G/SCM/Q2/CHN/87  
 
29 January 2020  
(20-0672) Page: 1/2 
Committee on Subsidies and Countervailing Measures  Original: English  
 
SUBSIDIES  
FOLLOW -UP QUESTIONS POSED BY THE UNITED STATES  TO REPLIES1  
REGARDING  THE NEW AND FULL NOT IFICATION OF CHINA2 
The following communication, dated 27 January 2020 , is being circulated at the request of the 
delegation of the United States . 
 
_______________  
 
 
We appreciate China 's answers to the United States ' questions regarding China 's 2017 notification 
but have some follow -up questions.  
Question 1  
It appears that none of the sub -central legal measures referenced in the sub -central section of 
China 's notification have been published in the MOFCOM Gazette. Does China agree that normative 
documents that establish or implement a subsidy program at the sub -central level of government 
must be published in the MOFCOM Gazette pursuant to China 's Protocol of Accession?  
Question 2 
Although China maintains that the National Integrated Circuit Investment Fund (IC Fund) is "not 
affiliated with any government departm ents", based on public information, the IC Fund is nearly 
100% owned by various government departments and state -owned enterprises. Moreover, based 
on numerous legal measures that establish and regulate the IC Fund, such as the Guidelines for the 
Developme nt and Promotion of the Integrated Circuit Industry, the government established the IC 
Fund to achieve certain governmental economic development objectives. Given these facts, please 
explain why the IC Fund should not be considered an entity that could pro vide subsidies under the 
Agreement on Subsidies and Countervailing Measures (Subsidies Agreement)?  
Question 3 
What is the difference between a "government investment fund" and a "government -invested 
industry investment fund"? What type is the IC Fund?  
Ques tion 4 
The measure that established the National Strategic Emerging Industry Venture Investment 
Guidance Fund states that "when necessary, the State may promise to appropriately surrender 
profits of its investment by surrendering its distribution of excess  profits".3 Is this a common 
provision for all "guidance funds"?  Do "government investment funds" or "government -invested 
industry investment funds" also contain this same provision?  
 
1 G/SCM/Q2/CHN/81 . 
2 G/SCM/N/3 15/CHN . 
3 State Council Reply Letter on Establishment of the National Strategic Emerging Industry Venture 
Investment Guidance Fund (Guo Han [2015] No. 131), Section 9(2).  G/SCM/Q2/CHN/87  
 
- 2 - 
 
  Question 5 
The United States previously asked about the Jiangxi Province Interim Measure on the Administration 
of the Strategic Emerging Industries Investment Guidance Fund , Jiangxi Provincial People's 
Government (27 March 2012).4 This provincial level SEI Guidance Fund appears to not only provide 
investment support, but also u ses government regulatory agencies to encourage financial 
institutions to provide loans to target investment projects. For instance, the measure states "Article 
12. Enhance cooperation with financial institutions, and encourage financial institutions to pr ovide 
loan support. The Managing Commission5 Office will recommend the preferred projects to financial 
institutions. After financial institutions examine [the investment], they will reply to the Managing 
Commission Office with the projects passed by the lo an committee and the credit line amount. For 
financial institutions that provide loan support to the enterprise taking up the project in the amount 
6 times or more compared to the guiding funds invested, the Managing Commission, having 
examined and agreein g, may provide it [the lending financial institution] a onetime award, the award 
amount will be equivalent to 5% of the loan principle, and will come out of the listed expenditures 
of the guidance fund for that year." Is this a common provision for all "gu idance funds"?  Do 
"government investment funds" or "government -invested industry investment funds" also contain 
this same provision?  
Question 6 
In replying to a question concerning the Central State -Owned Capital Management Budget, China 
appears to be stating that injections of capital by the government into state -owned enterprises "is 
beyond the scope of subsidies defined by the WTO". However, Article 1 of the Subsidies Agreement 
clearly includes government equity investments as a "financial contributi on". And Article 14 clearly 
considers that a government equity investment that is inconsistent with the usual investment 
practice (including for the provision of risk capital) of private investors provides a benefit. Does 
China agree that government equity  investments inconsistent with the usual investment practice of 
private investors (including for the provision of risk capital) should be considered a subsidy under 
the Subsidies Agreement?  
 
__________  
 
4 G/SCM/Q2/CHN/74.  
5 The Managing Commission is composed of  various provincial government officials, including the 
Executive Deputy Governor of the Jiangxi Provincial Government, see Jiangxi Province Interim Measure on the 
Administration of the Strategic Emerging Industries Investment Guidance Fund, Jiangxi Provin cial People's 
Government (27 March 2012), Article 5.