WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/CHN/44 
26 July 2012 
 (12-4094) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
  
 
  
SUBSIDIES 
 
Questions Posed by CANADA Regarding the  
New and Full Notification of CHINA1 
 
 
 The following communication, dated 24 July 2012, is being circulated at the request of the Delegation of Canada. 
 
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 Question 1  
 This notification covers the period for 2005 to  2008.  Could China indicate when its 2011 new 
and full subsidy notification will be provided? 
 
Question 2  
 Article 25 of the ASCM requires members notif y any subsidy granted or maintained within 
their territories. Could China explain why only central government level programmes have been 
notified?  Could China please indicate when s ub-central government level programmes will be 
notified? 
 
Question 3 
 
 Article 25.3 of the ASCM requires that subsid y notifications include information on subsidy 
per unit or, in cases where this is not possible, th e total amount or the annual amount budgeted for that 
subsidy.  For many of the notified programme s, there are no figures on the amount of support 
provided.  Could China please indicate why, in ma ny cases, information on subsidy per unit or on the 
total amount or the annual amount  budgeted was not provided? 
 
1. Preferential tax policies for foreign-invested enterprises 
 
Question 4  
 According to the description of this progra mme, one of the eligibility criteria is "the 
establishment or expansion of ex port-oriented enterprises".  Could China please explain how this 
programme complies with China's obligations un der Article 3 of the ASCM, specifically, the 
prohibition on subsidies contingent on export pe rformance?  Could China also provide information 
                                                      
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  regarding the amount of tax forgone under this pr ogramme and the industries that have been the 
largest users of this programme? 
 
2. Preferential tax policies for fo reign-invested export enterprises 
 
Question 5 
 
 According to the description of this progr amme, one of the eligibility criteria is 
"Export-oriented foreign-invested enterprise which in any year has an output value of all export 
products amounting to 70 per cent or more of the total output value of the products of the enterprise 
for that year".  Could China please explain how this programme complies with China's obligations 
under Article 3 of the ASCM, specifically, the prohibition on subsidies contingent on export 
performance?  Could China also provide informati on regarding the amount of tax forgone under this 
programme and the industries that have b een the largest users of this programme? 
 
6. Preferential tax policies for advanced tec hnology enterprises with foreign investment 
 Question 6 
 
 Could China please explain how "advanced t echnology enterprises" are defined under this 
programme? 
 
7. Preferential tax policies for foreign-invested  enterprises engaged in agriculture, forestry 
or animal husbandry and foreign-invested enterprises established in remote underdeveloped areas 
 
Question 7  
 According to the description of  this programme, foreign-invest ed enterprises established in 
remote underdeveloped areas may be allowed a 15 pe r cent to 30 per cent reduction of the amount of 
enterprise income tax payable.  Could China please provide more detail on how  eligibility for the tax 
reduction and the size of the tax reduction (i.e . from 15 to 30 per cent) are determined? 
 8. Preferential tax policies for enterprises with foreign investment recognized as high or 
new technology enterprises established in the State high or new technology industrial development zones 
 
Question 8  
 According to the description of this progra mme, Chinese foreign equity joint ventures are 
exempt from enterprise income tax in the first a nd second years, starting from the year when they 
begin to make profit.  Could China please indicate whet her to be eligible to receive support under this 
programme, there are any ownership requirements for joint ventures (e.g. 50/50?).  Could China 
please specify which companies or types of compan ies have received support under this programme? 
 
9. Preferential tax policies for enterprises recognized as high or new technology enterprises 
established in the State high or new technology industrial development zones 
 
Question 9  
 Could China please explain how "enterprises recognized as high or new technology enterprises" are defined under this programme?  How do they differ from "advanced technology  G/SCM/Q2/CHN/44 
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  enterprises" under the preferential tax policies fo r advanced technology enterprises with foreign 
investment programme? 
10. Preferential tax policies for high or new technology enterprises 
 
Question 10  
 
 Could China identify the criteria that a company must satisfy to be considered a high or new 
technology enterprise?  Could China specify which co mpanies or types of companies have received or 
would be eligible to receive support under this programme?  Could China confirm whether this 
programme is ongoing?    
19. Preferential tax treatment for public infrastructure projects supported by the State 
 
Question 11  
 Could China specify which companies or types of  companies have received or were eligible 
to receive support under this programme (i.e. domes tic firms, foreign firms, joint ventures, etc.)? 
Could China please provide a list of projects that  received support under this programme?  Could 
China confirm whether this programme is ongoing? 
 
20. Preferential tax treatment for projects fo r environmental protection, water and energy 
conservation 
 
Question 12 
 
 According to the description of this progra mme, support is provided to domestic industrial 
enterprises, regardless of the ownership, on research and development of new products, new 
technologies and new crafts which have increased 10 per cent (included) or more from the previous 
year.  Could China please indicate whether ther e are any further conditions for research and 
development to be eligible to receive support u nder this programme?  Could China specify which 
companies or types of companies have received or would be eligib le to receive support under this 
programme?   
45. Research and development f und for industrial technologies 
 
Question 13 
 
 Could China explain how "industrial technologi es" are defined under this programme?  Could 
China specify which companies or ty pes of companies have received or would be eligible to receive 
support under this programme?  Regarding the form of the subsidy, could China also explain what is 
meant by "Financial Appropriations"?  Could Chin a confirm whether this programme is ongoing?   
 
49. Fund for international market exploration by SMEs 
 Question 14 
 
 Could China identify the criteria that a compan y must satisfy to be considered a SME under 
this programme?  Could China specify whether SMEs from all industries can qualify for support 
under this programme?  Are there any export performance or import substitution requirements 
associated with this programme?  Could China confirm whether this programme is ongoing?   G/SCM/Q2/CHN/44 
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  50. Fund for optimizing the import and export  structure of mechanical and electrical 
products as well as high-tech products 
Question 15 
 
 According to the description of the programme , this fund is provided for enterprises or 
industrial associations engaged in projects of technology research and development, public 
information service and personnel training, etc.  Could China please provide additional information on 
the eligibility requirements for receiving support under this programme?  Are there any export 
performance or import substitution requirements as sociated with this programme?  Could China 
specify which companies or types of companies have  received or would be eligible to receive support 
under this programme? 
 
52. Fund for promotion of coordinated developm ent of foreign trade and economic relations 
among regions 
 
Question 16 
 
 According to the description of the programme , this fund is provided for projects aiming at 
exploration of international market, scientific i nnovation and information system construction in the 
central, western and north-eastern areas of China.  Could China please provide additional information 
on the eligibility requirements for receiving supp ort under this programme?  Are there any export 
performance or import substitution requirements asso ciated with these programmes?  Could China 
specify which companies or types of companies have  received or would be eligible to receive support 
under this programme? 
 
53. Preferential tax policies for key leading enterprises engaged in agricultural 
industrialization 
 
Question 17 
 
 Could China please explain the criteria used to de termine if an enterprise is considered a "key 
leading enterprises in agriculture industrialization" for the purpose administering this tax exemption?  
Could China also explain the rationale for specifically  targeting such enterprises with preferential tax 
policies?  
54. Preferential tax policies for enterprises en gaged in projects of preliminary processing of 
agricultural, forest, animal and fishery products  
 
Question 18  
 Could China indicate if this programme is a successor to the programme "Preferential tax 
policies for key leading enterprises engaged in agri cultural industrialization (Section 53)"?  Could 
China provide an estimate of the number companies or types of companies that have received support 
under this programme?  China notes that "enterprise income tax on the income derived by an 
enterprise from stipulated projects of preliminary processing related to farming, forestry, animal 
husbandry and fisheries may be exempted or reduced ." Could China provide examples of "stipulated 
projects" for each of the different activities?   Further, could China clarify what kind of pref erential tax treatment is given to enterprises 
engaged in projects of preliminary processing fo r fisheries products?  Could China provide an 
estimate of how many enterprises in the fish proc essing industry received this subsidy?  Could China  G/SCM/Q2/CHN/44 
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  confirm whether this programme ongoing?  Are ther e any other subsidies given to the fisheries 
industry in China? 
 
55. Fund for specialized economic cooperatives of farmers  
Question 19  
 Could China please explain what is meant by the term "qualified specialized cooperatives of 
farmers" and indicate the number of these cooperativ es?  Could China elaborate as to the types of 
activities that are eligible to receive support from this fund?    58. Fund for popularization of agricultural technologies   Question 20 
  Could China elaborate on the criteria for projects "that embody geographic advantage"?  Do 
these projects include both crops and livestock?  Wh at types of projects have received support under 
this fund and where are these pr ojects located in China?   
 
60. Subsidy for promoting superior strains and seeds  
 
Question 21 
 
 Could China specify which superior strains a nd seeds of which crops have been identified by 
local authorities for planting?   
 
63. Direct subsidy to farmers 
 Question 22 
 
 Could China elaborate on the eligibility criteria for this subsidy?  Is there a limit on the 
amount of subsidy per farmer?   
 
64. Fund for agricultural comprehensive development 
 Question 23 
  Could China please explain what is meant by the term "agricultural comprehensive 
development projects" and provide some examples of  the types of projects that have received support 
from this fund?    
81. Preferential tax policies for foreign-inv ested enterprises and foreign enterprises which 
have establishments or place in China a nd are engaged in production or business 
operations purchasing domestically produced equipment  
82. (Preferential tax policies for domestic en terprises purchasing domestically produced 
equipment for technology upgrading purpose 
 Question 24 
 
 Based on the description of these programmes, it appears that some enterprises are provided 
preferential tax treatment to purchase domestically  produced equipment.  Please explain how these 
programmes comply with China's obligations under Article 3 of the ASCM.  Could China also G/SCM/Q2/CHN/44 
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  provide information regarding the amount of ta x forgone under these programmes and the industries 
which have been the largest users of these programmes?  
89. Preferential tax treatment for raw copper materials 
 
Question 25  
 Could China indicate what if any conditions ex ist as to where the 'upgrading equipment' is 
manufactured?    90. Preferential tax treatment for casting and forging products 91. Preferential tax treatment to dies products 
 
Question 26 
 
 According to the notification, these programmes provided subsidies for the upgrading of 
technology.  Could China please indicate if the enterprises listed in the respective circulars for each programme are exclusively domestic-invested enterprises?  
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