G/SCM/Q2/CHN/63  
 
27 April 2016  
(16-2372)  Page: 1/2  
Committee on Subsidies and Countervailing Measures  Original: English  
 
  SUBSIDIES 
REPLIES TO QUESTIONS1 BY MEXICO REGARDING 
THE NEW AND FULL NOTIFICATION BY CHINA2 
The following communication, dated 26 April 2016, is being circulated at the request of the 
delegation of China.  
_______________ 
  With regard to the new and full notification by  China on subsidies and countervailing measures, 
dated 30 October 2015, Mexico would like to ask the following questions: 
 15 PREFERENTIAL TAX TREATMENT FOR BUILDING MATERIAL PRODUCTS PRODUCED WITH 
INTEGRATED UTILIZATION OF RESOURCES 
 16 PREFERENTIAL TAX TREATMENT FOR BUILDING MATERIAL PRODUCTS PRODUCED WITH 
INTEGRATED UTILIZATION OF RESOURCES 
 Question 1  
China's notification states that these prog rammes (numbers 15 and 16 on pages 21 to 
23 of the said document) grant preferential tax treatment that is conditional upon the 
"integrated utilization of resources". Furthe rmore, programme 15 makes reference to a 
"Catalogue of Comprehensive Use of Resources  for Preferential Enterprise Income Tax 
Treatment". In this regard, would China plea se elaborate on the meaning of "integrated 
utilization of resources" and on the contents of this Catalogue. 
 
Reply: 
 For Progamme 15 of the notification the "preferential tax treatment for building materials products 
produced with integrated utilization of resources", please refer to the Notice on Publishing the 
Catalogue of Comprehensive Use of Resources for Preferential Enterprise Income Tax Treatment  
(Cicular Cai Shui No. 117 of 2008) for details of the Catalogue. For Progamme 16 "preferential tax 
treatment for building materials products produced with integrated utilization of resources", 
eligible products include: 1) Recycled water, rubber powder which is made of junked tires entirely, retreads, specific building material products with  raw materials containing no less than 30% waste 
residues; 2) Building gravel aggregates produced with building (structure) wastes and gangues as 
raw materials; and 3) Some new-type wall material products.  39 SPECIAL FUND FOR THE DEVELOPMENT OF INTERNATIONAL ECONOMY AND TRADE  
 
Question 2  
With regard to this programme (number 39 on pages 42 to 43 of the above-mentioned 
document, in particular point 7, subparagrap h 3), China's notification states that the 
subsidy is granted to enterprises and institut ions that "[c]onduct overseas investment, 
contract foreign projects, engage in fore ign labour cooperation, and other foreign 
                                               
1 G/SCM/Q2/SCM/56. 
2 G/SCM/N/220/CHN - G/SCM/N/253/CHN - G/SCM/N/284/CHN. G/SCM/Q2/CHN/63 
 
- 2 - 
 
  investment and cooperation business (…)". Would China please clarify whether the 
enterprises and institutions are required to meet all of the criteria set out in 
subparagraph 3 in order to be eligible for the subsidy. We ask this because the word "and" would appear to indicate that the four  criteria specified in subparagraph 3 must 
be met for the subsidy to be granted. 
 Reply: 
 As for paragraph 3) of "to whom and how the subsidy is provided", China's notification states "Conduct overseas investment, contract foreign projects, engage in foreign labour cooperation, and other foreign investment and cooperation business". This is to list several ways of foreign 
investment and cooperation, and enterprises do not have to do all the listed things to get the 
subsidy. There might be a misunderstanding due to the translation of the Notification from English 
into Spanish. 
 
Furthermore, with regard to this same programme, would China please explain the 
scope of the expression "foreign projects". That is to say, could it refer to projects that 
necessarily involve the exportation of Chinese products? 
 Reply: 
 
Please specify which paragraph Mexico referred to when talking about "Overseas Project Contract" 
in Programme 39 of China's notification. Since the English version of China's notification does not contain such expression. If Mexico asked China to clarify the content of "foreign investment and 
cooperation business", it mainly refers to overseas investment, foreign contract projects and 
foreign labour cooperation, instead of export contracts of Chinese products.  
__________