G/SCM/Q2/CHN/54  
 
26 January 2016  
(16-0524)  Page: 1/5  
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 25 January 2016, is being circulated at the request of the 
Delegation of the Canada.  
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  Regional Subsidies  
 
Question 1  
 
Article 25 of the ASCM requires members notify an y subsidy granted or maintained within their 
territories. Could China explain why only central government level programmes have been notified? Could China please indicate when sub-central government level programmes will be 
notified? 
  Amount of support 
 
Question 2  
 
Article 25.3 of the ASCM requires that subsidy notifications include information on subsidy per unit 
or, in cases where this is not possible, the total amount or the annual amount budgeted for that subsidy. For many of the notified programmes, there are no figures on the amount of support 
provided. Could China please indicate when information on subsidy per unit or on the total amount 
or the annual amount budgeted will be provided?  
  
Preferential tax policies for high or  new technology enterprises (p. 11) 
 Question 3  
 
Could China identify the eligibility criteria for projects to be approved for this program? For example, what type of enterprises within what industry can apply for a financial contribution? 
Could China provide recent examples of the types of  projects that have received support from this 
fund?   
Preferential tax policies for enterprises with  foreign investment established in special 
economic zones (excluding Sh anghai Pudong Area) (p. 12) 
 
Question 4  
 Could China clarify which types of companies have been the major beneficiaries of this tax policy? 
 
                                               
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  Question 5 
 Paragraph one, in the section on how the subsidy is provided and to whom, states that foreign enterprises which have establishments or places in these Special Economic Zones are eligible for 
the special tax rates. Can China confirm that foreig n enterprises are also eligible for the benefits 
outlined in paragraphs 2, 3 and 4?  
 
Preferential tax policies for enterprises with foreign investment established in the three 
gorges of Yangtze River economic zone (p. 15)  
Question 6 
 Could China provide more information and examples of what is meant by "projects encouraged by 
the State"?  
  
Preferential tax policies in the Western Regions (p. 17) 
 Question 7  
Could China provide a list of the major industries that have been beneficiaries of this particular 
policy? Which enterprises "established in the wester n regions and/or engaged in the encouraged or 
advantageous industries" have been the biggest beneficiaries of the VAT exemption? Could China 
provide information regarding the amount of tax forgone under this Programme? 
  
Preferential tax treatment for building mate rials products produced with integrated 
utilization of resources (p. 21)  Question 8 
 
Could China clarify whether steel products are included as manufactured products listed in the Catalogue? If so, could you provide a detailed list of which steel products?  
 
 Preferential VAT on hydr opower products (p. 27) 
 
Question 9  Could China clarify which companies have been the major beneficiaries of the preferential VAT? Of 
the power stations that have benefited the most fr om this preferential tax, could China provide a 
list of which industries/companies have been their major customers?   
 
Tax policies for the research and development of enterprises (p. 37) 
 
Question 10  
 Could China explain how "new technologies, new products and new techniques" are defined under this programme? Which "new technology" companies have been the major beneficiaries of this tax 
policy? 
  
Research and development fund for industrial technologies (p. 38) 
 Question 11 
 
What are the criteria for "approved research and development projects"? Which industrial 
technologies qualify for this particular fund? Could China provide a list of the companies/industries that have been approved for funding? G/SCM/Q2/CHN/54 
 
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  Development fund for SMEs (p. 39) 
 Question 12  
Could China clarify what the defini tion for SMEs is in order to qualify for this development fund? 
Furthermore, do state enterprises qualify for this development fund? Could China identify which industries are targeted for support in their investments abroad? 
 
 Special fund for the development of international economy and trade (p. 42)  
Question 13 
 Could China clarify whether this fund is the succe ssor to the "Fund for promotion of coordinated 
development of foreign trade and economic rela tions among regions" (Section 38)? Could China 
clarify what the eligibility criteria (i.e. sizes) are? Similarly, are enterprises or institutions from all industries eligible to qualify? Could China clarify whether there is any export performance or 
import substitution requirements associated with this fund? 
  Fund for Promoting the trade of agricultural, light industry and text ile products (p. 44) 
 
Question 14  
 
Could China specify how "agricultural, light indust ry and textile products" are defined under this 
programme? Regarding the form of the subsidy, could China also explain what is meant by 
"Financial Appropriations"? Could China confirm whether this programme is ongoing? 
 
 Preferential tax policies for enterprises engage d in projects of preliminary processing of 
agricultural, forest, animal and fishery products (p. 45) 
 
Question 15  
Could China indicate if this programme is a successor to the programme "Preferential tax policies 
for enterprises engaged in projects of preliminary processing of agricultural, forest, and animal and fishery products (Section 42)"? Could China provide an estimate of the number of 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 please provide th e definition of "stipulated projects" if it has 
changed from its previous notification? Could China identify the criteria by which stipulated 
projects by enterprises may qualify for income tax exemptions or reductions? Could China identify the criteria for "preliminary processing" (versus secondary processing) in the areas of farming, 
animal husbandry and fisheries? Could China comment on the frequency by which enterprises that 
qualify for preferential tax policies are exempted from paying enterprise income tax? Could China 
identify the average reduction in enterprise income tax for qualifying enterprises? Could China 
confirm whether this programme is ongoing? 
  Fund for specialized economic co operatives of farmers (p. 45) 
 
Question 16  
 
Could China explain what the definiti on is for "qualified specialized cooperatives of farmers", and if 
there have been any changes from its previous notification for this type of program? It is mentioned that local governments review applications for fund allocation. Could China clarify what 
the criteria for such review processes are, specifically what kinds of activities qualify or disqualify 
eligibility?   G/SCM/Q2/CHN/54 
 
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  Fund for subsidizing the training of  rural migrant labour force (p. 46) 
 Question 17  
To whom and how is the subsidy is provided? Who/which organizations would be qualified for 
providing training services to farmers? Would foreign companies providing consulting services with establishments in China be qualified? Would foreign institutions without establishment in China be 
eligible? Could China define what types of training services to farmers qualify for this subsidy? For 
example, one of the policy objectives is to facilita te the migration of the rural labour force, would 
non-farming related training be eligible for this subsidy?  
 
Subsidy for promoting superior strains and seeds (p. 48)  
Question 18  
 Could China clarify which crops or livestock were targeted under the program? Could China provide 
evidence of the effectiveness of this subsidy for promoting superior strains and seeds to increase 
both quality and quantity of their agricultural output? Regarding the form of the subsidy could 
China also explain what is meant by "Financial Appropriations"?   
 
Subsidy for purchasing agricultural machinery and tools (p. 49)  
Question 19 
 Based on the description that the MOA and MOF join tly review applications for funds submitted by 
local governments; could China clarify whether in dividual farmers and service providers can apply 
directly for this subsidy? Could China clarify what the criteria is for determining what are "agricultural machinery and tools" for eligibility for this subsidy? Could China identify the average rate of subsidy for agricultural machinery an d tools for this programme? Is there a maximum 
subsidy cap to each individual farmer or serv ice provider? Is the subsidy for made-in-China 
agricultural machinery and tools only? Would foreign agricultural machinery and tools be eligible for the subsidy as well, and how could they become eligible to apply for the subsidy?  
 
 Comprehensive subsidies for agricultural inputs (p. 49) 
 
Question 20  Could China confirm whether this programme is ongoing and clarify which agricultural inputs are 
eligible for this subsidy? Could China also explain the specific mechanisms by which compensation 
to farmers is calculated in the circumstances of pr ice hikes of agricultural inputs? For example, are 
payments calculated based on the percentage increa se in an input's price, or are payments made 
when prices exceed a predetermined target price? Could China identify the average rate of subsidy 
for farmer losses for this programme? Could China please provide a breakdown of the expenditures paid to support production of  specific commodities by year (e.g., 2014 
canola/rapeseed, soybeans, etc.)?  
  Direct subsidy to farmers (p. 50) 
 
Question 21  
Could China confirm whether this programme is ongoing? Could China clarify if the edibility criteria 
for direct payment eligibility have changed since its last notification for this type of program? If yes, please describe the criteria. Could China clarify whether there is still no limit on the 
maximum amount of direct subsidy paid per farm er? Could China identify examples of whom the 
direct payment is provided to? Would it be to the owners of the taxable area of farmland? How are direct payments determined in circumstances wh ere land tenure is uncertain or undefined? Could 
China provide further information on the effectiveness of this subsidy in terms of growth in the 
numbers of farmers, number of farms, farm income or production data? G/SCM/Q2/CHN/54 
 
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  Fund for agricultural comprehensive development (p. 51) 
 Question 22  
 
Could China identify the eligibility criteria for projects to be approved for this fund? For example, 
can projects by individuals or private enterprise s qualify for this fund? Could China provide new 
examples of the types of projects that have received support from this fund? 
 
 Fund for disaster prevention and relie f in agricultural production (p. 54) 
 
Question 23 
 Could China clarify the eligibility criteria for "preventing and controlling agricultural disasters" that 
agricultural producers must ensure in order to qualify for this fund? Could China identify the 
average rate of subsidy for farmer damages and losses caused by agricultural disasters for this programme? 
 
 Subsidy fund for agricultural resources  and ecological protection (p. 55) 
 
Question 24  
 Regarding subsidies on farmers' income loss during a period of farmland pollution, could China 
identify the average rate of subsidy for farmer in come losses for this fund? What are the eligibility 
criteria for "farmland pollution" for farmers to qualify for this fund?  
 
Subsidy fund granted by Central Finance to close small enterprises (p. 78)  Question 25  
 
Canada notes that this program is targeted at small enterprises, but wonders whether China has similar programs for larger enterprises that may be operating in situations of overcapacity and 
excess production. 
 
 
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