G/SCM/Q2/CHN/93  
28 October  2020 
(20-7573) Page: 1/13 
Committee on Subsidies and Countervailing Measures  Original:  English  
 
  
SUBSIDIES  
REPLIES TO QUESTIONS1 POSED BY THE UNITED STATES REGARDING  
THE NEW AND FULL NOTIFICATION OF CHINA2 
The following communication, dated 2 7 October  2020, is being circulated at the request of the 
delegation of China . 
 
_______________  
 
 
The United States appreciates China 's 2019 subsidy notification, which was submitted in 
a timely manner and is clearly the most extensive and substantive notification China has 
submitted since becoming a WTO Member in 2001 . While clearly the most comprehensive 
subsidy notification China has submitted to date, the United States remains concerned 
that China 's notification over -reports inconsequential subsidy programs that do not 
satisfy the criteria for notification under Article 25 of the Agreement on Subsidies and 
Countervailing Measures (Subsidies Agreement), while under -reporting significant 
programs that do satisfy the criteria for notification . Nonethele ss, the United States views 
China 's latest notification as a major step forward towards meeting its transparency 
obligations under the Subsidies Agreement.  
Question 1  
As noted above, China 's subsidy notification appears to over -report inconsequential 
subsi dy programs that should not be notified . These include programs for poverty 
alleviation, disabled people, HIV drugs, general employment promotion, and sewage 
treatment . The programs for poverty alleviation are the most extensive and include the 
following : central government Programs  47 Fund for Poverty Alleviation and 73 
Preferential Tax Policy for Poverty Alleviation Migration and sub -central programs in : 
Shanxi Province ( Fund for poverty alleviation ); Inner  Mongolia Autonomous Region ( Fund 
for poverty all eviation ); Jilin Province ( Fiscal Fund for poverty alleviation ); Heilongjiang 
Province ( Fiscal fund for poverty alleviation ); Anhui Province ( Fiscal fund for poverty 
relief ); Henan Province ( Fund for employment and social society projects ); Hubei Province 
(Fiscal Fund for poverty alleviation ); Hunan Province ( Fund for poverty alleviation ); 
Hainan Province ( Fund for ethnic minorities development ); Chongqing Municipality ( Fund 
for poverty alleviation ; Subsidy for employment of workers living under th e poverty line ; 
Fund for poverty alleviation ); Tibet Autonomous Region ( Fund for poverty alleviation ); 
Shaanxi Province ( Fund for poverty alleviation ); Gansu Province ( Grant for poverty 
alleviation workshop ; Grant to support targeted poverty alleviation ); Qinghai Province 
(Fund for poverty alleviation ). 
Do these programs provide a benefit to an entity that produces a good ? How is the subsidy 
benefit provided under each program specific under Article 2 of the Subsidies Agreement?  
 
1 G/SCM/Q2/CHN/86.  
2 G/SCM/N/343/CHN.  G/SCM/Q2/CHN/93  
- 2 - 
  Reply : 
WTO authorizes its member states to notify based on their own understanding of the Subsidies 
Agreement . We have taken notice that the US, at the beginning of its subsid y notification, has 
explicitly stated that "the United States has included certain activities in this notification which 
arguably are not (or are not always) 'specific subsidies ' within the meaning of the Agreement ". 
Question 2  
a. Did any of the following programs, directly or indirectly, support the i nstallation of 
new capacity : central government Programs 60 ( Reward and Support Fund for 
Restructuring of Industrial Enterprises ) and 70 ( House Property Tax and Urban 
Land Use Tax Concession for Enterprises Involving the Reduction of Excessive 
Capacities a nd Structural Adjustment ) and sub -central programs in : Hebei 
Province ( Fund for workers ' resettlement of enterprises with overcapacity 
reduction and Reward for efforts to remove steel overcapacity ); Inner Mongolia 
Autonomous Region ( Reward for removing ove rcapacity in the steel and coal 
sectors ); Anhui Province ( Fund for removing overcapacity in the iron and steel and 
coal industries ); Shandong Province ( Reward for overcapacity reduction in steel 
industry  and Reward for the structural adjustment of industri al enterprises ); 
Henan Province ( Fund to resolve the overcapacity ); Guangxi Zhuang Autonomous 
Region ( Reward for the restructuring of industrial enterprises ); Chongqing 
Municipality ( Subsidy for workers' diversion and resettlement in the effort to cut 
Overcapacity ); and Shaanxi Province ( Fund for overcapacity reduction )? 
Reply : 
First, on the Central Government Program 60 (Reward and Support Fund for Restructuring of 
Industrial Enterprises) : It rewards local governments for resolving excess steel and coa l production 
capacity . The reward is given only when production capacity is reduced, and it is used for supporting 
dislocated employee . Therefore, there is no practice of supporting new capacity.  
Second, on the Central Government Program 70 (House Property  Tax and Urban Land Use Tax 
Concession for Enterprises Involving the Reduction of Excessive Capacities and Structural 
Adjustment) : In order to promote capacity reduction, structural adjustment, as well as industrial 
transformation and upgrading, the Minist ry of Finance, jointly with the State Taxation Administration, 
issued the Notice on Policies of House Property Tax and Urban Land Use Tax Concession for 
Enterprises Involving the Reduction of Excessive Capacities and Structural Adjustment (Cai Shui 
[2018] No. 107). For enterprises that have suspended production and business or closed in line with 
the policies on capacity reduction and structural adjustment, house property tax and urban land use 
tax will be exempted from the month following the production an d business suspension . Eligible 
enterprises (industries) can apply to enjoy this favorable treatment in accordance with relevant 
provisions . It is not designed for specific industries, and there is no practice of supporting new 
capacity.  
b. Why are the funds provided through Program 60 distributed to enterprises instead 
of directly to dislocated workers?  
Reply : 
The fund is a reward for the proper support of dislocated workers by enterprises involved in capacity 
reduction . Therefore, enterprises are the main bo dy of supporting dislocated workers . The central 
funds are only rewards and not enough to cover all the supporting costs . Therefore, the fund is used 
to support their employees by enterprises.  G/SCM/Q2/CHN/93  
- 3 - 
  c. For each of the programs identified above, once funds for havin g reduced capacity 
are received, can the enterprise spend that money as it wishes?  
Reply : 
The enterprise cannot use the fund for capacity reduction as it wishes, and it should be used for 
supporting their laid-off employees . Auditing and financial departments audit, supervise and inspect 
the use of such funds . Entities and individuals will be he ld accountable in accordance with relevant 
regulations for violating regulations, falsely reporting, falsely claiming, withholding, or embezzling 
such funds.  
d. For all of the funds identified above, are enterprises allowed to use funds or money 
saved through  tax breaks to invest in new higher technology steel capacity, even 
if such investment results in a net increase in steel production capacity?  
Reply : 
In order to promote capacity reduction, structural adjustment, as well as industrial transformation 
and up grading, the Ministry of Finance, jointly with the State Taxation Administration, issued the 
Notice on Policies of House Property Tax and Urban Land Use Tax Concession for Enterprises 
Involving the Reduction of Excessive Capacities and Structural Adjustmen t (Cai Shui [2018] No. 107) 
in September  2018. It clarified relevant policies on house property tax and urban land use tax . This 
policy applies to companies that have suspended production or closed, instead of those seeking to 
expand capacity . In accordanc e with Guo Fa [2013] No. 41 and Guo Fa [2016] No. 6, China strictly 
prohibits new steel production capacity in any name.  
Question 3  
a. Beside the coal production capacity reducing subsidy provided by Hebei province, 
there also appears to be a steel capacity reduction subsidy, which was not notified . 
The Notice on Issuing the Hebei Province Dissolving Steel Overcapacity Award 
Measure  (Ji Fa Gai Chan Ye [2014] No. 709) appears to provide subsidies at a rate 
of RMB 20 -30 per ton of production capacity t hat is retired (Section 1) . Funding 
distribution notices indicate that RMB 1.18  billion  was spent on the program in 
20173 and RMB 700  million  in 2018 .4 Why was this program not notified ? Have the 
relevant legal measures been published in the MOFCOM Gazette?  
b. Does this program apply only to production capacity retired in absolute terms, or 
can it support, directly or indirectly, the installation of new capacity?  
Reply : 
Reply a -b: China holds that the question list of subsidy notification shall be based  on the subsidy 
notification submitted by the member.  
Question 4  
a. For each of the following programs, please identify the specific products or sectors 
being supported ( e.g., the eight product categories identified under the current 
strategic emerging indust ry (SEI) policy ; the ten product categories identified 
under the Made In China 2025 (MIC 2025) policy ; a combination of SEI and 
MIC 2025  products ; or some other group of products or industries) : central 
government Program s 56 ( Fund for Development of Strategic Emerging 
Industries ), 59 ( Fund for Industrial Transformation and Upgrading ); 60 (Reward 
and Support Fund for Restructuring of Industrial Enterprises ); and 70 ( House 
Property Tax and Urban Land Use Tax Concession for Enterprises Inv olving the 
 
3 See attachment to Hebei Province Government Office Notice on Adjusting and Specifying the 
2016-2017 Dissolving Steel Overcapacity Special Purpose Funding (Ji Cai Jian [2017] No.  15). 
4 See attachment to the Hebei Province Government Notice on Early Distri bution of the 2018 Dissolving 
Steel Overcapacity Special Purpose Funding (Ji Cai Jian [2017] No.  376).  G/SCM/Q2/CHN/93  
- 4 - 
  Reduction of Excessive Capacities and Structural Adjustment ); and sub -central 
programs in : Hebei Province ( Special reward for restructuring of industrial 
enterprises  and Fund for development of emerging industries ); Shanghai 
Municipality ( Fund f or industry transformation and development ; Fund for the 
development through structural adjustment ; and Fund to accelerate the fostering 
of emerging industries ); Zhejiang Province ( Fund for promoting industrial 
restructuring ); Fujian province ( Grant for su pporting the development of strategic 
emerging industries ); Hunan Province ( Fund for industrial transformation and 
upgrading ); Guangdong Province ( Fund developing innovation platforms for 
strategic emerging industries and Fund for technical renovation ); Guangxi Zhuang 
Autonomous Region ( Fund for industry and information technology development 
and Fund for technological renovation of enterprises ); Guizhou Province ( Fund for 
transformation and upgrading the industry ); Shaanxi Province ( Reward for 
Technical tr ansformation  and Fund for the development of new materials ); Gansu 
Province ( Fund for developing strategic emerging industries ); Ningxia Hui 
Autonomous Region ( Fund for new industrialized development projects ); Xinjiang 
Uygur Autonomous Region ( Fund for strategic emerging industries ); Ningbo City 
of Zhejiang  Province ( Fund for technical transformation) ; and, Shenzhen City of 
Fujian Province ( Fund for strategic emerging industries ). 
Reply : 
The following reply is based on the verified information:  
First, th e Fund for Industrial Transformation and Upgrading, established in accordance with Cai Jian 
[2016] No. 844 issued by the Ministry of Finance, mainly concerns innovation -oriented development 
in such fields such as green manufacturing.  
Second, the Fund for D evelopment of Emerging Industries, a program implemented in Tangshan 
City, Hebei Province, is mainly used to support industrialization projects in such fields as advanced 
environmental protection.  
Third, the Fund for Strategic Emerging Industries, implemen ted in Xinjiang Uygur Autonomous 
Region, aims to encourage the development of knowledge - and technology -intensive industries, low 
resources consumption, great growth potential and sound overall benefits in different sectors.  
Fourth, industrial enterprises are the beneficiaries of the Fund for Technological Renovation of 
Industrial Enterprises, implemented in Guangxi Zhuang Autonomous Region.  
Fifth, the Fund for New Industrialized Development Projects, implemented in Ningxia Hui 
Autonomous Region, is specifi cally used to support industrial upgrading, structural adjustment, 
energy conservation, consumption reduction, industrial park construction, and operation control in 
the industrial sector of the entire autonomous region . It does not target certain types of  products.  
Sixth, the Fund for Industrial Transformation and Upgrading, implemented in Hunan Province, is 
specially used for expenditure of designated provincial enterprise technology centers and 
technological transformation, energy conservation, research and development of industrial 
technologies, green transformation and upgrading, clean production rewards, green industrial 
manufacturing pilot and demonstration rewards, innovation rewards, etc.  
Seventh, the Fund for Technical Transformation, implemented i n Ningbo City, Zhejiang Province, 
concerns clean energy industry, energy conservation, environmental protection, etc.  
b. Do any of the sub -central "transformation and upgrading " funds identified above 
also support Made in China 2025 (as Shanghai 's transformation and upgrading 
program and the central government 's transformation and upgrading programs 
do)? G/SCM/Q2/CHN/93  
- 5 - 
  Reply : 
The local government independently determines the scope and methods o f supporting the local 
transformation and upgrading plan based on the local economic development situation, industrial 
structure, and industrial foundation.  
c. Do any of the programs identified above, or the programs funded by the notified 
special funding out lays, provide a benefit based on a catalogue of specific 
products ? If yes, which programs ? If yes, does that catalogue include imported 
products?  
Reply : 
Industrial transformation and upgrading funds mainly support public service platforms, green 
developmen t, energy conservation, environmental protection, and innovation capacity building to 
promote the development of areas with market failure . In implementation, China strictly abides by 
WTO rules of non -discrimination and transparency, strictly follows fair competition, and treats 
domestic and foreign companies equally . There is no such practice of providing financial support to 
products in a specific catalogue.  
d. Do any of the programs identified above in any way encourage the development of 
domestic supply chains or provide subsidies contingent upon the purchase of 
domestically -made equipment or components?  
Reply : 
Industrial transformation and upgrading funds mainly support public service platforms, green 
development, energy conservation, environmenta l protection, and innovation capacity building . 
China treats domestic and foreign companies equally.  
Question 5  
Based on the United States ' review of the MOFCOM Gazette, it appears that none of the 
legal measures referenced in the sub -central portion of China 's notification have been 
published in the MOFCOM Gazette . When will these measures be published as required by 
China 's Protocol of Acce ssion?  
Reply : 
Verification underway with relevant departments.  
Question 6  
The U.S. appreciates China's more fulsome fishery subsidy notification, covering the 
2017 -2018 period . Regarding Program 75, have the local governments that implement 
subsidy program s pursuant to the legal measure identified for this program notified all of 
the relevant subsidy programs in the relevant local government sections ? If so, which 
local government programs are related to this central government program ( i.e., 
Program  75)?  
Reply: 
This program is developed by the central government.  
Question 7  
How does the fishery sector benefit from these funds ? What other sectors benefit from 
these funds ? The relevant legal measure China notified seems to indicate that a total of 
RMB 17.556  billion  in funds supported programs described in this measure . How was the 
amount attributed to the fishery sector (RMB 44  million  in 2017 and RMB 60  million  in G/SCM/Q2/CHN/93  
- 6 - 
  2018) calculated ? How much funding was made available by local governments, pursuant 
to this measure?  
Reply : 
Fishery subsidy is used for fishery resources enhancement and release, ship reduction and business 
switching by fishermen, artificial fish shelter construction, elimination of operations causing great 
damages to marine resources, renov ation of used wooden fishing boats, marine aqua farm 
construction, deep -water aquaculture cage promotion, and public infrastructure construction such 
as navigation marks of fishing ports and harbors . The Subsidy for Reform in Tax and Fee on Refined 
Oil for  Fisheries comes from the central government 's budget . It is allocated from the central 
government to local governments by general transfer payments, and managed by local governments 
to support the above purposes.  
Question 8  
a. The measure notified under Prog ram 76 indicates that the funding is in the form of 
"investment ". Does that indicate that the administration of the subsidy program is 
governed by the Administrative Measures for Investment Subsidies and Subsidized 
Interest within the Central Budget (PRC N DRC Order No. 45, issued Dec. 5, 2016)?  
Reply : 
In accordance with the National Animal and Plant Protection Capability Enhancement Program 
Construction Plan (2017 -2025) (Fa Gai Nong Jing [2017] No.913) issued by the National 
Development and Reform Commissio n, and the Ministry of Agriculture and Rural Affairs, the central 
government provides certain investment subsidies to eligible public infrastructure projects for 
epidemic prevention of aquatic animals.  
b. Are "investment subsidies " and "subsidized interest " subsidies, as described in the 
Administrative Measures for Investment Subsidies and Subsidized Interest within 
the Central Budget (PRC NDRC Order No. 45, issued Dec. 5, 2016) related to 
"special funds " notified elsewhere in this notification (G/SCM/N/343/CHN) ? For 
instance, if a notified special fund administrative measure indicates that the 
funding can be used for "investment " or "subsidized interest, " does that mean that 
such programs should operate p ursuant to the Administrative Measures for 
Investment Subsidies and Subsidized Interest within the Central Budget (PRC 
NDRC Order No. 45, issued Dec. 5, 2016)?  
Reply : 
Verification underway with relevant authorities.  
c. Are "investment subsidies " and "interest  subsidies " related to "basic construction " 
(基建) expenditures in the national and local budgets?  
Reply : 
In accordance with th e Order No. 45, this measure is only applicable to the central budgetary 
investment arranged by the National Development and Reform Commission and other relevant 
ministries.  
Question 9  
Regarding Program 77, under "2. Policy objective and/or purpose of the subsidy ", China 
indicates that one goal is "to promote the sustainable and healthy development of distant 
water fishing and improve the stability, safety, pollution prevention and habitability of 
distant water fishing vessels ". How much of the funds described in program 77 are used 
to: (1) refurbish domestic marine vessels, (2) retire domestic marine vessels, G/SCM/Q2/CHN/93  
- 7 - 
  (3) refurbish distant water vessels, and (4) reduce the operating costs or support 
international fishery resource exploitation and usage of distant water vessels?  
Reply : 
From 2017 to 2018, the central government allocated RMB 1.5  billion each year for ship reduc tion 
and business switching. Relevant data has been provided in the Notification of Subsidy Provided at 
the Central Level of the Chinese Government (2017 -2018). We have no updated information to 
provide.  
Question 10  
Further research suggests that there is more detail on the operation of the subsidies 
administered under Program 77 in the Ministry of Finance Notice on Supplementing the 
Vessel Scraping and Decommissioning and Vessel -type Standardization Subsidy Funding 
Administration Measure  (Cai Jian [2016] No. 418) . In particular, this measure appears to 
establish the International Fishery Resource Exploitation and Usage subsidy for distant 
water fisheries . When will China intend to notify this measure and publish it in the 
MOFCOM Gazette?  
Reply : 
The Internat ional Fishery Resource Exploitation and Usage Subsidy has been included in the Subsidy 
Notification of Program 77, specifically in the Subsidy Subjects: 4) For conservation and utilization 
of international fishery resources, the applicant shall be checked to determine whether the conditions 
are met and there is no violations of laws and regulations occurred in resource exploitation.  
Question 11  
Further research suggests that there is more detail on the operation of the subsidies 
administered under Program77 in the General Office of the Ministry of Agriculture Notice 
on Issuing the Distant Water Fishery Fuel Price Policy Implementing Adjustment Pl an 
(Nong Ban Yu [2016] No. 43). In particular, this measure appears to provide detailed 
information on the operation of the International Fishery Resource Exploitation and Usage 
subsidy for distant water fisheries . Does China intend to notify this measure and publish 
it in the MOFCOM Gazette ? Where can this measure be obtained?  
Reply : 
The General Office of the Ministry of Agriculture Notice on Issuing the Distant Water Fishery Fuel 
Price Policy Implementing Adjustment Plan (Nong Ban Yu [2016] No.  43) will b e replaced by a new 
measure.  
Question 12  
Regarding Program 79, "Subsidy for reform in tax and fee on refined oil (for fisheries) ", 
China does not provide a precise value for the fiscal expenditures that fall under 
Program  79. However, the United States has  identified a budget expenditure titled 
"Subsidy for reform in tax and fee on refined oil for fisheries " in the National General 
Public Budget Expenditure budget (RMB 18.5  billion  in 20175 and RMB 18.1  billion  in 
20186). 
a. Is the U.S. understanding correct  that the budget expenditures identified as 
"Subsidy for reform in tax and fee on refined oil for fisheries " account for the 
subsidies issued pursuant to Program 79?  
 
5 2017 National General Public Budget Expenditure.  
6 2018 National General Public Budget Expenditure.  G/SCM/Q2/CHN/93  
- 8 - 
  Reply : 
The Subsidy for Reform in Tax and Fee on Refined Oil for Fisheries is allocated from the central 
government's budget. It is allocated from the central government to local governments by general 
transfer payments, and managed by the latter. It is used to support ship reduction and business 
switching by fishermen, artificial f ish shelter construction, elimination of operations causing great 
damages to marine resources, renovation of used wooden fishing boats, deep -water aquaculture 
cage promotion, and public infrastructure construction such as navigation marks of fishing ports and 
harbors. These funds are in nature local government subsidies, and may overlap with subsidy 
programs notified by local governments.  
b. Are there any other budget line items where other fishery related subsidies might 
be accounted for?  
Reply : 
All fishery -related subsidies have been notified.  
c. Further research suggests that there is more detail on the operation of the 
subsidies administered under Program 79 in the General Office of the Ministry of 
Agriculture Notice on Issuing the Implementation Plan  related to the Domestic 
Fishery Fishing and Aquaculture Industry Fuel Price Subsidy Policy Adjustment  
(Nong Ban Yu [2015] No. 65). Does China intend to notify this measure and publish 
it in the MOFCOM Gazette ? Where can this measure be obtained?  
Reply : 
The General Office of the Ministry of Agriculture Notice on Issuing the Implementation Plan related 
to the Domestic Fishery Fishing and Aquaculture Industry Fuel Price Subsidy Policy Adjustment 
(Nong Ban Yu [2015] No.  65) has been annulled and will be replac ed by a new document.  
Question 13  
According to the Domestic Refined Fuel Price Reform Upward Adjustment According to 
the System notice issued on December  2, 2019 (and earlier iterations of this program), 
purchasers of diesel fuel in the fishery sector enjo y a preferential price compared to other 
retail purchasers, based on a state determined sales price .7 Does China intend to notify 
this program and publish it in the MOFCOM Gazette?  
Reply : 
China has not implemented the measure mentioned by the US, and purc hasers of diesel fuel in the 
fishery sector do not enjoy a preferential price compared to other retail purchasers.  
Question 14  
How many other local governments have specific budgetary outlays to support distant 
water fishing vessels, like Shandong 's program 15.7 and the Qingdao City, Shandong 
Province program 33.1 ? Do programs 15.7 and 33.1 provide subsidies independently in 
addition to the central International Fishery Resource Exploitation and Usage subsidy for 
distant water fishing vessels?  
Reply : 
From 2017 to 2018, Qingdao and Rizhao of Shandong Province implemented distant water fishery 
subsidy policies at the municipal level.  
 
7 Domestic Refined Fuel Price Reform Upward Adjustment According to the System (December  2, 2019), 
Footnote 4.  G/SCM/Q2/CHN/93  
- 9 - 
  Question 15  
For each of the sub -central fishing programs identified below, how much of the funding is 
used to : (1) decreas e the operation costs of domestic marine vessels, (2) decrease the 
operation costs of distant water vessels, (3) reward distant water fishing vessels for 
bringing catch back to China for processing, (4) provide insurance and other income 
supplement to fish ermen during a moratorium on fishing, or (5) support vessel 
refurbishing?  
Sub-central fishery programs : Zhejiang Province (Grant for policy -based fishery mutual 
insurance ; and Fund for marine and fishery comprehensive management and industry 
development) ; Fujian  Province (Fund for marine and fishery structural adjustment) ; 
Fuzhou City, Fujian Province (Fund for fishing ports) ; Shandong Province (Fund for distant 
water fishery development) ; Guangdong Province (Fund for developing the deep -water 
cage aquacult ure; Production and living allowance for fishermen during fishing close 
seasons ; Fund for aquaculture ; and Living allowances for fisherman during fishing close 
seasons) ; Dalian City of Liaoning Province (Fund for marine and fishery development) ; 
Qingdao Ci ty of Shangdong Province (Fund for distant water fishery) ; Ningbo  City of 
Zhejiang Province  (Fund for policy -based fishery insurance) ; and, Xiamen City of Fujian 
Province (Fund for marine and fishery development)  
Reply : 
The Fund for Marine and Fishery Structural Adjustment (Fujian Province), the Fund for Policy -based 
Fishery Insurance (Ningbo City), and relevant fishery subsidy funds of Guangdong Province are not 
used in the above five aspects. Xiamen City has not granted subsidies in accordance  with Xiamen 
Marine and Fishery Development Fund Subsidy Program.  
Question 16  
The United States had previously asked about the relationship between administrative 
measures and subsidy program operation information . For instance, regarding 
Program  1.80, Industrial Transformation and Upgrading Fund  of China 's 2017 
notification8, the United States asked about subsidy programs implemented through other 
measures, besides the administrative measure which describe the operation of separate 
subsidy programs .9 In particular, the United States asked why "subsidy programs that 
draw funding from the notified Program 1.80 were not notified ." China's response was 
that the documents the United States raised guide "the application for support from the 
Industrial Transformation and Upgrading Fund. "10 Here we list again the measures in 
reference:  
• MIIT Notice on Issuing the 2015 Industrial Transformation and Upgrading Key 
Project Guide (Gong Xin Bu Gui [2015] No. 252) . 
• MIIT Notice on Issuing the 2016 Industrial Transformation and Upgrading 
(Made in China 2025) Key Project Guide (Gong Xin Bu Gui Han [2016] No. 433) . 
• Notice on Organizing the Development of Green Manufacturing System 
Integration Work (Cai Jian [2016] No. 797) . 
If these measures guide "the application for support from the Industrial Transformation 
and Upgrading Fund, " please explain why these measures were not notified . Is it China 's 
position that all of the program operation information (including how the subsidy is 
provided, the form of the subsidy, and how the amount of the subsidy is determined for 
each subsidy recipient) for each sub sidy program supported by the Industrial 
Transformation and Upgrading Fund can be found in the administrative measure, without 
reference to any subsidiary measures?  
 
8 G/SCM/N/315/CHN.  
9 G/SCM/Q2/CHN/75, Question 53.  
10 China's Responses to G/SCM/Q2/CHN/75, Question 53.  G/SCM/Q2/CHN/93  
- 10 - 
  Reply : 
For the notified Industrial Transformation and Upgrading Fund, the application is ev aluated based 
on the guidelines that have been specified in Cai Jian [2016] No.  844 issued by the Ministry of 
Finance. The Notice of the Ministry of Industry and Information Technology on Issuing Guidelines 
for Key Industrial Transformation and Upgrading P rograms in 2015 (Gong Xin Bu Gui [2015] 
No. 252), and the Notice of the Ministry of Industry and Information Technology on Issuing 
Guidelines for Key Industrial Transformation and Upgrading Programs (Made in China 2025) in 2016 
(Gong Xin Bu Gui [2016] No.  433) are only documents for regulating the application of industrial 
transformation and upgrading funds.  
Question 17  
Like the central government, it appears that certain large and complicated subsidy 
funding allocations do not contain all program operation  information in the administrative 
measures . For instance, Shanghai notified the "Fund for Industry Transformation and 
Development "11, and indicated that RMB 1.05  billion  was spent in 2017, and RMB 
1.55 billion  was spent in 2018 . We also note that China 's 2018 subsidy notification 
references the Shanghai Fund for Industry Transformation and Development.12 
The United States could not find any specific subsidy program operation information 
(including how the subsidy is provided, the form of the subsid y, and how the amount of 
the subsidy is determined for each subsidy recipient) in the notified administrative 
measure .13 Instead, the United States found, similar to the central "Industrial 
Transformation and Upgrading Fund ", that there were other subordin ate measures that 
actually provide information on how the various subsidy programs operate under and 
draw funding from the Shanghai Fund for Industry Transformation and Development.  
The United States has identified at least 13 separate subsidy programs tha t appear to be 
funded by the Shanghai Fund for Industry Transformation and Development, and these 
13 programs are described through five separate "detailed rules ", which appear to be 
measures issued pursuant to the notified Administrative Measures of Shang hai 
Municipality on the Management of Funds for Industrial Transformation and Development 
(Hu Jing Xin Gui [2015] No. 101).  
• The Detailed Rules for the Shanghai Municipality Industrial Strong Base 
Special Purpose Support Implementation  (Hu Jing Xin Fa [2017 ] No. 232) 
appears to contain subsidy program operation information for at least one 
subsidy program.  
• The Detailed Rules for the Shanghai Municipality Industrial Technology 
Innovation Special Purpose Support Implementation  (Hu Jing Xin Ji [2015] 
No. 769) a ppears to contain subsidy program operation information for at least 
three subsidy programs.  
• The Detailed Rules for the Shanghai Municipality Technology Transformation 
Special Purpose Support Implementation  (Hu Jing Xin Gui Fan [2018] No. 1) 
appears to con tain subsidy program operation information for at least one 
subsidy program.  
• The Detailed Rules for the Shanghai Municipality Promotion of Product Brand 
Economic Development Special Purpose Support Implementation (Hu Jing Xin 
Du [2015] No. 543) appears to contain subsidy program operation information 
for at least four subsidy programs.  
• The Detailed Rules for the Shanghai Municipality First Piece of High End Smart 
Equipment Breakthrough and Demonstration Use Special Purpose Support 
Implementation (Hu Jing Xin Zhuang [2015] No. 737) appears to contain 
subsidy program operation information for at least 4 subsidy programs.  
 
11 G/SCM/N/343/CHN, Subsidies at the Sub -Central Government Level, 9.2.  
12 G/SCM/N/315/CHN, which covers China's subsidies for FY 2015 -2016, Program 2.83.  
13 Administrative Measures of Shanghai Municipality on the Management of Funds for Industrial 
Transformation and Development (Hu Jing Xin Gui [201 5] No.  101).  G/SCM/Q2/CHN/93  
- 11 - 
  If our understanding that the program operation information (including how the subsidy 
is provided, the form of the subsidy, and h ow the amount of the subsidy is determined for 
each subsidy recipient) is detailed in the above list of detailed rules, please explain why 
these measures, and the subsidy program operation information described therein, were 
not notified along with the Administrative Measures of Shanghai Municipality on the 
Management of Funds for Industrial Transformation and Development (Hu Jing Xin Gui 
[2015] No. 101) . If China considers that these other subordinate measures are not 
necessary to understand the operation of all 13 subsidy programs identified, can China 
please indicate in which provisions of the Administrative Measures of Shanghai 
Municipality on the Management of Funds for Industrial Transformation and Development 
(Hu Jing Xin Gui [2015] No. 101) specific subsidy operation information for each of the 
13 programs (including how the subsidy is provided, the form of the subsidy, and how the 
amount of the subsidy is determined for each subsidy recipient) can be found?  
Reply : 
Shanghai's Funds for Industrial Tran sformation and Development is a comprehensive fund for 
industries. China notifies in accordance with requirements of the SCM Agreement and our own 
understanding of the Agreement.  
Question 18  
Do any other special funds notified by China have detailed rules or guides, pursuant to the 
notified administrative measures, that provide the actual subsidy operation information 
(including how the subsidy is provided, the form of the subsidy, and how the amount of 
the subsidy is determined for each subsidy recipient) ? If so, which administrative 
measures notified at the central and local level would need "detailed rules " or "guides " 
to be identified in order to understand the program operation?  
Reply : 
China notifies in accordance with requirements of the SCM Agreement and our understanding of the 
Agreement . 
Question 19  
The Shanghai Fund for Industrial Transformation and Development has been notified in 
both of China 's most recent notifications .14 Regarding China 's notification of 2015 -2016 
programs and specifically referring to the Shanghai Fund for Industrial Transformation 
and Upgrading, the United  States asked, "Is this program related to, or implemented 
pursuant to Made in China 2025? "15 to which China responded, "Reply : This program is 
not related t o Made in China 2025. "16 However, at least two of the detailed rules the United 
States identified above17 explicitly state that the subsidies are meant to implement the 
central or local level Made in China 2025 policies . Why does China consider these 
progr ams to be not related to Made in China 2025 ? Are there other instances where an 
administrative measure might not cite to the underlying industrial policy, but where 
detailed rules or guides do cite to the underlying industrial policy, at either the central  or 
local level?  
Reply : 
The indicators in Made in China 2025 are predictive and guiding in nature rather than compulsory, 
and are mainly used for guidance.  
 
14 G/SCM/N/315/CHN, Program 2.83; and G/SCM/N/343/CHN, Subsidies at the Sub -Central Government 
Level, 9.2.  
15 G/SCM/Q2/CHN/75, Question 65.  
16 China's Responses to G/SCM/Q2/CHN/75, Question 65 (emphasis added).  
17 Detailed Rules for the Shanghai M unicipality Industrial Strong Base Special Purpose Support 
Implementation  (Hu Jing Xin Fa [2017] No.  232) and Detailed Rules for the Shanghai Municipality Technology 
Transformation Special Purpose Support Implementation  (Hu Jing Xin Gui Fan [2018] No.  1). G/SCM/Q2/CHN/93  
- 12 - 
  Question 20  
There  also appear to be a number of other special funds that Shanghai did not notify . Can 
you explain why China did not notify the following Shanghai funds?  
• The Science and Technology Innovation Program Special Fund18, which 
provided RMB  3,043,150,000 in subsidies in 201819, appears to maintain some 
programs that are specific to the "high te chnology industry, biopharmaceutical 
industry and other sectors ".20 Since these funds do appear to support 
enterprises in specific sectors, can China explain why this fund was not 
notified?  
• The Patent Funding21, which provided RMB 169,429,000 in subsidy fu nding in 
201822, "focuses support on invention patent and strategic emerging industry 
patent work. "23 Since these funds appear to focus on SEI sectors, can China 
explain why this fund was not notified ? How much of the funding actually went 
to enterprises a pplying for patents in the SEIs compared to other subsidy 
recipients?  
Reply : 
China holds that the question list of subsidy notification shall be based on the subsidy notification 
submitted by the member.  
Question 21  
Shanghai also has a Zhangjiang National Indigenous Innovation Demonstration Zone 
Development Special Fund24 which provided RMB 431,540,000 in subsidies in 2018 .25 The 
administrative measure states that support should target "key sectors ".26 Are the "key 
sectors " referenced here indicating the eight key product categories now targeted by 
strategic and emerging industry (SEI) policy or the ten key sectors targeted by the Made 
in China 2025 policy ? If "key sectors " does not include the eight key product categories 
targeted by strategic and emerging industry (SEI) policy or the ten key sectors targeted 
by the Made in China 2025 policy, which sectors does "key sectors " refer to in this 
measure ? Since at least some of the subsidy programs provided through this National 
Indigenous Innovation Demonstration Zone support manufacturers in research and 
development to commercialize new products27, can China provide the program operation 
information (including how the subsidy is provided, the form of the subsidy, and how the 
amount of the subsidy is determined for each subsidy recipient) for the programs that 
enterprises in the "key sectors " can apply for ? How many other National Indigenous 
Innovation Demonstration Zones are there ? Has China notified all of the funding outlays 
 
18 Administrative Measures for Shanghai's Science and Technology Innovation Program Special Fund  
(Hu Ke He [2017] No.  11). 
19 2018 Distribution Notice for Shanghai's Science and Technology Innovation Program Special Fund.  
20 Administrative Measures for Shangh ai's Science and Technology Innovation Program Special Fund  
(Hu Ke He [2017] No.  11), Art. 3.  
21 Administrative Measures for Shanghai Patent Funding (Hu Zhi Ju [2017] No.  16). 
22 2018 Distribution Notice for Shanghai Patent Funding.  
23 Administrative Measures  for Shanghai Patent Funding (Hu Zhi Ju [2017] No.  16), Article 4.  
24 Shanghai Zhangjiang Independent Innovation Demonstration Zone Development Special Fund 
Administrative Measures  (Hu Zhangjiang Gao Xin Guan Wei [2016] No.  85). 
25 2018 Distribution Notice for Shanghai Zhangjiang Independent Innovation Demonstration Zone 
Development Special Fund.  
26 Shanghai Zhangjiang Independent Innovation Demonstration Zone Development Special Fund 
Administrative Measures  (Hu Zhangjiang Gao Xin Guan Wei  [2016] No.  85), Article 2(1).  
27 Shanghai Zhangjiang Independent Innovation Demonstration Zone Development Special Fund 
Administrative Measures  (Hu Zhangjiang Gao Xin Guan Wei [2016] No.  85), Article 5(3).  G/SCM/Q2/CHN/93  
- 13 - 
  that support enterprises through other National Indigenous Innovation Demonstration 
Zones, particularly the funding that supports enterprises in the "key sectors " targeted?  
Reply : 
China holds that the question list of subsidy notification shall be based on t he subsidy notification 
submitted by the member.  
__________