development Process , OECD Publishing, Paris. Viewed 
at: http://d x.doi.org/10.1787/9789264229617 -en. 
180 MOF, The Operation Status of State -owned Enterprises 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 /Rev.1  • China  
 
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  3.178.   The number of Central Governm ent-owned Enterprises (excluding financial institutions) 
under the State -owned Asset Supervision and Administration (SASAC) continue d to decline, 
totalling 106 in 2016 (January).181 SASAC, as a representative of the Government, is in charge of 
major decision s 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, an d include 
companies where there has been disinvestment but 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 subsidiar ies.182 The State is a majority 
shareholder in all but one of the 100 largest publicly listed Chinese companies. Of the ten largest 
SOEs, six are under SASAC's supervision (Table 3.21).  
Table 3.21 Ten largest st ate-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 201 2).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 support in 2014 (for a total of RMB 17.306 billion) 
nine were SOEs ( Table 3.22) . 
3.180.   The Anti -Monopoly Law (AM L) 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 refo rm 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, a nd transport. 
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 receiv ed 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 
                                                
181 The n umber of central -level non -financial SOEs under SASAC's administration has continue d to 
decline  from 196  (2003) to 159 (2006) , 129 (Dec. 2009), and 112 (Feb. 2015)  (For a full l ist 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, Management for Professionals , Springer 
International Publishing,  Switzerland.  
183 WTO (20 12), Trade Policy Review – China , Geneva . 
184 SINA Corporation online information. Viewed at: 
http://finance.sina.com.cn/stock/s/20150430/005922077076.shtml . 
185 OECD (2015), " SOEs in China's economic devel opment" , in State -Owned Enterprises in the 
Development Process , OECD Publishing, Paris. Viewed at: http://dx.doi.org/10.1787/9789264229617 -8-en.  WT/TPR/S/342 /Rev.1  • China  
 
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   Company  Government grant  
(RMB billion)  Industry  State -owned  
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 Tec hnology Group Co Ltd  0.83 Semiconductor  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 w ell as the Recommendations for the 
Development of the 13th 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 n eed 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 Chinese 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 accounted for 95.2% of the total value of governme nt 
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 procure ment 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 resou rces. 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.  
3.184.   China has introduced some changes to it s 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  
                                                
186 The Guiding Opinions of CPC Central Committee and State Council on Deepening the Reform of 
SOEs. Viewed at: http://www.sasac.gov.cn/n85881/n85921/c2051975/content.html  (in Chinese only).  
187 The Guiding Opinions on Encouraging and Regulating Introducing No n-national Capital into SOE 
Investment Projects; and EUROBiz , "Balancing Reform and Growth: China's 13th Five -Year Plan ", 4 December 
2015. Viewed at: http://ww w.eurobiz.com.cn/balancing -reform -and-growth -chinas -13th-five-year-plan/.  
188 The top 10 local procuring entities are the provinces of Guangdong, Jiangsu, Shandong, Zhejiang, 
Henan, Guangxi, Anhui, Chongqing, Shanghai and Jiangxi . WT/TPR/S/342 /Rev.1  • China  
 
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  and non -competitive bidding. Other procurement legislation includes the Law of the People's 
Republic of China on Tendering and Bidding and its 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 regul ar 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 e xceeds 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 Procuremen t 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 no t 
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 st andards 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 inclu des 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 r equired 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 regulat ions. There 
are no criteria specified as to what constitutes domestic goods or provisions on local content. To 
observations made by Members during its last review, China stated that in practice the Chinese 
government applies non -discriminatory and equal tr eatment in government procurement to 
products manufactured by domestic -funded and foreign -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 a vailable. In addition, article 8 of MOF Order No. 18 of 
11 August  2004 states that the suppliers participating 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 approva l 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 Government Procurement Law provide the details on 
government procurement procedures. There are c urrently six methods for the government 
procurement of goods, services and works, compared to five in the previous review: public 
tendering, selective tendering, competitive negotiations, request for quotations (price enquiry), 
competitive consultations an d 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 
                                                
189 The authorities have in dicated that the Centralized Procurement Catalogue  comprises items with 
unified technological and service standards. The purpose of centralized procurement is to reduce the cost 
through large-scale procurement.  WT/TPR/S/342 /Rev.1  • China  
 
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  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 proc urement 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 u nder local budgets are prescribed and 
published by the respective governments of provinces, autonomous regions or municipalities 
directly under the Central Government or the department 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 fi ve 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 dea dline 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 three suppliers meeting the qualifications required 
or the prices offered exceed the procurement b udget.   
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 proportion of the tot al 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 su bmitted an offer or the offers have been 
deemed inadequate, or when a second tendering process has been attempted but has failed. It can 
also be used in cases of urgency, due to the technical 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 con cluded, 
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 procuring party and qualified suppliers chosen by the 
team upon evaluation. This method can be applied for: the procurement of services; procurement 
for which detailed specifications o r 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 competiti ve 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  score 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 
consultation; the price score of this offer is the full score. The scores of the prices offered by other 
supplier s are computed according to a formula.192 
                                                
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 Government Procurement . Viewed at: 
http://gks. mof.gov.cn/zhengfuxinxi/guizhangzhidu/201501/t20150120_1182425.html  (in Chinese Only).  
192 The formula is as follows: s core assigned to the quotation for consultation = (benchmark price for 
consultation/ final quotation for  consultation) ×  price weight × 10 0 (Interim Measures for the Administration of 
Competitive Consultation in Government Procurement ).  WT/TPR/S/342 /Rev.1  • China  
 
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  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. N o 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 req uired, 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%; se lective 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, Ch ina 
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 Implementing Regulations, two different bid evaluation 
methods may be used: the lowest evaluated bid price method and the overall -score method, based 
on evaluati on scores of quantitative indicators. If the lowest -evaluated bid price method is used, 
the supplier whose bid meets all the substantive requirements specified in the bidding documents 
and whose bid price is the lowest wins the bid.  Projects of goods and s ervices 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 two methods.  The overall -score method refers to 
the bid evaluation method where the su pplier 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 e ach 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 ac cording 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 e valuation methods and criteria, and the text of the contract to be signed. If the 
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 Circular of the Ministry of Finance on Making Eff orts 
                                                
193 WTO document WT/TPR/M/ 300/Add.1, 9 September 2014, p. 64 . WT/TPR/S/342 /Rev.1  • China  
 
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  to Accomplish the Work of Government Procurement Information Disclosure (Cai Ku [2015] 
No. 135) sets out the scope, contents and requirements for the announcement. The result of the 
bid must also be announced by t he purchaser or procurement agency wit hin 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 bri ng 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 v arious 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, C hina promotes the use of information 
technology and the gradual adoption of e -procurement, as of procurement. The authorities have 
noted that China is also promoting the standardization 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, fir stly 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 establishe d, 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 rec ords 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 th e 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 sub mitted 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 f or the first 
time in the offer.  
3.3.7   Intellectual property rights  
3.3.7.1   Overview and institutional developments  
3.205.   The responsibility for organizing the implementation of the National Intellectual Property 
Strategy lies with the Inter -Ministerial Joint Conference for I mplementation of the National 
Intellectual Property Strategy, established in October 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 
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 authorities are in the process of implementing the 
                                                
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 the national, regional, and 
industrial level  can be found on t he Office 's website  at: http://www.nipso.cn . WT/TPR/S/342 /Rev.1  • China  
 
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  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 e nterprises, 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 administr ative 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 proc essing 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 deve lopment of an 
IP service industry.  
 Achieving Better Organization and Implementation of the IP strategy. The aim is to 
strengthen overall planning for the implementation 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 amendments 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 Treaty on Audiovisual Performanc es (9 July 2014). 
The Marrakesh Treaty to Facilitate Access to Published 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 continu ed to increase the number of  IPR protection 
applications through international treaties, particularly in the area of patents. In  2014, Chinese 
citizens filed 26,196 applications through the Patent Cooperation Treaty (PCT) system; 
52,101  trademark applicati ons were filed through the Madrid system in 2013 and 60,205 
in 2015.198 
                                                
197 SIPO online information. Viewed at: http://english.sipo.gov.cn/laws/ . 
198 WIPO online statistics. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN ; and information provided by the 
authorities.  WT/TPR/S/342 /Rev.1  • China  
 
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  Table 3.25 China's membership of international intellectual property rights conventions, 
2015  
Convention  Status  Date of accession  
Agreeme nt 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 
Duplicat ion 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 concerning the International Registration of 
Marks  In force  1 December 1 995 
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  
Washingto n 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, and the Rules for Implementation of the Patent 
Law, last amended in 2010, regulate patent protection for inven tions, 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 Administ rative 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.  
3.211.   Decisions regarding patent applications may be r e-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 accompanyin g 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.  
                                                
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 Au gust 2011;  and IP/N/1/CHN/P/3 , 26 August 2011.  WT/TPR/S/342 /Rev.1  • China  
 
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  3.212.   Foreign or international patent a pplications 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 nation al 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 subject to the provisions of the Regulations on the 
Administration of Technology Impo rt and Export, as revised in December 2010.  
3.213.   Compulsory licences of patents may be granted 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, w ithout 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 t hrough the 
abuse of the IPR granted by the patent. 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  compu lsory 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  Declaration 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 -exploitation of the licence or an act  of monopoly, 
SIPO may conduct open hearings upon request by one 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 Examination 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 lo cal IP offices to strengthen and standardize 
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, 
                                                
200 Major  national  projects have been identified in the National Medium - and Long -Term Program me for 
Science and Technology Development  (2006) in the areas of information, manufacturing, bio-pharmaceutical s, 
energy, resources and environment, aimed at promoting social and economic development .  
201 Article s 22 and 33 of the Measures for Exercising Patent Compulsory Licences  regulate the 
administration of  compulsory licensing of patented drugs.  
202 Decision on Revisin g 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 Pat ent Agency , SIPO Decree [2015] No. 70. Viewed at: 
http://www.sipo.gov.cn/zwgg/jl/201504/t20150430_1111398.html  (in Chinese only).  
205 Decision on Revising the Measures for Patent Ad ministrative Law Enforcement , SIPO 
Decree  [2015]  71. Viewed at: http://www.sipo.gov.cn/zwgg/jl/201506/t20150601_1125506.html  (in Chinese 
only).  WT/TPR/S/342 /Rev.1  • China  
 
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  1,119,714  applications for utility models and 551,481 for industrial designs, compared with 
801,135, 861,053, and 548,428  applications, respectively, 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/ips tats/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 tech nology, 
as witnessed by the fact that no individual field reaches 10% of the total and 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 trademarks at the provincial level and below. 
The settlement of disputes regarding trademarks is the responsibility of the Tradem ark 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.  
3.219.   The Trademark Law, its Implementing R egulations and various rules issued by SAIC, form 
the main legislative and regulatory framework regarding 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 trademarks; the introduction of the princ iple of good 
faith for the registration and use of trademarks; the increase of penalties for trademark 
infringements; and the strengthening of the protection of exclusive trademark rights. The 
                                                
206 WIPO online information. Viewed a t: 
http://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html . 
207 The rules related to trade mark administration 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/conten t_2670953.htm  (in Chinese only).  WT/TPR/S/342 /Rev.1  • China  
 
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  Regulations on the Implementation of the Trademark  Law were als o 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 third time in accordance with SAIC No. 65 of 
28 May 2014. On 3 July 2014, the SAIC issued th e 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 accordance with the agreement signed between the native 
country and China or the international treaty acceded to by the native country and China, or with 
the principle of recip rocity. The term of protection for trademarks is 10 years, renewable for 
consecutive periods of 10 years, indefinitely. Foreign nationals or foreign enterprises with habitual 
residence or places of business in China can submit their applications for tradem ark 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. Thi s timeframe limitation does not apply in cases of abusive registration. If the TMO refuses 
to register a trademark, the applicant has the right to appeal the decision before the Board within 
15 days of  receipt of the notification of the decision. If the Bo ard 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 Ca ses 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 aga inst 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 Intermediate People's Court, by intermediate people's 
courts with regional jurisdiction over the case.  
3.223.   SAIC's Provisions on the Determination and Protection of Well -Known Trademarks209, 
promulgated on 3 July 2014, define "well -known b rands" 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 s ubject 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 Kong, 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.  
3.225.   Trademark protection in e -commerce is gran ted through a number of circulars or other 
type of measures. SAIC's Circular of Opinions 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 f acilitating 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 
                                                
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 Anno uncement [2014] No.66. Viewed at: 
http://sbj.saic.gov.cn/sbyw/201407/t20140711_146664.html  (in Chinese only).  WT/TPR/S/342 /Rev.1  • China  
 
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  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 imports in the fields of trademarks or copyright.  
3.227.   In the course of the previous review, answering 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 optimization and improvement of the syst em and the 
development of additional functions.  
3.3.7.2.3   Geographical indications  
3.228.   In the absence of specific legislation for 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 Protection System and Mechanism (SCOPSR [2011] 
No. 26), calls for setting up a special GI protection regime and en courages 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 N o. 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 age ncy 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 f or 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 GIs 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 . 
3.3.7.3   Copyright and related rights  
3.231.   In China, copyright is regulated in accordance with the Copyright Law of the People's 
Republic of China (amend ed 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 Protection of Computer Software, the Regulations on 
Collecti ve 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 cov ers: authorship; 
revision; integrity; reproduction; distribution; rental; exhibition; performance; presentation; 
                                                
210 WTO document WT/TPR/M/300, 9 September 2014.  WT/TPR/S/342 /Rev.1  • China  
 
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  broadcasting; network communication; cinematography; adaptation; translation; compilation; and 
other rights held by copyright owners. Copyright  owners or owners of related rights may authorize 
collective non -profit copyright administration organizations to exercise their rights.  
3.232.   Copyright registration and enforcement takes place at both the central and provincial 
levels. The National Copyright Ad ministration of China (NCAC), under the State Council, 
administers copyright on a national scale. A t the provincial level,  copyright registration and 
administration is carried out by the respective local copyright administration offices.  
3.233.   The term of copyri ght protection for natural persons is life plus 50 years.211 Works of a 
legal entity or other organization, or works created in the course of employment and the copyright 
of which is held by a legal entity or other organization, are also protected by copyrig ht 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 t he 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 org anizations 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 r esidents 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 Copyright Law provided their co pyrights 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) publi shed 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 not co vered 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 calcula ted based 
on the value of products, the amount of the fines 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 Measure s 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 
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 Copyright 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 Im plementing 
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 
                                                
211 In the case of more than  one right holder, protection  is granted for 50 year s after the death of the 
last surviving right holder.  
212 Article s 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 t he 
Regulations for Protection of Compu ter Software, Decision 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).  
214 The Measu res for Paying Remuneration for the Use 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).  WT/TPR/S/342 /Rev.1  • China  
 
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  and Publication (Copyright) Administration and Law Enfor cement 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 1 7 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 Cop yright 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 Film 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 Sta te Council in 
2001, and effective as of 1 October 2001) and under the Rules 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 2 001). 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 has 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 -voluntary" licences have been is sued 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 th e compensation and 
penalties for infringements of the rights of new varieties of plants.  
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 othe r 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 f or the Implementation of the Law on Drug 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 en tities. Such undisclosed 
                                                
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) Admi nistration 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/483/20173 7.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/content s/483/249606.html  (in Chinese  only). WT/TPR/S/342 /Rev.1  • China  
 
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  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 authorit ies 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 responsible 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 civi l 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 co ntinued 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 a re 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, inc luding 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 the 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 mil lion) 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 instanc e 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  .. 
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  .. 
                                                
217 WTO document WT/TPR/M/300/Add.1 , 9 September 2014, p. 332.  WT/TPR/S/342 /Rev.1  • China  
 
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   2012  2013  2014  2015  
Unfair competition cases accepted  1,123  1,302  1,422  .. 
Unfair competition cases clo sed 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 ava ilable.  
Source:  Information provided by the Chinese authorities.  
3.244.   During the review period, a special campaign of "convoy" enforcement of IPR laws and 
protection was launched, focusing on carrying out intensive inspections and on the rectification of 
law en forcement 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 established 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 50 0 patent disputes.  
3.3.7.5.2   Administrative 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 relevant departments, as well as the handling of 
major cases involving IPR infringement and counterfeit goods. The NLG is comprised of the 
Supreme People 's Court and Supreme People 's Procuratorate and 30 agencies including the State 
Council ministries and organs in charge of IPRs, quality supervision, market regulation and cr ime 
crackdown. The office of the NLG, located at MOFCOM, 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 Strengthening the Patent A dministrative 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 Pat ent Infringement Judgment and Counterfeit Patent Determination (on 
a trial basis) in July 2014. The Guidelines contain 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 c ases 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 the 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 offices 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 authorities noted that China led a number of campaigns and 
actions to strengthen administrative law enforcement 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 we bsites during the review period, and, to this end, issued the Opinions on 
Further Strengthening Regulation over the Copyright of Works Transmitted via the Internet on 
30 December 2013.  
3.248.   The authorities noted that the NCAC has also 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 online services, the publication of pre -warning lists 
for key works and the coordination of the resol ution of copyright disputes with right holders. In 
May 2014, NCAC issued the 2014  National Work Plan of Cracking Down on Copyright Infringement WT/TPR/S/342 /Rev.1  • China  
 
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  and Counterfeiting in the Sector of Press and Publishing (Copyright) with provisions to fight 
counterfeiting and  promote the application of copyrighted 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 u se 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 
Manufactu ring 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 through the creation of specialized IPR court s. On 
31 August 2014, the Standing Committee of the National 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 cou rts. 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 subject to t he 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 rega rding copyright, trademark, and unfair competition; and ( 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 Court, 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 signi ficant 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 Intellectual 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 layou t-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.  
3.3.7.5.4   Customs law enforcement  
3.253.   In accordance with the revised Regulations 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 detentio n of suspected infringing goods. In 
accordance with the Regulations on Customs Protection of Intellectual Property, counterfeit goods 
                                                
218 The text of the Provisions may be viewed at: 
http://www.chinacourt.org/law/deta il/2014/10/id/147980.shtml  (in Chinese only) . WT/TPR/S/342 /Rev.1  • China  
 
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  will be seized by Customs, which will destroy them if the infringing features cannot be removed. 
Except in extraordinary c ircumstances, 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 au tomobile 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.  
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  4  TRADE POLICIES BY SE CTOR  
4.1  Agricultu re 
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 dr op 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 li vestock, 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 agriculture, 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 (percentag e 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 
Livestock  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 milk  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 Statistics China (2015), National Statistics Year Book 2015 .) 
3 CPC Central Committee, State Council, No.  1 Document of 2015 , Several Opinions on Enhanc e Reform 
and Innovation and Accelerating Agriculture Modernization . Viewed at : 
http://english.agri.gov.cn/news/dqnf/201502/t20150203_24952.htm .  WT/TPR/S/342 /Rev.1  • 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 11th 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 contract rights and finance policies in rural areas, 
protecting the quality of farmland to increase productivity, 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 f or 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. The 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 f ramework 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 tr ansfer 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) are, 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 t han 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, spirits 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 h ighlight ed the important  role of agriculture in China's  socioeconomic 
development (CPC Central Committee, State Council, Several Opinions on Enhanc ing Reform and Innovation 
and Accelerating Agriculture Modernization. V iewed 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 Economic 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 extend contracts to individual households, currently for 
"at least 30 years". Within the period o f 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 General Office of the State Council , Opinions on Guiding Rur al Areas Land 
Operation Right to Orderly Transfer and Developing Agriculture Moderate Scale Operatio n, Zhong Ban Fa 
[2014] No. 61.  Viewed at : http://news.xinhuanet.com/politics/2 014-11/20/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 /Rev.1  • 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 rat es 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 preparat ions, 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 (mineral or chemical fertilizers), 51 (wool , carded or 
combed), and 52 (cotton). In -quota and out -of-quota 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 pri ce 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 en terprises 
and another part to other enterprises. Historically, the 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-of-
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 r ice (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 li nes) 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 Tar iff of 
Imports and Export of the People's Republic of China , 2015.  
                                                
10 The variable rate is calculated a ccording to  a formula, 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 /Rev.1  • 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 farmers 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 automat ic import licences increased 
slightly as the requirement was imposed on seven additional products (sugar). Thus, in 2015 
licensing requirements applied to 83 (76 in 2013) agricultural products (WTO definition), out of a 
total of  396 (442 in 2013) products subject to automatic import licensing (17.2% of the total). The 
main products concerned were: meat, dairy products, oilseeds, fats and oils, and tobacco. 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 regarding the application of export subsidies on 
agricultural products; howeve r, 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 al l 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 quota s, 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. Thes e 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 lin es at the HS 8 -digit level covering agricultural 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 document s 
G/AG/N/CHN/24, 17 December 2012 ; and G/AG/N/CHN/2 7, 7 March  2014). 
14 These are all items under HS 0506 (Bones and horn -cores, unworked, defatted, simply prepared, not 
cut to shape; treated with acid  or de-gelatinized ; 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 coffee s, teas and spices (HS Chapter 09); vegetable  saps and extracts 
(HS 1302); and nearly all tariff lines under HS Chapter s 16 to 22 (prepared foodstuff; sugar and sugar 
confectionary products; cocoa and cocoa preparations; preparations of cereals; preparations of vegetables, 
fruit and nuts; miscellaneous edible preparations; beverages, spirits (State Administration  of Taxation online 
information . Viewed at:  http://hd.chinatax.gov.cn/fagui/action/InitChukou.do ). 
16 The Catalogue of Good s Subject to Export Licence of 201 5, MOFCOM GACC Decree [2014] No. 94. 
Viewed at:  http://www.mofcom.gov.cn/article/b/c/201412/20141200854859.shtml ; and The Catalogue of 
Good 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 /Rev.1  • China  
 
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  Table 4.3 Agricultural products subject to exp ort 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 MOFCOM  
Live cattle, swine and fowl (for export to Hong  Kong, C hina 
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 (for 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.mof com.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 processed "under processing trade".18  
4.1.3.2   Internal measures  
4.1.3.2.1   Support measures  
4.17.   In 201 5, China made a notification to the 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 se eds 2002 Financial 
appropriations  MOF Circular s 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  
Comprehens ive 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 Ca i 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 servi ces 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 for 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 C ai 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, black moss, bones, ivory, musk, some plants used to m ake 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 domestic support covers the period 200 9-2010 (WTO 
document G/AG/N/CHN/28, 6 May 2015).  
20 WTO document s G/SCM/N/ 220/CHN , G/SCM/N/253/CHN  and G/SCM/N/ 284/CHN, 30 October 201 5. WT/TPR/S/342 /Rev.1  • 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 C ai 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 "11th 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 s 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 Inpu ts; 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 the 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 agricultural 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 Farmland 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 
Subsid y 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 s 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 p erson who cultivates the land. In general, 
                                                
21 WTO (2014), Trade Policy Review – China , Geneva; and WTO document s G/SCM/N/ 220/CHN, 
G/SCM/N/253/CHN  and G/SCM/N/ 284/CHN, 30 October 201 5. WT/TPR/S/342 /Rev.1  • 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 level and the amount of the subsidy granted may 
vary. However, government out lays for direct 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, imp roved 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 it s 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 i s 
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 introd uced 
in 2002 to improve the  quality of seeds and livestock 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 covered by the scheme in cludes: 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 bill ion 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 2015, 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 w ithin 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, Sichua n 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 
Agricul ture 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, w hich 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 agricultura l 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 according to the  agricultural taxable area, taxable regular 
production, amount of land planted with 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 Machinery 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_1 237885.htm . WT/TPR/S/342 /Rev.1  • China  
 
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  Table 4.6 Agriculture Support and Preservation Subsidy  
General 
guidelines  Farml and 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 S ubsidy 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 sub sidy 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  Moder ate-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 subs idized 
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 grain s 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 
determine d 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/lanmudaohang/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 Fin ance and Department of Agriculture of Shandong Province, Lu Cai Nong [2015] 
No. 26, 17 June 2015. Viewed at: 
http://www.zgsxzs.com/a/news/zhaoshangdongtai/she ngquzhengce/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 Agriculture 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 /Rev.1  • 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 h old the monopoly to administer the right 
to produce, manufacture, sell, transport, and import 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 loc al 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 below 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 t o ensure a stable supply of grains. Grain reserves of maize, 
rice, soya beans and wheat are maintained by central and local authorities to ensure food security. 
According to the authorities, the purchase of the reserves is  carried out by appointed enterpri ses 
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 pr ices, 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 Au tonomous 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 subsid y 
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 leaf tobacco, leaf tobacco, cigarette paper, filter rods, cigarette tow, and 
equipment to manufacture cigarettes ( Tobacc o Monopoly Law  (24 April 2015). V iewed at: 
http://www.tobacco.gov.cn/html/27/2701/270101/4830381_n.html ). 
29 Imports and exports of c otton are subject to state trad ing. 
30 Cotton Ta rget Price Reform Pilot 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 C otton 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, Hunan, 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.c n/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 /Rev.1  • China  
 
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  4.26.   A similar subsidy programme was put in place, in 2014, for soya beans in four provi nces: 
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 p rogramme, 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 rural households through the access to insurance, the 
People's Bank of Chin a (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, t he PBOC has set benchmarks on new deposits g ranted 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, t he 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 ag riculture, 
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 agricultu re-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 the telecommunications sector in China and their 
recent evolution are described in Box 4.1.  
Box 4.1 Economic characteristics and evolution 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 licen ces. 
 
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 co mpanies 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/default/files/files/120_FSN_APEC/Sep_9a.pdf ; and information provided by 
the authoriti es. 
36 People's Bank of China (201 5), 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 /Rev.1  • China  
 
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  Name and market share of the broadband internet services 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 ratios 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 enterp rises obtained telecom business licen ces, 
with foreign equity ratio rang ing 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 basic 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 repo rts and has only mar ginally 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 Information Technology ( MIIT) and the administrative 
departments in  charge of telecommunications in all provinces, autonomous regions and 
municip alities , 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 Service s (Ministry 
of Industry and Information Technology Order No. 31 of 19  May 2015) which aims at  standardizing 
the provision of  telecommunicati on short  message  service s, safeguarding the lawful rights and 
interests of users, and promoting the healthy development of  the short message service market.  
4.32.   The 2015 Investment Catalogue, which entered into force in April 2015, eliminated 
electronic commerce business es run by  foreign -invested telecom compan ies from its restricted 
category. In addition, the Noti ce of Liberaliz ation 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 p rocessing business es ("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 
telecom munications  businesses and services, the Catalogue of Telecom Business Clas sification  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 fo reign ownership ratios. The 
authorities underline d 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 Fre e 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/2 64/Rev.1, 
paragraphs 165 to 204 ; and 2010 : WT/TPR/S/230/Rev.1, paragraphs 83 to 98.   WT/TPR/S/342 /Rev.1  • China  
 
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  commerce"), was further liberalized as the maximum foreign shareholding  participation allowed  
previously of 55% was rais ed to 100% in January 2015.  
4.35.   Regarding preferential agreements , five out 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 th e 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 
agreem ent 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 follow ing value -added 
telecom munication  services: information services (app 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%) t o undertake online data and transaction processing for 
profit e -commerce, a liberalization already available erga omnes  since January  2014 in the context 
of the establishment of the CSPFTZ. The Republic of  Korea -China agreement does not contain any 
supplem entary 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  the filing obligation for network interconnection 
agreements  and mandates that t he interconnection between tel ecom networks be based on the 
principles of technological feasibility, economic rationality, equity, cooperation and coordination. In 
accordance with the Regulations, t he leading telecom  business operator (i.e. China T elecom in 
Southern China and China Uni com 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 te lecom networks of two non -dominant business operator s must be negotiated 
between the two parties. The telecom munications  authorities are responsible for the regulation 
and administration of telecom interconnection as well as for the coordination and settle ment of 
disputes. Since the last review, the MIIT has not received any interconnection -related complaints 
from operators. In addition, in 2014, the M IIT optimize d 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 the ir 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 unbundlin g in the 
review period. The Notification to Open the Broadband Access Market to Private Capital (MIIT 
Notification No. 577, 2014) issued by MIIT in December 2014 provides that pilot wired acce ss 
facilities service providers  can engage in the rent al of acce ss 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 loo p unbundling.38 
4.39.   There were also developments with respect to number portability. As a first step in this 
area, t he 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, t he change from one -
way to two -way number portability was completed in the Hainan Province, marking the official 
availability of two -way number portability service s 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 Busines s Classification (2015 version) , 
under the name of "wired access facilities serv ices".  WT/TPR/S/342 /Rev.1  • China  
 
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  Yunnan Provinces on 20 September 2014. By the 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. O n 15 August 2014, the State Council i ssued a R esolution to abolish the 
requirement of examination and approval of telecom munications  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 provide s the International 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 -telephon e 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 Telecommuni cation/ICT Indicators database.  
4.42.   The regulatory framework applied by the MIIT regarding licensing  did not change during the 
period under review. Licensing is regulated by State Council Decree No. 291 on Regulations on 
Telecommunications, S tate 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 basic telecom business licen ce (China Telecom, China 
Mobile, China Unicom, CITIC Application Services Providers, and China Satel lite 
Telecommunications) and 24, 001 enterprises had obtained a value -added tele com business 
licence. In May 2015, MIIT launched a trial programme for Mobile Virtual Network Operator s 
(MVNO) licen ces in order to improve policies and promote competition in the mobile 
communication s market. By the end of 2015, 42 such licen ces ha d 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. B y the end of 2014, telephone networks and broadband networks covered all towns in 
rural areas of China while telephone ne tworks 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 administrative villages by the end of 2020. The 
Governmen t 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 information on communication services. While the t elecom 
service providers bear the costs of construction, operation and maintenance of facilities used for 
universal services, the G overnment pro vides these 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 fi nancial services regime in China has been described in detail in previous Trade Policy 
Review (TPR) reports, notably in 2014, 2012 and 201039, and has remained largely unchanged.  
                                                
39 WTO docum ents 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 /Rev.1  • China  
 
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  4.2.2.1   Market overview  
4.45.   The main economic characteristics of China's financial servic es 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 i n the insurance subsector and 308,000 in the 
securities, fund management and future s subsectors (245 ,000 in securities, 13,600 in  fund management excluding 
private funds, and 49,300 in futures)  
Banking services  
Evolution of the nu mber 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 m ajor commercial banks; 12 joint stock banks; 133 urban commercial banks; 665 rural 
commercial banks; 89 rural cooperative banks; 1 postal savings bank; and 41 foreign -corporate banks . 
In addition, 66 foreign corporate banks from 26 countries and regions ha d 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 loa ns 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 b y 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 companies (of which 28 foreign invested insurance companies); 
64 non-life companies  (of which  21 foreign invested insurance 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 insurance 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 ca pita 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) 
Concentr ation (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 /Rev.1  • 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 iss ued 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 tr illion 
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 (existing bonds and repurchase s): RMB 93.49 trillion  
Turnover of securities investment fun ds: RMB 1.99 trillion  
a Commercial banks include state -owned commercial banks, joint -equity banks, urban commercial 
banks, rural commercial banks and foreign -invested banks.  
Source:  Information provided by the Chinese authorities.  
4.2.2.2   Regulatory  framework fo r banking  
4.46.   During the period under review, the main changes with respect to banking concern: 
preferential and bilateral policies, licensing regulation s, credit cards and financial leasing 
regulatory frameworks, consumer finance, the investment catalogue , the Negative Lists that apply 
in Free Trade Zones (FTZ), anti -money laundering measures, the bank deposit insurance scheme, 
prudential regulations, measures taken to tackle systemic risks such as non -performing loans, 
local government special purpose vehicle s, 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 services 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 Arrangement s (CEPAs ) and their supplements: a negative list  to regulate 
restrictions related to commercial presence and a positive list f or cross-border commitments in 
financial services. It is difficult to compare these commitme nts one -by-one with those of China 
under the GATS or under the previous CEPAs .  
4.48.   The FTA s 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 require d to set up op erational 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 Australian bank in China to apply to engage in 
RMB business if one branch of t he 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 /Rev.1  • China  
 
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  4.49.   The New Agreements on Trade in Services between mainland China an d Hong Kong, China 
and the agreement between the mainland China and Macao, China, consolidate the concessions 
contained in the previous supplements to the CEPA s 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 s ervices 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. T he provisions governing licensing 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 Bank s. On 
20 December  2014, the State Council issued the Dec ision (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 l owering 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 requireme nt 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 Ord er 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 requirement for sub -branches of foreign -funded 
banks. Relevant rules concerning conditions and procedures for the issuance of debt instruments 
and capital su pplement instruments by foreign -funded banks are incorporated into the measures in 
order to help these banks boost their capital. The measu res 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, wor king capital and business address changes by branch es of 
operati onal institutions, the set -up of a self -service bank, the postponed set -up or opening of 
foreign -invested  banks or their branch es, the temporary closure and re opening  of foreign -invested  
banks, the transfer of credit asset s from the head office or affiliated bank s to foreign -invested  
banks, and the use of interest -bearing asset s by branch es of foreign banks. The measures also 
enhance prudential regulat ory requirements by reinforcing reporting o bligations 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 C RBC offices 
regarding the licens ing and the monitoring of fore ign-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 establishment and opening, increase of capital, changes 
of business scope, and esta blishment and change and termination of representa tive offices, were 
delegated to local CBRC offic es. 
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 procedu res 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 wi ll be able to engage in bankcard clearing business after their 
applications are approved by the authorities and licen ces 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 /Rev.1  • China  
 
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   The application requirements, covering various aspects, include a minimum of 
RMB 1 billion (US$161 million) of registered capit al; 
 Applicants shall file applications with the PBOC f or 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 licen ces 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 organizat ions' 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 ; 
and 
 Institutions that ha d 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 Reg ulatory 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 rul es, 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 m easures  were promulgate d and 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 neces sarily 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 f oreign ownership limits set by financial services 
regulations, namely : (a) that single overseas financial institution s 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 WT/TPR/S/342 /Rev.1  • China  
 
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  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.  
4.56.   Foreign investment in finance companies, currency brokerage companies , and  trust 
companies remain s 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 Fin ancial 
Institutions  (Order of the China Banking Regulatory Commission  No. 13, 2007) nor the amended 
Measures of the China Banking Regulatory Commission 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 , restrict 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 Implementatio n of Administrative Licensing Mat ters 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 sing le 
offshore institution is allowed to have a maximum of 20% participation in a trust company.  
4.57.   There have been no change s in the scope and the conditions of banking activities allowed in 
the CSPFTZ and in other free trade zones , but the liberalization of t he licen sing regime for 
foreign -funded banks contained in the State Council Decision (Guo Ling) No.  657 of 
20 December  2014 on Amending the Regulations o n the Administration of Foreign -Invested Banks , 
which came into effect on 1 January 2015, also appl ies 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 accordance 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 i n 2014, and issued the revised Guideline 
for Stress Tests of Commercial Banks in Decem ber 2014. CBRC also issued the Guidelines for the 
Consolidat ed Management  and Regulation  of Commercial Banks  in December 2014 to further 
improve the framework for consolidat ed regulation.  
4.59.   Other recently issued prudential regulations include the revised CBRC Measures for the 
Administration of the Leverage Ratio of Commercial B anks (16 March 2015), the Circular on 
Matters Relevant to the Strengthening of the Administration of the Deposit Devi ation Ratio of 
Commercial Banks  by the CBRC, the CBRC Circular on Revising the Basis for Calculating the Loan 
to Deposit Ratios of Commercial B anks (30 June 2014), and the CBRC 2014 Guidelines on the 
Internal Control of Commercial Banks .  
4.60.   During the period under review , China continued to issue measures aimed at preventing 
systemic risks such as those arising from non –performing loans, shadow ban king, excessive debts 
for local government financing platforms and risks of real estate bubbles. Those risks have a 
certain degree of interlinkage.41 The n on–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 indicator, strengthens risk -checking for key fields and 
key clients, and requires banking financial institutions to improve their cr edit 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 se ctors benefitting from 
the post -crisis stimulus (real estate, local govern ments ' 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 banking had risen to nearly 53% of GDP, with annual 
                                                
41 As described by the 2015  IMF country report, firms and local governm ent 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. Furthermore,  local government spending is also linked to the real estate sector 
directly through land sales revenues and indirectly through 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 /Rev.1  • China  
 
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  growth rates averagin g around 30% during 2012 -2013. 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 shifted towards conventional loans. Some of the 
measures adopted were targeted at reining in interbank 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 an d 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 has been established and a registry system 
for trust products is under preparation , and the standard ized 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 re gions and most tier 3 and 4 cities (small and middle -size cities) are in 
a situation of oversupply of residential real estate, 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 o n the regions 
and the markets. The aim of this policy is to allow adjustment to take place while preventing a 
sharp correction, by supporting the market if necessary , 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 purchase s were re laxed, 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 residenc y. This was later accompanied by measures 
to adjust the amount required as a down payment to obtain a loan. I n March 2015, the PBOC, the 
Ministry of Housing and the CBRC jointly released the Notice on the Matters of Personal Housing 
Loan Polici es (Yin Fa No. 98, 2015), increasing the minimum down payment to 40% for loans to 
household s that  already own one residential house , wish to improve their residential conditions  
and still have  outstanding payment s. In September 2015, the PBOC  and CBRC join tly released the 
Notice on Matters to Further Improve Differentiation Housing Credit Policie s (Yin Fa No. 305, 
2015), adjusting the minimum down -payment ratio to 25% for household s applying  for personal 
housing loans for the first time in cities without pu rchase -limiting measures. At the same time , 
social hou sing 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 Chi nese 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, inc luding 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 strengthening 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, t he 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 cla rified that all spending  that is  
fiscal in nature should be brought into the budget and be financed transparently, and that 
                                                
42 WMPs offered by C hina are investment products with  fixed returns and 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  guarantees.  Proceedings from the marketing of WMPs are 
invested in a range  of loans and securities and the returns offered  have traditionally largely  exceed ed 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 C onsultation  – Staff Report , Country Report No. 14/235 , July, paragraph 1 6, 
page 11. Viewed at: https://www.imf.org/external/pubs/ft/scr/2014/cr14235.pdf .  WT/TPR/S/342 /Rev.1  • China  
 
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  commercial investment projects of local government s do not have an explicit or implicit 
government guarantee. Measures have also bee n taken to : replac e existing debts with local 
governments' bond s, in order to solve local governments' problem s with respect to the repay ment 
of matured debts; ease the interest burden  of local governments; optimize the debt maturity 
structure; and avoid t he risk of signif icant 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 Administration of Freezing of Assets Relating to Terrorist 
Activities  (People's Bank of China, Ministry of Public Security, an d 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 ris k-based management principle and promote the implementatio n 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 we re no significant changes as compared to the 
situation described in previous TPR reports regarding supervisory authorities and prudential 
regulations  in the insurance subsector . The main changes concern the r ules of  ownership of 
insurance companies and pre ferential 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 regard ing the Investment and Shareholding of 
Limited Partnership Equity Investment Ent erprises in Insurance Companies  (Baojianfa No. 36, 
2013), allowing domestic and foreign investment by limited partners of private equity funds in 
domestic Chinese insurance com panies, 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 prohibited from pa rticipating 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 w ere removed from the restricted category. 
Thus, according to the authorities investments above RMB 100 million 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 t o 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 T he 
Agreement on Achieving Basic Liberaliza tion 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,  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 f or cross-border 
commitments . 
4.71.   The FTA with Australia also contains supplementary 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 h ad previously been autonomously 
liberalized erga omnes . 
                                                
46 The agreement with Australia offers the choice between positive and negative listing and Australi a, 
unlike China,  made the latter choice for its commitments.  WT/TPR/S/342 /Rev.1  • China  
 
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  4.2.2.4   Regulatory regime for securities and stock exchanges  
4.72.   No significant changes regarding the su pervisory authorities and licens ing regime  for 
securities and stock exchanges have taken place as compared t o the situation described in 
previous T PR 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 financial reporting standards , and preferential and 
bilateral policies.  
4.73.   The 2015 version of the Investment Catalogue maintains securities companies in the 
"restricted ca tegory" but it broadens their business scope and partially liberalizes foreign 
ownership by rai sing 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 invest ment, including : easing the rules for margin borrowing 
(April  2013), liberalizing mutual funds (August 2014) , and allowing investors to open multiple 
brokerage accounts (Apri l 2015). However, in May 2015, the authorities  tightened the rules on 
margin tradi ng 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 measure s 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 post ed draft regulations that would allow pension fund s 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 l onger the only way for securities firms to dispose of clients' collateral.  
2/07/2015  The China Securities Regulatory Commission (CSRC) s tates it would  severely crack down on market 
manipulations.  
4/07/2015  Stabilization fund:  21 securities firms commit ted 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 propriet ary 
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 pledge d to buy more small and medium -cap stocks.  
Measures taken to support major shareholders and directors of listed companies t o increase the 
shareholding of their own companies.  
CSF g ave secured credit line of RMB  260 billion to brokers that needed liquidity.  
9/07/2015  CSRC ban ned directors and major shareholders of listed companies from selling any shares for 
six months.  
CBRC allow ed bank roll -over loans backed by shares.  
28/07/2015  CSRC investigate d 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 governme nt and corporat e 
bonds". In the 2015 edition, "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" . 
48 China officially launched margin trading by sec urities 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. Official 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 tha t 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 margins that are much higher (5:1 or above) than those 
allowed f or brokerage accounts, with no limits on the type of shares in which they can invest.  WT/TPR/S/342 /Rev.1  • China  
 
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  Date  Specific measures  
31/07/2015  CSRC, Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) target ed high-
frequency traders in "spoofing" probe; trading of 24 suspicious securities accounts suspended.  
21/08/2015  Announcement of s evere 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 Administ rative Measures on the Algorithmic Trading on Securities and 
Futures Markets .  
6/11/2015  Relaunch of IPOs.  
7/1/2016  CSRC release d 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 comp anies may provide these services. Article 166 of the 
Securities Law of the People's Republic of China ( its last amend ment was promulgated by 
Presidential Decree No. 14 and entered in to 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 S tate. The 
concept of Chinese legal person includ es Chinese -foreign contractual joint ventur es 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 inv estors 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 Provision s on the Shanghai -Hong 
Kong Stock Connect  Pilot Program me (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 enga ge 
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) o n 10 April 2014,  the Shanghai Stock Exchan ge 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, t rading 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 monit ored on a "real time" basis, both 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 Southbound Trading Link to an aggrega te quota of 
RMB 250 billion and a daily quota of RMB  10.5 billion. Quotas may be adjusted in the future. The 
Provision s also set some limitations for foreign  investor s investing in stocks in China, namely that  
the shareholding ratio of an individual foreig n 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 apply 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 mainland China that trade on either the Shanghai or 
Shenzhen stock exchanges. B -Shares are eligible for foreign investment pr ovided 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 Stock 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 Inv estor (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_tradinfra/chinaconnect/Documents/Investor_Book_En.pdf . 
52 All Hong Kong, China and overseas investors are allowed to trade eligible shares listed in Shanghai. 
However, on ly mainland institutional investors and individual investors who have RMB 500,000 in their 
investment and cash accounts are eligible to trade Hong Kong -listed shares. With respect to China, only 
A-shares listed in Shanghai will be included in the initial s tage. 
53 WTO document  WT/PR/S/300/ Rev.1, paragraphs 4.78 to 4.83 . WT/TPR/S/342 /Rev.1  • 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 h ad been 
qualified as RQFIIs, and the ir 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 private 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 residency in China can be regarded as Chinese 
citizens, and they may trade on China's securities market s 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 secur ities as compared to China's GATS S chedule. Th e 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 obligation s are  widely defined , a negative list ap plies to  commercial 
presence reservations, and a positive list  applies to supplementary com mitments 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 owners hip allowed in joint ventures of companies engaged in the underwriting of 
A-shares and in th e underwriting and trading of B -shares and H -shares,  and to the right to provide 
trading, advisory and portfolio management and custody services to Qualified Domest ic Investors 
(QDII) . Additionally, u nder 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   Regulato ry framework for mutual funds and asset management companies  
4.83.   The CSRC is the supervisory authority for mutual funds and asset management companies. 
Overseas institutions are not permitted to directly conduct publicly offered securities investment 
fund busi ness 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 annui ty 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 annui ty funds are stipulated in the 
Interim Measures for Qualification Accreditation of Enterprise Annui ty 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 considerat ions. 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 Australia offers the choice between positive and negative listing and Australia, 
unlike China, made the latter choice for its commitments.  WT/TPR/S/342 /Rev.1  • 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 expenses, 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 general 
government expenditure on health  64.2 57.2 54.1 64.2 67.0 67.9 69.3 67.6 
Private ex penditure 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 H ealth (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 applied regulatory regime regarding market access 
and national treatment.  They contain three limitations: (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 licen ces from the Ministry of Public Health ; the term of 
service is six months and may be exten ded to one year" (market access mode 4); and (c) "the 
majority of doctors and medical personnel of the joint venture hospital s 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, article s 8 and 17 of the Interim Measures for the Administration of 
Sino-Foreign Equity/Cooperative Joint Venture Medical Institutions, require that the establishment 
of a Sino -foreign  equity/cooperati ve 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 Institutions, 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 in to 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, regardless of ownership, a re approved according to 
what the plan stipulates. Prior to their establishment , 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 Ministry 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 /Rev.1  • China  
 
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  level of the municipality divided into di stricts) 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 licen ces fro m 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 o r 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 d octors may re -register. The health administrative departments at the level of 
municipality divided into districts are in charge of registering foreign doctors. A n 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 maximum  of 20 year s 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 CSPFTZ. As a result of the evaluation of the pilot 
project, the 2015 negative list for the CSPFTZ and other pilot FTZs w as amended to indicate that  
medical institutions in the FTZs could operate as joint venture s 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 China do not contain any supplementary/preferential 
concession s as compared to the GATS commitments except in four cases. First, both Chinese 
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 provider s 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 service s 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); abolishi ng the 
domestic minimum requirement in joint -ventures 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 th e 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 , abolish ed the minimum investment requirement s for Chinese nationals in joint -venture s 
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 Hainan . Australian providers may establish service suppliers in Shanghai 
Municipality , in four provinces: Jiangsu, Fujian, Guangdong and Hainan and also in Beijing and Tianjin.  
60 For more information on these commitments, see : Trade and Industry Department of the Government 
of the Hong Kong Special Administrative Region online information , "Mainland and Hong Kong C loser 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". Vi ewed at:  
http://www.cepa.gov.mo/cepaweb/front/eng/index_en.htm . WT/TPR/S/342 /Rev.1  • China  
 
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  4.2.3.2   Retirement home services61 
4.92.   China did not undertake any GATS commitments regarding retirement homes, but has done 
so in the China -Australia FTA, the CEPAs and the subsequent  agreements with Hong Kong, China 
and Macao, China .  
4.93.   Retirement home service s 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 do mestic and foreign investors may establish retirement homes; however, for eign 
providers have to be licens ed 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 Chi nese 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 afore mentioned, 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 a nd 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 
transform ation of public retirement homes, and to establish chains and create brands. National 
treatment will apply regarding taxes. In addition, the 2015 Investment Catalogue classifies 
"services institutions for the elderly, the disabled and children" in the enco uraged 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 regulated by the genera l regulatory framework for the 
insurance sector.  
4.97.   Costs incurred by patients, covered by China' s basic medical insurance, are reimbursed if 
patients undergo treatment in a "designated" medical 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 describe s the audiovisual services trade 
regulatory regime using the MTN.GNS/W/120 -CPC provisional nomenclature 's classi fication and 
definitions , as has been the case  in other Trade Policy Review reports, rather than the sui generis  
classification used b y 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 C atalogue, and for consistency  with other sectors described in the present report, the 
Chinese nation al regulations' categories will be used.  
                                                
61 Retirement h ome services are p art of CPC  93311 - Welfare services delivered through residential 
institutions to old pers ons 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 Civil Affairs  Announceme nt No. 81 , 28 November 2014 . WT/TPR/S/342 /Rev.1  • China  
 
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  4.99.   The main economic indicators of China's audiovisual se ctor and their recent evolution  are 
contained in Table 4.10 . Growth in China's audiovisual/e ntertainment 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 Stat istics (UIS) online information. V iewed 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 program mes should be provided to 99% of the 
population.65 In order to achieve th is goal  the Government encouraged banks to provide credit and 
financing to the entertainment industry  (Table 4.11) . The China De velopment Bank (CD B) actively 
supported  cultural and creative industries  during the period under review . By end-2015, the loan s 
provided by the CDB amounted to RMB 176.1 billion . 
Table 4.11 Outstanding credit from 21 major bank s 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 audiovisual 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 
cultur al and creative activities , film production, publishing, print ing and duplicat ing, advertising,  
performance s and entertainment, animation, internet culture, cultural leisure and related 
industries.  Secondly, the National Film Industry Development Fund, whi ch support s the 
development of the film industry including the construction of theatres and key production bases , 
the renovation of equipment, and the translation  of films into minority languages, and provid es 
incentives for th e production, distribution an d projection of outstanding domestic films. It also  
funds the distribution and projecti on of films with cultural and artistic characteristics.  The Fund is 
regulated by the Measures of Collection and Allocation 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), j ointly released by the Ministry 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 include news and press, broadcasting, television, film and video recording 
production and culture and arts.  WT/TPR/S/342 /Rev.1  • 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 Concerni ng Tax Policies for Continuously Supporting the Deve lopment of 
Cultural Industries (Cai Shui  (2014)  No. 85) issued by the Ministry of Finance, the General 
Administration of Customs, and the State Administration of Taxation  provides that R&D expenses 
incurr ed by cultural enterprises for the development of new technologies, new products and new 
processes may be income -tax deductible. The same C ircular grants an import duty exemption for  
equipment and related components and parts imported for use in cultural p rojects promoted by 
the S tate and which can not be manufactured domestically. The C ircular to Incorporate Railway 
Transportation and Post al Services into the Pilot Programme to Replace the Business Tax for the  
VAT (Cai Shui (2013) No. 106) specifically prov ides that overseas film production, distribution and 
projection shall be VAT exempted. The Circular to Apply Z ero VAT Tax Policy to Exported S ervice s 
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 status of audiovisual activities, 2011 and 2015  
 2011 Catalogue  2015  Catalogue  2015 CSPFTZ Negative 
List 
Radio, televi sion 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 pr oduction 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 (includ ing 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 Investment to Pilot Free Trade Zones (the "Negative 
List")  (Guo Ban Fa No. 23, 2015), the non -compliant measures in the Negative List of the CSP FTZ 
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 Administrat ion of Radio, 
Film and Television (SARFT) and of the General Administration of Press and Publications.  WT/TPR/S/342 /Rev.1  • 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 picture production and distribution companies is 
prohibited , with the exception of film distribution companies of  Hong Kong, China, and Macao, 
China investors , which ar e permitted to establish wholly owned subsidiaries in China for the 
distribution of Chinese -made films, as stipulated by the Supplemen tary Provisions to the Film 
Market Entry R ules 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 allow ed to produce and distribute  audiovisual (including 
post-movie) products in accordance with SARFT and MOFCOM Order No. 50, 7 March 2005 and  
SARFT and MOFCOM  Order No. 52, 25 March 2011, respectively. L imitations on foreign investment 
for the d istribution of videotape s were eliminated in the 2015 I nvestment Catalogue.  
4.106.   This general prohibition stems not only from the foreign investment regimes define d by 
the 2011, 2015 and CSPFTZ Investment C atalogues but also from legislation spec ific to the sector, 
namely the Circular on Opinions on Foreign Inve stment in Culture Related Areas , jointly issued by 
the SARFT  and the Ministry of Culture, the General Administration of Press and Publication, the 
National Development and Reform Commission, and the Ministry of Comme rce in July 2005. This 
regulation superseded the earlier Provisional Rules on Operation Qualifications for Entry into Film 
Production, Distribution and Ad Exhibiti on of 29 October 2003, revised in November 2004, which 
authorized, for a brief period, foreig n 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 -owned production and distribution compan ies is 
prohibited, co -productions are allowed either in the framework of a State -to-State agreement or in 
the absence thereof under the rules set by SARFT Decree No. 3 1 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 investor s jointly participate 
in the funding and production of a film in China, and in the sharing of rewards and risks associated 
with the exploita tion 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 out the production of a film in China, enjoys 
exclusively the rewards , and bears the risks associated with the exploitation of the rights over the 
film. The Chinese participant provides assistance by way of equ ipment, instruments, and labour, 
and is compensated by the foreign i nvestor 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 p roduction or film ing 
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 Pe ople'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 , releas e 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 negotiation s 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, t he 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 /Rev.1  • 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 -Invested 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 Provisio ns on Foreign -Invested Cinemas 
(SAFRT, Ministry of Commerce, Ministry of Culture Order No. 5149, 18 January 2006) contain the 
industry's main regulatory framework. As shown in Table 4.12 , in accordance with the three 
foreign investment catalogue regimes (2 011, 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 
foreig n 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 licen ces 
directly from film administrative authorities at county level. The Decision on Revising Some Rules 
and Normative Documents , SAPPFRT 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 production 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 [production] services ), 961 32 (television [production] 
services ), 96133  (combined program me making and broadcasting services ), 75241 (television 
broadcast transmission services ), and 75242 (radio broadcast transmission services ). 
4.113.   Under the f oreign investment regimes define d 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 Chines e 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; t he durati on 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 services68 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 /Rev.1  • China  
 
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  5  APPENDIX TABLES  
Table A1. 1 Status of Selected Reforms Announ ced 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 m arkets to play a greater role in resource allocation.  Aim t o 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 est ablish 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 appropria te. 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 pro duction, 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 managemen t 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 interest rate liberalization, while removing deposit rate 
controls.  Liberal ized 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 are as. 
• 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 intere st 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 for 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 Program me 
approved in April 2014, and officially launched in 
Novemb er 2014.  
• Allow q ualified 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 consume r 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 exp lore 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 /Rev.1  • China  
 
- 146 - 
 
  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 environme ntal 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 /Rev.1  • China  
 
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  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 par tnership 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 environment al 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 th e reform in science and technology, establish an IP trade platform  
 Give more autonomy to universities and scientific institution s 
Agriculture 
modernization   Review land contracts, separate land ownership, contract rights and operation rights  
 Farmland prote ction 
 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 environ ment, reduce government intervention and simplify administrati ve 
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  
 Financ ial reform: promote private investment in banking, enhance financial service provision to 
SMEs and rural areas; promote a tran sparent capital 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, prot ection 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 Chang jiang 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 and efficient use of fossil 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 contract water saving management  
 Promote reasonable consumption  
Environment 
protection   Air, water and soil protection, control contamination and reform monit oring 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 n ew 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, Negativ e 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 inte rnational 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 intern ational 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 /Rev.1  • 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/crocheted  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 /Rev.1  • China  
 
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  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 an d 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 
Machine ry 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 & t elecommunication 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 transport 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 Liqui d 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 /Rev.1  • 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 /Rev.1  • China  
 
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  Table A 1.6 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 Kingdo m 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 
Austra lia 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 thereafter re -imported into China.  
Source:  UNSD, Comtrade database.  
 WT/TPR/S/342 /Rev.1  • China  
 
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  Table A2. 1 Main notifications under WTO Agreements (1 January 2014 -1 March 2016, 
(or last notification if applicable)   
Agreement  Requirement/content  Document symbol and date of  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 a nd 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 det ermination 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 val uation 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 enq uiry 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 Econo mic 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 /Rev.1  • China  
 
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  Agreement  Requirement/content  Document symbol and date of  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, 23/09/2 002 
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 o n import 
licensing  G/LIC/N/1/CHN/6, 24/03/2010  
Article 7.3  Responses to questionnaire 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 safeg uards; 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 Cou ntervailing 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  
Agre ement 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 Agr eement  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, 31/01/2 014-
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 /Rev.1  • China  
 
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  Agreement  Requirement/content  Document symbol and date of  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 Aspects 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 /Rev.1  • China  
 
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  Table A2. 2 WTO dispute settlement cases involving  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 establish ed,  
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/DS 496 
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 comp osed 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 compo sed 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 c omposed  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 /Rev.1  • China  
 
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  Table A2. 3 Industries in which FDI was/is restricted, 2011 and/or 2015  
(The shad ed 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 c ontrolling 
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 Catalo gue 
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 contro lling 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 -produ cts 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 r ice, 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 co ntrolling 
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 Produ cts 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 o f 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 Catalog ue 
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 we ll 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 t he 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 /Rev.1  • China  
 
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  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 pai nts 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, cau ses 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 act ive 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) Chemi cal 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 a utomobile 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 ves sels (including 
sections) (with Chinese parties as the controlling 
shareholders)  
(XIII) Manufacturing of Communication Equipment, 
Computers and Other Electronic Equipment  Not listed in the 2015 Catalogue  
1. Production of satellite telecasting ground rece iving facilities 
and key components  13. Production of satellite telecasting ground receiving 
facilities and key components  WT/TPR/S/342 /Rev.1  • China  
 
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  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 cap acity 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 Ind ustries  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. Ra ilway 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 Catalogu e 
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 20 11 Catalogue  VI. Information Transmission, 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 ser vices (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 var ieties 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. Construc tion 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 Cata logue 
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 
sharehold ers) 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 stati ons 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 havi ng 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. F inance 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 2 0% 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 /Rev.1  • China  
 
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  2011  2015  
3. Securities compa nies (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 b rokerage 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 estat e secondary market transactions and real estate 
intermediary or brokerage companies  Not listed in the 2015 Catalogue  
IX. Leasing and Commercial Services Industries  IX. Leasing and Commercial 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 Indus tries  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. Imp ort 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 purp oses; 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 operation s 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 insti tutions (limited to Sino -foreign 
equity/cooperative joint venture operations)  
XII. Cultural, Sports and Entertainment Industries  XIII. Cultural, Sports and Entertainment Industries  
1. Production of radio and television programmes and movies 
(limited to S ino-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 cont rolling 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 agencie s (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 Restricted by the State or by the 
International Treaties that China Has Concluded or 
Acceded to  XIV. Other Industries Restricted by State Laws and 
Regulations or by the International Treaties that China  
Has Concluded or Acceded to  
a Led by Chinese parties means: (i) that those in charge 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 directo rs 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 /Rev.1  • China  
 
- 160 - 
 
  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 di fferent 
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 vari eties, 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 mat erials (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 radioact ive 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 Protectio n 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 t he 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 tr aditional 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 s melting and processing, and nuclear 
fuel production  
4. Special -Purpose Equipment Manufacturing Industry  (III) Special -Purpose Equipment Manufacturing 
Industry  
(1) Manufacturing of weapons and ammunition  10. Manufacturing of weapons and ammunition  
5. Ele ctric 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 pol lutant 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 o f 
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 Indust ries 
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 In dustries  
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 Commercial Services Industries  
1. Social i nvestigation  18. Social investigations  WT/TPR/S/342 /Rev.1  • 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 
Industrie s, 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 diagno sis 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 el ectronic 
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 ad ministrative 
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, Environmental, and Public 
Facilities Management Industries  IX. Water Conservancy, Environme ntal, 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 operatio n 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 affa irs, 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 Industr ies 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. Publ ishing 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 an d 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 sa tellites, 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 program me 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. Constructi on 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 Prohibited by the State or 
International Treaties China has Concluded or Acceded 
to XIII. Other Industri es Prohibited by State Laws and 
Regulations or by International 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 /Rev.1  • 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 i n-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 authoritie s.  WT/TPR/S/342 /Rev.1  • 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 inco me 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 
preferent ial 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 transport ation, 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, and 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, copy rights 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) Oth er 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 requir e key state 
support and possess core proprietary intellectual property rights, engage in business involving products (services) that fall  into 
the scope specified in the Advanced and New Technology Areas 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 enterp rises 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 
establishme nts are set up but there is no actual relationship with the income obtained by the institutions or establishments set 
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 intangible 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 ca pital 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 following 
tax year.  
11. The income obtained by enterprises from the production of products in line with s tate 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 investme nt 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 preferentia l 
category", "water and energy conserva tion special facilities enterprise income tax preferential category" and "safety production 
special facilities enterprise income tax preferential category" can be deducted from the taxable income. If the taxable incom e 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 listed in the "Catalogues for the Guidance of Foreign Investment 
Industries", the foreign investment projects that meet  the requirem ent 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 the "Category of non -tax-exempted imported items under foreign 
investment projects"b and the "Category  of non -tax-exempted  imported 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 p roject 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 par ts, 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 du ties 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 fr om 
urban waste and renewable water) is subject to such preferential taxation policies as exemp tion, refund upon collection or 
refund after collection.  
C. Several polices on software and integrated circuits  
1. Certified domestic new software enterprises and integrated circuit design enterprises, from  the first profit earning year, are 
exempted fro m 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 0.2 5 µm, if the business period exceeds 15  years, from the first profit earning year, it is exempted from enterprise income 
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 en terprise 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 coll ected WT/TPR/S/342 /Rev.1  • China  
 
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  Government tax preference policies  
from the third to the f ifth year.  
4. For software purchased by enterprises and public institutions with the approval of the tax authorities, its depreciation y ears 
may be shortened to a minimum of 2 years, if software is deemed a fixed or intangible asset from an accounting poi nt of view.  
5. For the production equipment of enterprises manufacturing integrated circuits, with the approval of the tax authorities, i ts 
depreciation years may be shortened appropriately and the minimum is 3 years.  
6. Qualifying software and integrate d 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 Inco me 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 D ecember 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 produc ts 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 Committ ee of Economic Trade 
for Foreign Countries on further Encouraging 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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