G/SCM/Q2/CHN/125  
 
23 January 2024  
(24-0511) Page: 1/4 
Committee on Subsidies and Countervailing Measures  Original: English  
 
 
SUBSIDIES  
QUESTIONS POSED BY THE UNITED KINGDOM REGARDING  
THE NEW AND FULL NOTIFICATION OF CHINA1 
The following communication, dated and received on 22 January 2024, is being circulated at the 
request of the delegation of the United Kingdom.  
 
 
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The United Kingdom thanks China for its efforts in submitting its 2023 subsidy notification. The 
United  Kingdom believes that the sharing of information is in the interest of all Members and is 
essential for the effective funct ioning of the SCM Agreement. We would therefore be grateful for any 
information China can provide on the following questions.  
General Questions  
We would like to thank China for its reply to the UK 's question 16 on its 2021 notification. 
(G/SCM/N/372/CHN)  In its answer, China stated that "... SOEs have been integrated with the market 
economy and become the main entity independently engaging in market competition. SOEs purchase 
and sell according to commercial considerations. SOEs are  subject to the same laws and rules as 
other enterprises in terms of access to funds, bankruptcy and competition legislation and do not 
enjoy privileges. "2 
Question 1  
Could China please confirm that its State -Owned banks do not constitute any of the following under 
Article 1.1(a)(1) of the Agreement on Subsidies and Countervailing Measures:    
a) A public body which provides financial contributions? or  
b) A funding mechanism which receives contributions from the government?  
Specific Questions  
Preferential t ax policies in the western regions  
The notification states that imported products contained within the following catalogues do not 
qualify for preferential tax treatment: The Catalogue for Imported Products not Subject to Tax 
Exemption in Domestic Invested Projects; The Catalogue for Imported Products not Subject to Tax 
Exemption in Foreign Invested Projects; and The Catalogue for Imported Major Technical Equipment 
and Products not Subject to Tax Exemption . 
 
1 G/SCM/N/401/CHN  
2 G/SCM/Q2/CHN/111  G/SCM/Q2/CHN/125  
 
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  Question 2  
Could China please provide furt her information on the criteria used when preparing these 
three  catalogues?  
Question 3  
Could China please clarify whether the lists of products contained within the three catalogues are 
periodically reviewed and updated?  
Preferential tax treatment of additional calculation and deduction of research and 
development expenses  
Question 4  
Could China please clarify whether the subsidy is available to only Chinese -owned enterprises, or 
whether foreign -invested enterprises operating in China are also able to apply?  
Preferential tax policies for enterprises transferring technology  
Question 5  
Could China please provide further information on:  
a) The purpose and functioning of the tax incentives for scheme, including how "resident 
enterprises " are defined and whether the "transfer of technology " can occur between 
enterprises of any nationality?  
b) The level of "transfer of technology " which is required for an enterprise to qualify for the 
scheme?  
Preferential tax treatment for enterprises with com prehensive utilization of resources  
Question 6  
Could China please provide further information on the scheme, including what is meant by 
"comprehensive utilisation of resources " and what sectors and activities can qualify for the scheme?  
We note that this s cheme and China 's "Preferential tax treatment for projects for environmental 
protection, water and energy conservation " scheme have similar objectives.  
Question 7  
Could China please clarify:  
a) What the differences are between the two schemes?  
b) Whether enterp rises can apply for, and receive, preferential tax treatment under both 
schemes at the same time?  
Preferential tax treatment for energy -saving and new energy vehicles and vessels  
The notification states that new energy vehicles listed in the "Catalogue of the Models of New Energy 
Vehicles Exempted from Vehicle Purchase Tax " are eligible for preferential tax treatment.  G/SCM/Q2/CHN/125  
 
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  Question 8  
Could China please provide further information on the criteria used when preparing this catalogue, 
including:  
a) Whether foreign vehicle models can qualify for listing within the catalogue?  
b) Whether the list of vehicle models is periodically reviewed and updated?  
Question 9 
Could China please provide information on the number of enterprises which received preferential tax 
treatment under the scheme during the reporting period?  
Preferential tax treatment for the public buses and trolleybuses purchased by urban public 
transportation enterprises  
Question 10  
Could China please provide further information on the  eligibility criteria for the scheme, including 
whether preferential tax treatment is also extended to the purchase of foreign -made public buses 
and trolleybuses?  
Question 11  
Could China please provide information on the number of buses and trolleybuses th at were 
purchased by urban public transportation enterprises during the reporting period?  
Preferential tax policies for farming, forest, animal husbandry and fishery product 
projects  
Question 12  
Could China please provide further information on the eligibi lity criteria for farming, forestry, animal 
husbandry and fishery projects to be able to qualify for preferential tax treatment under the scheme?  
Preferential VAT for large passenger aircraft and new regional aircraft  
The notification states that only "taxpayers " are eligible for preferential tax treatment under the 
scheme.  
Question 13  
Could China please clarify whether foreign enterprises operating in China can also qualify for the 
scheme?  
The notification states that the objective of the scheme is to "encourage R&D in aircraft 
manufacturing industry ", but also states that "taxpayers " that are already producing and selling 
aircraft (regional and civil jet aircraft) are also eligible for support ".  
Question 14  
Could China please provide further information on what R&D activities are eligible for preferential 
tax treatment under the sche me? 
Question 15  
Could China please provide information on the number of "taxpayers " which received preferential 
tax treatment under the scheme during the reporting period, including the number of beneficiaries 
that were undertaking only R&D activities?  G/SCM/Q2/CHN/125  
 
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  Policies on house property tax and urban land use tax for enterprises designing and 
manufacturing large passenger aircraft and its engine  
The notification states that only "taxpayers " are eligible for preferential tax treatment under the 
scheme.  
Question 16  
Could China please clarify whether foreign enterprises operating in China can also qualify for the 
scheme?  
The notification states that "Taxpayers and their wholly -owned subsidiaries engaged in development 
projects of large passenger aircraft " are eligible  for preferential tax treatment under the scheme.  
Question 17  
Could China please clarify whether both the "Taxpayers " and their wholly -owned subsidiaries can 
apply for, and receive, preferential tax treatment under the scheme at the same time?  
We note tha t this scheme and China's "Preferential VAT for large passenger aircraft and new regional 
aircraft " share the same policy objective.  
Question 18  
Could China please clarify whether "Taxpayers " are able to apply for, and receive, preferential tax 
treatment under both schemes at the same time?  
Preferential treatment policy for some passenger vehicles  
Question 19  
Could China please provide further information on the eligibility criteria for the sc heme, including 
whether preferential tax treatment is also extended to the purchase of foreign -made vehicles?  
Special fund for the development of clean energy  
Question 20  
Could China please provide further information on the eligibility criteria for the sc heme, including 
whether foreign enterprises operating in China can also apply?  
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