WT/TPR/S/375/Rev.1  
14 September 2018  
(18-5649) Page: 1/193 
Trade Policy Review Body   
 
 
 
TRADE POLICY REVIEW  
REPORT BY THE SECRET ARIAT  
CHINA 
Revision  
This report, prepared for the seventh Trade Policy Review of China, has been drawn up by the 
WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement 
establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from China on its trade policies 
and pract ices. 
 
Any technical questions arising from this report may be addressed to Masahiro  Hayafuji 
(tel: 022 739 5873); Pierre Latrille (tel: 022 739 5266); Arne Klau (tel: 0 22 739 5706); and 
Usman  Ali Khilji (tel: 0 22 739 6936).  
 
Document WT/TPR/G/ 375 contains  the policy statement submitted by China.  
 
 
Note: This report was drafted in English.  
  WT/TPR/S/375 /Rev.1  • China  
 
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  CONTENTS  
SUMMARY  ................................ ................................ ................................ ........................  9 
1   ECONOMIC ENVIRONMEN T ................................ ................................ ........................  15 
1.1   Main Features of the Economy  ................................ ................................ ..................... 15 
1.2   Recent Economic Developments  ................................ ................................ ................... 15 
1.2.1    Monetary and exchange policy  ................................ ................................ ................... 19 
1.2.1.1    Monetary  policy  ................................ ................................ ................................ ....19 
1.2.1.2    Exchange rate policy  ................................ ................................ ............................. 20 
1.2.2    Fiscal policy and reform  ................................ ................................ ............................ 21 
1.2.3    Other structural measures  ................................ ................................ ........................ 23 
1.2.4    Balance of payments  ................................ ................................ ................................ 24 
1.3   Developments in Trade and Investment  ................................ ................................ ........ 27 
1.3.1    Trends  and patterns in merchandise and services trade  ................................ ................ 27 
1.3.2    Trends and patterns in FDI  ................................ ................................ ....................... 30 
2   TRADE AND INVESTMEN T REGIMES ................................ ................................ ...........  31 
2.1   General Framework  ................................ ................................ ................................ ....31 
2.2   Trade Policy Framework and Objectives  ................................ ................................ ......... 32 
2.2.1    Institutional framework  ................................ ................................ ............................ 32 
2.2.2    Trade policy formulation and objectives  ................................ ................................ ......32 
2.3   Trade Agreements and Arrangements  ................................ ................................ ........... 34 
2.3.1    WTO ................................ ................................ ................................ ...................... 34 
2.3.2    Regional trade agreements and unilateral measures  ................................ ..................... 34 
2.3.3    Other agreements and arrangements  ................................ ................................ ......... 36 
2.4   Investment Regime  ................................ ................................ ................................ ....36 
2.4.1    Regulatory framework and market access  ................................ ................................ ...36 
2.4.2    Examination and approval procedures  ................................ ................................ ........ 41 
2.4.3    Incentives for foreign investment  ................................ ................................ ............... 43 
3   TRADE POLICIES AND PRACTICES BY MEASURE  ................................ ........................  45 
3.1   Measures Directly Affecting Imports  ................................ ................................ .............. 45 
3.1.1    Customs procedures, valuation, and requirements  ................................ ....................... 45 
3.1.2    Rules of origin  ................................ ................................ ................................ ......... 46 
3.1.3    Tariffs  ................................ ................................ ................................ .................... 47 
3.1.3.1    Applied MFN tariffs  ................................ ................................ ................................ 47 
3.1.3.2    Tariff rate quotas  ................................ ................................ ................................ ..48 
3.1.3.3    Bound rates  ................................ ................................ ................................ ......... 49 
3.1.3.4    Preferential tariffs  ................................ ................................ ................................ .49 
3.1.3.5    Tariff exemptions and concessions  ................................ ................................ .......... 50 
3.1.4    Other charges affecting imports  ................................ ................................ ................. 50 
3.1.5    Import prohibitions, restrictions, and licensing  ................................ ............................ 52 
3.1.6    Anti-dumping, countervailing, and safeguard measures  ................................ ................ 54 WT/TPR/S/375 /Rev.1  • China  
 
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  3.1.6.1    Anti-dumping measures  ................................ ................................ ......................... 54 
3.1.6.2    Countervailing measures  ................................ ................................ ........................ 59 
3.1.6.3    Safeguard measures  ................................ ................................ ............................. 60 
3.1.7    Other measures affecting imports  ................................ ................................ .............. 61 
3.2   Measures Directly Affecting Exports  ................................ ................................ .............. 61 
3.2.1    Customs procedures and requirements  ................................ ................................ .......61 
3.2.2    Taxes, charges, and levies  ................................ ................................ ........................ 61 
3.2.3    Export prohibitions, restrictions, and licensing  ................................ ............................. 62 
3.2.4    Export support and promotion  ................................ ................................ ................... 64 
3.2.5    Export finance, insurance, and guarantees  ................................ ................................ ..65 
3.3   Measures Affecting Production and Trade  ................................ ................................ .......67 
3.3.1    Incentives  ................................ ................................ ................................ ............... 67 
3.3.2    Standards and other technical requirements  ................................ ............................... 71 
3.3.2.1    Overview  ................................ ................................ ................................ ............. 71 
3.3.2.2    Product certification  ................................ ................................ .............................. 74 
3.3.2.3    Labelling and packaging  ................................ ................................ ......................... 75 
3.3.3    Sanitary and phytosanitary requirements  ................................ ................................ ....76 
3.3.4    Competition policy and price controls  ................................ ................................ ......... 77 
3.3.4.1    Competition policy  ................................ ................................ ................................ 77 
3.3.4.1.1    Legislative and institutional framework  ................................ ................................ .77 
3.3.4.1.2    Monopoly agreements  ................................ ................................ ......................... 80 
3.3.4.1.3    Dominant market positions  ................................ ................................ .................. 80 
3.3.4.1.4    Mergers and acquisitions  ................................ ................................ ..................... 81 
3.3.4.1.5    Administrative monopoly  ................................ ................................ ..................... 83 
3.3.4.1.6    Enforcement  ................................ ................................ ................................ ......83 
3.3.4.1.7    International cooperation  ................................ ................................ .................... 84 
3.3.4.2    Price controls ................................ ................................ ................................ ........ 84 
3.3.5    State trading, state -owned enterprises, and privatization  ................................ ............. 87 
3.3.6    Government procurement  ................................ ................................ ......................... 89 
3.3.6.1    Overview  ................................ ................................ ................................ ............. 89 
3.3.6.2    Legal and institutional framework  ................................ ................................ ........... 90 
3.3.6.3    Procurement methods and procedures  ................................ ................................ .....91 
3.3.6.4    Other policy considerations in governmen t procurement  ................................ ............ 95 
3.3.6.5    Suppliers complaint mechanism  ................................ ................................ .............. 95 
3.3.6.6    Accession to the GPA and other international cooperation  ................................ .......... 96 
3.3.7    Intellectual property rights  ................................ ................................ ........................ 96 
3.3.7.1    Overview  ................................ ................................ ................................ ............. 96 
3.3.7.2    Industry property  ................................ ................................ ................................ ..98 
3.3.7.2.1    Patents  ................................ ................................ ................................ ............. 98 
3.3.7.2.2    Trademarks  ................................ ................................ ................................ ..... 100 WT/TPR/S/375 /Rev.1  • China  
 
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  3.3.7.2.3    Geographical indications  ................................ ................................ ...................  102 
3.3.7.3    Copyright and related rights  ................................ ................................ .................  103 
3.3.7.4    Other IPRs  ................................ ................................ ................................ .........  104 
3.3.7.4.1    Layout -designs of integrated circuits  ................................ ................................ .. 104 
3.3.7.4.2    New plant varieties  ................................ ................................ ...........................  105 
3.3.7.4.3    Undisclosed information and trade secrets  ................................ ...........................  105 
3.3.7.5    Enforcement  ................................ ................................ ................................ ....... 106 
3.3.7.5.1    Overview  ................................ ................................ ................................ ........  106 
3.3.7. 5.2   Administrative enforcement  ................................ ................................ ...............  107 
3.3.7.5.3    Judicial enforcement  ................................ ................................ .........................  108 
3.3.7.5.4    Customs law enforcement  ................................ ................................ .................  109 
4   TRADE POLICIES BY S ECTOR  ................................ ................................ ...................  111  
4.1   Agriculture, Forestry, and Fisheries  ................................ ................................ .............  111 
4.1.1    Features and market development  ................................ ................................ ...........  111 
4.1.2    Policy objectives and administration  ................................ ................................ .........  113 
4.1.3    Policy instruments  ................................ ................................ ................................ . 114 
4.1.3.1    Border measures  ................................ ................................ ................................  114 
4.1.3.1.1    Measures affecting imports  ................................ ................................ ................  114 
4.1.3.1.2    Measures affecting exports  ................................ ................................ ................  115 
4.1.3.2    Internal measures  ................................ ................................ ...............................  117 
4.1.3.2.1  Support measures  ................................ ................................ ..............................  117 
4.1.3.2.2    Price controls  and market price support systems  ................................ ..................  123 
4.1.3.2.3    Other measures  ................................ ................................ ...............................  125 
4.1.3.3    Levels of support  ................................ ................................ ................................  126 
4.1.3.3.1    WTO notifications  ................................ ................................ .............................  126 
4.1.3.3.2    OECD estimates of support  ................................ ................................ ................  126 
4.2   Mining and Energy  ................................ ................................ ................................ .... 129 
4.2.1   Mining  ................................ ................................ ................................ ..................  129 
4.2.2    Energy  ................................ ................................ ................................ .................  133 
4.2.2.1    Overview including environmental policy  ................................ ................................  133 
4.2.2.2    Coal ................................ ................................ ................................ ..................  135 
4.2.2.3    Oil ................................ ................................ ................................ .....................  135 
4.2.2.4  Gas ................................ ................................ ................................ .....................  136 
4.2.2.5  Electricity  ................................ ................................ ................................ .............  136 
4.3   Manufacturing  ................................ ................................ ................................ ..........  140 
4.3.1    Recent developments  ................................ ................................ .............................  140 
4.3.2    Selected subsectors  ................................ ................................ ...............................  141 
4.3.2.1    Automobiles, automotive parts, and components  ................................ ....................  141 
4.3.2.2    Electronics and information technology (IT) ................................ ............................  142 
4.3.2.3    Machinery and equipment  ................................ ................................ ....................  144 WT/TPR/S/375 /Rev.1  • China  
 
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  4.3.2.4    Iron and steel  ................................ ................................ ................................ ..... 145 
4.4   Services  ................................ ................................ ................................ ..................  148 
4.4.1    Telecommunications  ................................ ................................ ...............................  148 
4.4.1.1  Statistical overview  ................................ ................................ ...............................  148 
4.4.1.2  Regulatory framework  ................................ ................................ ...........................  149 
4.4.2    Financial services  ................................ ................................ ................................ ... 154 
4.4.2.1    Market overview  ................................ ................................ ................................ . 154 
4.4.2.2   Regulatory developments for banking services  ................................ ........................  155 
4.4.2.3    Regulatory developments for insurance services  ................................ .....................  158 
4.4.2.4    Regulatory developments for stock markets  ................................ ...........................  158 
4.4.2.5    Regulatory developments for mutual funds and asset management  ...........................  159 
4.4.2.6    Regulatory developments for pension funds  ................................ ...........................  159 
4.4.2.7    Regulatory developme nts concerning e -payments  ................................ ...................  160 
4.4.3    Legal services  ................................ ................................ ................................ ....... 160 
4.4.4    Accounting, auditing and bookkeeping services  ................................ .........................  162 
4.4.5    Taxation services  ................................ ................................ ................................ ... 164 
4.4.6    Engineering and integrated engineering services  ................................ .......................  164 
4.4.7    Pipeline services  ................................ ................................ ................................ .... 166 
5   APPENDIX TABLES  ................................ ................................ ................................ .. 169  
 
CHARTS  
 
Chart 1.1 Production composition of merchandise trade, 2015 and 2016  ................................ ...28 
Chart 1.2 Direction of merchandise trade, 2015 and 2016  ................................ ....................... 29 
Chart 1.3 Foreign direct investment, 2000 -16 ................................ ................................ ........ 30 
Chart 3.1 Distribution of MFN applied tariff rates, 2013, 2015, and 2017  ................................ ..48 
Chart 3.2 Import licensing by HS section, 2017  ................................ ................................ .....53 
Chart 3.3 Anti -dumping measures in force, by product, 2013 -16 (end -period) and as of 
30 June 2017  ................................ ................................ ................................ .................... 58 
Chart 3.4 Eximbank operations, 2012 -17 ................................ ................................ .............. 66 
Chart 3.5 Patent applications by top fields of technology, 2002 -16 ................................ .........  100 
Chart 4.1 Value of production  ................................ ................................ ............................  112 
Chart 4.2 Volume of production  ................................ ................................ .........................  112 
Chart 4.3 Stocks of selected commodities at beginning of marketing years 2005/06 – 
2016/17  ................................ ................................ ................................ .........................  125 
Chart 4.4 Green and Amber Box support, 2004 -10 ................................ ...............................  127 
Chart 4.5 OECD measurement of support 2004 -16 ................................ ...............................  128 
Chart 4.6 Net imports, production and consumption of energy, 2016  ................................ ...... 133 
Chart 4.7 Structure of energy production and consumption, 2015  ................................ ..........  133 
Chart 4.8 Structure of e lectricity production and consumption, 2015  ................................ ...... 137 
Chart 4.9 Installed generation capacities by type of primary energy, 2015  ..............................  137 WT/TPR/S/375 /Rev.1  • China  
 
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  TABLES  
 
Table 1.1 Selected macroeconomic indicators, 2013 -17 ................................ .......................... 15 
Table 1.2 GDP by sector, 2013 -17 ................................ ................................ ........................ 17 
Table 1.3 Balance of payments, 2013 -17 ................................ ................................ .............. 25 
Table 1.4 Composition of trade in services, 2013 -17 ................................ .............................. 26 
Table 2.1 Duty reductions and exemptions under China's respective free trade agreements 
in 2016  ................................ ................................ ................................ ............................. 35 
Table 2.2 Summary data of the FTAs between China and Georgia and between China and 
the Maldives  ................................ ................................ ................................ ...................... 35 
Table 2.3 Foreign direct investment subject to approval, 2017  ................................ ................. 42 
Table 3.1 China's legislation related to customs procedures, March 2018  ................................ ..45 
Table 3.2 China's tariff structure, 2013, 2015 and 2017  ................................ .......................... 47 
Table 3.3 Summary analysis of China's preferential tariff, 2017  ................................ ............... 49 
Table 3.4 Excise (or consumption) tax, 2015 -17 ................................ ................................ ....51 
Table 3.5 Solid wastes forbidden for import into China since end -2017 ................................ .....54 
Table 3.6 Anti -dumping investigations and measures, 2013 -17, as of 30 June 2017  ................... 57 
Table 3.7 Anti -dumping measures in force, by trading partner/region, 2013 -17, as of 
30 June 2017 ................................ ................................ ................................ .................... 57 
Table 3.8 Anti -dumping measures in force, by product and by origin, as of 30 June 2017  ........... 58 
Table 3.9 CV investigations and measures, 2013 -17, as at 30 June 2017  ................................ ..59 
Table 3.10 CV investigations initiated during the period under review, as at 30  June 2017 .......... 59 
Table 3.11 Export duties by type and HS Chapter, 2017  ................................ ......................... 62 
Table 3.12 Products subject to export quotas and licensing  ................................ ..................... 63 
Table 3.13 Support measures to projects for industrial transformation and upgrading  ................ 70 
Table 3.14 Various support measures in 2015 -17 ................................ ................................ ...70 
Table 3.15 Standards approved, 2015 -17 ................................ ................................ ............. 73 
Table 3.16 Department rules related to price controls, 2017  ................................ .................... 84 
Table 3.17 Products/Services subject to price controls b y the Central Government, 2017  ............ 85 
Table 3.18 Products/Services subject to price controls by local governments, 2017  .................... 86 
Table 3.19 SOEs in China's economy, 2009 -16 ................................ ................................ ......88 
Table 3.20 China's ten largest state -owned enterprises, 2016  ................................ .................. 88 
Table 3.21 Top 10 companies listed in SSE/SZSE that received public support in 2016  ............... 89 
Table 3.22  Government procurement by type of purchase, 2014 -16 ................................ ......... 89 
Table 3.23 Government procurement by procurement method, 2014 -16 ................................ ...94 
Table 3.24 Summary of IPR legislation in China, 2017  ................................ ............................ 97 
Table 3.25 China's membership of international intellectual property rights conventions, as 
of mid -2017 ................................ ................................ ................................ ...................... 98 
Table 3.26 Recent changes in patent -related regulations, 2017  ................................ ............... 99 
Table 3.27 Recent changes in p atent-related regulations, 2014 -16 ................................ .........  100 
Table 3.28 Trademark applications and registrations, 2015 -17 ................................ ..............  102 
Table 3.29 General regulatory framework of new plant varieties protection, 2017  ....................  105 WT/TPR/S/375 /Rev.1  • China  
 
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  Table 3.30 Intellectual property enforcement, 2014 -17 ................................ .........................  106 
Table 4.1 Principal indicators for agriculture, animal husbandry, forestry and fisheries, 
2013-17 ................................ ................................ ................................ .........................  111 
Table 4.2 Agricultural production, 2013 -17 ................................ ................................ ..........  111 
Table 4.3 Main agricultural exports and imports of China, 2013 -17................................ .........  113 
Table 4.4 Tariff rate quotas on agricultural products and their utilization, 2015 -16 ...................  115 
Table 4.5 Agricultural products subject to export quotas and licensing in 2017  ........................  116 
Table 4.6 Size of the export quotas for corn flo ur, rice flour and wheat flour, 2013 -17 ..............  116 
Table 4.7 Legal basis for support to agriculture, forestry, and fisheries, 2009 -14 .....................  117 
Table 4.8 Support programmes and budget outlays, 2014 -17 ................................ ................  119 
Table 4.9 New subsidies programmes experimented during the period under review  ................  121 
Table 4.10 Minimum purchase prices 2012 -18 ................................ ................................ ..... 124 
Table 4.11 Distribution  of the financing of the agricultural insurance scheme between 
central and local authorities, and total public expenditures on the scheme  ..............................  125 
Table 4.12 OECD indicators for support to agriculture in China, 20 07-16 ................................ . 128 
Table 4.13 China's main mining production,  2014-16 ................................ ...........................  129 
Table 4.14 Mining industry investment regime, 2015 and 2017  ................................ ..............  132 
Table 4.15 Coal capacity reduction, 2016 -18 ................................ ................................ ....... 132 
Table 4.16 China's key trading partners for oil imports, 2017  ................................ ................  135 
Table 4.17 Investment in power generation capacity by type of source, 2015 and 2016  ............  137 
Table 4. 18 Investment regime for electricity, 2015 and 2017  ................................ ................  138 
Table 4.19 Action plans for IT and its sub -sectors for the period between 2016 and 2020  .........  144 
Table 4.20 Figures for crude steelmaking capacity in selected GFSEC steel producers, 
2014-16 ................................ ................................ ................................ .........................  146 
Table 4.21 New capacity additions in GFSEC selected steel producers, 2014 -16 .......................  146 
Table 4.22 Permanent capacity closures in GFSEC selected steel producers, 2014 -16 ...............  147 
Table 4.23 Telecom prices in China as a percentage of the gross national income per capita  ..... 148 
Table 4.24 Telecom services opened to foreign investment  ................................ ...................  149 
Table 4.25 China's GATS commitments in telecommunication services and their 
correspondence in the new telecom catalogue  ................................ ................................ ..... 150 
 
BOXES  
 
Box 1.1 Belt and Road Initiative  ................................ ................................ ........................... 18 
Box 2.1 Summary of main changes in the 2017 Investment Catalogue  ................................ .....38 
Box 3.1 Main regulations/Guidelines dealing with competition policy issues  ............................... 79 
Box 4.1 Economic characteristics and evolution of the telecommunications sector  ....................  148 
Box 4.2 Financial services: st atistical overview  ................................ ................................ .... 154 WT/TPR/S/375 /Rev.1  • China  
 
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  APPENDIX TABLES  
 
Table A1.1 China's merchandise exports by group of products,  2013-16 ................................ . 169 
Table A1.2 China's merchandise imports by group of products, 2013 -16 ................................ . 171 
Table A1.3 China's merchandise exports by destination, 2013 -16................................ ...........  172 
Table A1.4 China's merchandise imports by origin, 2013 -16 ................................ ..................  173 
Table A1.5 Inward foreign direct inv estment, 2013 -16 ................................ ..........................  174 
Table A1.6 Inward foreign direct investment by sector, 2013 -16 ................................ ............  175 
Table A1.7 Main destinations of outward foreign direct investment, 2016  ................................  176 
Table A1.8 Outward foreign direct investment by sector, 2015  ................................ ..............  177 
 
Table A2.1 Main notifications under WTO Agreements (1 January 2015 -31 March 2018)  ...........  178 
Table A2.2 WTO dispute settlement cases involv ing China, 1 January 2016 - 
31 March  2018 ................................ ................................ ................................ ................  181 
Table A2.3 Industries in which FDI was/is restricted, 2015 and/or 2017  ................................ .. 182 
Table A2.4 Industries in which FDI was/is prohibited, 2015 and/or 2017  ................................ . 185 
 
Table A3.1 China's preferential rules of origin, 2017  ................................ .............................  187 
Table A3.2 Summary of China's MFN applied tariff, 2017  ................................ ......................  189 
Table A3.3 Sub -central subsidy programmes notified to the WTO in 2016  ...............................  190 
 
  WT/TPR/S/375 /Rev.1  • China  
 
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  SUMMARY  
1. During the review period, the Chinese economy continued to be a major driver of global 
economic growth. However, real GDP growth has been moderating as the economy adjusts to the 
"new normal", which implies more stable, albeit lower,  growth rates of around 7% per year in the 
foreseeable future; growth rebalances from investment to consumption, from external to internal 
demand, and from manufacturing to services. Real GDP grew by 6.7% in 2016, and is expected to 
be around 6.8% in 2017.  Consumption was responsible for around two -thirds of the growth during 
the review period. The share of services in GDP exceeded 50% for the first time in 2015. Within 
services, e -commerce sales and tourism services imports have been particularly strong. I n 
contrast, the share of merchandise trade in GDP ha s declined. Income inequality and poverty 
levels have declined. E xcess capacity in some energy and manufacturing sectors and implicit 
assistance to state-owned enterprises ( SOEs) have increased over a number of years.  
2. The Government has been trying to address these issues by focusing on the quality and 
sustainability rather than the quantity of growth. Under the 13th Five-Year Plan (2016 -2020), the 
authorities intend to continue the process of s tructural economic reform, which includes the 
promotion of private sector participation in the economy, as well as the reform of SOEs, while 
keeping the preponderance of public ownership. Other measures mentioned in the Plan include the 
promotion of compet ition, fiscal reform, financial sector reform to increase private capital 
participation in banking and expand the provision of financial services, and making the exchange 
rate and interest rate more market -oriented. Reforms have advanced across many areas,  including 
the introduction of measures to reduce overcapacity, strengthen local government borrowing 
frameworks, and address financial sector risks.  
3. In 2016, the People's Bank of China (PBOC) moved to a more market -based approach of 
conducting monetary po licy. The new approach involves a closer management of liquidity in the 
banking system through an expanded range of instruments such as repos (or reverse repurchase 
agreements) and lending facilities to promote better capital allocation and guide market in terest 
rates to more closely match the PBOC's objectives. Under the new system, the PBOC uses a 
corridor or an interest rate band, where the upper limit is set by its overnight seven -day and one -
month standing lending facilities, while the lower rate is th e interest paid by the PBOC on excess 
deposit reserves. China has a managed floating exchange rate regime, which uses a basket of 
currencies as a reference. During the period under review, the PBOC continued to increase 
exchange rate flexibility. It also  introduced a counter -cyclical factor into exchange rate 
determination , with a view to better reflecting the fundamentals of the Chinese economy and the 
changes in the international foreign exchange market, as well as to offset pro -cyclical volatilities 
and to mitigate the "herding effect" in the foreign exchange market. Inflation, as measured by the 
consumer price index, increased to 2% in 2016, which is within the PBOC 's desired range of 2 -3%. 
In 2017, the inflation rate was 1.6%.  
4. During the review period, China continued to pursue a proactive fiscal policy, which was 
guided by supply -side restructuring and adjusting to the "new normal". In 2016, the fiscal deficit 
rose to 3.8% of GDP from 3.4% in 2015. The increase was due to declining tax revenue as a shar e 
of GDP, which can be attributed to the nationwide implementation of the VAT pilot reforms, which 
reduced indirect tax revenue significantly.  
5. China's current account surplus contracted during the review period. It totalled 
US$202.2  billion in 2016, and wa s equivalent to 1.8% of GDP. The lower surplus stems, to a large 
extent, from a decrease in the merchandise trade surplus, which fell due to a fall in exports. In 
2017, the current account surplus was equivalent to 1.3% of GDP. The services deficit continu ed 
to widen during the review period.  
6. Merchandise trade (imports plus exports) declined from 33.5% of GDP in 2015 to 31.2% in 
2016, with both exports and imports falling. Exports continue to be dominated by manufactures, 
which accounted for 93.7% of total merchandise exports in 2016 . Manufactures are also the 
largest import category , responsible for around 65% of the import bill. In 2017, merchandise trade 
amounted to 32.3% of GDP. In 2016 (the latest year for which data were available), the main 
destinatio ns for merchandise exports were the United States; the European Union ; 
Hong Kong,  China; Japan; and the Republic of Korea; which combined represented about 60% of 
total exports. The main sources of China's  imports were the European Union;  the Republic of WT/TPR/S/375 /Rev.1  • China  
 
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  Korea;  the United States ; the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu 
(Chinese Taipei ); Japan ; and ASEAN countries.  
7. China continues to be one of the world's largest recipients of FDI. FDI inflows have been 
growing for a number of yea rs and the trend continued in 2016. Hong Kong, China was the largest 
investor in China, accounting for over 80% of FDI inflows, followed by the British Virgin Islands, 
Singapore and the Cayman Islands. Major recipients of investment inflows were manufactur ing, 
real-estate, leasing and business services and wholesale and retail trade. China is a significant 
overseas investor. Outward FDI has also been trending upwards for a number of years; however, 
the increase has not been as pronounced as for inward FDI. The main destinations for outward FDI 
are: Hong Kong, China; the United States; the Cayman Islands; and the British Virgin Islands. The 
main sectors invested in are leasing and business services, banking, manufacturing and wholesale 
and retail trade.  
8. China  is an active Member of the WTO. It is an observer to the Committee on Government 
Procurement and is in the process of negotiating its accession to the Plurilateral Agreement on 
Government Procurement (GPA) . China  is also an observer to the Plurilateral Ag reement on Trade 
in Civil Aircraft, and, as a participant in the Information Technology Agreement (ITA), has agreed 
to its expansion. During the review period, China  was involved in seven cases under the WTO 
dispute settlement system: in five cases as a re spondent and in two as a complainant. It was also 
involved as a third party in ten cases brought to the Dispute Settlement Body (DSB).  During the 
review period, China submitted to the WTO a number of notifications ; nonetheless, some 
notifications including  those on state -trading enterprises, domestic support, and subsidies provided 
by the central government remain pending.  
9. During the period under review, China expanded its RTA network by signing  two new 
agreements with the Maldives and Georgia, bringing the total number to 17. The volume of 
Chinese trade covered by FTAs remains small; it may rise considerably in the future , should some 
of the ongoing negotiations on new agreements and on the revision of existing agreements 
succeed since they invo lve major trading partners.  China continues to grant unilateral trade 
preferences to LDCs. As of December 2017, duty -free treatment on 97% of tariff lines was granted 
to LDCs.  
10. The Catalogue of Industries for the Guidance of Foreign Investment (Investment C atalogue), 
which is revised periodically, remains the main instrument used to guide FDI in China. The 
Catalogue was revised in 2017. Under the Catalogue, foreign investment projects are classified in 
the encouraged category and in a "Negative List", which contains a list of industries where FDI is 
restricted or prohibited. Projects that fall outside of the Negative List require record -filing. Projects 
in the encouraged category are eligible for preferential treatment, for example, customs duty 
exemptions fo r the importation of equipment. The 2017 revision of the Catalogue encourages FDI 
in, inter alia , advanced manufacturing, high technology, the energy saving and environmental 
protection industry, and the modern services industry. According to the authoriti es, no technology 
transfer requirements are imposed on foreign investment projects. During the period under 
review, China continued  to encourag e FDI in the central and western regions, where projects may 
benefit from favourable policies. FDI involving inve stments in Chinese domestic enterprises may 
be subject to national security reviews if the FDI is related to defence, or is deemed to have an 
influence on national security . Foreign -invested projects (FIPs) in China are subject to approval or 
to record -filing. Projects subject to approval are listed in a specific catalogue, while most projects 
not included in it are subject to record -filing. Approval requires the examination of the investment 
project, and a number of conditions must be met.  
11. The pilot refor m of the foreign investment system, which was initiated in 2013 through the 
establishment of the China (Shanghai) Pilot Free Trade Zone, was expanded to 11 pilot free trade 
zones during the review period. FDI access to these zones is based on a negative li st approach. 
For industries not included in the negative list, foreign investors are to receive treatment similar to 
domestic companies with regard to the establishment and approval requirements and process. 
Except for the incorporation procedures regulate d by the Company Law, foreign investors are not 
subject to government approval, but only to record -filing. The authorities consider that the 
negative list applicable to pilot free trade zones is more open than the Investment Catalogue 
applicable nationwide . Pilot f ree trade zones have become an important tool not only for 
investment promotion , but also to help increase exports. Companies located in a pilot free trade 
zone can produce either in bonded or non -bonded areas. Tariff payments by companies located  in WT/TPR/S/375 /Rev.1  • China  
 
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  bonded areas are suspended and only become effective when final products are sold to the rest of 
China. Total imports of China (Shanghai) Pilot Free Trade Zone in 2017 amounted to 
RMB 800 billion, while exports were RMB 600 billion.  
12. China continued to make efforts to reform and harmonize its customs procedures. About 
one third of imports are now declared through single windows. Clearance times of imports were 
reduced to an average of 16.7 hours in 2017 from over 22 hours in 2016. China accepted the 
Agreement on Trade Facilitation in September 2015. It notified its Category A commitments, which 
cover the majority of measures, in June 2014, and its Category B commitments in June 2017. 
China does not have any Category C commitments. The indicative implement ation date for most 
Category B commitments is February 2020.  
13. The simple average applied MFN rate as of December 2017 is 9.3%, slightly lower than in 
2013 and 2015. A tariff reform implemented in December 2017 reduced applied MFN tariffs for 
some 200 consum er products. Almost all ( 99.6% ) tariff lines are ad valorem . The average tariff is 
14.6% for agricultural products (WTO definition) and 8.5% for non -agricultural products. About 
10% of tariff lines are duty -free. Tariff rate quotas apply to 47 tariff lines . All of China's tariffs are 
bound.  
14. Imports, like domestically  produced goods, are subject to Value Added Tax (VAT). VAT on 
goods has two rates: 11% (down from 13% in July 2017) and 17%. A consumption tax is levied 
on: products that are harmful to human he alth, social order and the environment; luxury goods; 
high-energy consumption and high -end products; and non -renewable and non -replaceable 
petroleum products. Tax rates continue to vary considerably depending upon the product; they can 
be ad valorem , speci fic or compound. Since 2015 , consumption taxes on luxury cosmetics have 
decreased while the taxes on certain luxury cars have increased.  
15. There have been no major changes in the application procedures and terms of import 
licences since China's previous Revi ew. A catalogue of goods subject to automatic and non -
automatic import licensing is issued annually. In 2017, China subjected 498 tariff lines at the 
eight-digit level to automatic import licensing and 89 tariff lines to non -automatic import licensing. 
Since January 2018, China prohibits the importation of 24 kinds of solid waste.  
16. The legal framework governing trade contingency measures remained unchanged during the 
review period. As at mid -2017, China maintained 91 anti -dumping, one safeguard, and 
five countervailing measures. The total number of measures and investigations has remained 
relatively constant during the review period. Anti-dumping measures were mostly targeted at 
Japan, the United State s, the European Union  and the Republic of Korea. Chemic al products and 
resins accounted for most measures during 2013 -17. 
17. Clearance times for exports were further reduced during the period under review, to a 
nationwide average of 1.1 hours in 2017. Export taxes apply mostly on metals and ores. As at 
October 20 17, 102 tariff lines (at the HS eight-digit level) were subject to statutory export duties, 
the same number as in 2015, while 179 tariff lines carried interim duties, down from 314 in 2015. 
The number of tariff lines subject to export licensing is 524. In 2017, global export quotas applied 
to 100 tariff lines. The authorities indicate that China did not maintain or introduce any export 
subsidies on agricultural products during the review period. Exporters are entitled to VAT rebates, 
which are usually lower  than the VAT paid.  
18. To promote exports, the Trade Development Bureau (TDB) of the Ministry of Commerce 
organizes exhibitions in emerging markets and provides export -oriented training activities. It also 
maintains the websites of China Trade Promotion and p rovides, through various service platforms, 
background information about foreign markets.  
19. The China Export -Import Bank (China Eximbank) provides public export finance and the 
China Export and Credit Insurance Corporation (SINOSURE) provides public export credit 
insurance. Foreign -owned companies are also eligible for the services of China Eximbank and 
SINOSURE. Disbursements of both institutions grew during the review period.  
20. China submitted to the WTO a number of notifications on its subsidies up to 2014.  However, 
for most projects no information was provided on the total subsidy amount and no subsidies were WT/TPR/S/375 /Rev.1  • China  
 
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  notified for the period between 2015 and 2017. Furthermore, the authorities did not provide any 
information on subsidies that went beyond their notifi ed programmes. Information available from 
other sources indicates that China has continued to provide substantial support for, inter alia , 
intelligent manufacturing, advanced technologies, new energy vehicles and fisheries. Outlays for 
these programmes are reported to be considerable.  
21. A 2017 amendment to the Standards Law allows the adoption of standards by associations 
such as chambers of commerce or technology groups. Since 2016, 1,301 standards considered 
unnecessary have been eliminated. A revised Food  Safety Law entered into force in October 2015. 
During the period under review, China submitted 94 TBT and 21 SPS notifications. Regarding TBT 
measures maintained by China, 22 specific trade concerns (STCs) were raised; 8 STCs were raised 
concerning SPS me asures maintained by China.  
22. Since China's previous Review, a noteworthy legislative development in the area of 
competition policy has been the amendment to the Anti -Unfair Competition Law, which entered 
into force on 1 January 2018. The new Law removes overlaps with the Anti -Monopoly Law by , 
inter alia, deleting provisions prohibiting public utility enterprises or monopolistic enterprises from 
requiring consumers to purchase designated products, and provisions on collusive tendering. 
Furthermore, the new  Law introduces provisions on the prevention of unfair competition activities 
carried out by technological means on the Internet, such as malicious interference.  
23. China applies price controls, both at the central and provincial levels, on commodities and 
services deemed to have a direct impact on the national economy and people's livelihoods. The 
commodities and services subject to price controls are listed in a Central Government Pricing 
Catalogue and in Local Government Pricing Catalogues. In January 2017,  price controls were 
eliminated on certain items including explosive materials, tobacco leaves, certain drugs, and some 
construction projects.  
24. State involvement in the economy remains considerable. According to a notification 
submitted in 2015, s tate-trading requirements concern ed, inter alia : grain, sugar, tobacco, rice, 
maize, cotton, coal, crude oil, processed oil, chemical fertilizers, tungsten, tea, silk, antimony and 
silver. The state retains a majority share in all but one of the 100 largest publicl y listed companies. 
No information was provided on public financial support for SOEs.  
25. The government procurement legislative and regulatory regime remained largely unchanged 
during the review period. The total value of government procurement accounted for  3.1% and 
4.2% of GDP in 2015 and 2016, respectively. This relatively low ratio may reflect the fact that 
important infrastructure projects implemented by SOEs are not covered by the Government 
Procurement Law. The majority of procurement takes place at th e sub -central government level.  
26. China's main laws concerning intellectual property rights ( IPRs) have remained largely 
unchanged since its previous Review . Enforcement of IPRs continues to be a major challenge for 
China. China has continued to strengthen its IPR enforcement, both at the administrative and 
judicial levels. During the review period, the authorities issued various notices and measures with 
a view to strengthening China's capacity to protect and enforce IPRs, and 11 additional specialized 
IPR courts were established by the Supreme People's Court in various cities.  
27. The value of production in the farming, animal husbandry, forestry and fisheries sector grew 
during the period 2013 -17, albeit at a slower pace than other sectors . Employment in the sector 
continued to drop from 31.4% in 2013 to 27.0% in 2017. China continues to be a net importer of 
agricultural products. Imports of agricultural products , which  represented 6.3% of total 
merchandise imports in 2017 , declined during the period 2013 to 2 016 (before rebounding 
in 2017); on the other hand, exports of agricultural products increased in 2017.  
28. China's latest agricultural strategy is aimed at deepening the supply -side structural reform  
by improving structures, promoting "green" production, ext ending the sector's industrial and value 
chain, boosting innovation and consolidating rural development. China also plans to deepen the 
reform on pricing mechanisms for major farm products to strengthen the role of market 
mechanisms and to reform, on a pil ot basis, the land management system so as to loosen control 
on the land operating rights, while maintaining the principle of collective ownership of land. The 
import and export regimes of agricultural products have remained stable during the review period . WT/TPR/S/375 /Rev.1  • China  
 
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  This is not the case of the direct support regime, which is undergoing a complex structural reform. 
China has not yet completed the regrouping  of support programmes in to mega programmes or the 
modif ication  and decentraliz ation of  their disbursement proce dures (so -called "large special 
programmes + task list management model"); numerous targeted programmes are being tested in 
various regions on a pilot basis. Price support mechanisms in China are also undergoing reform; 
some schemes have been suppressed or  reduced in terms of geographical scope or in terms of 
support prices. Stockpiling has started regressing for some products. China's overall level of 
support to agriculture continued to increase during the period under review.  
29. Regarding the mining sector,  the content of the prohibited category in the Investment 
Catalogue remained unchanged between 2015 and 2017; it includes exploration and exploitation 
of tungsten, molybdenum, tin, stibium, fluorite, rare earth, and radioactive minerals. Some 
changes have been made for the encouraged and the restricted categories related to mining. The 
use of new technologies in mining, particularly for the oil and gas sector, falls within the 
encouraged category, while exploration and exploitation of special and rare kinds  of coal and of 
graphite as well as smelting and separation of rare earth and smelting of tungsten fall within the 
restricted category.  
30. China is the world 's largest energy consumer . China imports between 16 % and 18% of its 
total energy consumption. Exports  of energy remain marginal. Coal  is a locally abundant and 
relatively cheap resource . It represents a declining but still very large (62% in 2016) part of its 
primary energy mix. China's policy based on environmental and overcapacity considerations has 
been implemented to reduce that share. The short -term objectives are that by 2020: the 
proportion of non -fossil energies in total primary energy consumption should be around 15%; the 
proportion of natural gas consumption should reach 10%; and the carbon dioxi de emission per 
unit of GDP should decrease by 40% -45% compared to 2005.  
31. Foreign investment in the exploration and development of oil of all types is encouraged; it is 
limited to Sino -foreign equity/co -operative joint ventures or other forms of Sino -foreign 
cooperation. These limitations have been abolished for oil shale and oil sand in the 2017 
Investment Catalogue. Foreign investment is allowed in oil refining and oil distribution. FDI in 
shale gas and coal bed methane gas has been liberalized in the 201 7 Investment Catalogue. 
Foreign investment is also allowed in the area of the importation and distribution of gas. Regarding 
electricity, the construction and operation of transmission and distribution networks fall within the 
restricted category in the 20 17 Investment Catalogue. China is in the process of reforming its 
electricity market, liberalizing prices for eligible customers, creating trading agencies, liberalizing 
retail distribution and unbundling distribution from power generation.   
32. The Government 's main initiatives in recent years to promote manufacturing in China 
included the adoption of the "China Manufacturing 2025" plan, which was issued in May 2015. In 
order to implement the plan, China intends to set up pilot projects in cities as well as "national 
demonstration zones ". The authorities state that the plan will apply on an equal basis for all 
enterprises established in China. Various sector -specific policies were introduced to promote the 
development of, for example, new energy vehicles, integ rated circuits, and robotics. The 
authorities note that they recognize the issue of excess capacity in some manufacturing sectors, 
such as iron and steel, and have made efforts to reduce capacity in recent years .  
33. In telecommunications, China introduced a new cybersecurity law in November 2016 aimed 
at, inter alia , "ensuring network security, safeguarding cyberspace sovereignty, national security 
and the societal public interest". This law imposes a number of security protection duties  on 
"network operators " (including users of networks), as well as the certification or the inspection of 
"critical network equipment and specialized network security products". The law also include s 
additional obligations for operators of critical information infrastructure as well as data localization 
requirements. China has also tightened the implementation of the existing legislation regarding the 
prohibition (for individuals) or the limitation (for foreign companies) on using Virtual Private 
Networks (VPN) to access the Internet. China has also continued to expand its Mobile Virtual 
Network Operators (MVNO) pilot scheme and to deploy its LTE 4th generation mobile network.  
34. Regarding financial services, in June 2016 and June 2017, China issued two implement ing 
regulations conce rning the licencing of foreign bank card clearing institutions. In March 2017, 
China eased approval requirements for foreign -owned banks to supply certain investment banking 
services in the country and to invest in domestic banking institutions. China also  partially WT/TPR/S/375 /Rev.1  • China  
 
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  liberalized rating agencies services in July 2017 and announced in November 2017 that it would 
abolish restrictions limiting a single foreign investor 's stake in a Chinese bank to 20% and capping 
total foreign ownership of any banking institutio n at 25%. During the review period, China opened 
the internet insurance market to both foreign and domestic operators, and allowed foreign insurers 
to engage in reinsurance in the Shanghai Pilot Free Trade Zone.  China has also opened further its 
interbank bond market.  
35. The practice of legal services by foreign firms in China is limited to representative offices, 
excludes Chinese law , and prevents foreign firms from employing Chinese qualified lawyers unless 
they relinquish their professional title. Foreigner s cannot sit the Chinese national lawyer exam. 
There are 287 such foreign representative offices present in eleven provinces operating in China.  
36. The practice of accounting services in China is allowed only in the form of partnerships or 
limited liability c ompanies, established and run by Certified Public Accountants (CPAs) licensed by 
the Chinese authorities. Foreigners can sit the Chinese national accountancy examination. Foreign 
accounting firms are permitted to affiliate with Chinese firms and enter into  contractual 
agreements with their affiliated firms in other WTO Members. Accounting firms can engage in 
taxation and management consulting services.  
37. The practice of engineering services in China is allowed in the form of wholly foreign -owned 
enterprises.  Foreign suppliers shall be registered architects/engineers or enterprises engaged in 
architectural/engineering/urban planning services in their home country. The examination for 
survey and design engineers is not open to foreigners. China has not conclude d mutual recognition 
agreements on qualifications in engineering design with other countries or regions nor has it  
autonomously recognized engineering design qualification s obtained in other countries or regions.  
38. Most of the pipeline trunk network in China belongs to three SOEs, which are listed on the 
Hong Kong , China  stock market and have foreign shareholders. Foreign participation is allowed; 
the 2017 Investment Catalogue classifies pipelines as an "encouraged industry" and allows wholly 
foreign -owned pipelines, subject to a national security review. A third party access pilot regime 
was established in 2014 for a test period of five years.  WT/TPR/S/375 /Rev.1  • China  
 
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  1  ECONOMIC ENVIRONMENT  
1.1  Main Features of the Economy  
1.1.  The Chinese economy  continued to be an important engine of global growth ; according to the 
Chinese authorities, it account ed for around 30 % of global economic expansion  during the review 
period.1 However, growth has been moderating as the economy adjusts to the "new normal "2, and 
the main contributor s have shifted from investment to consumption, from external to internal 
demand, and from manufacturing to services. The shift in the structure of development  is evident , 
as services now account for over 50 % of GDP and the share o f merchandise trade in GDP has 
declined. The growth has resulted in rising rural incomes; this has resulted in declining income 
inequality and poverty levels.3 Consequently, China 's GDP per capita has risen to US$8,12 4 in 
2016. Nonetheless, despite the imp ressive growth and unprecedented poverty reduction, the 
income gap between the richest and the poorest remains large.  
1.2  Recent Economic Developments  
1.2.  Real GDP growth was 6.9 % in 2015 and 6.7 % in 2016, lower than in the preceding years 
(Table 1.1). It is expe cted that real GDP will have grown by around 6.8 % in 2017. During the 
period under review, consumption contributed to nearly two -thirds of the expansion . The r easons 
for the consumption -driven growth include strong employment creation, rising incomes and 
improving coverage of the social safety net. Rising consumption manifests itself in the increasing 
importance of the services sector, whose share in GDP exceeded 50 % for the first time in 201 6 
(Table 1.2). Within services, e -commerce sales and tourism servi ces imports have been 
particularly strong.4 Furthermore, growth of financial intermediation services and wholesale and 
retail trade has also been buoyant over the past few years.  
Table 1.1 Selected macroeconom ic indicators, 2013 -17 
  2013  2014  2015  2016  2017a 
Nominal GDP (RMB billion)  59,524.4  64,397.4  68,905.2  74,358.5  82,712.2   
Nominal GDP (US$ billion)  9,607.3 10,48 2.3 11,06 4.7 11,191.0  12,237.8   
Real GDP (RMB billion, 2015 prices)  60,073.5  64,457.5  68,905.2  73,514. 5  ..  
Real GDP (US$ billion, 2015 prices)  9,695.9  10,492.1  11,064.7  11,064. 0  ..  
GDP per capita (RMB)  43,852.0  47,203.0  50,251.0  53,980.0   ..  
GDP per capita (US$)  7,078 7,684  8,069  8,124   ..  
National accounts       
Real GDP (%age  change)  7.8 7.3 6.9 6.7  ..  
 Domestic demand  8.1 7.2 7.2 7.4  ..  
 Consumption  7.2 7.2 8.3 8.4  ..  
 Investment  9.1 7.1 6.1 6.3  ..  
   Fixed  9.3 6.8 6.7 6.7  ..  
Contribution to GDP growthb      
 Consumption  3.6 3.6 4.1 4.3  ..  
 Investment  4.3 3.4 2.9 2.8  ..  
 Net exports  -0.1 0.3 -0.1 -0.4  ..  
Unemployment rate (%)c 4.1 4.1 4.1 4.0  ..  
Prices and interest rates       
Inflation (CPI, %age change)  2.6 2.0 1.4 2.0 1.6  
Lending rate (%, period average)  6.00 5.60 4.35 4.35  4.35  
Deposit rate (%, period average)  3.00 2.75 1.50 1.50  1.50  
                                                
1 The review period is 2016 -18, based on data and information available as at end -March 2018.  
2 The "new normal" refers to a statement by Xi Jinping , General Secretary of t he Communist Party of 
China , in 2014, where he stated that China was entering a "new normal". This term has subsequently come to 
refer to expectations of 7% growth rates for the foreseeable future. It is indicative of the Government's 
anticipation of moder ate but perhaps more stable economic growth  in the medium -to-long term.  
3 During 2014 to 2016, per capita disposable income of urban residents in China grew at an average 
rate of 6.3%, while for rural residents the average per capita disposable income growth was 7.6%, which 
reflects that the urban -rural income gap is narrowing. Furthermore, the authorities stated that since 2011 
more than 60 million people have been lifted ou t of poverty, thereby reducing the poverty incidence from 
10.2% to below 4%. In 2016, the Gini coefficient was 0.465, 0.012 lower than in 2011.  
4 Economic Survey of China 2017. OECD online information. Viewed at: 
http://www.oecd.org/china/economic -survey -china.htm  [23.03.2018].  WT/TPR/S/375 /Rev.1  • China  
 
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    2013  2014  2015  2016  2017a 
Exchange rate       
RMB per US$ (period average)  6.196  6.143  6.227  6.644  6.759   
Real effective exchange rate index (%age 
change)d 6.3 3.2 10.7 -5.6  -2.2  
Nominal effective exchange rate index (%age 
change)  5.3  3.1  9.5  -6.5   -2.5  
Monetary indicators       
Net d omestic credit (%age change)  15.1 16.2 23.7 20.1 11.3 
Broad money, M2 (%age change)  13.6 11.0 13.3 11.3  9.0  
Required reserve ratio (RRR) (% of bank 
deposits)  19.5 19.5 17.5 17.0  ..  
Excess reserve ratio (% of bank deposits)  2.3 2.7 2.1  ..   ..  
Fiscal policye (% of GDP)       
Financial balance  -1.8 -1.8 -3.4 -3.8  ..  
Total revenue  21.7 21.8 22.1 21.5  ..  
 Tax revenue  18.6 18.5 18.1 17.5  ..  
Total expenditure  23.6 23.6 25.5 25.3  ..  
Government total debt  .. .. 38.7 36.7  ..  
Saving and investment (S ource : National 
Bureau of Statistics)   
GDP by expenditure approach (RMB billion)  59,696.3  64,718.2  69,910.9  74,631.5   ..  
 Final consumption expenditure (RMB billion)  30,033.8  32,831.3  36,226.7  40,017.6   ..  
 Gross capital formation (RMB billion)  28,207.3  30,271.7  31,283.6  32,972.7   ..  
 Net exports of goods and services (RMB billion)  1,455.2  1,615.2  2,400.7  1,641.2   ..  
 Savings (RMB billion)  29,662.5  31,886.9  33,684.3  34,613.9   ..  
 Savings (% of GDP by expenditure)  49.7 49.3 48.2 46.4  ..  
 Investment (% GDP by expenditure)  47.3 46.8 44.7 44.2  ..  
Savings -investment gap (% of GDP by 
expenditure)  2.4 2.5 3.4 2.2  ..  
Saving and investment (S ource : IMF)   
Gross national savings (% of GDP)  48.8 49.0 47.5 45.9  ..  
Gross investment (% of GPD)  47.3 46.8 44.7 44.2  ..  
Savings -investment gap (% of GDP)  1.5 2.2 2.7 1.7  ..  
External sector (% of GDP, unless otherwise 
indicated)       ..  
Current account balance  1.5 2.3 2.7 1.8  1.3  
Net merchandise trade  3.7 4.1 5.2 4.4  3.9  
 Value of exports  22.4 21.4 19.4 17.8  18.1  
 Value of imports  18.6 17.3 14.2 13.4  14.2  
Services balance  -1.3 -2.0 -2.0  -2.2   -2.2  
Capital account  0.03 -0.00 0.00 -0.00  -0.00  
Financial account  3.6 -0.5 -3.9 -3.7  1.2  
 Direct investment, net  2.3 1.4 0.6 -0.4   0.5  
Balance -of-payments  4.5 1.1 -3.1 -4.0  0.8  
Merchandise exportsf (%age change)  8.9 4.4 -4.5  -7.2   11.4  
Merchandise importsf (%age change)  7.7 1.1 -13.4 -4.2   16.0  
Service exportsf (%age change)  2.7 5.9 -0.8 -4.1  -0.9  
Service importsf (%age change)  17.5 30.9 0.7 1.3  6.9  
Gross official reservesg (US$ billion; end period)  3,849.4  3,869.0  3,405.4  3,097.7   3,253.3   
 Foreign exchangeh (US$ billion; end period)  3,821.3  3,843.0  3,330.4  3,010.5   3,139.9   
Total external debt (US$ billion; end period)  1,532.8  1,779.9  1,383.0  1,415.8   1,710.6   
Debt service ratioi 1.6 2.6 5.0 6.1  ..  
.. Not available.  
a Estimates . 
b Refers to the growth of GDP multiplied by the respective contribution share.  
c Registered unemployment in urban areas.  
d A positive increase in the real effective exchange rate means an appreciation of renminbi relative to 
the other major currencies in th e index.  
e Including central and local governments.   
f Growth rates on merchandise and service trade are based on US$.  
g Excluding gold, including SDRs and Reserve Position in the Fund.  
h Excluding gold, SDRs and Reserve Position in the Fund.  
i Debt servic e ratio refers to the ratio of the payment of principal and interest of foreign debts to the 
foreign exchange receipts from foreign trade and non -trade services of the current year.  
Source:  National Bureau of Statistics online information; State Administration of Foreign Exchange online 
information; and IMF online information.  WT/TPR/S/375 /Rev.1  • China  
 
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  Table 1.2 GDP by sector, 2013 -17 
    2013  2014  2015  2016  2017  
GDP by industry at constant prices (annual %age change)    
Agriculture, forestry and fishing  4.0  4.2  4.0  3.5  4.1  
Industrya 7.7  7.0  6.0  6.0  6.4  
Construction  9.7  9.1  6.8  7.2  4.3  
Services  8.3  7.8  8.2  7.7  8.0  
 Wholesale and retail trade  10.5  9.7  6.1  7.1  7.1  
 Transport, storage and post  6.6  6.5  4.1  6.6  9.0  
 Restaurants and hotels  3.9  5.8  6.2  7.4  7.1  
 Financial intermediation  10.6  9.9  16.0  4.5  4.5  
 Real estate  7.2  2.0  3.2  8.6  5.6  
 Other  7.5  8.5  9.3  9.4.  10.4  
Share of main sectors in current GDP (%)      
Agriculture, forestry and fishing  9.6  9.3  9.1  8.9  8.2  
Industrya 37.4  36.3  34.3  33.3  33.9  
Construction  6.9  7.0  6.8  6.7  6.7  
Services  46.2  47.4  49.8  51.1  51.2  
 Wholesale and retail trade  9.5  9.7  9.6  9.6  9.4  
 Transport, storage and post  4.4  4.4  4.4  4.4  4.4  
 Restaurants and hotels  1.7  1.7  1.8  1.8  1.8  
 Financial intermediation  6.9  7.2  8.4  8.2  7.9  
 Real estate  6.0  5.9  6.1  6.5  6.5  
 Other  17.7  18.4  19.5  20.6  21.1  
a Including mining and quarrying, manufacturing, production and supply of electricity.  
Source:   National Bureau of Statistics of China online information.  
1.3.  Despite the growth, imbalances have accumulated  over a number of years. The shift to a 
more consumption -led expansion p attern has mainl y been driven by the deceleration in investment 
rather than a surge in consumption, as the contribution of consumption to growth has been 
relatively stable over the past two decades. After peaking at 42.1 % in 2010, the household saving 
rate in China has be en declining and was 37.1 % in 2015; however, it continues to be high  by 
international standards, resulting in capital accumulation, which in turn has been the driving force 
behind China 's growth for many years.5 However , this has led to misallocation of ca pital and falling 
investment efficiency, and to excess capacity in some manufacturing industries and in the real 
estate sector, resulting  in a declining contribution of total factor productivity to growth. According 
to the OECD, h igh enterprise investment was financed by debt , fuelled by interest subsidies and 
implicit guarantees for state -owned enterprises (SOEs) and other public entities; however, the 
authorities maintain  that credit activities are independent and driven by market conditions and do 
not involve any government interference. Furthermore, the authorities state that, according to the 
Commercial Bank Law, Chinese commercial banks operate independently, and are responsible for 
their own gains and losses, and commercial bank loans should take in to account return on net 
capital gains of an enterprise, debt payment capacity, and integrity and sustainable development. 
According to the authorities, the difference in interest rates reflects commercial banks ' 
independent activities and is not based on the ownership of the enterprises. E ffectively addressing 
sources of risk, such as excessive corporate leverage, real estate bubbles and leveraged 
investment in asset markets would help keep growth on a sustainable path.  
1.4.  The authorities are cognizant of th ese risks, and are focusing on the quality and sustainability 
of growth rather than its quantity with a view to encouraging innovation -driven, harmonized, 
green, open, and inclusive development. China continues to be in a transition to a more 
sustainable development  path and reforms have advanced across many areas, including the 
introduction of measures to reduce overcapacity ( Sections 4.2 and 4.3), strengthen local 
government borrowing frameworks, and address financial sector risks.  
1.5.  According to a report b y the IMF, China has the potential to sustain strong growth over the 
medium term, although the reform process to rebalance towards less credit -intensive growth 
                                                
5 Economic Survey of China 2017. OECD online information. Viewed at: 
http://www.oecd.org/china/ec onomic -survey -china.htm .  WT/TPR/S/375 /Rev.1  • China  
 
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  needs to be accelerated, while using still -sizeable buffers to smooth the transition.6 The repor t 
suggests that the Chinese authorities should : further boost consumption by increasing social 
spending and making the tax code more progressive; increase the role of market forces by 
reducing implicit subsidies to SOEs and opening more key sectors to priv ate investment; and 
further deleverage the private sector with continued regulatory/supervisory tightening, greater 
recognition of bad assets, and more market -based credit allocation. The Government disagrees 
with this viewpoint and maintains that the law provides for equal treatment and protection of 
market players. Furthermore, with regard to subsidy programmes, the authorities state that all 
enterprises, regardless of ownership, are treated equally and  that there are no specific subsidies to 
SOEs; all en terprises are entitled to receive subsidies if certain requirements are met. Additionally, 
China has taken a series of measures to help enterprises deleverage. These include inter alia : law-
based bankruptcy, merger and restructuring, optimization of enterp rises' debt structure, and debt -
to-equity swaps.   
1.6.  Furthermore, future growth could also be boosted by the "Belt and Road " (or "One Belt and 
One Road ") Initiative (Box 1), which aims to foster multinational cooperation in trade, investment 
and finance, brin ging much needed infrastructure and connectivity to the region. The authorities 
expect that the initiative could result in an increase in the trade and development level of the 
participating countries and achieve an open world economy. However, strong gove rnance of 
projects to assure that they are financially viable and that the recipient countries have sufficient 
institutional and macroeconomic capacity to manage them would be required to reap the benefits 
of this initiative.  
Box 1.1 Belt and Road Initiative  
China 's President Xi Jinping announced the building of the Silk Road Economic Belt and 21st Century Maritime 
Silk Road in 2013. These two initiatives have since come to be known as the Belt and Road Initiative ( BRI, or, 
alternatively, the One Belt and One Road Initiative (OBOR) ). 
 
In 2015, the National Development and Reform Commission (NDRC), t he Ministry of Foreign Affairs and the 
Ministry of Commerce (MOFCOM) jointly issued a roadmap (the Vision and Actions on Jointly Building Silk Road 
Economic Belt and 21st Century Maritime Silk Road) that underlines the five priorities of the initiative: po licy 
coordination (promoting intergovernmental cooperation); facilities connectivity (improving road, energy and 
information infrastructure); unimpeded trade (removing trade and investment barriers); financial integration 
(deepening of financial cooperatio n, expansion of bilateral currency swaps and settlements, establishment of 
new financial institutions); and people -to-people bonds (promotion of cultural and educational exchanges, 
enhancing cooperation on tourism and epidemic information). The Initiative also includes strengthening 
environmental and energy cooperation.  
 
The BRI is to be a network of ports, roads, railways, airports, power plants, oil and gas pipelines and refineries, 
and free trade zones. It would also incorporate the supporting IT, teleco m, and financial infrastructure. For the 
land part, the BRI follows the ancient silk route connecting Asia with Europe, while for the naval part, a 
21st Century Maritime Silk Road would connect eastern China to the Middle East, Africa and Europe. The BRI 
would encompass over 65 countries.  
 
Furthermore, the BRI aims to increase connectivity between the Asian, European and African continents. The 
objective of this increased connectivity is to enhance trade flows and spur long -term regional economic growth 
and development, benefiting all those involved. In this regard, the Government has entered into over 
100 intergovernment al cooperation agreements. These agreements reiterate the principle of jointly building 
through consultation to meet the interests of all c oncerned parties, as well as, fully align ing with existing 
multilateral and bilateral cooperation mechanisms and follow ing international best practices.  
 
As envisaged, the BRI would require an enormous financing commitment. Based on certain estimates, the  BRI 
will mobilize up to US$1 trillion of outbound state financing from the Chinese government in the next 
ten years. Most of this funding will come in the form of preferential debt funding, but some will be in equity. 
The Government has created a steering  group for the BRI, which is responsible for the overall planning, 
coordination and implementation of the BRI. The office is under the NDRC. Furthermore, specific recently 
created vehicles are envisaged to help allocate this money to appropriate projects and initiatives. These 
include, inter alia , the recent establishment of a US$40 billion Silk Road Fund (SRF), and the government  
directing large sums of its foreign exchange reserves and several of its la rgest state -owned banks to the 
initiatives ; some international organizations , including the Asian Infrastructure Investment Bank (AIIB)  and the 
                                                
6 IMF Country Report 17/247. IMF online information. Viewed at: 
http://www.imf.org/en/Publications/CR/Issues/2017/08/15/People -s-Republic -of-China -2017-Article -IV-
Consultation -Press -Release -Staff-Report -and-45170  [23.08.2018].  WT/TPR/S/375 /Rev.1  • China  
 
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  New Development Bank (NDB) , may be involved in BRI -related projects . Furthermore, China hopes to 
cooperate with different governments, companies and investment funds, potentially creating opportunities for 
many shared projects and public -private partnership (PPP) initiatives. It is estimated that thus far projects 
totalling approximately US$250 billion have either b een built already, recently started construction or have 
been agreed on and signed in relation to the BRI (PWC, China 's new silk route - the long and winding road . 
(Viewed at: https://www.pwc.com/gx/en/issues/high -growth -markets/publications/china -new-silk-route.html  
[23.03.2018] .) 
 
From China 's perspective, the BRI is intended to promote and build a new platform for international 
cooperation and create new drivers of shared development. As such , the BRI is seen as an effective and 
integrated way to stimulate trade and exports within BRI participants.  
 
The authorities consider that the BRI's potential to spur increased trade is enormous: with tarif fs at relatively 
low levels on most products in most markets ; it is transportation costs and non -tariff measures that now 
constitute the principal barriers to trade. The initiative directly targets transportation costs. Nonetheless, it 
would appear that if  governments are to maximize the BRI's contribution towards reaching their growth and 
development objectives, they will need to accompany the "hard" infrastructure being constructed with "soft" 
infrastructure: policies and institutions to support entrepren eurs, businesses and trade. Countries are expected 
to work together to lower non -tariff barriers by simplifying, harmonizing or recognizing each other 's technical 
standards and regulations for goods and services. In this respect, the Chinese government has  contributed 
US$1 million to the WTO 's Trade Facilitation Agreement Facility .  
 
One critical factor in determining how the BRI translates into broad -based growth will be whether small and 
medium enterprises (SMEs) are able to take advantage of the new trad e opportunities. Because SMEs account 
for the vast majority of enterprises and jobs in any country, their ability to become more competitive and 
succeed in international markets helps ensure the gains from trade are broadly shared across society. For 
examp le, China and Pakistan are to jointly build the China Pakistan Economic Corridor (CPEC). Under the 
CPEC, the two sides are to build a fleet of power plants, construct road and rail links, set up special economic 
zones where companies are to be accorded tax  breaks and other business incentives , and expand the Gwadar 
port on Pakistan 's south coast, which is financed, built and operated by China.  Estimates from the Pakistan 
Business Council suggest the projects could account for 20 % of the country 's GDP over t he next five years and 
boost growth by about 3  percentage points.  
1.2.1   Monetary and exchange policy  
1.2.1.1   Monetary policy  
1.7.  According to the authorities, price stability is the primary but not the only goal of monetary 
policy. Under the Law on the People 's Bank of China (PBOC), the aim of monetary policy is to 
maintain the stability of the value of the currency and thereby promote economic growth. 
However, as China is an economy in transition, other objectives such as employment, balance of 
payments and financial se ctor stability have to be considered when making monetary policy 
decisions.7  
1.8.  During the review period, monetary policy was guided by adjusting to the "new normal " and 
creating a monetary and financial environment that is conducive to supply -side structural reform. 
As such, during the first half of 2016, monetary policy was slightly loose; in the second half of 
2016 and first half of 2017 monetary policy tended to become neutral. The authorities consider 
their monetary stance to be neutral.8 
1.9.  Starti ng in 2016, the PBOC moved to a more market -based approach of conducting monetary 
policy. The new approach involves a closer management of liquidity in the banking system through 
an expanded range of instruments such as repos (or reverse repurchase agreeme nts) and lending 
facilities to promote better capital allocation and guide market interest rates to more closely match 
the PBOC 's objectives. Under the new system, the PBOC uses a corridor or an interest rate band, 
where the upper limit is set by its overn ight seven -day and one -month standing lending facilities, 
while the lower rate is the interest paid by the PBOC on excess deposit reserves. The PBOC 
focuses on the seven -day inter -bank market rate (M2 growth remains the official intermediate 
target and is set at 12 % for 2017), and influences its position within the corridor by adjusting 
liquidity in the money markets through repo or reverse -repo agreements.  
                                                
7 IMF Country Report 17/247.  
8 IMF Country Report 17/247.  WT/TPR/S/375 /Rev.1  • China  
 
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  1.10.   Major monetary policy decisions on benchmark lending and deposit rates continue to go 
through the St ate Council; rates on money market instruments such as repos and SLFs are set by 
the PBOC. In August 2016, as concerns emerged of a bubble in the debt market caused by 
investors using cheaper short -term financing (seven -day repos) to invest in longer -dated  bonds, 
the PBOC intervened and started using longer -term instruments, such as 14 -day repo agreements 
and medium -term loan facilities, which have a higher interest rate. This in turn increased the cost 
of capital for the borrowers and reduced speculative a ctivity. Furthermore, as a result of higher 
volatility in the money market in the second -half of 2016, the PBOC raised its reverse repos 
operations bid rate and the rate on its standing lending facilities twice by 10 basis points in the 
first quarter of 20 17. Under the new framework, the PBOC has been able to raise the cost of 
capital without dampening the growth of the economy. The new approach allows the PBOC to be 
more proactive and targeted in the implementation of monetary policy. Another advantage of the 
new approach is that it results in banks using capital more efficiently. Going forward, with inflation 
rising, the PBOC is expected to maintain  a sound and neutral monetary policy.  
1.11.   In 2016, i nflation, as measured by the consumer price index, increased to 2%, which was 
within the PBOC 's desired range of 2 -3%.9 The increase in prices was driven by rising food prices, 
higher prices of services, as well as higher prices of consumer goods. The authorities consider that 
growth in consumption was responsible f or driving up the prices of services.10 In the first 
two quarters of 2017, CPI growth fell to 1.4 % due mainly to a fall in food prices and monetary 
tightening, which resulted in a slowdown in the rise of prices for consumer goods. Nonetheless, the 
growth of  the prices of services accelerated in the first half of 2017.11 In 2017 as a whole, CPI 
growth was 1.6 %. 
1.2.1.2   Exchange rate policy  
1.12.   China has a managed floating exchange rate regime, which uses a basket of currencies as a 
reference. During the period under revie w, the PBOC continued to increase exchange rate 
flexibility.  
1.13.   With a view to better reflecting the fundamentals of the Chinese economy and the changes 
in the international foreign exchange market, as well as to offset pro -cyclical volatilities and to 
mitiga te the "herding effect " in the foreign exchange market, the PBOC introduced a counter -
cyclical factor into exchange rate determination.  
1.14.   The new formation mechanism for the exchange rate is the combination of the previous 
closing rate, exchange rate movemen ts against a basket of currencies, and the counter -cyclical 
factor. The counter -cyclical factor is calculated by removing the impact of the currency basket 
from the movement between the previous closing rates and the central parity, after which the 
exchang e-rate movements mainly reflect market supply and demand. The counter -cyclical factor 
can be found by adjusting the counter -cyclical coefficient, which is set by the quoting banks based 
on changes in the economic fundamentals and the extent of pro -cyclical ity in the foreign -exchange 
market.12 According to the authorities, the counter -cyclical factor of each quoting bank may differ 
from other banks. All the data and information involved when the counter -cyclical factor is set are 
either public information fro m the market or set by respective quoting banks without the 
intervention of third parties.  
1.15.   According to the authorities, the new mechanism has effectively contained the herding 
effect in the foreign -exchange market, enhanced the role of China 's macro -econo mic fundamentals 
in the formation of the RMB exchange rate, and maintained the basic stabilization of the RMB 
exchange rate at a reasonable and equilibrium level. At the end of 2017, the central parity of the 
RMB exchange rate was RMB 6.7 8 per US dollar, a ppreciating by 2.51 % from the end of the 
previous year.  
                                                
9 IMF Country Report 17/247.  
10 PBOC China Monetary Policy Report Quarter Four 2016. PBOC online information. Viewed at: 
http://www.pbc.gov.cn/english/130727/130879/3007494/3272842/index.html  [24.03.2018].  
11 PBOC China Monetary Policy Report Quarter Two 2017. Viewed at: 
http://www.pbc.gov.cn/english/130727/130879/3322165/index.html  [24.03.2018].  
12 PBOC China Monetary Policy Report  Quarter Two 2017.  WT/TPR/S/375 /Rev.1  • China  
 
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  1.16.   According to the IMF, the basket of currencies has not fully replaced the dollar as a 
reference; the authorities have made progress in reducing the dollar link and increasing market 
focus on the nomin al effective exchange rate. Additionally, tighter enforcement of capital flow 
management measures, a better growth outlook, and a weaker US dollar have helped reduce 
intervention in the foreign exchange market and the near -term risk of large outflows. Furt hermore, 
the IMF assesses that the real effective exchange rate is broadly consistent with fundamentals.13 
1.17.   With a view to promoting bilateral trade and investment, the PBOC continued to encourage 
direct trading between the RMB and other currencies. As such,  in 2015 -16, direct trading of the 
RMB against an additional 13 sovereign currencies was introduced on the interbank foreign 
exchange market.14 
1.2.2   Fiscal policy and reform  
1.18.   During the review period, China continued to pursue a proactive fiscal policy, which was  
guided by supply -side restructuring and adjusting to the "new normal ". The authorities consider 
that fiscal policy has been successfully used as an automatic stabilizer and counter -cyclical 
regulator, thus helping achieve sustained and steady economic and  social development.  
1.19.   In 2016, the fiscal deficit rose to 3.8 % of GDP from 3.4 % in 2015. The increase was due to 
declining tax revenue as a share of GDP; it fell from 18.1 % of GDP to 17.5 % over the same 
period. Total expenditure also declined slightly from 25.5% of GDP to 25. 3% over the review 
period. Government total debt declined from 38.7 % of GDP in 2015 to 36.7 % in 2016.  
1.20.   The decline in revenue as a share of GDP can be attributed to the nationwide 
implementation of the VAT pilot reforms, which reduced ind irect tax revenue significantly. In 
May 2016, the transformation of the business tax levied on services into VAT was completed, with 
financial, construction, real estate and lifestyle service industries also being subject to VAT. The 
VAT regime is complex,  consisting of 3  tax rates (17, 11, and 6 %) and two levy rates (5 and 3 %); 
in March 2018, the State Council announced its intention to lower some VAT rate s from 
1 May 2018. In addition to increasing the neutrality of China 's indirect tax system, the tax re form 
has eased the tax burden on firms. Revenue from VAT is shared between national and sub -national 
authorities. Other factors  affecting revenue collection include the lagged influence of the economic 
slowdown and the high base of the fiscal revenue from both the financial sector and some non -tax 
items in 2015.  
1.21.   On the expenditure front, urban and rural community expenditures, and expenditures in lieu 
of social welfare and employment, scientific and technological development, medical services, 
healthcare an d family planning, grew considerably.  
1.22.   The Budget Law issued in 2014 aims to mitigate off -budget spending and consolidate 
budget s as well as  to improve budget management and supervision by establishing and improving 
a standardized and more transparent budge t system. It mandates that state budgets be prepared 
at each of the five government levels, with the national budget consisting of the central budget 
and local budgets.15 The Law also specifies that a local general budget at any level must consist of 
the bu dget of the government at the corresponding level and the aggregate general budget at the 
next lower level. During budget implementation, governments may generally not introduce new 
measures to increase or reduce revenue or to increase expenditure. If such  a policy or measure is 
deemed indispensable and a budgetary adjustment is required, a request must be submitted to the 
                                                
13 IMF Country Report 17/247.  
14 The 13 currencies are: the Canadian dollar, the Danish krone, the Hungarian forint, the Mexican peso, 
the Norwegian krone, the Polish zloty, the Saudi riyal, the South African rand, the South Korean won, the 
Swedish krona, the Swiss franc, the Turkish lira, and the UAE dirham.  
15 The five levels are: Central Government; provinces, autonomous regions and municipalities directly 
under the Central Government; cities divided into districts and autonomous pr efectures; counties, autonomous 
counties, cities not divided into districts, and municipal districts; and townships, nationality townships and 
towns.  WT/TPR/S/375 /Rev.1  • China  
 
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  Standing Committee of the National People 's Congress at the same level for examination and 
approval.16  
1.23.   In August 2016, the State Council  issued the Guidance on Promoting the Reform of the 
Distribution of Fiscal Power and Duties of Expenditure between Central and Local Governments 
(Guo Fa [2016] No. 49).17 Under the guidance, the Central Government's fiscal power is to be 
strengthened; greater effort is to be made  to ensure that local governments fulfil their fiscal 
responsibilities; the overlap of central and local governments ' fiscal power is to be reduced; a 
dynamic adjustment system is to be established for power distribution; the expendi ture 
responsibilities of central and local governments are to be made clear; the corresponding 
expenditure responsibilities of overlapping power are to be also eliminated; and the fiscal power 
and expenditure responsibilities of governments below the provi ncial level are to be further 
divided.18  
1.24.   Furthermore, State Council Document 88, issued in October 2016, create d a resolution 
framework which classifies local government units by risk level and sets corrective measures .19 
Additionally,  Joint Circular 50, is sued in April 2017, strengthened the ban on off -budget borrowing 
and asked local governments to correct illegal practices by July 2017. According to an IMF 
report20, despite these measures, local government financing vehicles continue to borrow heavily. 
Additionally, the authorities are increasingly setting up Government Guided Funds (GGFs) and 
Special Construction Funds (SCFs) to fund public infrastructure. These new financing vehicles are 
akin to public venture capital funds. GGFs are funded by a mixture o f budgetary (a "junior 
tranche ") and non -budgetary financing (a "senior tranche " delivering a steady return) called 
"social capital ", which includes SOEs, local government financing vehicles (LGFVs), banks, and 
other financial institutions. SCFs are entire ly funded by policy banks. GGFs and SCFs continue to 
raise capital, with end -2016 assets of around 5 % of GDP.  
1.25.   According to the IMF, "augmented " debt, which includes the debt of LG FVs and entities such 
as government -guided funds, was estimated at 62 % of GDP in 2016 and projected to rise to 92 % 
in 2022. The IMF states that such debt -financed spending appears to be mostly non -market based 
with uncertain returns and by entities that are largely government -controlled. Thus "augmented " 
debt, according to t he IMF, provides a more accurate estimate of the fiscal impulse and potential 
debt burden on public finances; in 2014, two -thirds of LGFV debt (22 % of GDP) was recognized as 
government obligations. On the other hand, given recent reforms, especially the 20 14 Budget Law 
and subsequent regulations that legally removed government responsibility for such debt, there is 
now somewhat larger uncertainty regarding the degree to which "augmented " debt will eventually 
become a burden on public finances. However, the authorities disagree with the "augmented " debt 
and deficit concepts. According to the authorities, the 2014 Budget Law and subsequent 
regulations had clarified that LGFVs were standard firms and thus new borrowing was not part of 
the government sector. All  obligations of local governments have been explicitly recognized within 
official public debt statistics and local governments will not assume any legal repayment 
responsibility for LG FVs, GGFs, or SCFs in the future. The authorities stated that many LGFV 
projects were commercial and backed by real assets.21 
1.26.   Other fiscal measures adopted during the review period pertaining to supply -side reform 
and economic restructuring have included: a RMB 100 billion budget to cut overcapacity in steel 
and coal ( Sections 4.2 and 4.3), the destocking  of commercial housing by increasing the 
proportion of monetary compensation in the renovation of urban rundown areas and 
encouragement for commercially viable debt -for-equity swaps, the lowering of the contribution 
rate (premiu m rate/payment ratio) of the five social insurances and one housing fund temporarily, 
                                                
16 Article 68 of the Budget Law of, adopted at the 10th Session of the Standing Committee of the 
12th National People's Congress on 31 August 2014.  
17 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2016 -08/24/content_5101963.htm  [24.03.2018].  
18 Information provided by the authorities.  
19 MOF online information (in Chinese). Viewed at: 
http://www.mof.gov.cn/zhengwuxinxi/zhengcefabu/201611/t20161 114_2457914.htm  [11.04.2018] . 
20 IMF Country Report 17/248. IMF online information. Viewed at: 
http://www.imf.org/en/Publications/CR/Iss ues/2017/08/15/People -s-Republic -of-China -Selected -Issues -45171  
[27.03.2018] . 
21 IMF Country Report 17/247.  WT/TPR/S/375 /Rev.1  • China  
 
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  increased resources for poverty alleviation , and the development of  more measures to support 
environmental protection, energy conservation and emissions reduction. Additi onally, the fiscal 
system was reformed to support SOE reforms and social security ( Section 3.3.5).22 Specific 
measures undertaken include inter alia : the special poverty alleviation fund set up for local 
governments; and a RMB 100 billion special award and subsidy fund also provided to local 
governments to be used for employees affected by overcapacity reduction ( Sections 4.2 and 4.3).   
1.2.3   Other structural measures  
1.27.   Reform of SOEs and the related overcapacity issue are integral parts of the 13th Five Year -
Plan and the Supply -Side Restructuring Policy. Against this background, the authorities continued  
to implement  measures to reform SOEs and reduc e overcapacity during the review period 
(Sections 3.3.5, 4.2 and 4.3). In September 2015, China 's Guidelines on Deepe ning SOE Reforms 
were released. The Guidelines identify priority areas for reform, which include: improvement of the 
modern enterprise system ; improv ement of the administration of state -owned assets with a focus 
on capital management ; development of mixed ownership ; and strengthening of supervision so as 
to avoid loss of state -owned assets.  
1.28.   Mixed -ownership reforms, which allow private capital to be invested in government -run 
enterprises, have yielded some progress, with 68 % of State Asset Supervisory Admin istrative 
Commission (SASAC) -controlled central SOEs introducing non -State owners by end -2016. In 
addition, several troubled SOEs have announced restructuring plans; the focus appears more on 
mergers and consolidation, rather than operational restructuring . According to the authorities, 
SOEs in China have taken a series of measures including horizontal consolidation of businesses in 
the same category, vertical coordination of up - and downstream businesses and professional 
integration with a focus on key ind ustries ; most SOEs have realized the ir target s after 
restructuring. Since 2013, 32 central SOEs under SASAC have completed restructuring.  In 201 7, 
these 32 central SOEs realized a total profit of RMB 342.1 billion ( RMB 279.9 billion  in 2016) , an 
increase o f 65.3% since 2013. Furthermore, efforts to resolve unviable debt are also underway . 
According to an IMF report , 20% of identified "unviable " central SOEs ' debts were resolved , while 
SOEs continue to account for 50 % of unviable debt outstanding23; the authorities do not agree 
with th is. The target of 345 unviable firms to be reorganized (through inter alia  mergers, debt 
restructuring, and management reform) or closed  by SASAC in the coming three years appears 
rather modest given that it controls around 40,000 firms and that most unviable firms are SOEs.24 
1.29.   Additionally, in July 2016, the State Council issued a Guiding Opinion on Promoting 
Structural Adjustment and Restructuring of Central SOEs.25 It clarifies that: by 2020, central SOEs 
will have a clearer strategic position; the overall structure will become more rational and state -
owned assets will be distributed more efficiently; development quality will improve; and a group of 
innovative and internationally competitive enterprises will be established.  
1.30.   Related to the role of SOEs, the overcapacity issue concerns both the public and private 
sectors and has domestic and international implications. There appear s to be overcapacity in at 
least ten sectors including coal, steel, cement, plated glass, aluminium , chemicals, paper, solar 
power, shipbuilding, and coal fuelled  power. Firms in these sectors are defined by low capacity 
utilization rates as well as incurring losses. Overcapacity is also damaging as it has an effect  on 
medium -term growth, the environment , and financial stability. Cognizant of these problems, the 
authorities outlined capacity and employment reduction targets for the coal and steel sectors for 
2016-20 (Sections 4.2 and 4.3). According to official data, the authorities met capacity targets i n 
2016 and are on track to meet 2017 targets, partly due to tighter enforcement of environmental 
and regulatory standards. Total employment in the two sectors is also 2 6-27% (around 
1.9-2.6 million  persons ) below 2013 levels. However, it appears that some part of the capacity 
                                                
22 Information provided by the authorities.  
23 IMF Country Report 17/247.  
24 IMF Country Report 17/247 and IMF Country Report 17/248.  
25 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2016 -07/26/content_5095050.htm  [04.04.2018] . WT/TPR/S/375 /Rev.1  • China  
 
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  reduction came from the closure of already -idle plants, and there is still limited restructuring of 
overcapacity firms ' outstanding debt.26  
1.31.   During the review period, the PBOC continued to use window guidance and credit policies to 
signal and guide structural adjustments; these policies include: removing excess capacity, 
reducing stocks, deleveraging, reducing costs, and shoring up weak spots. In this regard, 
according to PBOC China Monetary Policy Quarter Four 2016 and PBOC China Moneta ry Policy 
Quarter One 2017  Reports, banks were encouraged and guided to provide support to build China 
into a manufacturing power  and to continue providing proper financial services for strategic 
adjustment of industrial structure, infrastructure building, and reform and development in key 
areas (such as shantytown renovations, underground utility tunnels, shipbuilding, railways, 
logist ics, and energy).27 In line with the supply -side restructuring policy, banks were encouraged 
to: drive industrial transformation by focusing on expanding service consumption; guide efforts by 
financial institutions to innovate organizational arrangements, p roducts, and service modes; and 
step up financial support to new priorities in consumption, such as retirement services and 
healthcare. Banks continue to provide preferential financial services for agricultur e-related areas 
and small businesses. During the  review period, the PBOC promoted the pilot programme of loans 
collateralized with contracted land and property operational rights for rural housing; it also 
encouraged small - and medium -sized enterprises (SMEs) to issue non -financial enterprise debt -
financing instruments, and supported eligible financial institutions to issue financial bonds to 
extend loans to small businesses.28 
1.32.   The PBOC urged banking institutions to implement various policies to provide financial 
support to address overcapacity issues in the coal and steel sectors ( Sections 4.2 and 4.3). It also 
improved the system of policies to support green finance and stepped up efforts for green 
financing.  
1.33.   Additionally, financial support policies were implemented for national strategies, including 
the Coordinated Development Plan of the Beijing -Tianjin -Hebei Area, the Development of the 
Yangtze River Economic Belt, the Belt and Road Initiative  (BRI), and the Western Region 
Development Strategy, to improve financial services for coordinated regional de velopment. 
Specific measures taken by the PBOC pertaining to the Belt and Road Initiative include:  a 
RMB 100 billion injection to the Belt and Road Fund; encouraging financial institutions to carry out 
overseas RMB fund business with the initial amount est imated to be RMB 300 billion, which will 
provide capital support to the Belt and Road initiatives; working with the IMF to establish the IMF -
China Capacity Building Centre; and promoting a network -oriented distribution of financial 
institutions and service s. Additionally, the PBOC hopes to increase cooperation with the European 
Bank for Reconstruction and Development and support connection between the Belt and Road 
Initiative and European Investment Plan. The PBOC will also continue strengthening cooperatio n 
with the African Development Bank, International Finance Corporation, Inter -American 
Development Bank and other international financial institutions in co -financing and other areas to 
drive investment and construction in related areas.   
1.34.   The PBOC continue d to support policies that were intended to improve financial services 
related to people 's livelihood, such as poverty alleviation, employment, and education. The PBOC 
also increased financial support for mass entrepreneurship and innovation and actively p romoted 
science - and technology -related financial pilot programmes.29  
1.2.4   Balance of payments  
1.35.   China 's current account surplus had been increasing since 2013; however, this trend was 
reversed in 2016, with the surplus declining to US$ 202.2  billion (1.8 % of GDP) , mirroring a 
narrowing of the difference  between  gross national savings and gross investment (Table 1.3).  The 
decrease in current account surplus continued in 2017.  
                                                
26 IMF Country Report 17/247.  
27 PBOC online information. Viewed at: http://www.pbc.gov.cn/english/130721/3272835/index.html  
[12.04.2018] . 
28 PBOC China Monetary Policy Report Quarter Four 2016 and PBOC China Monetary P olicy Report 
Quarter One 2017.  
29 PBOC China Monetary Policy Report Quarter Four 2016.  WT/TPR/S/375 /Rev.1  • China  
 
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  Table 1.3 Balance of payments, 2013 -17 
(US$ million)  
  2013  2014  2015  2016  2017  
Current account  148,204  236,047  304,164  202,203  164,887  
Goods and services balance  235,380  221,299  357,871  255,737  210,728  
  Trade balance  358,981  435,042  576,191  488,883  476,146  
    Exports  2,148,589  2,243,761  2,142,753   1,989,519   2,216,458  
    Imports  1,789,608  1,808,720  1,566,562   1,500,636   1,740,312  
  Service balance  -123,602  -213,742  -218,320   -233,146   -265,417  
    Exports  207,006  219,141  217,399  208,404  206,453  
    Imports  330,608  432,883  435,719  441,550  471,870  
Income  -78,442  13,301  -41,057  -44,013  -34,444  
  Credit  183,973  239,372  223,200  225,818  257,336  
    Compensation of employees  17,790  29,911   33,105   26,883   21,683  
    Investment income  166,183  209,462  189,268  198,374  234,920  
    Other  0  0  826  560  733  
  Debit  262,415  226,071  264,257  269,831  291,780  
    Compensation of employees  1,714  4,155  5,718   6,211   6,690  
    Investment income  260,701  221,916  258,380  263,406  284,833  
    Other  0  0  158  215  257  
Current transfers  -8,733  1,446  -12,649   -9,520   -11,398  
  Credit  53,162  41,127   35,938   30,900   28,619  
  Debit  61,895  39,681  48,588   40,420   40,016  
Capital account  3,052  -33  316    -344    -97  
Financial account  -88,331  -169,141  -91,523   27,250   57,003  
    Assets  -651,666  -580,634  9,454   -231,985   -378,247  
    Liabilities  563,334  411,493  -100,977   259,579   435,343  
  Financial account excluding reserve 
assets  343,048  -51,361  -434,462  -416,070  148,612  
    Direct investment  217,958  144,968   68,099   -41,675   66,309  
      China 's direct investment abroad  -72,971  -123,130  -174,391   -216,424   -101,914  
      Direct investment in China  290,928  268,097  242,489   174,750   168,224  
    Portfolio investment  52,891  82,429  -66,470   -52,271    7,431  
      Assets  -5,353  -10,815  -73,209   -102,770   -109,387  
        Equity securities  -2,531  -1,402  -39,679   -38,238   -37,697  
        Debt securities  -2,822  -9,413  -33,530   -64,531   -71,690  
      Liabilities  58,244  93,244  6,739   50,499   116,818  
        Equity securities  32,595  51,916  14,964   23,416   33,954  
        Debt securities  25,649   41,328   -8,226   27,083   82,864  
    Financial derivatives (other than 
reserves) and employee stock options  0  0   -2,087   -5,384    471  
      Assets  0  0   -3,420   -6,550    1,474  
      Liabilities  0  0  1,333    1,166   -1,003  
    Other investment  72,200  -278,758  -434,004   -316,741   74,400  
      Assets  -141,962  -328,909  -82,465   -349,906   -76,904  
        Trade credits and advances  -60,266  -68,756  -45,966   -100,800   -19,400  
        Loans  -31,947  -73,787  -47,464   -110,267   -39,732  
        Currency and deposits  -7,447  -185,604  -55,010   -64,280   -37,033  
        Other assets  -42,302  -762   65,976   -74,560   19,261  
      Liabilities  214,162   50,151  -351,538   33,165   151,304  
        Trade credits and advances  44,937   -2,079  -62,283   16,200   -1,200  
        Loans  93,443  -34,329  -166,667   -17,361   49,571  
        Currency and deposits  75,762   81,379  -122,552    9,062   105,455  
        Other liabilities  21  5,181  -36   25,264   -2,521  
  Reserve assets  -431,379  -117,780  342,939   448,681   -92,967  
Net errors & omissions  -62,925  -66,873  -212,958   -229,453   -221,889  
Source:   State Administration of Foreign Exchange online information. Viewed at:  http://www.safe.gov.cn/ . 
1.36.   The trade surplus declined from US$576.2 billion in 2015 to US$4 88.9 billion in 2016. The 
decline was due mainly to a fall in exports, which declined at a faster rate than imports.  The trade 
surplus declined further to US$476.1 in 2017.  
1.37.   The services deficit has been rising for a number of years, and the trend continued in 2016, 
with the deficit rising to US$2 33.1 billion. The widening deficit is on account of both incre asing 
services payments and declining receipts. Within services, payments in lieu of travel have been 
rising and accounted for nearly 58 % of total services payments in 2016. On the other hand, 
payments on transport services have declined to around 18 % of total services payments WT/TPR/S/375 /Rev.1  • China  
 
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  (Table  1.4). Services receipts for other business services, communications, computer and 
information, and travel rose, while those for transportation, construction, and insurance and 
pensions declined. In 2017, the services deficit s tood at US$265.4 billion.  
Table 1.4 Composition of trade in services, 2013 -17 
  2013  2014  2015  2016  2017  
Total credit (US$ billion)  207.0  219.1  217.4  208.4  206.5  
 (% of total credit ) 
Manufacturing services on physical inputs  11.2 9.8 9.4 8.9 8.8 
Maintenance and repair services  0.0 0.0 1.7 2.5 2.9 
Transportation  18.2 17.5 17.8 16.2 18.0 
Travel  25.0 20.1 20.7 21.3 15.8 
Construction  5.2 7.0 7.7 6.1 5.9 
Insurance and pension  1.9 2.1 2.3 1.9 2.0 
Financial services  1.5 2.1 1.1 1.5 1.6 
Charges for the use of intellectual property  0.4 0.3 0.5 0.6 2.3 
Communication, computer & information  8.3 9.2 11.3 12.2 13.1 
Other business services  27.6 31.4 26.9 27.8 28.4 
Personal, cultural & recreational services  0.1 0.1 0.3 0.4 0.4 
Government goods and services  0.6 0.5 0.5 0.6 0.8 
      
Total debit (US$ billion)  330.6  432.9  435.7  441.5  471.9  
 (% of total debit ) 
Manufacturing services on physical inputs  0.02 0.03 0.04 0.04 0.04 
Maintenance and repair services  0.0 0.0 0.3 0.4 0.5 
Transportation  28.5 22.2 19.6 18.2 19.8 
Travel  38.9 52.5 57.3 56.6 54.6 
Construction  1.2 1.1 2.3 1.9 1.8 
Insurance and pension  6.7 5.2 2.0 2.9 2.4 
Financial services  1.1 1.1 0.6 0.5 0.3 
Charges for the use of intellectual property  6.4 5.2 5.1 5.4 6.1 
Communication, computer & information  2.3 2.5 2.6 2.9 4.1 
Other business services  14.3 9.4 9.1 9.8 9.0 
Personal, cultural & recreational services  0.2 0.2 0.4 0.5 0.6 
Government goods and services  0.4 0.5 0.6 0.7 0.7 
Source:   State Administration of Foreign Exchange online information.  
1.38.   The financial account deficit  (excluding reserve assets) increased by around 4 % to reach 
US$41 6 billion at the end  of 2016. Direct investment turned from a surplus of over US$68 billion 
in 2015 to a deficit of nearly US$4 2 billion in 2016. The reversal was due in part to a significant 
outward investment on account of Chinese investments in the Belt and Road Initiative.30 On the 
other hand, the deficit on the portfolio investment account declined. The decline was due partly to 
the further liberalization of portfolio flows and the capital account. In 2017, t he financial account  
turned into a surplus of around US$150 billion . 
Capital controls  
1.39.   The RMB is fully convertible for current account transactions and partially convertible for 
some capital account transactions. Residents and non -residents are permitted to use RMB for FDI. 
However, with regards to portfolio investment, ov erseas investors can invest in Chinese securities 
markets through qualified foreign institutional investors (QFII), Renminbi Qualified Foreign 
Institutional Investor s (RQFII ), Shanghai/Shenzhen -Hong Kong Stock Connectivity, Bond 
Connectivity and direct inv estment in inter -bank bond markets. For single institutions, there is no 
transaction limit or total limit on Shanghai/Shenzhen -Hong Kong Stock Connectivity, Bond 
Connectivity and direct investment in inter -bank bond market s. From May 2016, China began to 
implement macro and prudent management policy over cross-border financing activities of all 
categories. Domestic financial institutions and enterprises no longer need prior approval  when 
acquiring foreign loan s (both in long and short terms); cross-border d omestic/foreign financing can 
be conducted independently within the upper limit of balance weighted by cross-border financing 
risks. Based on existing regulation s on foreign exchange management, not all domestic institutions 
                                                
30 PBOC China Monetary Policy Report Quarter Four 2016 and PBOC China Monetary Policy Report 
Quarter One 2017.  WT/TPR/S/375 /Rev.1  • China  
 
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  need to be approved by the State Administration of Foreign Exchange (SAFE) before holding 
external accounts. For example, when a non -banking institution issues bonds overseas, it can 
independently open related accounts if the local supervision authority requires it to open accounts 
to hold the collected capital.31  
1.40.   During the period under review, PBOC and SAFE continued to take measures to move 
towards further liberalization and convertibility. Measures include the implementation of macro -
prudential management policy for full -scale cross-border financing. Financial institutions are now 
permitted to conduct cross -border financing in both domestic and foreign currencies independently 
as long as these transactions are within the upper -limit of the institutions ' cross-border financing. 
The upper -limit is based on the firm 's capital and net assets.  
1.41.   During the period under review, the domestic inter -bank bond market was further 
liberalized to facilitate participation in domestic financial transactions by foreign institutions. 
Additionally,  in May 2016, SAFE cancelled  the transaction limit or total limit for single institutions. 
Foreign institutions now need not to be checked or approved before completing formalities 
regarding outward capital remittance and settlement and purchasing of excha nges.  
1.42.   The QFII and the RQFII schemes were also further liberalized in February 2016 and 
August  2016, respectively. Steps taken include: loosening the upper -limit for investment quota per 
institution, simplifying the quota approval management and easing the  lock-up period restrictions 
to further facilitate inward and outward remittances. The requirement for RQFIIs for proportion 
and outward remittances in instalments was cancelled and RQFIIs are now required to use RMB for 
both inward and outward remittances .  
1.3  Developments in Trade and Investment  
1.3.1   Trends and patterns in merchandise and services trade  
1.43.   Merchandise exports declined from US$2,273.5 billion in 2015 to US$2,097.6 billion 
in 2016. Over the same period, merchandise imports also declined from US$1,679.6 billion to 
US$1,587.9 billion. Based on the balance of payments data, merchandise trade  (the sum of 
imports and exports)  declined from the equivalent of 33.5% of GDP in 2015 to 3 1.2% in 2016.  
1.44.   Services exports declined from US$ 217.4 billion in 2015 to US$2 06.5 billion in 201 7, while  
services imports increased from US$435.7 billion to US$4 71.9 billion over the same period. Trade 
in services (the sum of imports and exports ) as compa red with GDP declined to 5.5% in 2017 .  
1.45.   Exports continue to be dominated by manufactures  (93.7% of total merchandise exports 
in 2016) (Chart 1.1 and Table A1.1). Within manufactures, the shares of inter alia  iron and steel, 
clothing , transport equipment, office machines and telecommunication equipment, other semi -
manufactures  and other consumer goods declined. According to the authorities, exports of iron and 
steel and other related industries were affected by international trade protectionism, and the 
decline in the share of clothing was due to rising relative production costs in China.  The share of 
exports under processing trade fell.32  
1.46.   Manufactures remain the largest import category, accounting for nearly 65% of 
merchandise imports in 2016, a slight incr ease from 64.2% in 2015 (Chart 1.1 and Table A1.2). 
Within manufactures, the shares of electronic integrated circuits and micro assemblies, and 
automotive products rose. The share of imports under processing trade declined as did that of 
primary products. Within primary products, the share of agricultural imports rose while that of 
fuels fell. The authorities state that the development, transformation and upgrading of the 
domestic manufacturing industry resulted in increased demand for imports of integrated  circuits, 
                                                
31 Inward portfolio investment is channelled through QFIIs; i t was subject to at least a three -month 
lock-in period for most shares and had an overall ceiling of US$80 billion. Outward portfolio investment is 
channelled through QDIIs; it was subject to a ceiling of US$90 billion.  
32 Under processing trade, imported g oods are exempt from payment of import duty as long as they are 
processed and exported within a specific period of time; if the goods are not exported, import duties are 
collected by Customs.  WT/TPR/S/375 /Rev.1  • China  
 
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  micromodules and other products in 2016. Increased consumption in China resulted in increased 
automobiles imports.  
1.47.   The United States remained the largest destination for China's exports in 2016, followed by 
the European Union (EU -28) and Hong Ko ng, China (Chart 1.2 and Table A1.3). The shares of the 
United States  and EU -28 increased during the review period as did the share of Japan. On the 
other hand, the share of the Middle East and Asia as a whole and Hong Kong, China fell.  
Chart 1.1 Production composition of merchandise trade, 2015 and 2016  
 
Source : UNSD, Comtrade database (SITC Rev.3) . 
WT/TPR/S/375 /Rev.1  • China  
 
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  1.48.   The main sources of China 's imports in 2016 were EU -28, ASEAN and the Republic of Korea 
(Chart 1.2 and Table A1.4). During the review period, the shares of EU -28, ASEAN and Japan rose, 
while those of the Republic of Korea, the United States and Middle East declined.  
Chart 1.2 Direction of merchandise trade, 2015 and 2016  
 
a Includes goods that have been exported from China and thereafter re -imported into China.  
Source:  UNSD, Comtrade database.  
WT/TPR/S/375 /Rev.1  • China  
 
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  1.3.2   Trends and patterns in FDI  
1.49.   With a view to  encouraging foreign direct investment (FDI), the Government has been 
gradually removing restrictions on such inflows through the further liberalization of the 11 existing 
pilot free -trade zones and a number of incentive schemes ( Section 2.4). Additionally , the free 
trade account s of the Pilot Free Trade Zone , which allow funds to be freely transferred to/from 
accounts outside mainland China33, have been further expanded ; the scope of qualifications has 
expanded to cover all technological innovation enterpri ses in Shanghai, and the cumulative 
amount financed through free trade accounts has reached RMB 1.1 trillion. The cross -border 
financing space for the enterprises and financial institutions in the Pilot Free Trade Zone has been 
further expanded, and the cr oss-border RMB innovation businesses have developed steadily. 
According to the authorities, China has implemented an overall macro -prudential management 
system for nationwide cross -border financing characterized by foreign and domestic currency 
integration . Reforms in foreign currency management , in areas such as relaxing the control over 
centralized operation and management of foreign exchange funds by multinational companies and 
the conditions of participating enterprises , have been pressed ahead with in an orderly manner.  
1.50.   China continues to be one of the largest recipients of FDI. FDI inflows have been growing for 
a number of years and the trend continued in 2016 (Chart 1.3). Investment in China was 
dominated by Hong Kong, China, which accounted for over  80% of FDI inflows, followed by the 
British Virgin Islands, Singapore and the Cayman Islands (Table A1.5). The major recipients of 
investment inflows were the manufacturing, real -estate, leasing and business services , and 
wholesale and retail trade sectors (Table A1.6).  
Chart 1.3 Foreign direct investment, 2000 -16 
(US$ billion ) 
 
Source:  UNCTAD, World Investment Report 2017 online information.  
1.51.   China remains a significant overseas investor. Outward FDI has also been trending upwards 
for a number of years; however, the increase has not been as pronounced as for inward FDI 
(although still large , outward FDI declined slightly in 2016 from 2015 levels). The main 
destinations for outward FDI are: Hong Kong, C hina; the United States; the Cayman Islands; and 
the British Virgin Islands (Table A1.7). The main sectors invested in are leasing and business 
services, banking, manufacturing and wholesale and retail trade (Table A1.8).  
                                                
33 Transfer of funds between free trade accounts and accounts in China is regarded as cross -border 
transactions.  
WT/TPR/S/375 /Rev.1  • China  
 
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  2  TRADE AND INVESTMENT  REGIMES  
2.1  General Framework  
2.1.  The National People 's Congress (NPC) and its Standing Committee exercise the legislative 
power in China. The structure of the legislative power and the legislation (e.g. relationship 
between the Constitution and laws) has remained largely unchanged since China's  previous Trad e 
Policy Review.1 The N PC elects the President and Vice -President of China.2 In accordance with the 
Constitution, the President, in pursuance of the decisions of the Standing Committee of the NPC, 
ratifies or abrogates treaties and important agreements con cluded with foreign States.3 The State 
Council (the Central Government ) is the executive body and the highest organ of state 
administration.4  
2.2.  On 18 August 2017, China established an internet  court (E -court) in Hangzhou. The court has 
jurisdiction over internet -related first instance civil and administrative cases that are within the 
jurisdiction of the grassroots people 's courts within Hangzhou .5 According to the principle of 
"online trial of online cases ", the court is to conduct prosecution, filing, test ifying, court 
proceedings and referee processes via an online litigation platform so that parties may complete 
lawsuits without physically going to the court.  
2.3.  The drafting authorities are generally required to publish administrative laws, regulations, 
draft rules or relevant description s for public comments for at least 30 days , except for those 
deemed inappropriate  by the authorities to be made public .6  
2.4.  All rules, normative documents and other policy measures formulated by various 
departments of the State Council  and/or by local people 's governments  related to or affect ing 
trade must comply with international trade rules, including the Marrakesh Agreement Establishing 
the WTO and its follow -up agreements, China 's accession protocol and China 's Working  Party 
Report.7 While the Constitution does not contain provisions concerning the relationship between 
international treaties/agreements and China 's domestic legislation, the authorities state that, in 
practice, China has always abided by treaty obligation s and transformed relevant provisions of 
international treaties into applicable domestic legislation through various means. The Civil Law 
states that if any international treaty concluded by China contains provisions differing from those 
in the law of Chin a, the provisions of the international treaty shall apply, unless China has 
announced reservations on such provisions; international practice may apply to matters for which 
neither the law of China nor any international treaty concluded by China has any pr ovisions.  
2.5.  China 's trade -related laws, regulations and rules (including drafts published for comments) 
are published in the China Foreign Trade and Economic Cooperation Gazette, issued by the 
Ministry of Commerce (MOFCOM).  
                                                
1 WTO document WT/TPR/S/342/Rev.1, 12 October 2016.  
2 The President appoints or removes the Premier, Vice -Premiers, State Councillors, Ministers in charge 
of ministries or commission s, the Auditor -General and  the Secretary General of the State Council in pursuance 
of the decisions of the NPC and its Standing Committee.  
3 The President also promulgates statutes in pursuance of the decisions of the NPC and its Standing 
Committee.  
4 Led by the Premier, the State Council is composed of Vice Premiers, State Councillors, Ministers in 
charge of ministries and Ministers in charge of commissions, the Auditor -General and the Secretary -General.  
5 They include: Internet shopping, services, m icrofinance loans and other contract disputes; Internet 
copyright ownership and infringement disputes; disputes infringing on the right of personality of others via 
Internet; Internet shopping product liability infringement disputes; Internet domain name d isputes; and 
administrative disputes arising from Internet administration.  
6 Decision of the State Council on Amending the Regulations on the Procedure of Making the 
Administrative Laws and Regulations, and Decision of the State Council on Amending the Reg ulations on the 
Procedure of Making Regulations and Rules, issued on 22 December 2017 (to enter into force on 1 May 2018). 
Public comments can be submitted through the website of the Legislative Affairs Office of the State Council.  
7 State Council, Guo Ban  Fa [2014] No. 29, Notice of the General Office of the State Council on Further 
Enhancing the Compliance of Trade Policies.  WT/TPR/S/375 /Rev.1  • China  
 
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  2.6.  Administrative decisions may be ch allenged within six months by those that deem their 
legitimate rights to have been damaged.8 Appeals can be made to a department at a higher level 
than the one that made the decision. There exist s everal independent administrative 
reconsideration commissio ns, on a pilot programme basis , in, for example, Beijing, Guangdong, 
Guizhou, Hainan, Heilongjiang, Henan, Jiangsu, and Shandong; the authorities are not aware of 
the total number of provinces that have established administrative reconsideration committees . 
Complaints from foreign -invested enterprises (FIEs) are dealt with by the Complaint Coordination 
Office for Foreign -Invested Enterprises and the National Complaint Centre for Foreign -Invested 
Enterprises, both under MOFCOM.9 Between January 2016 and May 2017 , seven complaints w ere 
filed by foreign investors.  
2.2  Trade Policy Framework and Objectives  
2.2.1   Institutional framework  
2.7.  Within the Central Government, the National Development and Reform Commission (NDRC) 
is in charge of formulating and implementing national economic and social development strategies, 
medium -to-long term plans, and annual plans . According to the authorities, the NDRC is also 
responsible for , inter alia : guiding, advancing and coordinating economic system r eforms ; and 
conducting research on major issues relating to  economic system reforms and opening -up to the 
outside world .;. The responsibility of MOFCOM include s formulating development strategies and 
policies for domestic and foreign trade and internationa l economic cooperation ; drafting laws and 
regulations and departmental rules for domestic and foreign trade, foreign investment, and foreign 
economic cooperation ; guiding overall work related to foreign investment ; and formulating and 
implementing foreign investment policies and reform plans. The Ministries of: Agriculture, 
Environmental Protection, Finance, Industry and Information Technology, and Transportation are 
also involved in the formulation and implementation of trade policy  in the areas under thei r 
responsibility . In recent years, the National Leading Group for Comprehensive Deepening Reform 
has lead , inter alia , financial and taxation reforms.  
2.8.  On 17 March 2018, a decision on the institutional restructuring plan of the State Council was 
adopted by the 13th National People 's Congress. The plan states , inter alia , that the Ministry of 
Natural Resources, the Ministry of Ecological Environment, the Ministry of Agriculture and Rural 
Affairs, the Ministry of Culture and Tourism, and the National Health Commission will be 
established , and that the Ministry of Science an d Technology  and the Ministry of Justice will be 
restructured. Some other organs and functions of the State Council, such as the State Intellectual 
Property Office and national and local taxation systems, will be restructured, and the State Market 
Regulato ry Administration, State Radio and Television Administration, China Banking and 
Insurance Regulatory Commission, State International Development Cooperation Agency,  State 
Medical Insurance Administration, State Grain and Reserves Administration, and State Immigration 
Administration will be established.  
2.2.2   Trade policy formulation and objectives  
2.9.  China 's economic, trade , investment and development policies are outlined in a number of 
legal instruments, including the Five -Year Plan for National Economic and Socia l Development and 
different Catalogues  that provide guidance on the implementation of the overall policies, 
listing,  inter alia: those products that are subject to licences or import/export taxes; industries 
that can benefit from preferential treatment; an d sectors in which investment is encouraged, 
restricted , or prohibited.  
2.10.   As stated in the 13th Five -Year Plan for Economic and Social Development, China 's main 
trade and investment objectives are: (1)  accelerating the optimization and upgrading of trade; 
(2) improving the utilization of foreign capital; and (3) promoting the steady and healthy 
development of outward investment.  
                                                
8 Administrative Procedure Law (in Chinese). Viewed at: http://www.npc.gov.cn/wxzl/gongbao/2014 -
12/23/content_1892467.htm  [27.03.2018].  
9 MOFCOM Decree 2006/2, 1 October 2006 (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/ article/b/c/200609/20060903283275.shtml  [18.09.2017].  WT/TPR/S/375 /Rev.1  • China  
 
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  2.11.   China considers that the Multilateral Trading System (MTS) plays a leading role in China 's 
process of opening up, and regional tra de agreements ( RTAs) are viewed as a complement to the 
MTS. According to the authorities, the  Chinese leadership recently indicated that its economic 
development had entered into a new stage by shifting "from speed to quality "; China would 
continue liberalizing its market further, and aim to achieve "more open, inclusive, and balanced " 
development in which benefits can be shared by all.10 
2.12.   In order to further liberalize the domestic market, China intends to  focus on : the 
modernizat ion of existing industries; the development of clean and knowledge -based industries; 
and the services sector.   
2.13.   According to the authorities, China remains concerned about overcapacity in certain 
industries, energy conservation, and the protection of the en vironment. In this respect, the 2017 
Catalogue for the Guidance of Foreign Investment Industries ( Investment Catalogue) encourages 
foreign investment in those sectors that conform to China 's industrial structure adjustment and 
"China Manufacturing 2025 " strategy11 (Section 4.3).  
2.14.   Through the expansion of the Pilot Free Trade Zone (PFTZ), launched in Shanghai in 2013, 
and the establishment of other PFTZs (in Fujian, Guangdong, and Tianjin in 2015 and in 
Chongqing, Henan, Hubei, Liaoning, Sichuan, Shanxi, and Zhejiang in 2017), China is exploring, 
inter alia , the establishment of a new foreign investment regulatory framework, based on granting 
pre-establishment national treatment (i.e. no approval required at the time of establishment) to 
foreign investment in activities not included in a "negative list " (see below), and eventually 
applying successful experiences nationwide.  
2.15.   China continues to promote its "Going Abroad Policy ", as outward direct investment is 
considered a way to promote trade, as well as to int egrate into global production, value, and 
logistics chains. The Belt and Road Initiative, announced in 2014, aims at, inter alia , promoting 
connectivity and cooperation through the development of infrastructure among countries on the 
original Silk Road thr ough Central Asia, West Asia, the Middle East and Europe.12  
2.16.   The 2013 Decision on Major Issues Concerning Comprehensively Deepening Reforms 
continued to shape China 's trade and investment policies during the period under review mainly on 
judicial reforms.13  
2.17.   More recently, in April 2017, the State Council issued the Priority Tasks on Deepening 
Economic Reform, which indicate China 's intention to deepen economic reforms through supply -
side structural reform, particularly in areas such as delegating power, stre amlining administration, 
state-owned enterprises and state -owned assets, fiscal  policy , taxation and finance.14 
Furthermore, at the meeting of the Chinese Communist Party 's Central Committee 
(26 June 2017)15, China 's leaders stated their intention to impleme nt a more proactive strategy of 
opening up and attracting foreign investment and foreign technologies. At the meeting, several 
"opinions " or "plans " were examined and adopted. These included: (a) Implementation Plan for 
Restructuring of Central -Government Enterprise s; (b) Opinions on Improving the Safety of 
Overseas Enterprises and Foreign Investment; (c) Plan on the establishment of the Internet Court 
in Hangzhou; (d) Summary Report on the Progress of China (Guangdong), China (Tianjin) and 
China (Fujian) P ilot Free Trade Zones.  
                                                
10 Xi Jinping , "Secure a Decisive Victory in Building a Moderately Prosperous Society in All Respects and 
Strive for the Greater Success of Socialism with Chinese Characteristics for a New Era", delivere d at the 
19th National Congress of the Communist Party of China, 18 October 2017. Viewed at: 
"http://www.xinhuanet.com/english/download/Xi_Jinpi ng's_report_at_19th_CPC_National_Congress.pdf  
[28.03.2018] . 
11 Also known as "Made in China 2025".  
12 Chinese Government online information. Viewed at: 
http://e nglish.gov.cn/archive/publications/2015/03/30/content_281475080249035.htm  [20.09.2017].  
13 WTO document WT/TPR/S/342/Rev.1, 12 October 2016.  
14 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2017 -04/18/content_5186856.htm  [25.08.2017] . 
15 Chinese Government online information (in Chinese). Viewed at: http://ww w.gov.cn/xinwen/2017 -
06/26/content_5205603.htm  [25.08.2017] . WT/TPR/S/375 /Rev.1  • China  
 
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  2.18.   According to the authorities, there has been no change since the previous review in China 's 
central -provincial relationships in the context of the institutional framework related to trade policy 
and practices.  
2.3  Trade Agreements and A rrangements  
2.3.1   WTO  
2.19.   China has been a WTO Member since 11 December 2001. China 's trade policies have been 
reviewed six times; the previous Review took place in July 2016. China is an observer to the 
Committee on Government Procurement and is in the process of n egotiating its accession to the 
Plurilateral Agreement on Government Procurement. China presented its fifth offer to the 
Committee in December 2014.16 The country is a participant in the Information Technology 
Agreement (ITA) and has agreed on the expansion  of the ITA.17 It is an observer to the Plurilateral 
Agreement on Trade in Civil Aircraft. China deposited its instrument of acceptance of the Protocol 
of Amendment inserting the Agreement on Trade Facilitation (TFA) into Annex 1A of the WTO 
Agreement on 4 September 2015. China notified its Category A commitments in June 2014, and its 
Category B commitments in June 2017. China does not have any Category C commitments 
(Section 3.1.1).  
2.20.   At the Eleventh Ministerial Conference, the Chinese delegation remarked  that the 
19th National Congress of the Communist Party of China ( CPC) held in October 2017 established 
the Chinese leadership 's thought s on socialism with Chinese characteristics for the new era; the 
report delivered at the National Congress states that China supports the multilateral trading 
system and promotes the development of an open global economy.  
2.21.   During the period under review, China submitted to the WTO a number of notifications 
covering a wide range of agreements (Table A2. 1). Nonetheless, some notifications including those 
on state -trading enterprises, domestic support, and subsidies provided by the Central Government 
remain pending.  
2.22.   Under the WTO dispute settlement system, between 1 January 2016  and 31 March 2018, 
China was involved in six cases as a respondent, and two as a complainant  (Table A2.2). China 
was also involved as a third party in ten cases brought to the Dispute Settlement Body (DSB).  
2.3.2   Regional trade agreements and unilateral measures  
2.23.   The authorities state tha t the strategy of accelerating the implementation of free trade 
agreements (FTAs) is an important element of China 's new round of trade liberalization. Since 
2002, China has signed 16 FTAs with 24 countries or regions, including: ASEAN; Australia; Chile; 
Costa Rica; Georgia; Hong Kong, China; Iceland; the Republic of Korea; Macao, China; Maldives; 
New Zealand; Pakistan; Peru; Singapore; Switzerland and  Chinese Taipei . 
2.24.   According to the statistics of the General Administration of Customs of China (GACC), 
in 2016, the trade volume between China and its FTA partners amount ed to 38.8 % of the total 
foreign trade volume of China ( including : Chinese Taipei; Hong Kong, China; and Macao, China), 
and 25.4 % (excluding : Chinese Taipei; Hong Kong, China; and Macao, Ch ina). In 2016, 
RMB 42.2 billion of duty was exempted or reduced when Chinese enterprises imported products 
from the FTA partners. Table 2. 1 further details these exemptions or reductions by agreement.   
                                                
16 WTO document GPA/ACC/CHN/45, 5 January 2015.  
17 WTO document WT/L/956, 28 July 2015.  WT/TPR/S/375 /Rev.1  • China  
 
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  Table 2.1 Duty reductions and exemptions under China 's respective free trade 
agreements in 2016  
Agreement  Duty reductions and 
exemptions  
(RMB 100 million)  
China -ASEAN Free Trade Area  256  
Economic Cooperation Framework Agreement  50 
China -New Zealand Free Trade Agreement  27 
China -Australia Free Trade Agreement  23 
China -Chile Free Trade Agreement   17 
China -Republic of Korea  Free Trade Agreement  8 
China -Singapore Free Trade Agreement  8 
Asia-Pacific Trade Agreement  7 
Mainland and Hong Kong Closer Economic Partnership Arrangement  (CEPA) 5 
China -Switzerland Free Trade Agreement  4 
China -Pakistan Free Trade Agreement  2 
China -Peru Free Trade Agreement  2 
Zero Tariff Measures for Agricultural Products from Chinese Taipei  1 
China -Iceland Free Trade Agreement  0.2 
China -Costa Rica Free Trade Agreement  0.1 
Mainland and Macao Closer Economic Partnership Arrangement  (CEPA) 4.5 
Total  411  
Source:  Information provided by the authorities  of China . 
2.25.   According to the authorities, a s the next step, China intends to construct a high -standard 
FTA network starting with neighbouring countries, extending to the countries participating in the 
Belt and Road Initiative and opening up to the whole world. China intends , together with free trade 
partners , to continue to reduce tariff and non -tariff barriers, to mutually open up trade -in-goods 
and to strive for mutual benefits and win -win outcomes. Meanwhile, China intends to actively open 
up trade in services and areas of investment, promote facilitation and liberalization of tr ade in 
services and investment, and create better market access and investment protection conditions for 
Chinese investors that "go global ".  
2.26.   New FTA s signed during the period under review are the China -Georgia FTA signed in 
May 2017 and the China -Maldives  FTA signed in December 2017. Table 2 .2 provides the main 
trade data related to these two agreements.  
Table 2.2 Summary data of the FTAs between China and Georgia and between China and 
the Maldives  
Summary dat a of the FTAs involving China  
China -Georgia Free Trade Agreement  
Parties  China and Georgia  
Date of signature/entry 
into force 13 May 2017/1 January 2018  
Transition for full 
implementation  Category  % of tariff lines  Transition period  
(upon entry into force)  
 China  Georgia   
A 90.9 96.5 Upon entry into force  
B 3 0 5 years  
C 6.1 3.5 Excluded from  liberalization  
Main products excluded 
from liberalization  Durum wheat, maize seed, seed of durum wheat, yellow soya beans, rolled or 
flaked oats,  potato starch, granulated sugar, formula milk powder,  cigarettes 
containing tobacco,  cigars, cheroots & cigarillos containing tobacco, etc.  
Merchandise trade (2016)  Imports from Georgia: US$ 170 million. Exports to Georgia: US$ 547 million  
Related WTO documents  Not yet notified  
Other subjects covered  Services, IPR, competition, e-commerce, investment, horizontal legal and 
institutional provisions (including dispute settlement).  
Relevant websites  http://fta.mofcom.gov.cn  
http://www.mfa.gov.ge/Home.aspx?lang=en -US 
China -Maldives Free Trade Agreement  
Parties  China and Maldives   
Date of signature/entry 
into force 7 December  2017/Not yet in force  WT/TPR/S/375 /Rev.1  • China  
 
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  Summary dat a of the FTAs involving China  
Transition for full 
implementation  Category  % of tariff lines Transition period  
(upon entry into force)  
 China  Maldives   
A 91.1 70.3 Upon entry into force  
B 4.3 20.3 5 years  
C 0 5.0 8 years  
 E 4.6 4.4 Excluded  
Main products excluded 
from liberalization   For China: rice, wheat, cotton, edible, oils, sugar, tobacco, wood, papers, etc.  
For Maldives: fishery products, pig meat products, wines, cigarettes, liquors, etc.  
Merchandise trade (2016)  Imports from Maldives: US$0.24  million  
Exports to Maldives: US$ 320 million  
Related WTO documents  Not yet noti fied 
Other subjects covered  Services, i nvestment  
Relevant websites  http://fta.mofcom.gov.cn   
http://www.trade.gov.mv/  
Source:  WTO Secretariat and information provided by the authorities  of China . 
2.27.   Currently, China is negotiating seven  FTAs,  namely the Regional Comprehensive Economic 
Partnership Agreement, the China -Japan -Republic of  Korea FTA, the China -Gulf Cooperation 
Council FTA, the China -Sri Lanka FTA, the China -Israel FTA, the China -Norway FTA and the China -
Mauritius FTA. In addition , China is negotiating a second phase for three of its FTAs namely the 
China -Pakistan FTA, the China -Singapore FTA and the China -New Zealand FTA. Meanwhile, 
revisions to the China -Pakistan, China -Singapore, China -Chile, China -New Zealand FTAs are under 
negot iation.  
2.28.   Regarding the relationship with Hong Kong, China, a new C loser Economic Partnership 
Arrangement (C EPA) Investment Agreement between the mainland and the Hong Kong Special 
Administrative Region (SAR) was signed on 28  June 2017; it has been implement ed since 
1 January 2018. The agreement includes investment access, protection and promotion. In terms of 
investment access for the areas not included in the CEPA Trade in Service s Agreement (such as 
manufacturing), the mainland is open to the Hong Kong SAR through the negative list with 26 non -
conforming measures. Further opening measures are stipulated for ship manufacturing, aircraft 
manufacturing, resource and energy exploitatio n and financial market investment vehicles. The 
Hong Kong SAR will be granted most -favoured treatment in investment areas where the 
agreement applies. The mainland and the Hong Kong SAR offer each other investment protection 
in terms of expropriation, comp ensation and transfer. The agreement includes a specific investor -
to-government dispute resolution system.  
2.3.3   Other agreements and arrangements  
2.29.    China continues to grant unilateral preferences to least developed countries ( LDCs). 
According to the authorities,  by the end of 2017, China had granted duty -free treatment to 
36 LDCs, as per arrangements of diplomatic notes, on 97 % of the tariff lines; 3 LDCs on 94 % of 
the tariff lines; and the remaining 1 LDC on 61 % of the tariff lines. During the review period, 
Samoa was removed from the list of the LDCs to which China granted unilateral preferences on 
1 January  2017, and Equatorial Guinea was removed from the list on 4 June 201718; The Gambia 
and Sao Tome and Principe started receiving duty -free treatment in 2017.  
2.4  Investment Regime  
2.4.1   Regulatory framework and market access  
2.30.   The main legislation regulating foreign direct investment in China include s: the Law on Sino -
Foreign Equity Joint Ventures, the Law on Sino -Foreign Contractual Joint Ventures, and the Law on 
Foreign -Invested Enterprises, as well as their related administrative regulations and rules. Foreign 
invested enterprises in China are regulated by these laws, regulations and rules as well as t he 
                                                
18 After the approval of the State Council, the newly graduated LDCs are granted duty -free treatment 
for three years as a transitional period.  WT/TPR/S/375 /Rev.1  • China  
 
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  Company Law .19 According to the authorities, MOFCOM and related depa rtments are in the process 
of drafting a new law on foreign investment.  
2.31.   On 3 September 2016, the Standing Committee of the NPC adopted amendments to four 
laws including the Law on Foreign -Invested Enterprises; the amendment entered into force on 
1 October  2016.20 The amendment concerned the adoption of record -filing administration  for 
foreign -invested enterprises that are not subject to the Special Administrative Measures for 
Foreign Investment Access (investment negative list) (see below).21 The investment negative list  
adopted on 8 October 2016 includes investment classified in the restricted and prohibited 
categories.   
2.32.   The Catalogue of Industries for the Guidance of Foreign Investment (Investment Catalogue) 
continues to serve as the main instrument used to  guide FDI in China. The most recent revision to 
the Catalogue took place in 2017.22 The 2017 Catalogue contains: (1) a list of industries where FDI 
is encouraged; and (2) the investment negative list , which contains a list of industries where FDI 
is, inter alia, restricted or prohibited .23 Projects in the encouraged category are eligible for 
preferential treatment, for example, customs duty exemptions for the importation of equipment.  
2.33.   As of October 2016, foreign -invested enterprises (FIEs) investing in projects in the 
restricted category of the negative list must undergo an examination and approval process. 
Foreign direct investment in industries and projects that are not specified in the list require record -
filing. According to the authorities, t he negative list is to be implemented nationwide, in principle; 
exceptions include measures related to national security and financial prudence. T he 2017 
Catalogue continues to state that the p rovisions stipulated in any of the preferential and free trade 
agreements signed by China shall prevail over the Catalogue. The 2017 Catalogue has been in 
force since July 2017 and replaced the 2015 Investment Catalogue.  
2.34.   The main differences between the 2 017 Catalogue and the 2015 Catalogue are highlighted 
in Box 2.1, Table A2.3, and Table A2.4. T he 2017 Catalogue  removed the requirement that 
Chinese shareholders must hold a dominant position regarding , inter alia , accounting and auditing, 
foreign shipping  tally, manufacturing of power battery for new energy vehicles, processing of 
edible oil and fats, and produc tion of biological liquid fuels. Certain activities that had been 
classified under the "encouraged " category entailing certain shareholding and sen ior management 
composition requirements in 2015 have been reclassified into the negative list in the 2017 
Catalogue. The 2017 Catalogue intends to encourage FDI in , inter alia , advanced manufacturing, 
high technology, the energy saving and environmental pr otection industry, and the modern 
services industry. The aut horities indicate that items restricted or prohibited for both foreign and 
domestic investment no longer appear in the 2017 Investment Catalogue; the removal of such 
items does not mean they are o pen to foreign investment.  
                                                
19 Company Law (Revised in 2013). Invest in China online information. Viewed at: 
http://www.fdi.gov.cn/1800000121_ 39_4814_0_7.html  [19.09.2017] . 
20 National People's Congress online information (in Chinese). Viewed at: 
http://www.npc.gov.cn/npc/xinwen/2016 -09/03/content_1996747.htm  [12.09.2 017].  
21 On 8 October 2016, the Ministry of Commerce formulated and introduced the Interim Measures for 
the Establishment and Modification  of Registration of Foreign -Invested Enterprises, which inter alia  provide s 
the details of online filing procedures. MO FCOM online information (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201610/20161001404974.shtml  [13.09.2017]. On 30 July 2017, the 
Decision on the revision of the Interim Measures for the Establishment and Modification of Registration of 
Foreign -Invested Enterprises (MOFCOM Order (2017) No.  2) was issued; the order aimed at promoting reforms 
in the administrative systems of foreign investment and highlighted the orientation of streamlining 
administration and decentralizing powers. MOFCOM o nline information (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201707/20170702617582.shtml  [30.01.2018] . 
22 MOFCOM and NDRC, Catalogue for the Guidance of Foreign Investment Industries 2017 (2017 
Amendment Order), Guo Fa [2017] No. 4 (in Ch inese). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201706/20170602600841.shtml  [04.04.2018]. The previous version 
was issued in 2015. MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201503/20150300911747.shtml  [04.04.2018] . 
23 In general, projects in the "encouraged" category (those that the authorities are interested in 
promoting) are those that use improved technology and are less polluting, while "restricted" industries are 
those deemed to employ outdated technologies, over -exploit scarce natural resources or harm the 
environment. The "prohibited" category includes projects that pollute the environment, destroy natural 
resources or go against social and public interests.  WT/TPR/S/375 /Rev.1  • China  
 
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  Box 2.1 Summary of main changes in the 2017 Investment Catalogue  
Encouraged Category  
(1) Activities removed from the encouraged category : 
 
Manufacturing:  
1. Manufacturing of equipment  for railway transportation (limited to equity joint ventures or contractual joint 
ventures)  
2. Manufacturing of light gas -turbine engine  
3. Manufacturing and maintenance of marine engineering equipment (including modules, Chinese part shall 
hold the major ity of shares)  
4. Manufacturing of crankshafts of low and mid speed for diesel engine for vessels (Chinese part shall hold the 
majority of shares)  
5. Manufacturing of large pumped -storage aggregate with the nominal power of 350MW or above: pump 
turbine an d speed controller, large speed -variable reversible pump turbines, generator motor and such 
accessory equipment as excitation and starting device  
Services:  
1. Accounting and auditing (chief partner must have Chinese nationality)  
2. Construction and operati on of key water control projects for comprehensive utilization (Chinese partner shall 
hold the relative majority of shares)  
 
(2) Activities added to the encouraged category : 
 
Manufacturing:  
1. Manufacturing of intelligent emergency medical equipment  
2. Man ufacturing of hydrological monitoring sensor  
3. Research, development and manufacturing of virtual reality (VR) and augmented reality (AR) equipment  
4. Research, development and manufacturing of key components of 3D printing equipment  
Energy:  
1. Construction and operation of hydrogen refuelling station  
Services:  
1. Construction and operation of urban parking facilities  
Restricted Category/Restrictive Measures  
(1) Activities removed from the restricted category:  
 
Energy:  
1. Construction and operat ion, in small grids, of power plants using coal -fired and steam condensation thermal 
generator sets with a single generator capacity of 300,000 kW or less, and thermoelectric power stations using 
coal-fired, steam condensation and extraction thermal genera tor sets with a single generator capacity of 
100,000 kW and less  
Services:  
5. Construction and operation of large theme parks  
 
(2) Activities removed from the restricted category as a result of removal of access restrictions to 
foreign investment : 
 
Mining:  
1. Prospecting and exploration of unconventional oil resources such as oil shale, oil sand and shale gas 
(applicable to equity joint ventures or contractual joint ventures)  
2. Exploration and mining of noble metals (gold, silver and platinum group)  
3. Min ing and mine selection of lithium mines  
Manufacturing:  
1. Production and research and development of automobile electronic network technology, EPS electronic 
controller (applicable to equity joint ventures)  
2. Manufacturing of energy power battery (energy density of 110  Wh/kg or above, cycle life of 2,000 or more 
times) – requirement that foreign investment should not exceed 50 % 
3. Manufacturing of equipment for railway transportation (applicable to equity joint ventures or contractual 
joint ventures)  
4. Ma nufacturing and maintenance of marine engineering equipment (including modules) – requirement that 
the Chinese part shall hold the majority of shares  
5. Manufacturing of crankshafts of low and mid speed for diesel engine for vessels – requirement that the 
Chinese part shall hold the majority of shares  
6. Design and manufacturing of civil satellites, and manufacturing of civil satellites effective payload – 
requirement that the Chinese part shall hold the majority of shares  
7. Processing of edible oil of soy bean, rapeseed, peanut, cottonseed, tea seed, sunflower seed, and palm  – 
requirement that the Chinese part shall hold the majority of shares, and processing of rice, flour and raw 
sugar, and deep processing of corn  WT/TPR/S/375 /Rev.1  • China  
 
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  8. Manufacturing of biological liquid fue l (fuel ethanol and bio -diesel)  
9. Smelting of rare metals including molybdenum, tin (excluding tin compounds), and antimony (including 
antimony oxides and antimony sulphides)  
10. Manufacturing of motorcycles (share of Chinese partner is no less than 50 % and the same foreign 
company can set up equal to or less than two joint ventures manufacturing the same kinds of vehicles 
(motorcycles) in China)  
11. Credit investigation and rating service companies  
Services:  
1. Accounting or auditing – requirement that ch ief accounting or auditing partner must have Chinese 
nationality  
2. Construction and operation of key water control projects for comprehensive utilization – requirement that 
Chinese partner shall hold the relative majority of shares  
3. Highway passenger t ransport companies  
4. Construction and operation of large wholesale market of agricultural products  
5. Ocean shipping tally companies (limited to Sino -foreign joint equity/cooperative joint venture operations)  
Prohibited Category  
(1) Activities removed from the prohibited category :  
  
Manufacturing:  
1. Processing of traditional Chinese medicines that have been listed in the Regulations on Conservation and 
Management of Wild Chinese Medicinal Material Resources and Rare and Endangered Plants in China  
2. Ivory carving  
3. Tiger bone processing  
Energy:  
1. Construction and management of conventional coal -fired power of condensing steam plants whose unit 
capacity is not more than 300,000  kW, within a large power grid, and the coal fired power of condensing -
extraction steam plants with dual use unit condensation with unit capacity of not more than 200,000  kW 
Services:  
1. Construction and management of nature reserve s and internationally  significant marsh  land 
2. Construction of golf courses and villas  
3. Projects that endanger the safety and performance of military facilities  
 
(2) Activities added in the prohibited category : 
 
1. Measurement of ground motion  
2. Editing of books, newspapers, periodicals, audio -visual products and electronic publications  
3. Broadcast (TV) video on demand services and installation services of signal -receiving facilities  
4. Digital news and information services, and Internet public release information service  
5. Research institutes of social sciences  
Source:  Catalogues of Indu stries for the Guidance of Foreign Investment (2015 and 2017 versions) and 
information provided by the authorities of China.  
2.35.   The authorities indicate that the Government has never made, through existing Chinese 
laws, regulations and policies, technology transfer a precondition for inward FDI, or issued any 
laws, regulations, or policies obligating investors to transfer their technologies.24  
2.36.   The State Council has also been developing  a Market Access Negative List, which applies to 
both domestic and foreign  companies; the latest of such a list was issued on 2 March 2016 .25 The 
list applies on a trial basis to 15 municipalities and provinces including Tianjin, Shanghai, Fujian 
and Guangdong. According to the authorities, the list will be applicable throughout the country 
in 2018. While the investment negative list only applies to foreign investors, the Market Access 
Negative List applies to both domestic and foreign investors. When investing in China, a foreign 
investor must first meet the requirements of the n egative list in the Investment Catalogue, and 
then the Market Access Negative List.  
                                                
24 Nonetheless, some Members raised concerns about Chin a's reported de facto  technology transfer 
requirements. WTO documents WT/TPR/M/342, 26 September 2016 and WT/TPR/M/342/Rev.1, 
28 October  2016. Some Members raised concern over China's technology licensing requirements in the Council 
for Trade in Goods on 2 6 March. WTO online information. Viewed at: 
https://www.wto.org/english/news_e/news18_e/good_28mar18_e.htm .  
25 NDRC online information (in Chinese). Viewed at: 
http://www.ndrc.gov.cn/gzdt/201604/W020160412311161765167.pdf  [15.09.2017].  WT/TPR/S/375 /Rev.1  • China  
 
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  2.37.   Concerning measures applicable to foreign -invested firms and projects in Pilot Free Trade 
Zones , the Special Administrative Measures for Foreign Investment Access to Pilot  Free Trade 
Zones (PFTZs Negative List) was revised in 2017  (Section 3.2.4) .26 The authorities consider that 
the PFTZs Negative List has significant advantages over the 2017 Investment Catalogue in terms 
of, inter alia , openness and transparency in that the  PFTZs Negative List has a higher opening level 
than the Investment Catalogue in mining, manufacturing, transportation, commercial se rvices and 
the financial sector.   
2.38.   FDI in the form of mergers and acquisitions (M&As) is subject to anti -trust reviews27, which 
are intended to assess their impact on the market ( Section 3.1.6). Guidelines to assess the impact 
of anti -trust reviews, issued in 2011, are in force.28 During the period under review , several 
guiding documents were issued , includ ing the  Guiding Opin ions on Standardization of Names of 
Applications of the Concentration of Undertakings29, issued on 14 February 2017 , with a view to 
providing clear guidance for the parties involved and enhancing the predictability of enforcement.30 
In addition, according to  the authorities, procedures for reviews were adjusted in 2015; the case -
handling department and office are now respectively responsible for case acceptance and review, 
aiming at improving the professional level of the review.  
2.39.   FDI involving investments in  Chinese domestic enterprises may be subject to national 
security reviews if the FDI is related to defence, or is deemed to have an influence on national 
security ( Section 3.3.4). Relevant legislation remained largely unchanged during the period under 
review. The authorities state that no FDI applications have been denied for approval since 2015.  
2.40.   China has signed bilateral investment agreements with 131 regions and countries ; among 
these, the bilateral agreement betwee n China and Indonesia was terminated i n 2016 .31  
                                                
26 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2017 -06/16/content_5202973.htm  [14.09.2017].  
27 The administrative regulations with regard to FDI involving M&As include: Article 31 of the Anti -
Monopoly Law, 1 August 2008 (in Chinese) .– Viewed at: http://www.gov.cn/flfg/2007 -
08/30/content_732591.htm . [15.09.2017]; Provisions of the State Council on the Thresholds for Declaring 
Concentration of Business Operators, 3 August  2008 (in Chinese) . Viewed at: http://www.gov.cn/zwgk/2008 -
08/04/content_1063769.htm  [15.09.2017]; the Regulations on Mergers and Acquisition of Domestic 
Enterprises by Foreign Investors , 22 June 2009 (in Chinese) . Viewed at: 
http://www.mofcom.gov.cn/article/b/f/200907/20090706416939.shtml  [15.09.2017] ; Measures on the 
Examination of Concentrations of Underta kings, 1 January 2010 (in Chinese) . Viewed at: 
http://fldj.mofcom.gov.cn/article/c/200911/20091106639145.shtml  [19.09.2017] ; Measures on the 
Notification of Concentrations of Undertakings, 1 January 2010 (in Chinese) . Viewed at: 
http://fldj.mofcom.gov.cn/a rticle/c/200911/20091106639149.shtml  [19.09.2017]; and the Provisions on 
National Security Review of Acquisitions of Domestic Enterprises by Foreign Investors, 1 September 2011 (in 
Chinese) . Viewed at: http://www.mofcom.gov.cn/aarticle/b/c/201108/201108077 13530.html  [19.07.2017] . 
28 The Interim Provisions on the Assessment of the Impact of Concentration of Undertakings on 
Competition, 5 September 2011. Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zwgk/2011 -09/02/content_1939083.htm  [18.09.2017] . 
29 MOFCOM Anti -Monopoly Bureau online information (in Chinese). Viewed at: 
http://fldj.mofcom.gov.cn/article/c/201702/20170202514617.shtml  [18.09.2017].  
30 In addit ion, in November 2015, Supervision Trustee Model Text was issued. MOFCOM Anti -Monopoly 
Bureau online information (in Chinese). Viewed at: 
http://fldj.mofcom.gov.cn/article/c/201511/20151101196166.shtml  [18.09.2017].  
31 These are: Albania, Algeria, Argentina , Armenia, Australia, Austria, Azerbaijan, the Bahamas, 
Bahrain, Bangladesh, Barbados, Belarus, Belgium, Benin, Bolivia, Bosnia and Herzegovina, Botswana, Brunei 
Darussalam, Bulgaria, Ca bo Verde , Cambodia, Cameroon, Canada, Chad, Chile, Colombia, Congo, Côte 
d'Ivoire, the Democratic Republic of the Congo, Costa Rica, Croatia, Cuba, Cyprus, the Czech Republic, 
Denmark, Djibouti, Ecuador, Egypt, Estonia, Ethiopia, Finland, France, Gabon, Georgia, Germany, Ghana, 
Greece, Guinea, Equatorial Guinea,  Guyana, Hungary, Iceland, India, Indonesia, Iran, Israel, Italy, Jamaica, 
Japan, Jordan, Kazakhstan, Kenya, the Democratic People's Republic of Korea, the Republic of Korea, Kuwait, 
Kyrgyz Republic, Lao PDR, Latvia, Lebanon, Libya, Lithuania, Luxembourg, Madagascar, Malaysia, Mali, Malta, 
Mauritius, Mexico, Moldova, Mongolia, Morocco, Mozambique, Myanmar, Namibia, the Netherlands, 
New Zealand, Nigeria, Norway, Oman, Pakistan, Papua New Guinea, Peru, the Philippines, Poland, Portugal, 
Qatar, Romania, the Russian Federation, Saudi Arabia, Serbia, Seychelles, Sierra Leone, Singapore, Slovak 
Republic, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Tajikistan, Tanzania, 
Thailand, The former Yugoslav Republic of Macedonia,  Trinidad a nd Tobago, Tunisia, Turkey, Turkmenistan, 
Uganda, Ukraine, the United Arab Emirates, the United Kingdom, Uruguay, Uzbekistan, Vanuatu, Viet Nam, 
Yemen, Zambia, and Zimbabwe.  WT/TPR/S/375 /Rev.1  • China  
 
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  2.4.2   Examination and approval procedures  
2.41.   As described above, t he establishment of or changes in foreign -invested enterprises (FIEs) 
investing in foreign -invested projects (FIPs)32 that are not specified in the investment negative list 
are subject to a record -filing procedure via an integrated foreign investment management 
information system.33 Foreign investment partnerships are required  to register with the 
Department of Industry and Commerce; no approval is required. Registration requirements with 
SAIC are the same as those for domestic enterprises, but may vary slightly depending on the 
activity. Corporations are registered in accordance with the Company Law, while partnerships are 
registered in accordance with the Partnership Law and other measures.34 Provisions regarding 
capital requirements under the Company Law, last amended in 2013, ha ve remained largely 
unchanged since China 's previous review.  
2.42.   Procedures and requirements for the approval and record -filing of  FIPs are stipulated in 
a 2014 NDRC document.35 In addition to requirements under the Investment Catalogue, p rojects 
subject to approval are those listed in the Catalogue of Investment Projects Subject to 
Government Approval .36 To obtain approval, an investment project must be examined, and a 
number of conditions must be met, including those related to the environmental impact of the 
project and to land use.   
2.43.   Record -filing requires an applicant to establish an enterprise; apply for a business licence; 
register with the authorities concerning, inter alia,  taxation, customs, foreign exchange and the 
pertinent regulatory bodies ; and submit the required documents to the local government 
authorities.37 Record -filing is handled by the competent local authorities. If local authorities 
consider that a FI P does not qualify for record -filing, the relevant authority must issue a written 
opinion specifying the reasons for the decision within seven working days.38 According to the 
authorities, FIPs are subject to basically the same requirements as domestic inve stors when filing 
for an investment project.  
2.44.   The latest version of the Catalogue of Investment Projects Subject to Government Approval 
was issued in December 2016. The Catalogue indicates in which instances FIPs are subject to 
approval and the authorities in charge of undertaking the procedure.39 Depending on the amount 
                                                
32 FIPs are defined as: equity/cooperative joint ventures, wholly foreign owned ent erprises and foreign 
investment partnerships, as well as foreign enterprises merging with domestic enterprises, new investments in 
a foreign -invested enterprise and reinvestments by foreigners. See Article 2 of the Administrative Measures for 
the Approval and Record -Filing of Foreign -Invested Projects (FIPs), NDRC [2014] No. 12. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/201405/W020140521524444536751.pdf  [18.09.2017] . 
33 MOFCOM online information (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201610/20161001404974.shtml  [13.09.2017], and the National 
People's Congress online information (in Chinese). Viewed at: http://www.npc.gov.cn/npc/xinwen/2016 -
09/03/conte nt_1996747.htm  [01.09.2017] . 
34 The Measures for the Administration of the Establishment of Partnership Enterprises in the Territory of 
China by Foreign Enterprises or Individuals. Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zwgk/2009 -12/02/content_1478238.htm  [18.09.2017].  
35 The Administrative Measures for the Approval and Record -Filing of Foreign -Invested Projects (FIPs), 
NDRC [2014] No. 12 . NDRC online information (in Chinese). Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/201405/W020140521524444536751.pdf  [18.09.2017] ; and Decision on 
Revising Certain Articl es of the Administrative Measures for the Verification and Approval and Record -Filing of 
Outbound Investment Projects and the Administrative Measures for the Verification and Approval and the 
Record -Filing of Foreign Investment Projects, NDRC [2014] No. 20 . NDRC online information (in Chinese). 
Viewed at: http://www.sdpc.gov.cn/gzdt/201501/W020150115586334332592.pdf  [18.09.2017] . 
36 State Council Circular, Guo Fa [2014] No. 53. Chi nese Government online information (in Chinese). 
Viewed at: http://www.gov.cn/zhengce/content/2014 -11/18/content_9219.htm  [18.09.2017]. State Council 
Circular, Guo Fa [2016] No. 72. Chinese Government online information (in Chinese). Viewed at 
http://www.gov.cn/zhengce/content/2016 -12/20/content_5150587.htm  [18.09.2017] . 
37 These documents include: the description of the project and investors, the supporting documents to 
register an enterprise; the letter of investment intent; and the relevant resolution of the board of directors in 
the case of a project to increase capital or an M&A project (Article 18 of NDRC Notice [2014] No. 12).  
38 Article 20 of NDRC Notice [2014] No. 12.  
39 The Catalogue also stipulates the verification requirements for outward investment (Article 11 of the 
Catalogue of Investment Projects Subject to Gove rnment Approval (2016 Version). Guo Fa [2016] No.  72). WT/TPR/S/375 /Rev.1  • China  
 
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  invested or location of the project, approval is granted by various agencies (Table  2.3).40 Under 
the latest Catalogue, provincial governments may approve restricted projects funded by foreign  
investment of up to US$300 million (compared with US$100 million previously). The Catalogue 
also revoked approval requirement for 2 items and delegated approval authority to local 
governments for 15 items; it l ists specific projects that require approval of the Government for 
both domestic and foreign enterprises in such areas as: agriculture, energy, transportation, 
information technology, raw materials, manufacturing of machinery, light manufacturing, high and 
new technology and construction in urban are as. In the case of projects involving "serious " 
overcapacity, including steel, electrolytic aluminium, cement, sheet glass and vessels, the approval 
process is outlined in a specific piece of legislation.41 The authorities state that in accordance with 
requirements of existing policies, projects designed to expand capacity in any of these sectors are 
strictly prohibited.  
Table 2.3 Foreign direct investment subject to approval, 2017  
Investment category  Threshold  and ownership 
requirement  Approving agency  
Restricted  Less than US$300 million  Government at the provincial level  
US$300 million or above  NDRC  
US$2 billion or above  NDRC (approval)  
State Council for record -filing 
Source:  Guo Fa [2016] No. 72.  
2.45.   According to the authorities, FIP applications are usually approved as long as they have no 
negative impact on national security, the environment or public interest, and they comply with the 
relevant laws, regulations, catalogues, plans and industrial poli cies.42  
2.46.   The pilot reform of the foreign investment system through the establishment of pilot free 
trade zones, which was initiated in 2013 through the establishment of the China (Shanghai) Pilot 
Free Trade Zone (CSPFTZ), was expanded in 2017 to 7 other pil ot free trade zones (PFTZ) in 
Liaoning, Zhejiang, Hena n, Hubei, Chongqing, Sichuan and Shaanxi; currently there are 11 FTZs in 
China. The foreign investment access in all of the eleven FTZs is based on the Special 
Administrative Measures for Foreign Invest ment Access to Pilot Free Trade Zones  (2017 PFTZs 
Negative List ).43 The List provides an outline of those sectors in which foreign investment is 
restricted or prohibited, and replaced the 2015 Negative List.44 For all industries not listed in this 
document, foreign investors will receive treatment similar to domestic companies with regard to 
the establishment and approval requirements and process.45 Except for the incorporation 
procedures regulated by the Company Law, foreign investors are not subject to gover nment 
approval.  
2.47.   The 2017 PFTZs Negative List enumerates 95 prohibited or restricted areas (compared with 
122 in the  2015 PFTZs Negative List). The changes made in the 2017 PFTZs Negative List include 
reducing the number of sectors that are restricted or p rohibited to foreign investors and reducing 
the number of industries where foreign investors can only participate through a joint venture with 
                                                
40 The agencies in charge of approval, as well as the requirements to obtain approval, are listed in the 
Catalogue.  
41 Guidance Opinions on Resolving Serious Production Overcapacity Conflicts, Guo Fa [20 13] No. 41.  
42 Article 16 of NDRC Notice [2014] No. 12. These include the Catalogue for the Guidance of Foreign 
Investment Industries and the Catalogue of Priority Industries for Foreign Investment in the Central -Western 
Regions of China.  
43 Chinese Governme nt online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2017 -06/16/content_5202973.htm  [18.09.2017] . 10 entries and 
27 measures were eliminated from t he previous list and restrictions in some sectors including transportation, 
commercial services, finance, the manufacturing industry and the mining industry were relaxed.  
44Notice of the General Office of the State Council on Special Management Measures for  the Market 
Entry of Foreign Investment in the Pilot Free Trade Zone (Negative List), 8 April 2015, Guo Ban Fa [2013] 
No. 23. Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2015 -04/20/content_9627.htm  [19.09.2017].  
45 This means that they do not require government approval and, instead, they are subject to a 
simplified filing procedure, in addition to the incorporation procedure req uired by the SAIC. Under the new 
Record -Filing Measures, this procedure must be completed within 30 days of the company's incorporation, or 
within 30 days of the filing of contracts and articles of association of the foreign -funded enterprise.  WT/TPR/S/375 /Rev.1  • China  
 
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  a Chinese company or require  a minimum amount of Chinese equity participation. Compared with 
the 2015 PFTZs Negative List, certain provisions have also been removed. These include the 
prohibition of foreign investors from investing in internet access service establishments, and the 
requirement that Chinese parties must have a controlling stake in manufacturing of certain diesel 
engines and crank shafts.  
2.48.   Since 2013, the State Council has issued three plans for the Shanghai Pilot Free Trade 
Zone. They are: (1) the 2013 Overall Plan for China (Shanghai) Pilot Free Trade Zone ; (2) the 
2013 Further Deepening Reform and Open -up Plan for China (Shanghai) Pilot Free Trade Zone ; 
and (3) the 2017 Comprehensively Deepening Reform and Open -up Plan for China (Shanghai) Pilot 
Free Trade Zone , which  was issued on 30 March 2017 .46 These plans are currently all in effect.  
According to the authorities, the 2017 Plan aims to build the zone in such a way that , inter alia,  it 
complies with international standards, featuring rules-based free investment and tr ade with a 
favourable business environment .  
2.49.   The 2 015 State Council Circular on Distributing the Trial Measures on National Security 
Review of Foreign Investment in the Pilot Free Trade Zones continues to be in force with a view to 
ensuring control over po tential national security risks .47 The Circular clarifies standards for 
conducting security reviews of foreign investment that may affect national security or involve 
sensitive investors , as well as acquisition targets, and industries and technology.   
2.50.   Under  the FTZ pilot rules, investments by foreign companies will be strictly reviewed if they 
involve a controlling stake of businesses related to: the military fields, key agricultural products, 
energy  and resources , infrastructure, transportation, culture, IT products and services, core 
technology, a nd equipment manufacturing related to  national security. The review applies not only 
to foreign M&As but to all other types of foreign investment, including leasing, offshore 
transactions , and reinvestment by FIEs.48  
2.4.3   Incentives for foreign investment  
2.51.   Most capital goods imported to be used in projects in sectors  listed in the "encouraged " 
category of the Investment Catalogue  may benefit from customs duty exemptions. G oods listed in 
the Catalogue of Products Imported for Foreign Investment Projects and Not Eligible for Tax 
Exemption  and in the Catalogue of Imported Major Technical Equipment and Products Not Eligible 
for Tax Exemption (last revised in  2017 and entered into force on 1 January 2018)  are excluded 
from this  treatment .49 According to the authorities, tax incentives offered by the Government aim 
to encourage the practice of promoting industry upgrading via technological innovation, promote 
coordinated regional development, enhance environmental protection, prov ide incentives for 
energy conservation and emission reduction, support SMEs ' development, and achieve sustainable 
development.  
2.52.   Projects in sectors listed in the Catalogue of Priority Industries for Foreign Investment in the 
Central -Western Regions of China  (Central -Western Regions Catalogue) benefit from customs duty 
exemptions on the importation of equipment within the scope stipulated by relevant policies .50 
                                                
46 The Notice  of the State Council on Printing and Distributing the Comprehensively Deepening Reform 
and Open -up Plan for China (Shanghai) Pilot Free Trade Zone, Guo Fa [2017] No.23. Chinese Government 
online information (in Chinese). Viewed at: http://www.gov.cn/zhengce/content/2017 -
03/31/content_5182392.htm  [10.04.2018] . 
47 Notice of the General Office of the State Council on Printing and Distributing the Trial Measures for 
the National Se curity Review of Foreign Investment in Pilot Free Trade Zones, Guo Ban Fa [2015] No. 24. 
Chinese Government online information (in Chinese). Viewed at: http://www.gov.cn/zhengce/content/2015 -
04/20/content_9629.htm  [19.09.2017] . 
48 The review will evaluate the influence of foreign investment on national security, economic stability, 
social order, morality, Internet safety and the development of key technolo gy concerning State security. 
However, there are no details in the Circular on how to carry out the evaluation or on the definition of any of 
these factors. A joint committee with representatives from the NDRC, MOFCOM and other agencies will conduct 
the re views.  
49 MOF online information. Viewed at: 
http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201801/t20180105_2793555.html  [10.04.2018] . 
50 This includes the No.  43 notice jointly issued by the Ministry of Finance, the General Administration of 
Customs and the State Administration of Taxation in 2008.  WT/TPR/S/375 /Rev.1  • China  
 
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  Investors , domestic or foreign,  continue to enjoy a reduced enterprise income tax (EIT) rate of 
15% provided that they meet certain conditions and engage in encouraged projects in the 
applicable regions .51  
2.53.   The Central -Western Regions Catalogue was last revised on 17 February 201 7 to enlarge its 
sectoral scope: it now has 639 sectors, 1 39 more than the p revious Catalogue . Newly included 
sectors were related , inter alia , to modern agriculture equipment, high and new technology, 
services, labour -intensive industr ies, infrastructure building and automobile and electronics 
industries. Depending on particular provinces, the 2017 revision of the Catalogue was aimed at , 
inter alia : promoting the transformation and upgrading of traditional industries; supporting 
industrial development with high and new technology; expediti ng the development of the service s 
industr y; enhancing the development of labour -intensive industr ies; and strengthening the 
infrastructure and associated industries.  
2.54.   China continues to encourage FDI in high -tech enterprises and R&D; "qualified " R&D centres, 
domestic or foreign, can apply for imp ort duty and VAT exemption for "qualified " imported R&D 
equipment.52 
2.55.   Preferential tax treatment continues to be provided under the Enterprise Income Tax Law  
for eligible enterprises. Since 2016, preferential income tax policies for technologically advanced 
service enterprises have been applied in the pilot areas for innovative development of service s and 
trade53; in 2017, personal taxation pilot policies for , inter alia,  venture investment enterprises 
were implemented in eight comprehensive innovation and ref orm pilot areas in Beijing -Tianjin -
Hebei, Shanghai, Guangdong, Anhui, Sichuan, Wuhan, Xi 'an and Shenyang, as well as Suzhou 
Industrial Park.54 Tax preferences remain in place for high -tech enterprises that were established 
as of 1  January  2008 in a special economic zone or the Pudong New Area of Shanghai. Income 
earned in any of those zones is exempt from the enterprise income tax for two years including the 
first year in which income derived from production or operations is earned and the year that 
immediat ely follows, and a preferential rate of 50 % of the statutory tax rate of 25 % is applied 
between the third and fifth  years.  
 
                                                
51 These are Chon gqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Ningxia, Qinghai, Xinjiang 
Production and Const ruction Corporation, Xinjiang, Inner Mongolia, Guangxi, Xiangxi Tujia and Miao Peoples' 
Autonomous Prefecture of Hunan, Enshi Tujia and Miao People's Autonomous Prefecture of Hubei, Yanbian 
Korea People's Autonomous Prefecture of Jilin, and Ganzhou City of  Jiangxi. 
52 SAT Announcement [2017] No. 5 on Management Measures on VAT refund for domestic equipment 
purchased by R&D centres. SAT online information (in Chinese). Viewed at: 
http://www.chinatax.gov.cn/n810341/n810755/c2531251/content.html ; and Circular Caishui [2016] No. 121. 
Viewed at: http://www.chinatax.gov.cn/n810341/n810755/c2389878/content. html [18.09.2017].  
53 The Reply of the State Council concerning the Approval of the Pilot Areas for Innovative Development 
of Service Trade, Guo Han [2016] No. 40, 25 February 2016 (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2016 -02/25/content_5046212.htm  [26.09.2017].  
54 Notice of Personal Taxation Pilot Policies for Venture Investment Enterprises and Angel Investment, 
Cai Shui [2017] No. 38, 28 April 2017 (in Chi nese). Viewed at: 
http://www.chinatax.gov.cn/n810341/n810755/c2590818/content.html  [26.09.2017].  WT/TPR/S/ 375/Rev.1  • China  
 
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  3  TRADE POLICIES AND P RACTICES BY MEASURE  
3.1  Measures Directly Affecting Imports  
3.1.1   Customs procedures , valuation , and requirements  
3.1.  Customs procedures are regulated by several pieces of legislation (Table 3.1). In addition, 
the General Administration of Customs of the People's Republic of China (GACC) issues 
administrative customs announcements and decrees to introduce and enforce changes in customs 
procedures .1 Between September 2015 and  December  2017, it issued 190 announcements and 
9 decrees. These were mainly related to: procedures for goods in transit, advancing paperless 
clearance, promoting the use of single windows (which had covered all ports by 2017), 
implementing free -trade agre ements, authorized operators, e -commerce, and rating enterprises 
according to their credit history.   
3.2.  China has continued to make efforts to reform and harmonize customs procedures across its 
42 customs areas. In June 2016, the National Customs Clearance In tegration Reform was 
launched as a pilot phase; it was rolled out nationwide in July  2017. The Reform covers the whole 
import declaration process and has as a main objective improv ing the efficiency of clearance 
procedures. The authorities indicate that na tionwide clearance times were reduced to an average 
of 15.9 hours in 2017, from over 22 hours in 2016. According to the authorities, about one third of 
imports are now declared through single windows.  
Table 3.1 China's legislation related to customs procedures, March 2018  
Legislation  Date of issuance/amendment  
Customs Law  Order No. 50 issued in 1987, and amended in 2000 and 2013 (in Chinese - last 
amended on 28  December 2013). Viewed at : 
http://www.npc.gov.cn/npc/xinwen/2013 -12/30/content_1821988.htm  
[21.03.2018]  
Regulations on Import 
and Export Duties  State Council Decree No. 392, 29 October 2003. Viewed at: 
http://english.mofcom.gov.cn/aarticle/policyrelease/internationalpolicy/200705/20
070504715851.html  [21.03.2018]  
Provisions on the 
Customs Administration 
of Declarations for the 
Import and Export 
of Goods  GACC Decree No. 103 of 2004, and amended by No. 218  of 2014 (in Chinese - last 
amended on 13 March 2014). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info265127.htm  [21.03.2018]  
Customs Rules on 
Administration of the 
Levying of Duties on 
Imports and Exports  GACC Decree No. 124 of 2005 amended by GACC Decree No.  218 of 2014 (in 
Chinese - last amended on 13 March 2014). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info4487.htm  [21.03.2018]   
Source:  Information provided by the authorities of China.  
3.3.  Importers must register as foreign trade operators with the Ministry of Commerce (MOFCOM) 
or its authorized bodies befor e filing customs declarations. Foreign -invested enterprises (FIEs) may 
register as foreign trade operators; FIEs require a copy of the certificate of "approval of foreign -
invested enterprises" to register. Import declarations must be made in paper and elec tronic format 
or through the paperless procedure, and can be made either by a natural person or by a customs 
declaration enterprise.  
3.4.  Importers are required  to comply with the inspection and quarantine requirements of 
Customs and the General Administration  of Quality Supervision, Inspection and Quarantine 
(AQSIQ), as stipulated by law and by the Catalogue of Import and Export Commodities Subject to 
Compulsory Inspection.2 The Catalogue is amended every year to add or remove commodities as 
                                                
1 GACC online information makes available a full list of customs -related laws and regulations in Chinese. 
Viewed at: http://www.customs.gov.cn/customs/302249/302266/302267/index.html  [21.03.2018].  
2 GACC and AQSIQ Announcement [2014] No. 146 (in Chi nese). Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjgg/2014/201501/t20150106_429636.htm  [21.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  required to protec t human, animal or plant health and the environment, and to prevent fraud and 
safeguard national security.3  
3.5.  Enterprises are classified into different groups based on risk analysis. Customs inspection and 
supervision, including for exports, depend upon the  enterprise's rating ( Section 3.2.1). Goods 
imported by high -risk enterprises are inspected, while other exports are released through fast -
track clearance or a "low -risk examination". Enterprises are categorized according to their credit 
rating into: autho rized enterprises, enterprises of general integrity, and dishonest enterprises.  
3.6.  Some 134 "special customs supervision areas", governed by different regulations, continue to 
exist, mostly in the pilot free  trade zones ( Sections 2.4.1 and 3.2.4). The object ives of such areas 
include carrying out bonded processing, bonded logistics, and bonded services. China's special 
customs supervision areas are approved by the State Council and supervised by Customs. There 
are six  different types of these areas: bonded zo nes, export processing zones, bonded logistics 
parks, bonded ports, comprehensive bonded zones, and cross -border industrial zones. The 
authorities indicate that there have been no major changes in their rules and regulations. China 
also applies different c ustoms procedures to specific areas, in some instances on a trial basis, to 
assess their functionality.4  
3.7.  China deposited its instrument of acceptance of the Protocol of Amendment inserting the 
Agreement on Trade Facilitation (TFA) into Annex 1A of the WTO  Agreement on 
4 September  2015. China notified its Category A commitments, which cover the majority of 
measures, in June 20145, and its Category B commitments in June 2017.6 China does not have 
any Category C commitments. The indicative implementation date  for most Category B 
commitments is February 2020 , except for provisions under Article 10.9 on the temporary 
admission of goods, which were implemented in November 2016. Under the TFA, China has 
notified the following authorities as enquiry points: GACC fo r customs clearance, AQSIQ for import 
and export inspection and quarantine, and the Ministry of Transport for traffic in transit.7  
3.8.  There have been no changes in China's customs valuation rules and procedures since its 
previous review. Customs value is det ermined on the basis of the transaction value and, when it 
cannot be used, the other valuations methods are used in sequential order, as stipulated in the 
WTO's Customs Valuation Agreement.  
3.9.  Administrative decisions made by Customs may be appealed. Accordi ng to the authorities, 
there were  486 administrative review cases and 142 lawsuits between 2015 and 2017, involving 
issues such as classification, valuation, and the country of origin.  
3.1.2   Rules of origin  
3.10.   China continues to apply preferential and non -preferen tial rules of origin. There have been 
no changes in the regulations on those rules since the previous review.8  
3.11.   Preferential rules of origin apply in accordance with the specifications of the various 
preferential agreements signed by China (Table A3.1). Th ey are also used to grant preferential 
treatment to imports from LDCs. In general, the criteria used to determine origin include: change 
in tariff classification, whether the good is wholly obtained in one party , regional value content, 
processing operation or other requirements. Most FTAs provide for the possibility of bilateral 
                                                
3 Implementing Regulations for the Law on Inspection of Import and Export Commodities, Order of the 
State Council, No. 447. Viewed at: http://www.asianlii.org/cn/legis/cen/l aws/irftlotprocoioiaec1072  
[21.03.2018].  
4 GACC Decree No. 209, 27 June 2013, Customs Supervision Measures for Hengqin New Area (in 
Chinese). Viewed at: http://www.customs.go v.cn/publish/portal0/tab49660/info623256.htm  [21.03.2018] ; 
and GACC Decree No.  208, 27 June 2013, China Customs Regulatory Approach to Pingtan Comprehensive 
Experimental Zone (Trial) (in Chinese). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info623257.htm . 
5 WTO documents WT/PCTF/CHN/1, 1 June 2014 and G/TFA/N/CHN/1/Add.1, 24 November 2017.  
6 WTO documents G/TFA/N/CHN/1, 6 June 2017 and G/TFA/N/CHN/1/Add.2, 14 February 2018.  
7 WTO document G/TFA/CHN/2, 1 November 2017.  
8 Regulations on Places of Origin of Imports and Exports (Order of the State Council No. 416). See also 
WTO document G/RO/N/132, 7 September 2015.  WT/TPR/S/ 375/Rev.1  • China  
 
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  cumulation. Since China's last TPR, rules of origin of FTAs with Australia and the Republic of Korea 
were notified to the WTO.9  
3.12.   Non-preferential rules of origin are used to: apply the MFN tariff rate; ensure the origin of 
goods subject to anti -dumping, countervailing and safeguard measures; ensure that import quotas 
and tariff quota limits are imposed on specific countries; and det ermine the origin of imported 
goods purchased by the Government.  
3.1.3   Tariffs  
3.1.3.1   Applied MFN tariffs  
3.13.   China's tariff is comprised of MFN rates, "agreement tariff rates", special preferential tariff 
rates, general tariff rates, and tariff quota rates. In addition, i nterim tariff rates, which are usually 
lower than MFN rates, are applied for a specific period of time (i.e. usually one year).10 
3.14.   China's applied MFN tariff in 2017 consists of 8,547 lines at the eight -digit level in the 
Harmonized System 2017. Most tariff lines (99.6%) carry ad valorem  tariffs. 34 tariff lines (0.4% 
of all lines) carry specific rates. A tariff reform implemented in December 2017 reduced applied 
MFN tariffs for some 200 consumer products.  
3.15.   The simple average applied MFN rate in December 2017 was 9.3%, slightly lower than in 
2013 and 2015. The tariff was higher for agricultural products (WTO definition), at 14.6%, 
showing a small decrease compared to 2015 and 2013 (Table 3.2). The average applied tariff on 
non-agricultural products also fell sl ightly since 2013, to 8.5%. The percentage of tariffs that 
exceeded 15% (international tariff peaks) decreased to 13.9%, from 14.4% in 2015, while the 
percentage of tariffs subject to domestic tariff peaks fell  slightly, to 1.8%.  
3.16.   The distribution of China' s applied MFN tariff has not changed substantially since the last 
Review. In 2017, China's applied MFN tariff contained 78 different ad valorem  tariff rates (up from 
54 in 2015)11, ranging from 0 -65% (Table A3.2). 42.8% of all tariffs ranged from 5 -10%, sli ghtly 
lower than in 2015 (Chart 3.1). The percentage of duty -free lines has increased marginally, while 
the share of lines with rates higher than 25% has slightly decreased.  
Table 3.2 China's tariff structure,  2013, 201 5 and 2017  
  MFN applied  Current 
boundb Final 
boundb 2013  2015  2017  2017a 
Bound tariff lines (% of all tariff lines)  100.0  100.0  100.0  100.0  100.0  100.0  
Simple average rate  9.4 9.5 9.5 9.3 9.8 9.6 
 WTO agricultural products  14.8 14.8 14.8 14.6 15.1 15.1 
 WTO non -agricultural products  8.6 8.6 8.6 8.5 9.0 8.7 
Duty-free tariff lines (% of all tariff lines)  9.8 9.7 9.8 9.8 7.5 10.3 
Simple average rate of dutiable lines only  10.5 10.5 10.5 10.3 10.7 10.7 
Tariff quotas (% of all tariff lines)  0.6 0.6 0.6 0.6 0.6 0.6 
Non-ad valorem  tariffs (% of all tariff lines)  0.5 0.5 0.4 0.4 0.0 0.0 
Domestic tariff "peaks" (% of all tariff lines)c 2.1 2.2 2.0 1.8 2.1 2.1 
International tariff "peaks" (% of all tariff lines)d 14.4 14.4 14.6 13.9 15.6 15.4 
Overall standard deviation of tariff rates  7.5 7.5 7.5 7.4 7.6 7.7 
                                                
9 WTO documents G/RO/N/137 and 138, 11 April 2016.  
10 Agreement rates apply to imports from countries and customs territories with which China has 
preferential trade agreements ( Section 2). Special preference duty rates are unilateral preferences applied to 
imports originating in least developed countries with which China has a trade agreement. General rates apply 
to: products whose origin cannot be determined; products from countries that do not have a reciprocal trade 
agreement with China; non -WTO Members; and some territories of EU member States. If a country appears in 
several lists, the most favourable duty rate applies, taking into account the rules of origin. Interim duties are 
fixed annually by the Customs Tariff Commission, and usually apply from 1 Ja nuary to 31 December of each 
year. Interim duties are applied on an MFN basis and replace the MFN duties for the lines that are affected. 
Interim duty rates are lower than the MFN rates and in certain instances the interim duty rate applies to just 
part of  a tariff line.  
11 The increase in the number of tariff rates is due to the implementation of the Information Technology 
Agreement II.  WT/TPR/S/ 375/Rev.1  • China  
 
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    MFN applied  Current 
boundb Final 
boundb 2013  2015  2017  2017a 
Coefficient of variation of tariff rates  0.8 0.8 0.8 0.8 0.8 0.8 
Nuisance applied rates (% of all tariff lines)e 2.9 2.9 2.9 3.2 2.7 2.5 
Number of lines  8,238  8,285  8,547  8,547  8,547  8,547  
 Ad valorem  rates 7,385  7,437  7,671  7,669  7,903  7,666  
 Duty-free rates  810 806 838 840 644 881 
 Specific rates  35 34 34 34 0 0 
 Alternate rates  3 3 3 3 0 0 
 Otherf 5 5 1 1 0 0 
a As of 1 December 2017. Tariff cuts fully applied at the 8 -digit level (179 tariff lines) are included.  
b Bound rates are based on the 2017 tariff schedule. Final bound rates are to be fully implemented by 
2023.  
c Domestic tariff peaks are defined as those exceeding three times the overall average applied rate.  
d Intern ational tariff peaks are defined as those exceeding 15%.  
e Nuisance rates are those greater than zero, but less than or equal to 2%.  
f Rates involving either an ad valorem  rate, if the price is below or equal to a certain amount, or a 
compound rate, if the  price is higher.  
Note:  2013 and 2015 tariff schedules are based on HS12 nomenclature; 2017 tariff schedule is based on 
HS17 nomenclature.  
 Calculations are based on national tariff line level (8 -digit); excluding in -quota rates and including 
AVEs for non -ad valorem  rates provided by the authorities, as available.  
 Interim duty rates are used for the calculations when fully applied at the 8 -digit level.  
Source:  WTO Secretariat calculations, based on data provided by the authorities of China, and Ministry of  
Finance online information.  
Chart 3.1 Distribution of MFN applied tariff rates, 2013, 2015, and 2017  
 
Note:  Figures in parentheses denote the share of total lines. 2013 and 2015 tariff schedules are based on  
HS12 nomenclature; 2017 on HS17.  
Source:  WTO Secretariat calculations, based on data provided by the authorities, and Ministry of Finance of 
the People's Republic of China online information.  
3.1.3.2   Tariff rate quotas  
3.17.   Since China's previous review , there have been no changes to the list of products subject to 
tariff rate quotas (TRQ s), the in - and out -of-quota tariffs, or the allocation system. In 2017, TRQs 
applied to 47 tariff lines included in HS Chapters 10 (wheat and meslin, maize, rice), 11  (cereal 
flours other than of wheat or meslin, cereal groats), 17 (cane or beet sugar), 31  (mineral or 
chemical fertilizers), 51 (wool, carded or combed), and 52 (cotton). All in -quota rates are 
WT/TPR/S/ 375/Rev.1  • China  
 
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  ad valorem . In most cases, the out -of-quota rates are equal to the  bound rates. The most recent 
notification on tariff quota utilization dates from 2014.12 Fill rates for China's TRQs varied strongly 
by product ( Section 4.1.3.1.1).  
3.18.   In September 2017, the WTO's Dispute Settlement Body agreed to establish a panel to rule 
on a complaint filed by the United States regarding China's administration of its tariff rate quotas 
for certain imported farm goods.13 
3.1.3.3   Bound rates  
3.19.   Upon its entry into the WTO, China bound 100% of its tariffs at ad valorem  rates ranging 
from 0 -65% for agricul ture (WTO definition) and from 0 -50% for non -agricultural products. The 
simple average current bound rate is 9.8% (15.1% for agriculture and 9.0% for non -agricultural 
goods); final bound rates must be implemented by 2023. While all tariffs were bound at 
ad valorem  rates, applied MFN tariffs on 38 tariff lines are non -ad valorem . The authorities state 
that in practice ad valorem  equivalents do not exceed the bound tariff rate, as the lower rate is 
applied.  
3.1.3.4   Preferential tariffs  
3.20.   China applies preferential tar iffs under its bilateral and regional trade agreements. Chile and 
New Zealand face the lowest average tariff rates, followed by Costa Rica, Iceland, and the ASEAN 
countries (Table 3.3). The share of duty -free tariff lines in China's FTAs ranges between 9.8 % (FTA 
with Australia) and 95.7% (Iceland). Since 2015, preferential tariffs declined for: Macao, China; 
Peru; and Switzerland.  
Table 3.3 Summary analysis of China's preferential tariff, 2017  
  Total  WTO agric ulture  WTO non -agriculture  
  
Average 
(%) Duty -free 
ratesa 
(%) Average 
(%) Duty -free 
ratesa 
(%) Average 
(%) Duty -free 
ratesa 
(%) 
MFN 9.5 9.8 14.8 8.0 8.6 10.1 
Agreement tariff rates        
APTAb 8.9 10.0 13.8 9.0 8.1 10.2 
ASEANc 0.8 94.4 1.7 93.6 0.7 94.5 
Hong Kong, China CEPAd 7.0 31.8 12.3 22.8 6.2 33.3 
Macao, China CEPAd 7.2 27.3 10.0 36.0 6.8 26.0 
Chinese Taipei ECFAe 8.8 17.1 14.6 9.3 7.9 18.4 
Pakistan FTA  6.0 35.4 11.4 23.6 5.1 37.2 
Chile FTA  0.4 97.2 2.0 94.8 0.2 97.6 
New Zealand FTA  0.4 97.4 2.0 94.5 0.2 97.8 
Singapore FTA  4.7 43.2 8.7 41.9 4.0 43.4 
Peru FTA  1.9 73.0 4.5 46.6 1.4 77.2 
Costa Rica FTA  0.7 93.8 3.0 85.0 0.3 95.2 
Iceland FTA  0.7 95.7 2.9 91.2 0.3 96.4 
Switzerland FTA  4.8 23.6 9.2 15.5 4.1 24.9 
Australia FTA  9.1 9.8 13.7 8.0 8.4 10.1 
Korea, Rep. of FTA  6.7 20.1 11.4 19.1 6.0 20.3 
Least developed preferential rates        
 Special preferential tariff agreement for:       
 Bangladesh and Lao PDR under APTA  9.2 11.1 14.6 8.0 8.4 11.5 
 Cambodia  8.7 15.9 12.0 29.3 8.2 13.8 
 Lao PDR  9.0 13.6 12.7 23.0 8.4 12.1 
 Myanmar  9.0 13.7 13.8 13.9 8.2 13.7 
 LDC1 (35 countries)  0.7 96.5 2.4 93.4 0.4 97.0 
 LDC2 (Benin, Timor -Leste, Myanmar)  1.1 94.4 2.9 92.0 0.8 94.8 
 LDC3 (Bangladesh)  5.1 61.1 9.1 56.4 4.4 61.9 
Memorandum item:        
Bangladeshf 4.8 61.2 8.6 56.6 4.2 61.9 
Cambodiag 0.5 97.1 1.5 94.7 0.3 97.5 
Lao PDRh 0.8 94.5 1.6 94.4 0.7 94.5 
Myanmari 0.7 95.7 1.6 94.4 0.6 95.9 
                                                
12 WTO document G/AG/N/CHN/30, 2 February 2016.  
13 WTO document series WT/DS/517.  WT/TPR/S/ 375/Rev.1  • China  
 
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    Total  WTO agric ulture  WTO non -agriculture  
  
Average 
(%) Duty -free 
ratesa 
(%) Average 
(%) Duty -free 
ratesa 
(%) Average 
(%) Duty -free 
ratesa 
(%) 
Singaporej 0.8 94.4 1.7 93.6 0.7 94.5 
Korea, Rep. ofk 6.7 20.2 11.3 19.5 6.0 20.3 
a Duty-free lines as a percentage of total tariff lines.  
b Preferential rates under APTA are applicable to the Republic of Korea, Sri Lanka, Bangladesh, India, 
and Lao PDR.  
c Preferential rates under ASEAN are applicable to Brunei Darussalam, Cambodia, Indonesia, Lao PDR, 
Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Viet Nam.  
d Closer Economic Partnership Agreement.  
e Cross -straits Economic Co -operation Framework Agreement.  
f Based on lowest rates taken from 2 LDC countries, Bangladesh and Lao PDR under  APTA, and APTA 
preferences.  
g Based on lowest rates taken among ASEAN, and special preferences for Cambodia, and 14 LDCs.  
h Based on lowest rates taken among ASEAN, special preferences for Lao PDR, Bangladesh and Lao 
PDR under APTA, and APTA preferences.  
i Based on lowest rates taken among ASEAN, and special preferences for Myanmar, and 14 LDCs.  
j Based on lowest rates taken among ASEAN, and Singapore FTA.  
k Based on lowest rates taken among Korea, Rep. FTA and APTA.  
Note:  Calculations are based on national tariff line level (8 -digit); excluding in -quota rates and including 
AVEs for non -ad valorem  rates provided by the authorities, as available. Interim duty rates are used 
for the calculations when fully applied at the 8 -digit level.  
Source:  WTO Secr etariat calculations, based on data provided by the authorities of China.  
3.21.   China also grants preferential tariff treatment to imports from least developed countries. 
The most far -ranging scheme, which applies to 35 LDCs, provides for an average preferential  tariff 
of 0.7% and a share of duty -free lines of 96.5%.  
3.1.3.5   Tariff exemptions and concessions  
3.22.   Tariff exemptions apply to the following imports: (1) goods in a single consignment on 
which the duties are estimated to be less than RMB 50; (2) advertising materia l and samples of no 
commercial value; (3) goods donated by international organizations or foreign governments; 
(4) goods damaged prior to customs clearance; (5) fuels and provisions to be used by vessels that 
are in transit in China; and (6) goods imported  for daily use and valued at less than 
RMB 8,000  per person per day. Tariff concessions can apply to goods that are processed and 
exported within a specific period of time.  
3.23.   In addition, duty exemptions and reductions may apply in accordance with the releva nt 
regulations by the State Council and on goods imported into designated areas, for specific 
enterprises or for a specific use.14 For instance, imported commodities are exempt from import 
duties and other taxes when entering special customs supervision are as.  
3.24.   No information was available on the actual importance of tariff concessions or exemptions, 
e.g. in terms of government revenue forgone.  
3.1.4   Other charges affecting imports  
3.25.   Imports, like domestically produced goods, are subject to Value Added Tax (VAT). VA T on 
imports is collected by Customs on behalf of the State Administration of Taxation (SAT) and based 
on the c.i.f. price plus the import duty. If goods are also subject to the consumption (excise) tax, 
VAT is calculated including the consumption tax. VAT  on goods has two rates: 11% (down from 
13% in July 2017) and 17%. The lower rate applies to various food products, agricultural 
machinery, and books. The list of products that are exempt from VAT has not changed since the 
previous review. Domestically  produced agricultural products sold directly by the producer 
continue to be exempted from VAT, while imported goods are not. According to the authorities, the 
main beneficiaries of this provision are small -scale farmers.  
                                                
14 Customs Law, Article 57.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.26.   The consumption (excise) tax is levie d on: products that are harmful to human health, 
social order and the environment; luxury goods; high -energy consumption and high -end products; 
and non -renewable and non -replaceable petroleum products. Tax rates continue to vary 
considerably depending upon  the product; they can be ad valorem , specific or compound. Tax 
rates and the list of products subject to this tax may be modified as required; changes since 2015 
have concerned cosmetics and luxury cars (Table 3.4).  
Table 3.4 Excise (or consumption) tax, 2015 -17 
Product  2015  2016  2017 (and early 
2018)  
Tobacco     
Cigars  36% 36% 36% 
Cigarettes:     
Production procedure     
Price higher than RMB  70 per carton  56% plus RMB 0.003 
per cigarette  56% plus RMB 0.003 
per cigarette  56% plus RMB 0.003 
per cigarette  
Price lower than RMB  70 per carton  36% plus RMB  0.003 
per cigarette  36% plus RMB  0.003 
per cigarette  36% plus RMB  0.003 
per cigarette  
Wholesale  11% plus 
RMB 0.005/cigarette  11% plus 
RMB 0.005/cigarett e 11% plus 
RMB 0.005/cigarette  
Cut tobacco  30% 30% 30% 
Alcoholic drinks and liquor   
White spirit distilled from grain, 
potatoes or grapes  20% plus RMB 0.5 
per 500  g (or per 
500 ml) 20% plus RMB 0.5 
per 500  g (or per 
500 ml) 20% plus RMB 0.5 
per 500  g (or per 
500 ml) 
Yellow rice wine  RMB 240 per tonne  RMB 240 per tonne  RMB 240 per tonne  
Beer made from malt, whose factory 
price of a value over or equal to RMB 
3,000 (VAT excluded) per tonne  RMB 250 per tonne  RMB 250 per tonne  RMB 250 per tonne  
Beer made from malt, whose factory 
price of a value of less than RMB 
3,000 (VAT excluded) per tonne  RMB 220 per tonne  RMB 220 per tonne  RMB 220 per tonne  
Other fermented alcoholic beverages  10% 10% 10% 
Luxury cosmetics  30% 15% 15%a 
Precious jewellery, pearls, jade, 
and precious stone     
Gold, silver platinum jewellery, and 
diamonds  5% 5% 5% 
Pearls, jade, and precious stones  10% 10% 10% 
Firecrackers and fireworks  15% 15% 15% 
Gasoline    
Motor gasoline and aviation gasoline 
(containing > 0.013 g of lead per litre)  RMB 1.52 per litre  RMB 1.52 per litre  RMB 1.52 per litre  
Motor gasoline and aviation gasoline 
(containing < 0.013 g of lead per litre)  RMB 1.52 per litre  RMB 1.52 per litre  RMB 1.52 per litre  
Diesel oil  RMB 1.2 per litre  RMB 1.2 per litre  RMB 1.2 per litre  
Aviation kerosene  RMB 1.2 per litre  RMB 1.2 per litre  RMB 1.2 per litre  
Naphtha  RMB 1.52 per litre  RMB 1.52 per litre  RMB 1.52 per litre  
Solvent  RMB 1.52 per litre  RMB 1.52 per litre  RMB 1.52 per litre  
Lubricants  RMB 1.52 per litre  RMB 1.52 per litre  RMB 1.52 per litre  
Fuel oil  RMB 1.2 per litre  RMB 1.2 per litre  RMB 1.2 per litre  
Motor vehicles    
Passenger vehicles with less than 
9 seats with a cylinder capacity of:     
- less than 1,000  ml  1% 1% 1% 
-> 1,000 ml, but < 1,500 ml  3% 3% 3% 
-> 1,500  ml, but < 2,000 ml  5% 5% 5% 
-> 2,000  ml, but < 2,500 ml  9% 9% 9% 
-> 2,500  ml, but < 3000 ml  12% 12% 12% 
-> 3,000  ml, but < 4,000 ml  25% 25% 25% 
- 4,000 ml or more  40% 40% 40% 
Middle -size or light passenger vehicles 
for commercial purposes  5% 5% 5% 
"Ultra -luxurious" vehicles  10% n.a. 10%b 
Yachts  10% 10% 10% 
Luxury watches, with a unit price 
higher than RMB 10,000  20% 20% 20% WT/TPR/S/ 375/Rev.1  • China  
 
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  Product  2015  2016  2017 (and early 
2018)  
Golf equipment  10% 10% 10% 
Solid wood flooring  5% 5% 5% 
Disposable chopsticks  5% 5% 5% 
Batteries  4% 4% 4% 
Paint  4% 4% 4% 
n.a. Not applicable.  
a The excise duty imposed on ordinary cosmetics for beauty preservation and decoration purposes was 
repealed in October 2016. For "luxurious cosmetics" the tariff rate was revised to 15%.  
b Since December 2016, "ultra -luxurious" cars (defined as cars with a price of over RMB 1.3 million 
excluding VAT) have been subject to a consumption tax of 10%.  
Source:  Information provided by the authorities of China.  
3.1.5   Import prohibitions, restrictions, an d licensing  
3.27.   China classifies imports into three categories: not restricted, restricted and prohibited. The 
import of restricted goods is administered through licen ces or import quotas, although the latter 
have not been applied during the period under revie w. Non -automatic licen ces do not differentiate 
between the origins of products.  
3.28.   China's import licensing system includes non -automatic and automatic import licen ces. In 
addition, licences are used to allocate tariff -rate quotas. Furthermore, China applies  import 
licences to specific dual -use substances for the purposes of safeguarding national security and 
public interest and under relevant international agreements.15  
3.29.   A Catalogue of Goods Subject to Automatic Import Licensing is issued annually. All the 
commodities listed in the Catalogue can be imported freely; import licences are maintained only 
for statistical purposes. In 2017, China subjected 49 categories of goods (comprising 498 tariff 
lines at the eight -digit level, 102 more than in 2015) to automat ic import licensing, including bulk 
agricultural products, raw material (ores, ashes, fuels, inorganic chemicals, metals), and 
mechanical and electrical products.16  
3.30.   In addition, the Catalogue of Non -restricted Solid Waste subjects 18 tariff lines that can be 
used as raw material (same number as in 2015) to automatic import licen ces.17  
3.31.   There have been no major changes in the application procedures and terms of automatic 
import licen ces since the previous TPR.18 The validity of an automatic import licen ce is s ix months ; 
it can be extended in certain cases. Applications can be filed with the Ministry of Commerce or its 
entrusted institutions. Licen ce applications shall be immediately approved by the issuing authority. 
Automatic import licen ces are not transferab le. 
3.32.   Products subjected to non -automatic licen ces are listed in the Catalogue of Import Goods 
Subject to Licensing19 issued annually, as well as in an additional Catalogue of Restricted Imports 
for Solid Waste. In 2017, the Catalogue of Import Goods Subject to Licensing listed 89 tariff lines 
at the HS 8 -digit level that were subject to non -automatic import licensing, w hich was the same as 
                                                
15 WTO document G/LIC/N/3/CHN/14, 29 November 2016.  
16 Catalogue Goods Subject to Automatic Import Licensing (2017), MOFCOM GACC Joint Announcement 
[2016] No. 84 (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201612/20161202454762.shtml .  
17 Annex 3 of the An nouncement on Amending Catalogues of Imported Wastes Management, MEP 
MOFCOM NDRC GACC AQSIQ Announcement [201 7] No. 39, 10 August 2017 (in Chinese) . Viewed at:  
http://www.zhb.gov.cn/gkml/hbb/bgg/201708/t20170817_419811.htm . 
18 For details regarding the procedure to obtain automatic import licen ces, see China's last notification 
under Article 7.3 of the Agreement on Import Licensing Procedures (WTO document G/LIC/N/3/CHN/14, 
29 November  2016).  
19 Catalogue of Import Goods Subject  to Licensing (2017), MOFCOM GACC AQSIQ [2016] No. 85, 30 
December 2016  (in Chinese) . Viewed at: 
http://wms.mofcom.gov.cn/article/zcfb/g/201612/20161202454764.shtml  [21.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  in 2015, while the Catalogue of Restricted Imports for Solid Waste20 listed 29 lines, compared to 
52 in 2015 (Chart 3.2). As in 2015, imports subject to non -automatic licen ces mainly include used 
mechanical and electronic equipment, and  substances that deplete the ozone layer. The 
procedures to obtain a non -automatic import licen ce have remained unchanged since the previous 
review . 
Chart 3.2 Import licensing by HS section, 2017  
Note:  Calcul ations are based on the 2018 tariff schedule at 8 -digit level.  
Source:  WTO calculations, based on data provided by the authorities of China.  
3.33.   According to the Foreign Trade Law, China may maintain import prohibitions on grounds of 
national security; social interests; public morals; human, animal and plant health; environmental 
protection; balance -of-payments reasons; and commitments under international agreements. The 
Catalogue of Commodities Subject to Import Prohibition issued by the MOFCOM lists all prohi bited 
products.21 In 2015, China's notification listed 365 products (HS 8 -digit level) including mainly 
machinery and transport equipment.22 In addition, prohibited items related to solid waste are 
listed in the Catalogue of Prohibited Imports for Solid Wast e. On 9 January 2017, the Ministry of 
Environmental Protection made an Announcement on Adjusting the Catalogue of Wastes Subject to 
Import Administration (Announcement [2017] No.  3), which moved seven  solid wastes from the 
Catalogue of Solid Wastes Used as  Raw Materials and Subject to Import Restriction to the 
Catalogue of Solid Wastes Subject to Import Prohibition.23 
3.34.   On 18 July 2017, China notified the Catalogue of Solid Wastes Forbidden to Import into 
China by end -2017, which included 4 classes  and 24 kind s of solid wastes (Table 3.5).24 The 
authorities consider that this import prohibition does not influence the distribution of goods 
imported legally.  
3.35.   Pursuant to the Foreign Trade Law , the authorities may also restrict or prohibit imports in 
"infant industr ies" (which is not further defined); agriculture, animal husbandry, and fishery; and 
the precious metals industry. According to the authorities, this provision was not used during the 
review period.  
                                                
20 Annex 2 of the Announcement on Amending Catalogues of Imported Wastes Manag ement, MEP 
MOFCOM NDRC GACC AQSIQ Announcement [201 7] No. 39, 10 August 2017 (in Chinese) . Viewed at:  
http://www.zhb.gov.cn/gkml/hbb/bgg/201708/t20170817_419811.htm . 
21 GACC onli ne information (in Chinese). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab3400/info5315.htm  [22.03.2018].  
22 WTO documents G/MA/QR/N/CHN/1, G/MA/QR/N/CHN/2, and G/M A/QR/N/CHN/3, 24 April 2015.  
23 Announcement on Adjusting the Catalogue of Wastes Subject to Import Administration, the Ministry 
of Environmental Protection, the Ministry of Commerce, the National Development Reform Commission, the 
General Administration of  Customs and the General Administration of Quality Supervision, Inspection and 
Quarantine Announcement [2017] No.  3, 9 January 2017 (in Chinese). Viewed at: 
http://www.zhb.gov.c n/gkml/hbb/bgg/201701/t20170119_395009.htm . 
24 WTO document G/TBT/N/CHN/1211, 18 July 2017.  
WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 3.5 Solid wastes forbidden for import into China since end -2017  
No. Category  HS Code  Waste name 
1 
Household 
waste p lastics  3915100000  Polyvinyl waste and scrap  
2 Al compound packing film  
3 3915200000  Styrene polymer waste and scrap  
4 3915300000  Vinyl chloride polymer waste and scrap  
5 3915901000  PET waste and scrap, excluding waste PET beverage bottle (brick)  
6 Waste PET beverage bottle (brick)  
7 3915909000  Waste and scrap of other plastics, excluding waste disk scrap  
8 Waste disk scrap  
9 
Vanadium slag 2619000021  Vanadium scum and slag generated by steel smelting containing by weight 
20% of vanadium pentoxide or more (excluding granulated slag generated 
by steel smelting)  
10 2619000029  Other vanadium scum and slag generated by steel smelting (excluding 
granulated slag generated by steel smelting)  
11 2620999011  Slag, calx and dreg containing other metals and their compounds, containing 
by weight 20% of vanadium pentoxide or more (excluding those generated 
by steel smelting)  
12 2620999019  Slag, calx and dreg containing other metals and their compounds, containing 
by weight more than 10% and less than or equal to 20% of vanadium 
pentoxide (excluding those generated by steel smelting)  
13 Unsorted 
waste p aper 4707900090  Other recycled paper or paperboard (including unsorted waste and scrap)  
14 
Waste textile 
raw ma terials  5103109090  Other fallen wool of fine animal fur  
15 5103209090  Other fine animal fur waste (including waste yarn, excluding recycled fibre)  
16 5103300090  Other coarse animal fur waste (including waste yarn, excluding recycled 
fibre)  
17 5104009090  Other recycled fibre of fine or coarse animal fur  
18 5202100000  Waste cotton yarn (including waste cotton thread)  
19 5202910000  Recycled fibre of cotton  
20 5202990000  Other cotton waste  
21 5505100000  Synthetic fibre waste (including bourette, cotton waste and recycled fibre)  
22 5505200000  Artificial fibre waste (including bourette, cotton waste and recycled fibre)  
23 6310100010  New or unused sorted scrap fabric (including waste thread, rope, cord, cable 
and their products) made of textile materials  
24 6310900010  Other new or unused scrap fabric (including waste thread, rope, cord, cable 
and their products) made of textile materials  
Source:  WTO document G/TBT/N/CHN/1211, 18 July 2017.  
3.36.   In addition, prohibitions applied to imports under processing trade are listed in the 
Catalogue of Commodities Prohibited under Processing Trade. On 2 December 2015, the MOFCOM 
and GACC jointly issued the Circular on the Adjustment of Catalogue of Commodities Prohibited 
under Processing Trade25, in which three tariff lines (HS 8 -digit level) , including 26161000 (Silver 
sand and concentrates), 26179090 (Other sand and concentrates), and 391 52000 (Waste and 
scrap of styrene polymers) , have been  removed compared with the catalogue in 2014. The other 
products subject to these prohibitions have remained unchanged since the last Review.  
3.1.6   Anti-dumping, countervailing, and safeguard measures  
3.1.6.1   Anti-dumping measures  
3.37.   With 91 anti -dumping measures in force as at end -June 2017, the number of measures has 
remained  at a relatively constant level  since the previous TPR. In terms of sectors affected by 
AD measures, chemicals products accounted for 44% of the total number of measures in force as 
of 30 June 2017. The  average length of  the application of measures increased slightly, to 6.7 years, 
from 6.5 years at the time of the previous Review . In this respect, the  authorities indicate that 
anti-dumping measure s are normally terminated after a maximum of ten  years.  
3.38.   The legal framework to conduct AD investigations and apply AD measures is provided by the 
Foreign Trade Law26, the Regulations on Anti -Dumping (the AD Regulations)27, and a number of 
                                                
25 Circular on the Adjustment of Catalogue of Commodities Prohibited under Processing Trade, Ministry 
of Commerce and the General Administration of Customs [2015] No.  59, 2 December 2015 (in Chinese). 
Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info779914.htm . 
26 WTO document G/ADP/N/1/CHN/2/Suppl.4, 1 December 2004.  WT/TPR/S/ 375/Rev.1  • China  
 
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  published Rules, so me of them provisional.28 There have been no changes in China's institutional 
and procedural framework and legislation on AD  measures since its previous TPR.  
3.39.   MOFCOM is the agency responsible for initiating and conducting AD investigations, and 
determining t he existence of dumping  and of injury, and their causal link. There have been recent 
internal changes within MOFCOM with respect to the responsibilities assigned to its different 
bureaux. In April 2014, the Trade Remedy and Investigation Bureau (TRB) was e stablished within 
MOFCOM. The TRB is responsible for AD, countervailing duty, and safeguards investigations and 
determinations. The exceptions to this are AD investigations involving agricultural products, where 
the injury investigation is conducted jointl y by MOFCOM and the Ministry  of Agriculture.  
3.40.   The initiation of AD investigations is governed by the Provisional Rules of the Ministry of 
Foreign Trade and Economic Cooperation on Initiation of Anti -dumping Investigations.29 The AD 
investigations may be ini tiated at the request of an interested party. Petitions on behalf of the 
domestic industry must be presented to MOFCOM in writing, by natural or legal persons, or 
organizations , on behalf of the domestic industry.  MOFCOM must decide within 60 days of the d ate 
of receipt of a petition whether there are valid grounds to initiate an investigation.  MOFCOM may 
also self -initiate an anti -dumping investigation if it has sufficient evidence of the existence of 
dumping, injury, and causal link . 
3.41.   MOFCOM provides interested parties access to information. In accordance with the 
Provisional Rules governing Access to Non-Confidential Information, non -confidential information 
submitted is accessible to all interested parties, who are permitted  to search , read, transcribe and 
copy the material. According to the Provisional Rules governing the Disclosure of Information in 
AD Investigations , MOFCOM notifies relevant parties in an AD investigation of the essential data, 
information, evidence and reasons adop ted for establishment of the existence of dumping and the 
calculation of the dumping margin, within 20 days of the date on which  the preliminary 
determination is announced.  
3.42.   MOFCOM must make a preliminary determination of dumping , injury, and causation. If the 
preliminary determination  is affirmative, provisional AD measures may be applied, which may take 
the form of provisional AD duties, or a request to provide deposits, bonds, or other forms of 
guarantee.  The decision to apply provisional AD duties is mad e by the State Council Tariff 
Commission (SCTC) on recommendation of MOFCOM, but for other type s of measures (deposits, 
bonds, or other forms of guarantee) , the decision is made directly by MOFCOM.  Provisional 
measures  may not be applied earlier than 60 da ys from the date of publication of the investigation 
initiation decision  and may not exceed four months, although under "special circumstances" they 
may be extended to nine months . According to the authorities, "special circumstances" refer to 
cases where the investigating authorities are examining whether a duty lower than the margin of 
dumping would be sufficient to remove the injury to the domestic industry.30  
3.43.   If it has made a preliminary affirmative determination of the existence of dumping , injury 
and causation, MOFCOM continues the investigation to determine the margin of dumping and 
injury. An AD investigation must be completed within twelve months of the date on which the 
decision to initiate is announced (18 months under special circumstances such a s technically 
difficult cases).   
3.44.   Within 45 days of announcing the preliminary determination, price undertakings can be 
offered by the exporter or suggested to the exporter by MOFCOM. According to the Provisional 
Rules Governing Price Undertakings31, to accept an undertaking , MOFCOM must take into account 
the injury determined, the possibility of  circumvention , and public interest . If the price undertaking 
is accepted, MOFCOM may suspend or terminate the AD investigation , which  may be resumed if 
the expor ter violates the price undertaking, or if MOFCOM considers it necessary for other 
                                                                                                                                                  
27 WTO document G/ADP/N/1/CHN/2/Suppl.3, 20 October 2004.  
28 WTO documents G/ADP/N/1/CHN2/Suppl.1, 2, 4, 5, and 6.  
29 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003.  
30 WTO document G/ADP/Q1/CHN/54/Suppl.1, 2 May 2005.  
31 WTO document G/ADP/N/1/CHN/2/Sup pl.1, 18 February 2003.  WT/TPR/S/ 375/Rev.1  • China  
 
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  reasons.32 Exporters and producers offering  a price undertaking may withdraw at any time, but 
must announce their withdrawal to MOFCOM 30 days in advance.  
3.45.   In accordance with t he Provisional Rules G overning the S ampling33 (the Sampling Rules), 
MOFCOM must determine dumping margin  separate ly for each individual responding exporter or 
producer . However, MOFCOM may make use of a sampling method when the number of exporters 
or produc ers is so large that it would be unduly burdensome and prevent the timely completion 
of the investigation.  MOFCOM has the faculty to decide on the selection of exporters and producers 
for the sample and determines a  separate margin of dumping for each indi vidual exporter and 
producer selected in it.  The dumping margin  for responding exporters and producers not subject to 
individual examination is determined on the basis of the weighted average margin of dumping 
determined for the sampled exporters and produ cers, calculated excluding zero or de minimis  (less 
than 2%) margins of dumping. The investigating authorities generally adopt random sampling,  
taking into account export volumes. The Sampling Rules  also allow MOFCOM to have recourse to 
the sampling of pro ducts if the number of types of product under investigation is too large. 
The procedures and means of determining dumping are similar to those used for exporter and 
producer sampling.  
3.46.   Once it has determined the existence of dumping, injury, and  causation , as well as the 
margin of dumping and injury, MOFCOM submits its  findings and provides recommendations to the 
SCTC, which decides  whether  to impose AD  duties . The final determination is then published. To 
date, the SCTC  has neither rejected nor modified any proposals by MOFCOM.  
3.47.   AD duties may not exceed the margin of dumping established in the determination. China 
does not have provisions  on the lesser duty rule . Although China's AD regulations do not preclude 
the imposition of a duty lower than the margin of dumping, the investigating authority does not 
examine if a duty lower than the margin of dumping is sufficient to eliminate injury.   
3.48.   The final  determination  may be appealed by interested parties, which, if not satisfied, may 
request an administrative reconsideration by the Department of Treaties and Law or may bring the 
case directly to court. The decision resulting from  an administrative reconsideration may also be 
brought to court. The authorities indicated that, since 2015, there had been  one administrative 
review appeal and one lawsuit. The product involved was grain-oriented flat-rolled electrical steel 
imported from Japan, South Korea and the European Union. In January 2017, MOFCOM launch ed 
an administrative review and maintained the original decision.  In February 2017, the applicant 
filed a lawsuit against the determination and the administrative review decision. As at 
January  2018, the case was still pe nding before court.  
3.49.   According to the Provisional Rules governing Refund of Anti -Dumping, i mporters may apply 
for a refund within three  months of payment of the duty if they can provide evidence that the 
AD duty paid was higher than the margin of dumping . Applications are examined by MOFCOM, 
which makes a proposal for  a decision to the SCTC. However, there have been no request s for 
refunds during the period under review.  
3.50.   Article 56 of the AD Regulations allows for retaliatory measures when a trading partner  
''discriminatorily'' imposes AD measures on exports from China. The authorities indicate  that China 
has neither  applied Article 56 during the period under review, nor planned to revise the provisions.  
3.51.   MOFCOM may conduct a new shipper review and determine a separate dumping margin for 
a new exporter who  has exported the product in sufficient quantities as to constitute the basis for 
the determination of the ordinary export price . The applicant for new shipper review must show it 
is not related to any  of the  exporters subject to the anti -dumping duty . An interested party may 
apply for a review only after the final determination of the original investigation has come into 
force and within three months of an actual export.  MOFCOM will decide whether to initiate  a new 
shipper review within 30 working days of receipt of the application, and will complete the review 
within nine  months of initiation. The investigation period for the new shipper review is six months 
prior to the submission of the application.  The authorities indicate that there ha ve been no new 
shipper review s since 2015.  
                                                
32 WTO document G/ADP/N/2/Suppl.2 , 14 April 2003 . 
33 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.52.   Final AD measures can remain in place for a maximum of five years, but may be extended 
thereafter following review. China's AD Regulations contain provisions regarding "expi ry" (sunset) 
and "interim" reviews. With respect to sunset reviews, MOFCOM publishes a notice six months 
before the measure is scheduled to expire, and initiates a review if the domestic industry provides 
sufficient evidence that expiry would likely lead t o a continuation or recurrence of dumping and 
injury. If there is no petition to conduct a sunset review and MOFCOM decides not to initiate a 
sunset review on its own, the AD  measure is automatically terminated and a public notice is 
issued . MOFCOM may als o initiate an interim review, ex officio  or upon request of an interested 
party, provided that a reasonable period of time has elapsed. Both reviews must be conducted 
within twelve months of the initiation  date. The rules governing the interim review are p rovided in 
the Provisional Rules of the Ministry of Foreign Trade and Economic Cooperation on Interim Review 
of Dumping and Dumping Margin; however, there are no specific rules governing sunset reviews.  
3.53.   China initiated five AD investigations in 2016, down  from eleven in 2015, and nine during 
the first half of 2017. All 16 cases initiated in 2015 and 2016 resulted in provisional measures, 
compared with 89% in 2013 -14. Eleven final AD duty orders were issued in 2016, up from five 
in 2015 (Table 3.6).  
Table 3.6 Anti-dumping investigations and measures, 2013 -17, as of 30 June 2017  
 2013  2014  2015  2016  2017  
Investigation initiations  11 7 11 5 9 
Provisional measures  11 5 8 8 4 
Definitive measures  8 12 5 11 2 
Expired measures  1 23 17 6 6 
Measures in force  113 102 90 95 91 
Source:  WTO document s G/ADP/N/244/CHN,  17 October 2013;  G/ADP/N/252/CHN, 5 February  2014; 
G/ADP/N/259/CHN, 18 September 2014; G/ADP/N/265/CHN, 23 January 2015; G/ADP/N/272/CHN, 
9 October 2015; G/ADP/N/280/CHN, 10 March 2016; G/ADP/N/286/CHN, 7 September 2016; 
G/ADP/N/294/CHN, 15 March 2017; and G/ADP/N/300/CHN, 4 August 2017 . 
3.54.   As at end -June 2017, China had 91 AD duty orders in effect, down from 95 in 2016. Imports 
from 14 countries or territories were affected, compared to 13 at the time of the last TPR. Among 
all trading partners  affected, imports from Japan and the United States were sub ject to the largest 
number of AD measures, accounting for about 21% of the total in each case, followed by the 
European Union (19%), and the Republic of Korea (11%), compared to 16% and 12% respectively 
in 2016 (Table  3.7).  
Table 3.7 Anti-dumping measures in force, by trading partner/region, 2013 -17, as of 
30 June  2017  
Trading partner/region  2013  2014  2015  2016  2017  
Japan  22 18 18 20 19 
United States  20 22 19 20 19 
Korea, Republic of  16 11 10 11 10 
European Union  15 15 15 17 17 
Chinese Taipei  11 10 8 7 7 
Russian Federation  6 5 4 3 1 
India 4 5 5 5 5 
Singapore  4 3 4 4 5 
Thailand  3 2 2 3 3 
Other America   2 2 2 2 
Other Asia (including New Zealand)  8 5 0 1 1 
Other Europe  4 4 3 2 2 
Total  113 102 90 95 91 
Source:  WTO documents  G/ADP/N/244/CHN,  17 October 2013;  G/ADP/N/252/CHN, 5 February  2014; 
G/ADP/N/259/CHN, 18 September 2014; G/ADP/N/265/CHN, 23 January 2015; G/ADP/N/272/CHN, 
9 October 2015; G/ADP/N/280/CHN, 10 March 2016; G/ADP/N/286/CHN, 7 September 2016; 
G/ADP/N/294/CHN, 15 March 2017; and G/ADP/N/300/CHN, 4 August 2017 . 
3.55.   Chemical pro ducts , resins , plastic, and rubber  account ed for most measures during 2013 -17 
(Chart 3.3). As at end -June 2017, chemical products accounted for 4 3% of these orders, while 2 3% 
involve d resins, plastic, and rubber , and 1 2% involved base metals (Table  3.8). 58% of AD duty WT/TPR/S/ 375/Rev.1  • China  
 
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  orders had been in place for more than five years , down from 60.8% at the time of China's last 
TPR. 
Chart 3.3 Anti-dumping measures in force, by product, 2013 -16 (end -period)  and as of 
30 June 2017  
 
Source:  WTO document s G/ADP/N/2 52/CHN, 5 February  2014; G/ADP/N/2 65/CHN, 23 January 2015; 
G/ADP/N/280/CHN, 10 March 2016; G/ADP/N/294/CHN, 15 March 2017; and G/ADP/N/300/CHN, 
4 August 2017 . 
Table 3.8 Anti-dumping measures in force, by product and by origin, as of 30 June 2017  
Trading partners  (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) Total  
Japan  7 4 4 2 1 1 1     20 
United States  7 4 2 2   1 1  1 1 19 
European Union  8 2 4 1 1    1   17 
Korea, Rep. of  5 2 1  1 1      10 
Chinese Taipei  4 3          7 
India 4    1       5 
Singapore  3 2          5 
Thailand  2 1          3 
Brazil     1        1 
Canada     1        1 
France   1          1 
Italy  1          1 
Russian Federation   1          1 
Turkey       1      1 
Total  40 21 11 7 4 3 2 1 1 1 1 92 
Products:  
(a)  Products of the chemical and allied industries . 
(b)  Resins, plastics, and articles thereof; rubber and articles thereof.  
(c)  Base metals and articles thereof.  
(d)  Paper, paperboard, and articles thereof.  
(e)  Instruments, clocks, recorders and reproducers . 
(f)  Textiles and articles . 
(g)  Articles of stone, plaster; ceramic prod.; glass . 
(h)  Live animals and products . 
(i)  Vegetable products . 
(j)  Prepared foodstuff; beve rages, spirits, vinegar; tobacco . 
(k)  Vehicles, aircraft and vessels . 
Source:  WTO document G/ADP/N/300/CHN, 4  August  2017. 
3.56.   Between January 2016 and June 2017, 13 sunset reviews and 8 interim reviews were 
initiated. All 13 sunset reviews resulted in an ext ension of  AD duties . The results of the interim 
4 466
58
52464028
22
21
20
214
4
7
75
7
510
114
4
544
020406080100120
2013 2014 2015 2016 2017Precision instruments
Vehicles, aircrafts, vessels
Base metals and articles thereof
Articles of stone, plaster; ceramic; glass
Textiles and articles thereof
Paper, paperboard and articles
Resins, plastic and rubber
Chemical products
Mineral products
Prepared foodstuff; beverages, spirits; tobacco
Vegetable products
Live animals and productsChart 3.3   Anti -dumping measures in force, by product, 2013 -16 (end -period) and as of 30 June 2017
Source:   WTO documents G/ADP/N/252/CHN, 5 February 2014; G/ADP/N/265/CHN, 23 January 2015; G/ADP/N/280/CHN, 
10 March 2016; G/ADP/N/294/CHN, 15 March 2017;  and G/ADP/N/300/CHN, 4 August 2017.WT/TPR/S/ 375/Rev.1  • China  
 
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  reviews initiated were still pending as at end -June 2017. Furthermore, 12 orders expired without 
review.  
3.1.6.2   Countervailing measures  
3.57.   The legal framework governing countervailing measures consists of  the Foreign Trade Law, 
the Regulations on Countervailing Measures (CV Regulations), promulgated in 2001 and amended 
on 31 March 2004, and a number of published  rules.34 The main laws and regulations have not 
changed during the review period.  
3.58.   The procedure of c ountervailing (CV) investigations is similar to those applied for 
AD investigations. The main difference is the involvement of the exporting country  or territory's 
government  in the investigations, through consultations with MOFCOM prior to the initiation,  or by 
answering questionnaire s. If a mutually agreeable solution is found , MOFCOM  may decide not to 
initiate an investigation. Other differences include the lack of published rules governing the use of 
sampling  and price undertakings , and the absence of r ules on  interim or judicial reviews . 
3.59.   The number of CV initiations has remained at constant levels during the review period 
(Table 3.9). Two CV investigations were initiated, involving distillers dried grains from the 
United  States, and ortho chloro para ni troaniline from India,  in 2016 and 2017 respectively. The 
investigation initiated in 2016 concluded that both a subsidy and an injury existed as well as a 
causal link, and thus resulted in CV duty orders. The case initiated in 2017 is currently under 
investigation. As at 30  June 2017, five CV measures were in force affecting imports from the 
European Union  and United States (Table 3.10). The longest existing CV measure had been in 
place for over seven years.  
Table 3.9 CV investigations and measures, 2013 -17, as at 30 June 2017  
  2013  2014  2015  2016  2017  
Investigation initiations  1 0  0 1 1 
Provisional measures  1 1  0 1  0 
Definitive measures  0 2  0 0  1 
Expired measures  1 0 1  0 0  
Measures in force  3 5 4 4 5 
Source:  WTO document s G/SCM/N/95/CHN, 16 May 2013 ; G/SCM/N/267/CHN/Rev.1, 4 March 2014 ; 
G/SCM/N/274/CHN, 15 September 2014; G/SCM/N/281/CHN, 28 January 2015; G/SCM/N/281/CHN, 
28 January 2015; G/SCM/N/289/CHN, 22 October 2015; G/SCM/N/298/CHN, 17 March 2016; 
G/SCM/N/305/CHN, 5 September 2016; G/SCM/N/313/CHN, 1 March 2017; and G/SCM/N/321/CHN,  
7 August 2017.  
Table 3.10 CV investigations initiated during the period under review, as at 
30 June  2017  
Partners  Product  Initiation  Provisional 
measures  Final 
measures  Import volume as % 
of apparent domestic  
consumption or as % 
of total imports  
United States  Distillers dried 
grains with or 
without solubles  12.01.2016  30.09.2016  12.01.2017  99.96% of total 
imports  10.0% -10.5%  11.2% -11.4%  
All others: 
10.7%  All others: 
12% 
India Ortho chloro 
para nitroaniline  13.02.2017      44% of apparent 
domestic consumption      
    
Source:  WTO document s G/SCM/N/305/CHN, 5 September 2016; G/SCM/N/313/CHN, 1 March 2017; and 
G/SCM/N/321/CHN, 7 August 2017.  
3.60.   Under mainland China's RTAs with Hong Kong, China and Macao, China, the parties waived 
the right to use CV measures. Under China's RTAs with Australia, Chile, Georgia, Iceland, the 
Republic of Korea, New Zealand, and Pakistan, the parties maintain their ri ghts under the 
                                                
34 WTO document , G/SCM/N/1/CHN/1/Suppl. 1, 18 February 2003; G/SCM/N/1/CHN/1/Suppl.3, 
20 October 2004; and G/SCM/N/1/CHN/1/Supp l.4, 1 December 2004.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Anti-Dumping and Subsidies and Countervailing Measures Agreements. In RTAs between China 
and ASEAN , Costa Rica, Peru , Singapore and Switzerland,  parties abide by their obligations under 
those agreements . 
3.1.6.3   Safeguard measures  
3.61.   During the period under review, China initiated one safeguard investigation on sugar. The 
investigation was initiated in September 201635; definitive safeguard measures in the form of an 
additional ad valorem duty of 45%  were imposed on 22 May 2017. The duty applies to impor ts 
outside the existing quota, and will be reduced to 35% within three years.36  
3.62.   Laws and regulations governing safeguard measures in China have not changed during the 
review period. The Foreign Trade Law , amended in April 200437, the Regulations on Safeguar ds 
(SG Regulations) , promulgated in 2001 and last amended in October 200438, and other published 
rules provide the regulations on safeguard investigations and the application  of measures.39  
3.63.   MOFCOM, specifically the Trade Remedy and Investigation Bureau (TRB ), is in charge of 
investigating and determining if there has been an increase in imports and if injury has been 
caused. If an investigation involves agricultural goods, the investigation and determination of 
injury must be done jointly with the Ministry o f Agriculture. Investigations may be initiated 
following the written request of an interested party representing the domestic industry. The 
application must be accompanied by detailed information with respect to the increase in quantities 
of the imported p roduct, for a period of at least five years, as well as an analysis of reasons for the 
increase in imports. MOFCOM may also initiate an  investigation ex officio  if it has sufficient 
evidence of injury.  
3.64.   MOFCOM must review the evidence provided by the petit ioner and take a decision on 
whether to initiate an investigation within 60  days of  receipt of the written application; this period 
might be extended  in particularly complicated cases . A provisional safeguard measure may be 
applied for a maximum of  200 days from the effective date of the public notice.  
3.65.   Final measures may take the form of tariff increases or quantitative restrictions. Based on 
the findings and recommendation s by MOFCOM , SCTC will make the final determination on 
whether to adopt measures in the form of tariff increases. D ecisions to adopt a final measure in 
the form of  a quantitative restriction are made directly by MOFCOM. Final safeguard measures may 
not remain in place for more than four years;  this period may, however, be exte nded if its 
continuation is deemed to be necessary to prevent or remedy serious injury. The total period of 
application of a safeguard measure and any extension cannot exceed ten years.  
3.66.   MOFCOM must conduct a mid -term review of the safeguard measure when it s duration 
exceeds three years.  When the period of application of a safeguard measure exceeds one year, the 
measure applied must be progressively liberalized at regular intervals during the period of 
application.   
3.67.   The RTAs with New Zealand and Singapore pr ovide that a party may exclude imported 
goods originating from another party from the imposition of a safeguard measure, provided that 
such imports are non -injurious. In  contrast, the RTAs with ASEAN, Australia, Chile, Costa Rica, 
Georgia , Iceland, the Rep ublic of Korea, Pakistan, Peru and Switzerland provide that the parties 
maintain their right s under Article XIX of the GATT 1994 and the WTO Agreement on Safeguards. 
All RTAs preclude the simultaneous imposition of a global and a bilateral safeguard under the 
relevant RTA.  
                                                
35 WTO document , G/SG/N/6/CHN/2.  
36 WTO document , G/SG/N/8/CHN/2/Suppl.1.  
37 WTO document G/SG/N/1/CHN/2/Suppl.4.  
38 WTO document G/SG/N/1/CHN/2/Suppl.3.  
39 WTO document G/SG/N/1/CHN/2/Suppl.2, 15 April 2003.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.1.7   Other measures affecting imports  
3.68.   It would appear that there have been no changes to China's other measures affecting 
imports since its previous review.  
3.2  Measures Directly Affecting Exports  
3.2.1   Customs procedures and requirements  
3.69.   Exporters must  register as foreign trade operators with the MOFCOM or its authorized 
bodies before filing customs declarations. FIEs may also register as foreign trade operators; FIEs 
require a copy of the certificate of "approval of foreign -invested enterprises" to reg ister. Export 
declarations must be made in paper and electronic format or through the paperless procedure, and 
can be made either by the consignor, or by a customs declaration enterprise entrusted by the 
consignor.  
3.70.   Exporters must comply with the requireme nts stipulated in the Catalogue of Import and 
Export Commodities Subject to Compulsory Inspection, which is amended every year. Some items, 
such as dangerous chemicals, fireworks, lighters, toys and strollers, food products, and rare 
earths, are subject to  export inspection. These goods must be inspected where they are produced. 
The packaging of exports of dangerous chemicals and other dangerous goods must also undergo 
inspection and tests.  
3.71.   Enterprises are classified into different groups based on risk anal ysis. As with import 
procedures, customs inspection and supervision depend upon the enterprise's rating 
(Section  3.1.1). Goods exported by high -risk enterprises are inspected, while other exports are 
released through fast -track clearance or a "low -risk exa mination". Under the National Customs 
Clearance Reform40, which was announced on 28 June 2017, a number of steps have been taken 
to facilitate and expedite the clearance of exports. This includes the streamlining of the 
documentation process, increasing the  number of risk prevention centres, and the continued 
development of single windows. According to the authorities, about one third of exports are now 
declared through single windows. The authorities also indicate that clearance times for exports 
have been further reduced during the period under review, to a nationwide average of 1.1 hours 
in 2017.  
3.2.2   Taxes, charges, and levies  
3.72.   Export duties are based on the Regulations on Import and Export Tariffs. According to the 
authorities, they are applied to protect the  domestic environment and to save energy and scarce 
resources. The list of goods subject to export duties is issued on a yearly basis. Exports can be 
subject to "statutory" and interim export duties.41 
3.73.   Export duties are calculated based on the transaction v alue of exports plus transport, 
related fees, and insurance cost. In 2017, with the exception of two tariff lines, on fertilizer, all 
export duties are ad valorem . Certain items are exempt from export duties.42 Duty exemptions or 
reductions may also be gran ted under specific circumstances.43 
                                                
40 GACC online information (in Chinese). Viewed at: 
http://www.customs.gov.cn/customs/302249/302266/302267/711020/index.html  [22.03.2018].  
41 WTO document WT/TPR/S/342 /Rev.1, 12 October 2016, Section 3.2.2.  
42 These are: imported goods that are exported from the Customs territory within one year of the date 
of importation because they are damaged, of poor quality or do not conform to specifications; goods in a single 
consignment on which the duties are estimated to be not more than RMB 50; advertising material and samples 
of no commercial value; donated material; and fuels, stores, beverages and provisions to be used by vessels 
which are in transit.  
43 These include: expor ts into the special economic zones and other specially  designated areas; exports 
made by specific enterprises such as Chinese -foreign equity joint ventures, Chinese -foreign contractual joint 
ventures and enterprises with exclusive foreign investment; expor ts devoted to specific purposes and materials 
donated for public welfare use; and low -volume border transactions.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.74.   As at October 2017, 102 tariff lines (at the eight -digit level) were subject to statutory 
export duties, the same number as in 2015, while 179 tariff lines carried interim duties, down from 
314 in 2015 (Table 3.11). The r eduction in the number of tariff lines subject to export duties was 
partially due to the implementation of WTO dispute settlement decisions. The highest tax rate 
(50%) applies to tin ores and concentrates (HS 2609).  
Table 3.11 Export duties  by type and HS Chapter, 2017  
HS Chapters  Statutory duties  Interim duties  
No. of lines  Range %  No. of lines  Range %  
Total 102 20-50 180 0-35 
03 Fish and crustaceans  1 20 0 n.a. 
05 Products of animal origin, n.e.s.  4 (1) 40 1 0 
25 Earths and stone; plastering materials  0 n.a. 8 10-15 
26 Ores, slag and ash  7 (2) 20-50 25 0-20 
27 Mineral fuels, oil and waxes  0 n.a. 11 3-15 
28 Inorganic chemicals  3 (1) 20-30 2 5-10 
29 Organic chemicals  1 (1) 40 1 0 
31 Fertilizers  0 n.a. 6 5-30 
41 Raw hides and skins  2 20 0 n.a. 
44 Wood and articles of wood  0 n.a. 6 10-15 
47 Pulp of wood, paper or paperboard  0 n.a. 16 10 
72 Iron and steel  17 (5)  20-40 38 10-20 
74 Copper and articles thereof  32 (32)  30 33 0-15 
75 Nickel and articles thereof  4 (4) 40 5 5-15 
76 Aluminium and articles thereof  24 (24)  20-30 24 0-15 
79 Zinc and articles thereof  4 (4) 20 4 0-15 
81 Other base metals  3 (1) 20 0 n.a. 
n.a. Not applicable.  
Note:  Figures in brackets under the column "statutory duties" refer to the number of tariff lines subject to 
both a statutory and an interim export duty rate. Lines where export duty is only partially applied 
are included.  
Source:  Customs Tariff of Import and Exports, 2017.  
3.75.   Information concerning fiscal income derived from  export duties was not made available to 
the Secretariat.  
3.2.3   Export prohibitions, restrictions, and licensing  
3.76.   The State may restrict or forbid exports to: maintain national security and public morality; 
protect human, animal and plant health; protect the envi ronment; protect exhaustible natural 
resources that are in short supply or require "effective protection"; organize "export business 
management"; comply with China's international commitments; or under any other circumstance 
as provided for in any law or a dministrative regulation.  
3.77.   MOFCOM, in collaboration with other relevant departments, formulates and issues a 
Catalogue of Goods Restricted or Forbidden for Export; this Catalogue was last updated in 2008.44 
Reflecting this, the products subject to export pr ohibitions remained unchanged during the period 
under review. Export prohibitions apply to products such as: archeologic artefacts, bezoar, musk, 
black moss, certain plants, bones, ivory, natural sands (HS Chapter 25) asbestos, halogenated 
derivatives of h ydrocarbons, organic chemicals (HS Chapter 29), fertilizers (not chemically 
treated); unprocessed wood and some platinum products.45  
3.78.   China applies export licen ces to specific dual -use substances for the purposes of 
safeguarding national security and public  interest and performing the obligations under relevant 
                                                
44 GACC Announcement [2008] No. 96 (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/c/200812/20081205948343.html  [22.03.2018] .  
45 WTO documents G/MA/QR/N/CHN/2 and G/MA/QR/N/CHN/3, 24 April 2015.  WT/TPR/S/ 375/Rev.1  • China  
 
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  international agreements.46 The value of exports of goods subject to export licensing in 2016 was 
US$25.1 billion, equivalent to some 1.2% of China's exports.  
3.79.   Export restrictions take the form of quota s or licences. China imposes global and 
destination -specific export quotas. The list of products subject to quotas and the quota volumes for 
the following year is published in December of each year.47 Information provided by the authorities 
shows that, in  2017, global export quotas applied to 100  tariff lines at HS  8-digit level. While no 
product has been added to this list since 2015, various products have been removed, including 
talcum lump, magnesia, antimony and products thereof,  and indium and products thereof. These 
goods are now subject to export licen ces.  
3.80.   Goods that are subject to restriction are subject to non -automatic export licences. MOFCOM 
issues on a yearly basis the Catalogue of Goods Subject to the Administration of Export Licences.48 
The Catalogue lists goods that are subject to export quota (licences), export quota bidding 
(licences), and to general export licensing; the products mentioned therein have not changed  
during the period under review  (Table 3.12 ). For exports subject to a quota, the exporter must 
obtain quota access prior to applying for a licence.  In addition, to "maintain foreign trade order", 
export declarations of certain products subject to export licensing (e.g. liquorice, some types of 
magnesia products, rare earths,  antimony and antimony products, and natural sands), when 
exported to Chinese Taipei; Hong Kong, China; and Macao, China, may be cleared only through 
designated ports.49  
Table 3.12 Products subject to export quotas and licensing  
Products  Type of 
management  Comment  
Goods subject to quota and licensing    
Rice, maize, wheat, cotton, coal  Export quota 
(licensing)  The quota is 
allocated by the 
NDRC  
The licence is issued 
by MOFCOM  
Wheat flour; maize flour; rice flour; sawn lumber; live cattle, swine and 
chicken (for export to Hong Kong, China and Macao, China); live pigs (to 
Hong Kong, China and Macao, China); crude oil; refined oil; silver; and 
phosphate rock  Export quota 
(licensin g) The quota is 
allocated by 
MOFCOM  
Mat rush and mat rush products, talcum lump (powder), magnesia, 
liquorice and liquorice products  Export quota 
bidding (licensing)  The quota is 
allocated by 
MOFCOM  
Goods subject to licensing    
Live cattle, swine and chicken (for markets other than Hong Kong and 
Macao SARs); fresh chilled beef, pork and chicken; frozen beef, pork, and 
chicken; bauxite; rare earth; paraffin; tungsten; carborundum; platinum 
(for processing trade); some metals and m etal products; molybdenum 
and molybdenum products; natural sand; oil products (oil, grease, lube 
base oil); citric acid; penicillin industrial salt; vitamin C; sulfuric acid;  
disodium sulphate; motorcycles (including all -terrain vehicles) and their 
engines  and frames; and motor vehicles (including completely knock -
down kits) and their chassis; antimony, indium, tin, and products thereof  Export licence  A licence is granted 
to the exporter who 
has signed the 
relevant export 
contract  
Substances depleting the ozone layer, and alumina, coke, tungsten 
products, silicon carbide, manganese, and fluorite  Export licence  An export permit is 
required before 
applying for 
a licence  
Source:  MOFCOM GACC Joint Announcement No. 76 of 2015 (in Chinese). Viewed at: 
http://wms.mofcom.gov.cn/article/zcfb/g/201512/20151201225345.shtml ; and information 
provided by the authorities of China.  
                                                
46 WTO document G/LIC/N/CHN/14, 29 November 2016.  
47 MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201712/20171202690523.shtml  [22.03.2018].  
48 MOFCOM GACC Joint Announcement [2014] No.  94. 
49 For instance, the designated ports to clear export declarations for rare earths are Tianjin Customs, 
Shanghai Customs, Qingdao Customs, Huangpu Customs, Customs Hohhot, Nanchang Customs, Ningbo 
Customs, Nanjing and Xiamen Customs.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.81.   In addition to the list of goods subject to export licences un der general trade, the Catalogue 
of Goods Subject to the Administration of Export Licences also lists those export licences that 
apply to border trade. In January 2018, 44 categories of goods were subject to export licensing 
under general trade. The number  of tariff lines at the HS 8 -digit level subject to export licensing 
in 2018 was 524.  
3.2.4   Export support and promotion  
3.82.   The authorities indicated that China did not maintain or introduce any export subsidies on 
agricultural products during the years 2013 and 2 014.50 No information has been notified to the 
WTO for the years 2015 and 2016.  
3.83.   Exporters are entitled to VAT rebates. The rebate rates vary according to the product. 
Rebate rates are usually lower than the VAT paid. At present, the rebate rates are: 17%, 15%, 
13%, 11%, 9%, 5% and  0%. The two most common rebate rates are : 17%, which applies to 
some 29% of all tariff lines, and 0%, which applies to 22% of lines. Certain goods are not eligible 
for a rebate.51 In terms of the value of exports, over 70% of the e xported goods are subject to 
17% and 15% rebate rates. Fruits and nuts are generally subject to the rebate rate of 5%, while 
endangered animals and plants may not benefit from any rebate. According to the authorities, the 
management of the VAT rebate is us ed to contribute to environmental protection, energy saving 
and emission reduction. Thus, rebates are used to discourage the production and export of 
environment -polluting products. Changes in the rebate system since the last TPR include a 
resumption of th e 13% VAT rebate for exports of processed corn products (including starch and 
ethanol), from  11% previously, and an increase, from 11 to 13%, for export s of electronic and 
mechanical products and processed oil.  
3.84.   There are other forms of export support. The Trade Development Bureau (TDB) of the 
Ministry of Commerce organizes exhibitions in emerging markets and provides export -oriented 
training activities. It also maintains the websites of China Trade Promotion and provides, through 
various service platforms, background information about foreign markets. Since the last Review, 
TDB has extensively published on foreign trade policies, posted practical information on its 
websites, and released business information through its WeChat platforms.  
3.85.   The Overseas Commerc ial Complaint Service Centre for Chinese Enterprises provides 
services to Chinese enterprises in the areas of  complaint -handling, consulting, talent base 
construction, and support for start -ups.  
3.86.   Free trade zones have become an important tool of export and  investment promotion , as 
well as experimenting with policy reforms ( Section 2.4.1). The first free  trade zone (FTZ) in 
mainland China, Shanghai Free  Trade Zone (SFTZ), was established in August 2013. It was 
expanded in April 2015 and now covers some 121 s quare kilometres.  
3.87.   Companies located in the SFTZ can produce either in bonded or non -bonded areas. Tariff 
payments by companies located in bonded areas are suspended and only become effective when 
final products are sold to the rest of China. The SFTZ also  features a distinctive mechanism for 
dispute resolution, with arbitration governed by a separate set of Arbitration Rules issued by the 
Shanghai International Arbitration Centre. Although it was initially planned to introduce unfiltered 
access to the Inte rnet in the SFTZ52, restrictions have not been lifted.  
3.88.   Total SFTZ imports in 2017 amounted to RMB 800 billion, while exports were 
RMB 600 billion. Value -added in 2017 was estimated at RMB 800 billion; the estimated number of 
employees was 2.75 million. Of the 86,000 companies located in the SFTZ in 2017, 34,000 were in 
bonded areas. The majority of the companies are Chinese -owned.  
                                                
50 WTO document G/AG/N/CHN/29, 2 February 2016.  
51 Products  not subject to VAT rebate include: high -energy -consuming products, high -polluting products, 
and those related to the use of resources; and endangered species of fauna and flora.  
52 "China to lift ban on Facebook – but only within Shanghai free -trade zone", South China Morning Post, 
24 September 2013. Viewed at: http://www.scmp.com/news/china/article/1316598/exclusive -china -lift-ban-
facebook -only-within -shanghai -free-trade-zone [22.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.89.   In 2015, further FTZ s were established in Guangdong, Fujian and Tianjin. In March 2017, 
the Government approved the establishmen t of seven new FTZ, all with different sectoral 
priorities. They will be located in Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, and 
Shaanxi.  
3.2.5   Export finance, insurance, and guarantees  
3.90.   Export finance, insurance, and guarantees are granted by at le ast two  public institutions: 
the China Export -Import Bank (China Eximbank), which provides export finance; and the China 
Export and Credit Insurance Corporation (SINOSURE), which provides export credit insurance and 
related guarantees. Foreign -owned compan ies are also eligible for the services of China Eximbank 
and SINOSURE.  
3.91.   China Eximbank provides financing for the importation and exportation of capital goods and 
services and for Chinese companies that undertake overseas construction and investment projec ts. 
It provides both export buyers' credit and export sellers' credit. Export buyers' credit consists of 
loans extended in RMB or foreign currencies to overseas borrowers, while export sellers' credit 
consists of loans granted in RMB or foreign currencies to domestic enterprises when exporting 
vessels, equipment, electromechanical products, agricultural products, cultural products and 
services. The  authorities noted that loans are granted at commercial interest rates. Eximbank also 
has special lines of cred it and different financial instruments for SMEs. The Bank provides 
two preferential facilities used as Chinese government official development aid to developing 
countries, namely: government concessional loans and preferential export buyers' credit. 
Eximba nk is the only bank designated by the Chinese Government to implement such facilities.53 
There have been no changes in Eximbank's financing conditions since 2015.  
3.92.   Since 2015, Eximbank's operations have increased strongly for export seller's and buyer's 
credit (Chart  3.4).  
3.93.   State -owned China Export and Credit Insurance Corporation (SINOSURE) is China's official 
export credit insurance agency. It offers long- and medi um-term export credit insurance, overseas 
investment insurance, short -term export credit insurance, domestic credit insurance, credit 
guarantees, and reinsurance related to export credit insurance and debt collection services. 
SINOSURE focuses on the promo tion of Chinese exports of goods, technologies and services, 
especially high -tech and high value -added capital goods, and on assisting national enterprises to 
invest overseas, by providing insurance against non -payment risks.54  
3.94.   SINOSURE offers short -, medium - and long -term export credit insurance as well as overseas 
investment insurance. There are several kinds of short -term export credit insurance, of a 
maximum term of two years: (a) the comprehensive cover insurance, which cove rs both 
commercial and political risk; (b) the specific buyer's or specific contract insurance policies, which 
cover in addition buyer -related risks originated by measures decreed by the buyer's country, such 
as the imposition of restrictions or prohibitio ns on imports or the cancellation or non -renewal of an 
import licence; (c) the insurance policy against buyer's breach of contract, which covers the risk of 
loss of payment; (d) the SME comprehensive cover insurance, which covers receivable risks of 
export  enterprises on payments made both by L/C and non -L/C means; and (e) the SME easy 
credit insurance.55 
3.95.   Among the medium - and long -term insurance instruments, the Buyer Credit Insurance 
Programme insures against the default of payments by the borrower or guar antor under the credit 
agreement due to certain political and commercial risks.56 Both Chinese and foreign financial 
institutions are eligible for the programme, as well as foreign financial institutions with branches in 
China; they must have total assets o f more than US$10 billion and a good cooperation record with 
                                                
53China Eximbank online infor mation. Viewed at: http://english.eximbank.gov.cn/tm/en -
TCN/index_640.html . 
54 SINOSURE online information. Viewed at: 
http://www.sinosure.com.cn/sinosure/english/Company%20Profile.html . 
55 SINOSURE online information. Viewed at: 
http://www.sinosure.com.cn/s inosure/english/products_short.htm .  
56 SINOSURE online information.  WT/TPR/S/ 375/Rev.1  • China  
 
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  export credit agencies. The credit period is generally between two and fifteen years. Similar 
conditions apply for the Supplier's Credit Insurance Programme, which insures against the 
bankruptcy or default of importers.  
Chart 3.4 Eximbank operations, 2012 -17 
 
Source:  Export -Import Bank of China online information, and data provided by the authorities of China.  
3.96.   The Overseas Investment Insurance scheme  is designed to encourage investment abroad by 
Chinese enterprises and financial organizations by underwriting an investor's potential economic 
050100150200250300
2012 2013 2014 2015 2016 2017020406080100120
2012 2013 2014 2015 2016 2017
050100150200250
2012 2013 2014 2015 2016 2017024681012141618
2012 2013 2014 2015 2016 2017
020406080100120140
2012 2013 2014 2015 2016 201705101520253035404550
2012 2013 2014 2015 2016 2017Chart 3.4  Eximbank operations, 2012 -17
Source:  The Export -Import Bank of China online information, and data provided by the authorities.Actual disbursement of export seller's credit
RMB billionActual disbursement of export buyer's credit
RMB billion
Actual disbursement of import credit
RMB billionLetters of guarantee
US$ billion
International settlement transactions
US$ billionTrade financing transactions
US$ billionWT/TPR/S/ 375/Rev.1  • China  
 
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  losses in overseas investment caused by political risks in the host country. It consists of equity 
insurance and  liability insurance. Direct investments are eligible to benefit from the scheme, which 
provides insurance against loss of capital and realized earnings or loss of capital and accrued 
interests directly caused by the insured risks. The insured risks are ex propriation, restrictions on 
transfers and currency conversion, damage or inability to operate due to war and political riot, and 
breach of undertaking.  
3.3  Measures Affecting Production and Trade  
3.3.1   Incentives  
3.97.   During the period under review, China continued to p rovide a number of financial incentives 
to different sectors and industries. According to the authorities, these measures are in place to 
accelerate transformation and upgrading of traditional industries, foster infant industries, stimulate 
innovation, pro mote development in remote areas, enhance competitiveness of small and medium 
enterprises, and attract FDI. Furthermore, support was also granted with a view to protecting the 
environment, reducing emissions, and conserving energy. Generally, support is gr anted by the 
central or local governments through tax preferences, direct transfers, and access to credit.  
3.98.   Policies and industries identified as priority areas for support are outlined in the central 
Government's Five -Year Plans. For example, the 13th Five-Year Plan (2016 -2020) highlights the 
importance of innovation capacity.57 It advocates increased innovation in agriculture, strategic 
emerging industries (SEIs), intelligent manufacturing, and services. Even though the Plan does not 
outline any specific me asures, it serves as a reference for the design of central or sub -central 
support policies.  
3.99.   According to the 13th Five-Year Plan, the development of SEIs is of particular importance. 
The State Council issued a National Development Plan for Strategic Emergi ng Industry58, in which 
69 key tasks relating to strategic emerging industries and innovation were identified as key tasks 
for 2016 -20. Industries concerned are the information and technology industry, high -tech 
equipment and new materials industry, bio -industry, new energy vehicles, energy -conservation 
and environmental -protection industry, digital creative industry, aerospace and marine areas, and 
nuclear technology industry.  
3.100.   In December 2016, the National Development and Reform Commission (NDRC ) publishe d 
new Interim Measures for the Administration of Central Budget Investment Subsidy and Interest 
Discount Projects .59 According to the document, investment subsidies and interest discounts can 
be granted to industries and sectors in social and public services, and public infrastructure; 
agriculture and rural areas; ecological environment protection and restoration; major  scientific and 
technological areas; and social management and national security.  
3.101.   The NDRC also promulgated Interim Measures for the Administration of Central Budget 
Investment (Subsidy) on High -tech Industry Development Project s60 in December 2016. They 
establish that the Government can provide investment subsidies and interest discounts to 
high-tech promotion projects, including innovative capacity building projects, Internet and big data 
pilot projects, information and technology infrastructure building,  and regional industrial 
concentration and promotion projects. However, details of the specific measures are as yet 
unknown.  
                                                
57 Chinese Government online information (in Chinese). Viewed at: http://www.gov.cn/xinwen/2016 -
03/17/content_5054992.htm  [22.03.2018].  
58 State Council Circular on Printing and Distributing the National Development Plan for Strategic 
Emerging Industry, Guo Fa [2016] No. 67. Viewed at: http://www.gov.cn/zhengce/content/2016 -
12/19/content_5150090.htm  (in Chinese).  
59 National Development and Reform Commission Order No. 45. Viewed at: 
http://www.ndrc.gov.cn/zcfb/zcfbl/201612/t20161208_829543.html  (in Chinese).  
60 National Development and Reform Commission Circular on Printing and Distributing the Interim 
Measures for the Administration of Central Budget Investment (Subsi dy) on High -Tech Industry Development 
Project s, Fa Gai Gao Ji Gui [2016] No. 2514. Viewed at: 
http://www.ndrc.gov.cn/zcfb/gfxwj/201612/t20161219_830385.html  (in Chinese).  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.102.   In addition to the Central Government Five -Year Plans, there are also sector -specific 
five-year plans for individual industries. F or instance, NDRC and the National Energy 
Administration issued the 13th Five-Year Plan for Energy Technology Innovation in 
December  201661, in which China identified five specific areas and a total of 149 key projects that 
should be developed and supported  in 2016 -2020. Another example is the 13th Five-Year Plan for 
the Coal Industry which was issued by the NDRC and the National Energy Administration in 
December  2016. It stipulates that credit support can be provided to coal producers in different 
forms.62 However, these sectoral five -year plans just set policy guidelines and industry policies; 
they do not provide details of the specific support measures to be applied.  
3.103.   Authorized by the State Council, more concrete support measures for specific industries 
may be decided by individual ministries, the People's Bank of China or the NDRC. For instance, the 
Ministry of Finance increased the subsidy for coalbed methane production utilization from 0.2 yuan 
per cubic meter to 0.3 yuan per cubic meter in 2016.63 On 27 July 2015, NDRC, the Ministry of 
Industry and Information and Technology (MIIT) and the Ministry of Finance (MOF) jointly issued 
the 2nd Batch of Promotion Catalogue of Energy -Saving and Environment -Friendly Vehicles 
(Passenger Cars of 1.6 Litres and Below).64 Consumers who buy automobiles listed in the 
catalogue (which only contains automobiles produced in China) are provided a subsidy of 
RMB 3,000 from the Government. The authorities indicate that this policy was terminated 
in December 2015. Figures on tot al expenditures under the programme were not available.  
3.104.   In July 2016, China notified its support programmes maintained at the sub -central level 
during the period 2001 to 2014.65 The notification contains 100 different programmes from 
19 province administrat ions. Under these programmes, incentives are provided to: specific 
industries; "famous -brand" products and enterprises; small and medium enterprises; foreign trade 
enterprises; foreign -invested enterprises; less developed regions; and rural areas (Table A3 .3). 
Support programmes maintained by 13 provinces are not covered by this notification. The 
authorities indicate that these would be covered in a forthcoming notification for the years 2015 
and 2016.  
3.105.   For most projects, no information was provided on the t otal subsidy amount. Furthermore, 
only 5 programmes were still in force at the time of notification, while 95 programmes had 
expired. Some of the  programmes at the sub -central government level have the same name as 
projects at the central government level,  e.g. the subsidy for electric household appliances.  
3.106.   A number of communications have been submitted by other Members during the period 
under review, concerning, inter alia , China's notification of central subsidies, its fulfilment of 
subsidy notification requirements, its preferential tax policies, its notification of sub -central 
subsidies, its subsidies to the steel sector, and its "Famous Brand" programme.66 China provided 
written answers to questions asked in some of these communications.67 Specifically, China 
provided further information about the beneficiaries and eligibility criteria of the various 
programmes. It also indicated that the total amount of expenditure or revenue forgone is 
frequently not available due to the absence of a statistics system f or tax expenditure.  
                                                
61 The 13th Five-Year Plan for Energy Technology Innovation, Guo Neng Ke Ji [2006] No. 397 (in 
Chinese). Viewed at: http://zfxxgk.nea.gov.cn/auto83/201701/t20170113_2490.htm  [22.03.2018].  
62 NDRC and National Energy Admi nistrati on Circular on Printing and Distributing the 13th Five-Year Plan 
for the Coal Industry, Fa Gai Neng Yuan [2016] No. 2714 (in Chinese). Viewed at: 
http://www.ndrc.gov.cn/zcfb/zcfbtz/201612/t20161230_833687.html  [22.03.2018].  
63 Circular on Subsidy Standards for Coalbed Methane (Gas) Mining and Utilization, Cai Jian [2016] 
No. 31 (in Chinese). Viewed at: 
http://jjs.mof.gov.cn/zhengwuxinxi/zhengcefagui/201602/t20160226_1787180.html  [22.03.2018].  
64 NDRC online information (in Chinese) . Viewed at:  
http://www.ndrc.gov.cn/zcfb/zcfbgg/201507/t20150728_743103.html  [22.03.2018].  
65 WTO documents G/SCM/N/95/CHN/Suppl.1, G/SCM/N/123/CHN/Suppl.1, G/SCM/N/155/CHN/Supp l.1, 
G/SCM/N/186/CHN/Suppl.1, G/SCM/N/220/CHN/Suppl.1, G/SCM/N/253/CHN/Suppl.1 , and 
G/SCM/N/284/CHN/Suppl.1, 29 July 2016. Support programmes maintained at the central level were notified 
on 30 October 2015 (WTO document G/SCM/N/284/CHN) and were described  in the previous Secretariat 
Report.  
66 WTO documents G/SCM/Q2/CHN/54 -60, and 67 -71. 
67 WTO documents G/SCM/Q2/CHN/61 -66, and 72 -73. WT/TPR/S/ 375/Rev.1  • China  
 
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  3.107.   As at January 2018, no subsidies had been notified for the period 2015 to 2017. The 
authorities indicate d that a notification covering the years 2015 and 2016 would be issued before 
the TPR meeting.  
3.108.   In addition to the notified programme s, other programmes are in place to support different 
industries and attract foreign investment. However, no information on subsidies that extend  
beyond their notified programmes was provided to the Secretariat.  
3.109.   Each province or city may also provide a cer tain amount of financial support to a particular 
industry for a fixed period, in addition to the support measures granted by the central 
government. For example, according to some reports, in 2016 more than 15 provinces, 
autonomous regions, and municipalit ies provided financial subsidies to projects in the photovoltaic 
industry.68 
3.110.   China also provides specific support to projects for the revitalization and upgrading of 
certain regions. According to Opinions of the CPC Central Committee and the State Council o n the 
Overall Revitalization of the Old Industrial Base in Northeast China69, the 13th Five-year Plan, as 
well as the 13th Five-year Plan for Revitalizing Northeast China70, China provides support to 
projects in Industrial Transformation and Upgrading Demonstration Bases71 (Table 3.13), in order 
to accelerate the transformation and upgrading of old industrial cities.  Most of these supporting 
measures are not necessarily limited to old industrial cities or resource -intensive industries.  
3.111.   Support measures for the Central -Western Region are laid down in the Catalogue of 
Priority Industries for Foreign Investment in the Central -Western Regions, which was revised in 
February 2017 ( Section 2.4). Projects in sectors listed in the Catalogue are entitled to prefer ential 
policies, including exemption from import tariff for equipment and preferential income tax.  
3.112.   Support is also available for small and medium enterprises. The Plan on Promoting the 
Development of Small and Medium -sized Enterprises (2016 -2020)72, issued  by the Ministry of 
Industry and Information Technology, points out the objectives and key projects for the promotion 
of SMEs during the 13th Five-Year Plan. However, no details were provided on the concrete 
measures taken during the period under review.  
3.113.   During the period under review, China has continued to provide support for intelligent 
manufacturing, advanced technologies, new energy vehicles and fishery (Table 3.14). Outlays for 
these programmes appear to be considerable.73 Official expenditure figures on these support 
programmes were, however, not made available.  
                                                
68 The Summary of New Subsidy Policies in 2016, 22 March 2016. Viewed at: 
http://www.ssechina.com/news/24707_for_guangfufadian_text.htm .  
69 Opinions of the CPC Central Committee and the State Council on the Overall Revitalization of the Old 
Industrial Base in Northeast China. Viewed at: http://www.gov.cn/gongbao/2016 -05/10/content_5070739.htm  
(in Chinese).  
70 The 13th Five-Year Plan for Revitalizing Northeast China. Viewed at: 
http://www.ndrc.gov.cn/zcfb/zcfbghwb/201612/W020161219594214175674.pdf  (in Chinese).  
71 Opinions of supporting transformation and upgrading of Old Industrial Cities and Res ource -Intensive 
Cities, Fa Gai Zheng Xing Gui [2016] No. 1966. Viewed at: 
http://www.ndrc.gov.cn/zcfb/gfxwj/201610/t20161009_821994.html  (in Chinese) . 
72 The Plan on Promoting th e Development of Small and Medium -Sized Enterprises (2016 -2020), Gong 
Xin Bu Gui [2016] No. 223, 28 June 2016. Viewed at: 
http://www.miit.gov.cn/n1146 285/n1146352/n3054355/n3057527/n3057529/c5060464/content.html  (in 
Chinese).  
73 For example, annual expenditure for fisheries subsidies was estimated at RMB 40.4 billion for 2013  
(T.G. Mallory (2016) , Fisheries subsidies in China: Quantitative and qualitativ e assessment of policy coherence 
and effectiveness. Marine Policy (68), 2016, 74 -82). WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 3.13 Support measures to projects for industrial transformation and up grading  
Supporting policy Relating measures  
Industrial policy  Venture  Capital Guiding Fund for National Emerging Industrya;  
National Small and Medium Enterprises Development Fundb;  
Industrial Transformation and Upgrading (China Manufacturing 2025) Special Fundc;  
National Specialized Construction Fund;  
Preferential Tax Policies for Purchasing and Using Energy -Saving, Environmental 
Protection and Safe Production Appliances  
Innovation policy  National Fund for Technology Transfer and Commercializationd; 
Industrial Investment Funde; 
Intellectual Property Pledge Financingf 
Investment policy  Special Fund for Enhancing the Core Competitiveness of the Manufacturing Sector;  
Special Fund for Fostering and Developing Emerging Industry in Northeast China;  
Special Subsidy Fund for Major Projects of Northeast Revitalization and Inter -Provincial 
Co-Operation Projectsg; Interim Measures for the Administration of Central Budget 
Investment Subsidy and Interest Discount Projectsh 
Financial policy  Industrial Investment Fundi; 
Diversifying financing channels to support innovative industrial  projects  
a  National Development and Reform Commission: Venture Capital Guiding Fund for National Emerging 
Industry Will Be Put into Operation Soon, 25 August 2016. Viewed at: http://www.gov.cn/  (in Chinese).  
b  Nationa l Fund Valued 60 trillion RMB to support the Development of Small and Medium Enterprises. Viewed 
at: http://www.gov.cn/  (in Chinese).  
c  Ministry of Industry and Information Technology and Ministry of Finance, Gong Xin Ti ng Lian Gui [2017] 
No. 53, 24 May 2017. Viewed at: http://www.miit.gov.cn/  (in Chinese).  
d  Ministry of Finance and Ministry of Science and Technology, Cai Jiao [2011] No. 289, 4 July 2011. Viewed 
at: http://www.nfttc.gov.cn/  (in Chinese).  
e  National Development and Reform Commission, Fa Gai Cai Jin Gui [2016] No. 2800, 30 December 2016. 
Viewed at: http://cjs.ndrc.gov.cn/  (in Chinese).  
f  State Intellectual Property Office, Guo Zhi Ban Han Guan Zi [2016] No. 145, 18 March 2016. Viewed at: 
http://www.sipo.gov.cn/  (in Chinese).  
g  National Development and Reform Commission, Fa Gai Zhen Xi ng [2015] No. 1102, 19 May 2015. Viewed 
at: http://www.ndrc.gov.cn/  (in Chinese).  
h National Development and Reform Commission Order No. 45, 5 December 2016. Viewed at: 
http:// www.ndrc.gov.cn/  (in Chinese).  
i  National Development and Reform Commission, Fa Gai Cai Jin Gui [2016] No. 2800, 30 December 2016. 
Viewed at: http://cjs.ndrc.gov.cn/  (in Chinese).  
Source:  Information compiled by th e WTO Secretariat.  
Table 3.14 Various support measures in 2015 -17 
Sector  Type of support  Legislation  
Intelligent manufacturing;  
Fundamental industrial manufacturing;  
Eco-manufacturing  Financial appropriations  Circular of the Ministry of Industry and 
Information Technology Office of the 
Ministry of Finance on the release of 
industrial restructuring and upgrading in 
2017 (China Manufacturing 2025)a (Gong 
Xin Ting Lian Gui [2017] No.  53) 
New energy vehicles  Financial appropriations;  
Tax exemption  Circular on the Promotion of New Energy 
Vehicle in 2016 -2020b (Cai Jian [2015] 
No. 134);  
Announcement on Vehicle Purchase Tax 
Exemption for New Energy Automobilesc 
Microfinance company  VAT exemption;  
Income tax pre ferences  Circular on Tax Policy for Microfinance 
Companiesd (Cai Shui [2017] No. 48)  
SMEs  Income tax preferences  Circular on Expanding the Scope of 
Preferential Tax for SMEse (Cai Shui 
[2017] No.  43) 
Large aircraft design and 
manufacturing enterprises  VAT refund;  
Tax exemption  Circular on the VAT Policy for Large 
Airliners and New Arrivalsf (Cai Shui 
[2016] No. 141);  
Circular on Property Tax Policy and Land 
Urban Land Use Tax Policy for Large 
Passenger Aircraft and Large Passenger 
Aircraft Engine Design and Manufacturing 
Enterprisesg (Cai Shui [2016] No. 133)  WT/TPR/S/ 375/Rev.1  • China  
 
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  Sector  Type of support  Legislation  
Advanced technology services  Income preferences  Circular on Income Tax Policy to Promote 
Advanced Technology Service Enterprises 
in Service Trade Innovation and 
Development Pilot Areas (Cai Shui [20 16] 
No. 122)  
Manufacturing  Tax refund  Circular on Increasing Export Tax Rebate 
for Mechanical and Electrical, and Refined 
Oilh (Cai Shui [2016] No. 113)  
Software and integrated circuit 
industry  Tax preference  Circular on Income Tax Policy for 
Software and Integrated Circuit Industryi 
(Cai Shui [2016] No. 49)  
Renewable energy production  VAT refund  Circular on the VAT Policy for Wind Power 
(Cai Shui [2015] No. 74)  
Fishery  Transfer payment  Circular on Adjusting Oil Subsidy for 
Domestic Fishery and Aquacu lture to 
Promote the Sustainable and Healthy 
Development of Fisheriesj (Cai Jian 
[2015] No. 499)  
a  Ministry of Industry and Information Technology and Ministry of Finance, Gong Xin Ting Lian Gui [2017] 
No. 53, 24 May 2017. Viewed at: http://www.miit.gov.cn/ . 
b  Ministry of Finance, Ministry of Science and Technology, Ministry of Industry and Information Technology 
and National Development and Reform Commission, Cai Jian [2015] No. 134, 22 April 2015. Viewed at: 
http://jjs.mo f.gov.cn/ . 
c  Ministry of Finance, State Administration of Taxation, Ministry of Industry and Information Technology 
Announcement [2014] No. 53, 1 August 2014. Viewed at: http://www.chinatax.gov.cn/ . 
d  Ministry of Finance and State Administration of Taxation, Cai Shui [2017] No. 48, 9 June 2017. Viewed at: 
http://www.mof.gov.cn/ . 
e  Ministry of Finance and State Administration of Taxation,  Cai Shui [2017] No.  43, 6 June 2017. Viewed at: 
http://szs.mof.gov.cn/ . 
f  Ministry of Finance and State Administration of Taxation, Cai Shui [2016] No. 141, 15 December 2016. 
Viewed at: http://szs.mof.gov.cn/ . 
g  Ministry of Finance and State Administ ration of Taxation, Cai Shui [2016] No. 133, 28 October 2016. 
Viewed at: http://szs.mof.gov.cn/ . 
h  Ministry of Finance and State Administration of Taxation, Cai Shui [2016] No. 113, 4 October 2016. Viewed 
at: http://szs.mof.gov.cn/ . 
i  Ministry of Finance, State Administration of Taxation, National Development and Reform Commission and 
Ministry of Industry and Information Tech nology, Cai Shui [2016] No. 49, 4 May 2016. Viewed at: 
http://szs.mof.gov.cn/ . 
j  Ministry of Finance and Ministry of Agriculture, Cai Jian [2015] No. 499, 25 June 2015. Viewed at: 
http://jjs.mof.gov.cn/ . 
Source:  Information compiled by the WTO Secretariat.  
3.3.2   Standards and other technical requirements  
3.3.2.1   Overview  
3.114.   China has five kinds of standards: national, industry /sectoral, local, enterprise, and 
association. The first three types ca n be either voluntary or mandatory (technical regulations). 
National standards are developed for adoption at the national level, while industry/sectoral 
standards, which are also applicable nationwide, are developed in the absence of a national 
standard, w here specific conditions must be complied with in a professional field at the national 
level. Standards may also be developed locally (local standards) when national or industry/sectoral 
standards do not exist. However, if and when equivalent national stan dards are developed, these 
replace local and industry/sectoral standards except  in cases where local standards are stricter 
than national ones. Enterprise standards may be developed for an enterprise when national, 
industry or sectoral or local standards a re not available. Association standards were introduced as 
a new category by a 2017 amendment to the Standardization Law; these can be adopted for 
example by chambers of commerce or technology associations.  
3.115.   The Standardization Administration of China (SAC) , under the General Administration of 
Quality Supervision, Inspection, and Quarantine ( AQSIQ) , administers China's standardization 
system. The SAC is in charge of the overall coordination and unified management of China's 
national standardization system, as well as of the development of national policies and strategies 
with respect to standardization. It is also in charge of approving, number ing and issuing national 
standards, both voluntary and "mandatory" (as technical regulations are referred to in China). The WT/TPR/S/ 375/Rev.1  • China  
 
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  SAC is assisted in its functions and activities by the NDRC, the State Food and Drug 
Administration, the China Association of Standa rds (CAS), a number of ministries, and local and 
industry standardization associations.74 The CAS and some non -governmental organizations 
affiliated to AQSIQ, such as the China National Institute of Standardization (CNIS) , support SAC 
and other institutions  in the development of  standards through research and international 
cooperation, to promote the use of best international practices in the development of China's 
standards.75 The CAS also disseminates the proper use and application of standards.  
3.116.   The Ministr y of Industry and Information Technology (MIIT) is mainly responsible for the 
development and revision of standards in the following areas: chemicals, petrochemicals, ferrous 
metallurgy, non -ferrous metals, rare earths, gold, building materials, machinery,  automotives, 
shipping, aviation, light industry, textiles, packaging, aerospace, ordnance products for civilian 
use, nuclear products, electronics and communications. The China Electronics Standardization 
Institute (CESI) under MIIT engages in standardiza tion in the field of electronics. The China 
Communications Standards Association (CCSA), organized with the approval of the MIIT and 
registered with the Ministry of Civil Affairs, engages in standardization activities in the field of 
Information and Commun ications Technology (ICT). The China Food and Drug Administration 
(CFDA) prepares standards in accordance with the Drug Administration Law; standards for food 
are prepared by CFDA and the national Health and Family Planning Commission (NHFPC) in 
accordance  with the Food Safety Law.  
3.117.   AQSIQ is in charge of national quality, metrology, entry -exit inspection, animal and plant 
quarantine, certification, accreditation, standardization, and administrative law enforcement. 
AQSIQ is also the body in charge of ensurin g that both imports and exports comply with technical 
regulations and certification requirements.76 AQSIQ administers the Certification and Accreditation 
Administration of China (CNCA). It is also China's TBT Enquiry Point and responsible for submitting 
TBT notifications.  
3.118.   The Standardization Law (1988), amended in January 201877, and the Regulations for the 
Implementation of the Standardization Law  (1990) constitute the main legislation on standards in 
China. The authorities indicate that the 2018 amendment s hould provide for an easier preparation 
of market -oriented standards, more proactive participation in international standardization 
activities, and improve the management of the standard -setting process.  
3.119.   The procedures to formulate national standards are laid down in the Measures on 
Administration of  National Standards, Order No. 10 of 24 August 1990.78 The formulation process 
is mainly in public hands, while the respective industry plays a supportive role. The development 
of national standards is organized  by the SAC, through a process that comprises  a number of 
steps: a pre -research stage, project initiation, drafting of the proposed standard, opinion 
                                                
74 Both domestic and registered foreign -funded enterprises may participate in China's national 
standardization activities. They must file an application to participate in the corresponding technical committee, 
as specified in the Administration Provisions on National Professional Standardization Technology Committee 
(Guo Biao Wei Ban [2009] No. 3). The Provisions, Registration Form for Members of the National 
Standardizatio n Technical Committee and relevant information on the technical committee are available at: 
http://www.sac.gov.cn  (WTO document G/TBT/M/300/Add.1, 9 September 2014).  
75 The CAS is a nationwide public association of orga nizations and individuals engaged in voluntary 
standardization across China. It is approved by the Ministry of Civil Affairs and led by AQSIQ. Its main activities 
include: conducting research on policies, laws, and regulations related to standardization; p roviding 
certification services; and disseminating knowledge on standardization. The CNIS is a non -profit national 
research body affiliated with AQSIQ and engaged in standardization research, whose main responsibilities are 
to conduct strategic and compreh ensive research on standardization, to research and develop a range of 
fundamental standards, as well as to provide authoritative standards information services. China Association of 
Standards (CAS). Viewed at: http://www.chinacsrmap.org/Org_Show_EN.asp?ID=539 ; and China National 
Institute of Standardization. Viewed at: http://en.cnis.gov.cn/faq/201305/t20130527_14361.shtml . 
76 Law on Import and Export Commodity Inspection of 2002. Viewed at: 
http://www.china.org.cn/english/government/207371.htm ; and the Regulations on the Implementation of the 
Law on Import and Export Commodity Inspection. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300045852.shtml . 
77 NPC online information (in Chinese). Viewed at: http://www.npc.gov.cn/npc/ xinwen/2017 -
11/04/content_2031446.htm  [10.04.2018] . 
78 MOFCOM online information (in Chinese). Viewed at: 
http://tradeinservices.mofcom.gov.cn/article/zhengce/flfg/201 710/756.html  [10.04.2018] . WT/TPR/S/ 375/Rev.1  • China  
 
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  solicitation, examination of the technical contents, approval, and publication. National standards 
are pub lished in the Standard Press of China. They  are reviewed after five years of implementation 
to confirm whether they are still valid and required as they stand, or if they need to be amended 
or annulled. If it is decided that the standard should be annulled , a Notice of Annulment is issued. 
If it is retained, the results of the review are made public, and any modification to the standard 
listed in the National Standards Development and Revision Plan.  
3.120.   Industry or sectoral  standards are formulated by the relev ant technical committees. The 
standardization administrations of the competent ministries, with the support of the industry 
institutes of standardization and technical committees, are in charge of establishing industry or 
sectoral standard development plan s and approving the corresponding standards. Most national 
and industry or sectoral standards are filed and stored at the National Library of Standards. Local 
standards are formulated by  the standardization authorities of provinces, autonomous regions and 
municipalities directly under the Central Government in accordance with the Administrative 
Measures on Local Standards. Industry or sectoral and local standards must also be reviewed 
within five years of their implementation. The formulation procedures for  enterprise standards are 
determined by the enterprises themselves.  
3.121.   Chinese standards are divided into "mandatory standards" (technical regulation s) and 
voluntary standards. Technical regulations are mainly related to the protection of human health, 
person al property and safety, and are usually applied to : medicines, food hygiene, veterinary 
drugs, and pesticides; labour and transportation safety; construction; environmental emissions; 
and technical terminology. When a technical regulation is to be develope d, it must be stipulated 
that it will be a mandatory standard. To this end, for national standards, at the project initiation 
stage, the standardization authority requests an assessment by experts of the need and feasibility 
of making the proposed standard  mandatory. Once this is determined, the procedures to develop 
and issue a standard and a technical regulation have some differences: at the technical 
examination stage, mandatory standards must be publicly reviewed by convening meetings and 
the period for receiv ing comments cannot be less than two months. Also, according to the 
authorities, before their approval, mandatory standards with an impact on trade and not resulting 
from the adoption (without changes) of an international standard must be notified t o the WTO. 
Voluntary standards cannot in principle become mandatory standards since the nature of the 
standard has been determined at the beginning of its formulation procedures. However, 
a voluntary standard could be referenced in a technical regulation, making it mandatory.  
Government agencies, such as the NDRC and the MIIT, have the faculty to approve and 
promulgate technical regulations that may make reference to voluntary standards, rendering them 
mandatory.  
3.122.   As at end -2017, there were a total of 35,081  national standards (2,118 mandatory and 
32,597 voluntary standards ). According to the authorities , at end -2017 some 74.3% of mandatory 
standards and some 85.9% of voluntary standards were adoptions or an adaptation of 
international standards, compared to 74.3% and 75.2% at end -2014. Of the national standards 
approved in 2017, 2.2% were mandatory , compared to 5.9% in 2015  (Table 3.15).79 The 
authorities also indicate that since January 2016 , 1,301 standards considered unnecessary 
(including 414 mandatory sta ndards) have been eliminated, while 1,077 mandatory standards 
have become voluntary.  
Table 3.15 Standards approved, 2015 -17 
 2015  2016  2017  
National standards  1,930  1,763  3,811  
Mandatory 113 23 84 
Voluntary  1,817  1,740  3,724  
Sectoral standards  4,414  3,849  3,990  
Mandatory 78 84 84 
Voluntary  4,344  3,765  3,912  
Local standards  4,004  3,728  4,774  
Mandatory 125 80 62 
Voluntary  3,879  3,648  4,712  
Source:  Information provided by the authorities of China.  
                                                
79 WTO document G/TBT/M/300/Add.1, 9 September 2014.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.123.   Between January 2016 and November 2017, China submitted 94 TBT notifications, most of 
them under Article 2.9.80 The majority of the technical regulations notified were applied to regulate 
the market and to protect human health, safety and the environ ment, and were related to medical 
products, road vehicles, recycling, and electrical and electronic equipment.  
3.124.   In the Committee of Technical Barriers to Trade, b etween January 2016 and 
February  2018, 22 specific trade concerns (STCs) were raised by Members  regarding  TBT 
measures maintained or planned by China, including 13 new STCs.81 These STCs refer to a wide 
range of issues, including specific product regulations (cosmetics, medical products, furniture, 
chemicals, vehicles, coal) and new legislation on st andards and cybersecurity.  
3.125.   The amended Law on Prevention and Control of Atmospheric Pollution entered into force in 
January 2016 with a view to plac ing tighter controls over the emission of air pollutant s and 
regulat ing the formulation of environmental pr otection standards. The Law specifies quality 
standards for coal, fuels, paints and related products.  
3.126.   The Law on Traditional Chinese Medicine entered into force on 1 July 2017. The Law 
provides in Article 50 that the Government will develop a system of st andards for traditional 
Chinese medicine , which will be published online. The Government also promotes the development 
of an international system of standards for traditional Chinese medicine.  
3.3.2.2   Product certification  
3.127.   No changes have taken place in the laws a nd regulations governing China's certification 
system  since its previous review . China administers both a voluntary certification system and a 
compulsory product certification system. The China National Certification and Accreditation 
Administration (CNCA) , under AQSIQ, manages both systems. Certification and accreditation are 
regulated by: the Product Quality Law; the Import and Export Commodity Inspection Law; the 
Regulations on Certification and Accreditation; the Regulations on Compulsory Product 
Certif ication82, as well as the Measures for the Administration of Certification Bodies; the Measures 
for the Administration of Certification Certificates and Certification Marks; the Measures for the 
Administration of Organic Product Certification; and the Measu res for the Administration of Energy -
Saving and Low -Carbon -Emission Product Certification.  
3.128.   China's compulsory product certification system, which applies to both domestic products 
and imports, was established in 2001 to enforce product compliance with tech nical requirements. 
The products subject to compulsory product certification are listed in the Compulsory Product 
Certification Catalogue (CCC Catalogue); they cannot be sold in China or imported without China's 
Compulsory Certificates (CCC) and the corres ponding CCC marks.83 The CCC certification system is 
mainly based on national compulsory standards. The products that have been listed in the 
compulsory certification directory may only leave the factory, be sold, imported, and used in other 
business activity after they have been certified and labelled.  
3.129.   The CCC Catalogue is approved and released jointly by AQSIQ and the CNCA, together 
with the relevant industrial administrative departments, if approval from the industry regulator is 
required. Responsibility for the general adm inistration of the compulsory product certification 
system and its implementation lies with the CNCA. This involves updating the CCC Catalogue, 
drafting and promulgating the implementing rules for the compulsory certification of products 
listed in the CCC Catalogue, designing and promulgating certification marks, defining the 
requirements for CCCs, designating certification bodies, testing laboratories and inspection bodies, 
carrying out conformity assessment activities for CCC certification, designating th e organization 
that issues CCC marks, and handling complaints and appeals related to compulsory product 
certification. The CNCA may also authorize local Quality and Technical Supervision Bureaus and 
Local Entry -Exit Inspection and Quarantine Bureaus as loc al certification supervision authorities for 
                                                
80 WTO documents G/TBT/N/CHN/ series from 1 January 2016 to 30 November 2017.  
81 STCs 294, 296, 428, 456, 457, 466, 477, 489, 490, 493, 597, 508, 509, 526, 527, 533, 534, 536, 
537, and 538.  
82 AQSIQ Decree [2009] No. 117. Viewed at: http://www.aqsiqccc.com/en/aqsiq/ccc -5.html . 
83 AQSIQ Decree [2002] No. 5, Administrative Measures for Compulsory Product Certification.  WT/TPR/S/ 375/Rev.1  • China  
 
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  products listed in the CCC Catalogue in areas under their administration. Random conformity 
sampling tests are conducted on imports that have already acquired a CCC.  
3.130.   In 2017, the CCC Catalogue listed 170 produc ts including: motor vehicles and safety parts, 
tyres for motor vehicles, electrical wires, circuit switches, low -voltage electrical apparatus, low 
power motors, electrical tools, household electrical appliances, audio and video equipment 
(excluding for bro adcasting service), information technology equipment, telecommunication 
terminal equipment, safety glass, agricultural machinery, fire -fighting equipment, safety protection 
products, wireless LAN (local area network) products, decoration products, and remo delling 
products and toys.  
3.131.   To obtain the CCC mark, an application must be submitted to the authorized accredited 
certification bodies (ACB) designated by the CNCA, each of which is authorized to provide 
certification for several products subject to the CCC . In the context of the present Review, the 
authorities have indicated that there are  25 mandatory certification bodies.84 The application must 
be accompanied by supporting material required under the specific product certification rules. A 
review committee  is established by the CNCA, which analyses the application through the 
examination of files, and the organization of meetings and hearings.85 The investigation may also 
include type -testing of product samples  through a CNCA -designated test laboratory in Ch ina, and 
factory inspection by representatives  of a CNCA -designated certification body. The resulting report 
will be analysed by the CNCA, which must make a decision within 10 days or 15 days under special 
circumstances. If a product meets the certificatio n requirements, the CCC is issued and the 
applicant notified within 90 days of the date of the acceptance of the application. The CNCA's 
decision is published on its website. After a CCC is issued, certification bodies re -inspect the 
manufacturing faciliti es on a regular basis. The frequency depends on the security level and quality 
stability of the product and the classification status of the producing enterprise.  Applications to 
renew the CCC must be submitted 90 days prior to the expiry of the certificat e. CCCs are valid for 
five years from the date of approval of the application.  
3.132.   Under certain circumstances, exemptions from the CCC requirement may be granted. 
Eligible products include: goods used in research and testing to test production lines with the 
intention of importing technology, and to maintain equipment; goods used to complement factory 
production lines (excluding office supplies); and goods imported temporarily, spare parts or 
materials imported under processing trade,  parts of machines to be p rocessed and then exported 
as a complete machine, or goods for exclusive use in commercial exhibitions.  
3.3.2.3   Labelling and packaging  
3.133.   Laws and regulations on labelling, marking, and packaging focus mainly on food, drugs and 
cosmetics, medical devices, and seeds. No major changes have taken place in these rules since the 
previous review. The labelling and packaging requirements for food a re contained in the Provisions 
for the Administration of Food Labelling (AQSIQ Decree No. 123), the Provisions for the 
Supervision and Administration of Production of Food Additives (AQSIQ Decree No. 127), and the 
Announcement on the Issues Related to the Use of Mark of Corporate Food Production Licence 
(AQSIQ [2010] Announcement No. 34).  
3.134.   Imported pre -packaged food or food additives require a label and an instruction manual (if 
applicable) in Chinese. Such labels and instruction manuals must specify the or igin of the product; 
and the name, address and contact details of the domestic agent importing the food.  
3.135.   New rules on labelling, marking and packaging are contained in the Regulations for the 
                                                
84 Among  which: the China Quality Certification Centre; China Security Technology Certification Centre; 
China Agricultural Product Quality Certification Centre; China Safety Glass Certification Centre; Product 
Conformity Assessment Centre; China Certification Cent er for Fire Products under the Ministry of Public 
Security ; China Automotive Certification Centre (List of mandatory product certification bodies on the website 
of the CNCA (in Chinese). Viewed at: http://www.cnca.gov.cn/cnca/rdht/qzxcprz/jcjggljg/4731.html  
[10.04.2018]) . 
85 The reviews examine the applicant's technical capabilities and credibility, and undertake a 
cost-efficiency analysis.  They must be completed within 30 working da ys. CNCA online information. Viewed at: 
http://www.cnca.gov.cn/bsdt/szxkxm/qzscprzjgsyshjcjgzdsp/201203/t20120320_4448.shtml . WT/TPR/S/ 375/Rev.1  • China  
 
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  Implementation of the Drug Administration Law of 6 February 201 6, the Regulations on the 
Control of Pesticides of 8 February 2017, and the Regulations for the Supervision and 
Administration of Medical Devices of 4 May 2017, all of which replaced previous regulations in their 
respective fields.  
3.3.3   Sanitary and phytosanit ary requirements  
3.136.   The main legislation governing China's sanitary and phytosanitary (SPS) requirements has 
remained unchanged since its previous review. The latest revision of the F ood Safety Law  entered 
into force on 1 October 2015. The revision  highlighte d the following aspects: (1) the management 
of food safety risks; (2) the management of food safety at the sources; (3) the primary 
responsibility of food producers and operators in ensuring food safety; (4) the responsibility of 
local governments in ensur ing food safety; (5) the supervision and management of food safety; 
(6) the social governance of food safety; and (7) the punishment of severe violations of the Food 
Safety Law.86  
3.137.   Nonetheless, d uring the period under review, China introduced various regula tions related 
to sanitary and phytosanitary requirements in the form of inter alia  AQSIQ Decrees. These include: 
Measures for the Supervision and Administration of Inspection and Quarantine of Entry -Exit 
Cereals (AQSIQ Decree No. 177 of 2016), Measures for  the Administration of Units and Personnel 
for Entry -Exit Quarantine (AQSIQ Decree No. 181 of 2016), Administrative Measures for Health 
Licence at Frontier (AQSIQ Decree No. 182 of 2016), Measures for the Supervision and 
Administration of Inspection and Qu arantine of Entry Aquatic Animals (AQSIQ Decree No. 183 of 
2016), and Administrative Measures for Quarantine on Entry -Exit Cruises (AQSIQ Decree No. 185 
of 2016).  
3.138.   Four institutions are in charge of the SPS system in China: the National Health and Family 
Planning Commission, the China Food and Drug Administration (CFDA), the Ministry of Agriculture 
(MOA), and AQSIQ. The respective responsibilities have remained largely unchanged during the 
period under review87; except for some internal organizational change s in the China Food and Drug 
Administration (CFDA) in July 2016.  
3.139.   The Catalogue of Entry -Exit Commodities Subject to Inspection and Quarantine  lists all 
imports and exports subject to statutory inspection by the entry and exit inspection and 
quarantine auth orities prior to their commercialization (or exit) in (from) China. Regarding 
imports, in November 2017 the Catalogue contained 4,591 tariff lines at the HS 8 -digit level. 
In 2017, regulatory conditions changed for some 200 tariff lines.  
3.140.   Foreign enterprise s that manufacture, import, process and store food must be registered 
with the CNCA before their food products are imported into China.88 In addition, the 2015 Food 
Safety Law stipulates special regulations for certain food or food -related products (e.g. 
supplements89, "formula food for special medicinal purposes"90; and infant and follow -up formula 
and other special foods), which are subject  to supervision and administration. Enterprises 
producing these products must fulfil special registration or record -filing formalities, establish a 
production quality management system, and submit a "self -inspection" report to the food and drug 
administrat ion of the local government. Pursuant to the Food Safety Law, food importers also must 
establish a food and food additives import and sales record system to record, inter alia : the name 
of the product, its specifications, quantity, date of production, and production and import batch 
number; the shelf life of the product and food additives; and the name, address and contact 
details of the exporter. Registration and record -filing formalities vary according to the product.  
                                                
86 WTO, Trade Policy Review of China (2015).  
87 WTO, Trade Policy Review of China (2015).  
88 AQSIQ Decree [2012] No. 145, Provisions for the Administration of the Registration of  Overseas 
Manufacturers of Imported Food. Viewed at: http://www.chinatt315.org.cn/qwfb/2012 -3/31/39 530.aspx ; and 
the latest Catalogue of Registration of Foreign Manufacturers of Imported Foods (in Chinese). Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jl gg_12538/zjgg/2013/201305/t20130503_355293.htm  [05.04.2018] 
and https://cdn.chemlinked.com/file/OtherNews/The_Implementation_Catalogue.pdf  [05.04.2018] . 
89 Importers of supplements imported for the first time must register with the CFDA. Importers of 
vitamins or minerals do not require registration just record -filing.  
90 For a definition please refer to National Standard GB 29922 —2013. Viewed at: 
http://www.lndoh.gov.cn/zxfw/bjcx/spaqbz/201405/P020140514421230724630.pdf .  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.141.   AQSIQ is China's national SPS enquiry  point. Between January 2016 and November 2017, 
China submitted 21 notifications regarding adopted or planned SPS measures .91 Most of the 
measures notified refer to human health or food safety; many relate to nutritional fortifiers or food 
additives. None o f the notifications were related to emergency measures.  
3.142.   During the period under review, eight specific trade concerns (STCs) were raised by 
Members in the Committee on Sanitary and Phytosanitary Measures regarding  SPS measures 
maintained by China, of whic h three were raised for the first time. These STCs refer to: lack of 
transparency for certain SPS measures; import restrictions in response to the Fukushima nuclear 
power plant accident; measures on bovine meat; quarantine and testing procedures for fish; 
import restrictions due to African swine fever, Schmallenberg virus, and avian influenza; proposed 
amendments on GMOs; and an import ban on fresh mangosteen.92  
3.3.4   Competition policy and price controls   
3.3.4.1   Competition policy  
3.3.4.1.1   Legislative and institutional framewor k 
3.143.   Competition policy in China is governed by the Anti -Monopoly Law (AML), the Anti -Unfair 
Competition Law, and the Price Law. During the period under review, the Anti -Unfair Competition 
Law was amended. The amendment removed overlaps with the AML.  
3.144.   The AML 's main objectives are to safeguard fair market competition, and improve 
economic efficiency, while protecting consumer and public interest. It has jurisdiction over anti -
competitive activities that have an effect on the Chinese domestic market, whether th ey take place 
within China or abroad.  It focuses on preventing, analysing and combating three kinds of 
monopolistic conduct: monopoly agreements; the abuse of a dominant market position; and 
concentrations of  undertakings that have or are likely to have th e effect of eliminating or 
restricting competition. The AML applies to all sectors of the economy and to all types of 
enterprises with the exception of  associated or concerted conduct by agricultural producers and 
rural economic organizations in the produc tion, processing, sales, transportation, and storage of 
agricultural products .  
3.145.   The AML stipulates that state -owned enterprises (SOEs) that have a controlling stake in 
industries that affect the lifeline of the national economy and are of importance to nat ional 
security, as well as those SOEs that have been granted exclusive production and sales rights 
legally, will have their legitimate business interests protected by the State. In accordance with the 
AML, the State supervises and regulates these firms' op erations and the prices of the goods and 
services they supply. In this respect, China issued laws and regulations that allow production in 
certain sectors to be concentrated into monopolies, near -monopolies, or authorized oligopolies, 
such as the Postal La w (1986), the Railroad Law (1991), the Civil Aviation Law (1995), the 
Electricity Law (1996), the Regulations on Telecommunication (2000), and the Commercial Bank 
Law, as amended.  
3.146.   Since China's previous Review in 2016, a noteworthy legislative development  in the area of 
competition policy has been the amendment to the Anti -Unfair Competition Law, which was 
adopted on 4 November 2017 and entered into force on 1 January 2018. This is the 
first amendment to the Law since its introduction in 1993. The new Law removes overlaps with the 
Anti-Monopoly Law by deleting: (i) provisions prohibiting public utility enterprises or monopolistic 
enterprises from requiring consumers to purchase designated products, which would preclude 
other business operators from fair com petition; (ii) provisions prohibiting government agencies 
from abusing their administrative powers to require consumers to purchase designated products, 
or to restrict cross -regional market entry; and (iii) provisions on collusive tendering.93 The 
                                                
91 WTO documents G/SPS/N/CHN/1042 -1060.  
92 STCs 184, 354, 392, 395, 405, 406, and 416.  
93 When the Anti -Unfair Competition Law was first promulgated in 1993, the Anti -Monopoly Law and the 
Tendering and Bidding Law had not been introduced. Therefore, the Anti -Unfair Competition Law incorporated 
provisions to regulate certain monopolistic behavi ours and collusive tendering, which later overlapped with the 
 WT/TPR/S/ 375/Rev.1  • China  
 
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  amended L aw introduces new provisions on the prevention of unfair competition activities carried 
out by technological means on the Internet, such as malicious interference.94  
3.147.   An Anti -Monopoly Committee was established by the State Council, according to Article 9 
of the Anti -Monopoly Law, to be in charge of organizing, coordinating and guiding anti -monopoly 
work and to perform duties such as: (i) studying and drafting policies on competition;  
(ii) organizing investigation and assessment of competition on the market a s a whole and 
publishing assessment reports; (iii) formulating and releasing anti -monopoly guidelines; and 
(iv) coordinating administrative enforcement of the Anti -Monopoly Law. The Committee is headed 
by a Vice Premier and its membership consists of minis ters or senior officials from relevant 
ministries and regulatory commissions of the State Council. MOFCOM serves as the General Office 
of the Committee and is responsible for its day -to-day work.  
3.148.   Some academics are of the view that the current institution al framework of competition 
policy enforcement in China is not fully able to ensure the full function ing of competition policy , 
since: (i) the AML's division of authority across three agencies diminishes coherence in law and 
policy; and (ii) the lack of autonomy of the three agencies creates the potential that competition 
policy may be influenced by industrial policies which sometimes conflict with competition policy.95  
3.149.   Different aspects of anti -monopoly regulatory work fall under  the respective responsib ilities 
of MOFCOM, the National Development and Reform Commission (NDRC) and the State 
Administration for Industry and Commerce (SAIC). Specifically, MOFCOM's Anti -Monopoly Bureau 
is in charge of conducting anti -trust reviews of the concentration of undert akings. The NDRC and 
the SAIC deal with specific issues related to the surveillance of monopoly agreements, abuse of 
market dominance, and abuse of administrative powers. The Price Supervision and Anti -Monopoly 
Bureau of the NDRC has responsibility for inv estigating and punishing price -related violations of 
the rules in these areas, while the SAIC's Anti -Monopoly and Anti -Unfair Competition Enforcement 
Bureau deals with issues regarding monopoly agreements, abuse of dominant market position, and 
abuse of ad ministrative power to eliminate or restrict competition (other than price -related 
behaviours). Each authority has issued a series of departmental rules in their own area of 
responsibility. The main regulations/guidelines concerning competition are listed i n Box 3.1.  
3.150.   The Anti -Monopoly Committee of the State Council is currently drafting Guidelines on 
Anti-Monopoly by Abusing Intellectual Property Rights. The draft Guidelines were published online 
for public comments on 23 March 2017. They aim to provide guid ance on how the AML is 
applicable to intellectual property rights violations, as well as to improve the transparency of 
anti-monopoly enforcement. According to the authorities , the drafting process for the guidelines 
has been completed, and they have been submitted to the anti -monopoly office of the State 
Council and are open to public comment. Violations of the AML are subject to administrative 
penalties, including fines, confiscation of illegal gains, and cease -and-desist orders. These may be 
applied by M OFCOM, the SAIC or the NDRC, according to the nature of the case. The NDRC may 
delegate its faculty to relevant provincial Development and Reform Commissions (DRCs) and 
provincial DRCs may also delegate the case to a lower level. The SAIC may file monopoly  cases for 
investigation by itself, or authorize provincial Administrations for Industry and Commerce (AICs) to 
file such cases for investigation. For cases that SAIC has filed, it may investigate on its own, or 
delegate the investigation to relevant AICs at provincial or sub -provincial levels or of municipalities 
with independent planning status. For cases filed for investigation by an AIC, the provincial AIC 
may arrange for  agencies , including municipal AICs , to carry out investigation and relevant work. 
                                                                                                                                                  
subsequent Anti -Monopoly Law and Tendering and Bidding Law. The amended Anti -Unfair Competition Law 
tries to harmonize itself with the other two Laws by deleting those overlaps.  
94 Article 12 of the amended Anti -Unfair Competition Law now stipulates that market operators shall not 
use technological means to obstruct or damage the normal operation of network products or services lawfully 
provided by other operators by influencing the choice of user s or by other means. These prohibited behaviours 
may include, but are not limited to: (1) inserting a link or forcing the user to visit another webpage in the 
network products or services lawfully provided by other operators without their consent; (2) misl eading, 
deceiving, and forcing users to modify, shut down, and uninstall the network products or services lawfully 
provided by other operators; and (3) maliciously making the network products or services incompatible with 
the Internet products or services lawfully provided by other operators. A serious violation of these provisions 
may result in a fine between 500,000 RMB and 3,000,000 RMB.  
95 See William Kovacic, "Competition Policy and State -owned Enterprises in China ", World Trade Review 
(2017) . WT/TPR/S/ 375/Rev.1  • China  
 
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  In addition to these administrative measures, parties injured by violations of anti -monopoly 
provisions may take their case to the courts. To create an environment more favourable to 
competition, on 1 June 2016, the State Council issued the Opinions on Est ablishing a Fair 
Competition Review System During the Development of Market -Oriented Systems (Guo Fa No. 34, 
2016). The Opinions lay out a comprehensive plan for the establishment and implementation of a 
fair competition review system. Under the Opinions, all policies and measures related to market 
economic activities shall go through fair competition review before being issued. The NDRC and 
the SAIC have been taking joint actions with relevant departments to promote the implementation 
of the Opinions.  
Box 3.1 Main regulations/ Guidelines dealing with competition policy issues  
General Regulations (issued by the State Council/the Anti -Monopoly Committee)  
• Guidelines of the Anti -Monopoly Committee of the State Council  for the Definition of Relevant Market 
(24 May 2009)  
Regulations on price -related monopoly (issued by the State Council/NDRC)  
• Rules on Prohibiting Below -Cost Dumping (SDPC Order [1999] No. 2)  
• Rules on Prohibiting Price Frauds (SDPC Order [2001] No. 15)  
• Rules on Prohibition of Price Monopoly (NDRC Order [2010] No. 7)  
• Rules on the Administrative Procedures for Law Enforcement against Price Fixing (NDRC Order [2010] 
No. 8)  
• Provisions of the State Council on Administrative Punishment of Price -Related Viola tions (State Council 
Decree [2010] No.  585) 
• Procedural Rules on Administrative Punishment in relation to Prices (NDRC Order [2013] No. 22)  
Regulations on non -price related monopoly (issued by  the State Council/SAIC)  
• Certain Provisions on Prohibiting Unfair Competition in Prize -Attached Sales (SAIC Order [1993] No. 19)  
• Certain Provisions on Prohibiting Anti -Competitive Practices in Public Utilities Sectors (SAIC Order [1993] 
No. 20)  
• Interim Provisions on Prohibiting Bid-Rigging (SAIC Order [1998] No. 82)  
• SAIC Procedural Provisions on Prohibiting Abuse of Administrative Power to Eliminate or Restrict 
Competition (SAIC Order [2009] No. 41)  
• SAIC Provisions on Investigating and Handling Cases Concerning Monopoly Agreeme nts and Abuse of 
Dominant Market Positions (SAIC Order [2009] No. 42)  
• SAIC Provisions on Prohibiting Monopoly Agreements (SAIC Order [2010] No. 53)  
• SAIC Provisions on Prohibiting Abuse of Dominant Market Positions (SAIC Order [2010] No. 54)  
• SAIC Provisi ons on the Suppression of Abuse of Administrative Power to Eliminate and Restrict 
Competitive Conduct (SAIC Order [2010] No. 55)  
• Provisions on Prohibiting Abuse of Intellectual Property Rights to Eliminate or Restrict Competition (SAIC 
Order [2015] No.  74) 
Regulations on mergers (issued by the State Council/MOFCOM)  
• Provisions of the State Council on Thresholds for Prior Notification of Concentrations of Undertakings 
(State Council Decree [2008] No.  529) 
• Measures for Calculating the Turnover for the Declaration of Business Concentration in the Financial 
Industry (MOFCOM, PBOC, CBRC, CSRC and CIRC Order [2009] No. 10)  
• Measures on the Notification of Concentration of Undertakings (MOFCOM Order [2009] No. 11 )  
• Measures on the Examination of Concentration of Undertakings (MOFCOM Order [2009] No. 12)  
• Interim Rules on Assessment of the Impact of Concentration of Undertakings on Competition (MOFCOM 
Announcement [2011] No. 55)  
• Interim Provisions on Investigation s of Unnotified Concentrations of Undertakings (MOFCOM Order 
[2011] No. 6)  
• Interim Provisions on Standards Applicable to Simple Cases of Concentration of Undertakings (MOFCOM 
Announcement [2014] No. 12)  
• Guiding Opinions on the Notification of Simple Cases  of Concentration of Undertakings (Trial) 
(18 April 2014)  
• Guiding Opinions on the Notification of Concentration of Undertakings (18 April 2014, amendment to the 
previous version issued on 5 January 2009)  
• Entrustment Agreement on Supervision (Model Text, no n-binding) (27 November 2015)  
• Rules on Imposing Additional Restrictive Conditions on Concentration of Undertakings (Trial) (MOFCOM 
Order [2014] No. 6)  
• Guiding Opinions on Regulating Notification Names for Cases of Concentration of Undertakings 
(14 Februar y 2017)  
Source:  Information provided by the authorities of China.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.3.4.1.2   Monopoly agreements  
3.151.   The AML and its implementing regulations96 prohibit six types of  horizontal agreements: 
namely, (1) fixing prices; (2) restricting the availability of products; (3) splitting the markets; 
(4) restricting the purchase or development of new technologies; (5) joint boycotting of 
transactions; and (6)  other agreements confirmed by the authorities; and three types of  vertical 
agreements: (1) fixing the prices of products resold to a third party; (2) restricting the lowest 
prices of products resold to a third party; and (3) other agreements confirmed by the authorities. 
The prohibition applies to written or verbal monopoly agreements and to concerted behaviour 
among firms without explicit written or verbal agreement. In determining monopolistic behaviours, 
the relevant market can be defined as a commodity  scope, a geographic scope or relevant 
technology market.97 Trade associations are prohibited from organizing or facilitating monopoly 
agreements among their members. The NDRC is responsible for price -related monopoly 
agreements, while the SAIC is responsib le for non -price-related monopoly agreements. The 
detailed implementation rules in this regard are contained in the NDRC Rules on Prohibition of 
Price Monopoly (NDRC Order [2010] No. 7) and the SAIC Provisions on Prohibiting Monopoly 
Agreements (SAIC Order  [2010] No. 53).  
3.152.   The AML provides for the application of administrative penalties for concluding and 
implementing a monopoly agreement, including: issuing an order to discontinue the violation; the 
confiscation of any unlawful gains; and the imposition of  a fine of between 1 and 10% of the sales 
achieved in the previous year. If the monopoly agreement has not yet been implemented, the fine 
may not  exceed  RMB 500,000. Mitigation or exemption from the penalty may be obtained in cases 
of voluntary collaborati on with the investigating authority or by providing material evidence during 
the investigation.  
3.3.4.1.3   Dominant market positions  
3.153.   The AML and its implementation rules prohibit firms holding dominant market positions 
from certain types of conduct by abusing their dominant position.  For instance, these firms are 
prohibited from : selling products at unreasonably high prices or purchasing products at 
unreasonably low prices; without valid reasons, selling products at prices below costs or applying 
differential prices among counterparts on an equal footing; without valid reasons, refusing to 
transact with counterparts, or tying the purchase or sale of products; preventing counterparts 
from accessing essential facilities on reasonable conditions; or imposing unreasonable  trading 
conditions. While the existence of a dominant market position is determined based on a series of 
factors such as market shares, competitiveness, financial strength and technical conditions, the 
conclusion that an undertaking holds a dominant marke t position may also be drawn where : the 
market share of one undertaking accounts for half of the total relevant market; the joint market 
share of two undertakings accounts for two thirds of the total; or the joint share of three 
undertakings accounts for t hree-fourth s of the total. All determinations are made on a case -by-
case basis.  
3.154.   The main implementation rules related to the abuse of dominant market position are 
contained in the NDRC Rules on Prohibition of Price Monopoly (NDRC Order [2010] No. 7) and t he 
SAIC Provisions on Prohibiting Abuse of Dominant Market Positions (SAIC Order [2010] No. 54). 
The NDRC's investigation rules are provided by its Rules on the Administrative Procedures for Law 
Enforcement against Price Fixing (NDRC Order [2010] No. 8) an d the SAIC's investigations rules 
are specified by its Provisions on Investigating and Handling Cases Concerning Monopoly 
Agreements and Abuse of Dominant Market Positions (SAIC Order [2009] No. 42) and the Rules 
for the Administrative Penalty Procedures o f Administrative Department for Industry and 
Commerce (SAIC Order [2007] No. 28).  
                                                
96 These i nclude the NDRC Provisions on Prohibition of Price Monopoly (NDRC Decree 2010/7), SAIC 
Provisions on the Prohibition of Monopoly Agreements (SAIC Decree  2010/53), SAIC Provisions on the 
Prohibition of Abuse of Dominant Market Positions (SAIC Decree  2010/54 ), and SAIC Provisions on Prohibiting 
the Abuse of Intellectual Property Rights to Preclude or Restrict Competition.  
97 See: Guidelines of the Anti -Monopoly Committee of the State Council for the Definition of Relevant 
Market, issued on 24 May 2009 . Viewed  at: 
http://www.lawinfochina.com/display.aspx?lib=law&id=7575&CGid . WT/TPR/S/ 375/Rev.1  • China  
 
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  3.155.   The 2015 SAIC Order No. 74 expressly prohibits the abuse of intellectual property rights 
(IPRs) to eliminate or restrict competition. In addition to prohibition of monopolis tic agreements 
through exercising IPRs98, the abuse of dominant market positions based on the IPRs is also 
banned under the Order. Specifically, it prohibits IPR holders with a dominant market position from 
engaging in any of the following practices that may eliminate or restrict competition: refusal to 
license essential IPRs; restricting transactions; tying; imposing restrictive conditions; 
discriminating  against  unjustified licensees of equal merit. The Order also requires that IPRs be 
compulsorily licen sed if they are considered as an essential facility according to the criteria set out 
in the Order. It forbids entering into abusive IP standard -setting agreements. "Rule of reason" or 
case-by-case analysis is generally used in investigations.  
3.156.   Firms found violating relevant provisions may be subject to the confiscation of any 
unlawful gains and to fines of between 1 and 10% of the sales achieved in the previous year.  
3.3.4.1.4   Mergers and acquisitions  
3.157.   According to the AML, all concentrations above certain thresholds must be notified to 
MOFCOM for approval before any activity takes place.99 Concentrations may take the form of: 
(a) mergers; (b)  acquisition  of shares or assets giving control over other business operators; 
(c) control obtained by business operators over ot her operators by way of contract etc ., or having 
decisive influence over other operators. In the case of a merger, each participant to it must submit 
a notification.  
3.158.   The thresholds were established by the State Council Provisions (State Council Decree 
[2008] No. 529), and reaffirmed by the 2014 Guiding Opinions on the Application for 
Concentration of Business Operators. They are: (a) a combined worldwide turnover of all 
concerned firms exceeding  RMB 10 billion in the year preceding the merger, and an indivi dual 
turnover in mainland China of at least two of the firms exceeding  RMB 400 million; or (b)  a 
combined turnover in mainland China of all concerned firms exceed ing RMB 2 billion in the year 
preceding the merger, and an individual turnover in China of at least two operators exceed ing 
RMB 400 million. The MOFCOM Measures on the Notification of Concentration of Undertakings 
(MOFCOM Order [2009] No. 11) further provide that multiple -concentration activities between the 
same entities within a two -year period b e considered as a single transaction and that the value be 
the sum of the turnover from the transactions. In this case, even if each individual action is below 
the threshold, if the total transaction turnover is above the threshold, the concentration activ ities 
must be notified for approval. This is also reaffirmed by the 2014 Guiding Opinions. The methods 
for calculating the turnover in the financial industry were jointly issued by MOFCOM and relevant 
supervision commissions in 2009.100  
3.159.   Under the 2008 State  Council Provisions and the Interim Provisions on Investigation of 
Unnotified Concentrations of  Undertakings (MOFCOM Order [2011] No. 6), MOFCOM may initiate 
investigations to determine whether non -notified concentration  activities should have been notifie d 
and made subject to an anti -trust review. Parties to the concentration found at fault may face a 
fine of up to RMB 500,000 if the investigation finds that the non -notified concentration activity 
would have required clearance through anti -trust review. MO FCOM may also order that the 
concentration be reversed.  
3.160.   The notification documents should include the notification itself, an explanation of the 
impact of the concentration on competition in the relevant market, the concentration agreement, 
the financial r eport of each of the concerned firms in the previous year, and other documents 
specified by the authorities. After receipt of the notification and supporting materials, MOFCOM 
conducts a preliminary review of the notification and makes a decision, within 3 0 days, on whether 
                                                
98 A safe harbour based on market share is provided by IPR holders. For competing undertakings, the 
threshold is : 20% of the market or at least four substitutable technologies are available in the market; and for 
non-competing undertakings, it is: 30% of the market or at least two substitutable technologies are available 
in the market.  
99 Apart from MOFCOM, the SAIC and sectoral regulators may be involved in merger reviews.  
100 The methods are contained in the Measures for Calculating the Turnover for the Declaration of 
Business Concentration in the Financial Industry (MOFCOM, PBOC, CBRC, CSRC and CIRC Order [2009] 
No. 10). WT/TPR/S/ 375/Rev.1  • China  
 
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  a further review is needed. Relevant firms shall be informed of the result of preliminary review in 
writing. Where MOFCOM decides to carry out further review, it should be concluded within 90 days 
from the date when such a decision is ta ken. MOFCOM may approve the concentration, reject it, or 
approve it with conditions. The final decision shall also be sent to the concerned firms in writing. In 
cases where it is decided not to approve the proposed concentration, the reasons for such decis ion 
must be provided to relevant parties. Under some circumstances, MOFCOM may extend the period 
for the review. However, the extension period must not exceed 60 days.  
3.161.   According to the AML, MOFCOM shall take into consideration the following factors in the 
review: (a) the market share of the business operators involved  in the relevant market and their 
controlling power over that market; (b) the degree of market concentration in the relevant 
market; (c) the effect of the concentration on market access and tec hnological progress; (d) the 
influence of the concentration on consumers and other business operators; (e)  the effect of the 
concentration on national economic development; and (f) other elements that may have an effect 
on market competition. The authoriti es have noted that the  same criteria are applied to all 
businesses, including SOEs.  
3.162.   To facilitate notification, MOFCOM issued swift review procedures for cases which are 
defined as "simple cases". The relevant rules are contained in the Interim Provisions  on Standards 
Applicable to Simple Cases of Concentration of Undertakings (MOFCOM Announcement [2014] 
No. 12) and the Guiding Opinions on the Notification of Simple Cases of Concentration of 
Undertakings (Trial) (18 April 2014).101 The simple cases shall be published on the website of 
MOFCOM for ten days for public comments. According to the authorities, simple cases require 
simpler documentation and less consultation resulting in higher efficiency and shorter timelines. 
The authorities stated that in 2017, t he average initiation period for a concentrated anti -monopoly 
review of operators was 29.1 days and the average settlement period was 32.2 days; a decrease 
of 14% and 4.7% respectively since 2016. Furthermore, among these the settlement rate during 
the pre liminary review stage for simple cases was 97.8% in 2017.  
3.163.   The MOFCOM Decree No. 6 of 2014 stipulates that MOFCOM may impose additional 
restrictive conditions to alleviate the adverse impact of a concentration on competition. The 
Provisions allow for three  kinds of restrictive conditions to be applied: (a) structural conditions 
requiring the disinvestment  of tangible assets, IPRs and other intangible assets, or relevant rights 
and interests, etc.; (b) conditions requiring certain actions to be taken, such a s those requiring the 
business operators participating in a concentration transaction to make available their respective 
networks, platforms and other infrastructure, license key technologies (including patents, 
proprietary technologies or other IPRs), ter minate exclusive agreements, etc.; and 
(c) comprehensive conditions that combine structural conditions with conditions requiring actions 
to be taken.  
3.164.   The AML also provides that, in cases of acquisition of a domestic enterprise by a foreign 
investor or when  a foreign investor participates in concentrations by other means, a national 
security review must also be conducted if the authorities consider that the acquisition involves 
state security. The authorities note that review of the concentration of undertak ings and the 
national security review are two different review systems. MOFCOM is responsible for 
concentration review, while the national security authorities take care of factors related to national 
security.  
                                                
101 A concentration shall be considered as a simple case when: (a) in the same relevant market, the 
total market share of all business operators participating in the concentration is less than 15%; (b) an 
upstream -downstream relationship exists among th e business operators participating in the concentration, and 
the market share of such business operators in both the upstream and the downstream markets is less than 
25%; (c) the business operators participating in the concentration are neither in the same  relevant market nor  
do they  have any upstream -downstream relationship, and their market share in each market relevant to the 
concentration is less than 25%; (d) the business operators participating in the concentration intend to establish 
a joint venture abroad, which will not engage in any economic activities within the territory of China; (e) the 
business operators participating in the concentration intend to acquire the equity or assets of an overseas 
enterprise which does not engage in any economic act ivities within the territory of China; or (f) a joint venture 
jointly controlled by two or more business operators will be controlled by one or more of the existing business 
operators after the concentration.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.3.4.1.5   Administrative monopoly  
3.165.   The AML generally p rohibits administrative monopolies, including designated dealing, 
obstruction of free circulation of products across regions, restriction in tenders, investment or 
branch establishment restriction, forcing undertakings to pursue monopolistic conduct, and i ssuing 
rules with content excluding or restricting competition. The 2010 SAIC Order No. 55 further 
elaborates on the prohibitions defined in the AML. The NDRC Provisions on Prohibition of Price 
Monopoly contain similar provisions with a focus on price -related violations. Under the provisions 
of AML, remedies against administrative monopoly consist of cease -and-desist orders by the 
higher authority, together with disciplinary penalties for the officials who have direct responsibility 
or others directly conce rned. Furthermore, anti -monopoly law enforcement authorities can provide 
suggestions to the higher authority based on law. Administrative remedies to this end are 
prescribed in the 2011 SAIC Orders No. 53 (SAIC Provisions on Prohibiting Monopoly Agreements ) 
and No.  54 (SAIC Provisions on Prohibiting Abuse of Dominant Market Positions).  
3.166.   Some commentators consider that administrative monopoly is still a problem in China.102 It 
is believed that t he Central Government may intervene in resources allocation and ma rket entry 
while local governments can prohibit the sale of non -local products in order to protect local 
industries which contribute mostly to local revenue. However, the Chinese authorities disagree 
with this viewpoint.  
3.3.4.1.6   Enforcement  
3.167.   Since the AML entered i nto force in August 2008, the NDRC and the competent provincial 
anti-price-monopoly enforcement authorities have dealt with 150 price monopoly cases, which 
resulted in the imposition of fines amounting to  approximately RMB 11 billion. Between 
January  2016 and December 2017, the authorities dealt with 44 anti -monopoly cases and imposed 
fines of nearly RMB 1 billion. These cases concern the following industries: transportation, 
medicine and health, education, international maritime transportation, automobile and auto parts, 
tourism, express delivery, construction, etc. The types of monopoly include both monopoly 
agreements and abuse of dominant market position. The investigated undertakings include SOEs, 
foreign -invested enterprises, private companies and indu strial associations.  
3.168.   From January 2016 to June 2017, the SAIC and provincial AICs investigated 33 alleged 
monopoly cases and concluded 23 cases. They involved areas such as water supply, electricity, gas 
supply, tobacco, salt, telecommunication, banking, insurance, medicines and health care, 
broadcasting and television, port and maritime transportation, sale of petroleum, furniture, 
fireworks, auditing services, cryptographic devices, and food packing materials, as well as a 
variety of business entities an d related industrial associations. The administrative penalties applied 
to the concluded cases are available on the SAIC's website.  
3.169.   From July 2016 to June 2017, MOFCOM received a total of 386 applications for the 
approval of the concentration of undertakings, accepted 355  applications  and concluded 359 cases 
(including cases carried over from previous years). Among the closed cases, 356 were 
unconditionally approved, accounting for about 99%; three were approved with reservations, 
accounting for 1 %; and none was denied. Decisions on the reviews are published online. MOFCOM 
also investigated cases where suspected concentrations had not been notified and imposed 
penalties in seven of them. MOFCOM also supervised the implementation of twenty cases tha t had 
previously been approved with reservation.  
3.170.   Additionally, the SAIC has created industrial, commercial as well as market supervision 
departments so as to carry out special law enforcement campaigns to deal with competition 
restriction and monopoly in the public utilities sectors in a centralized manner, with key areas 
including inter alia:  the supply of water, power and gas, public transportation, and the funeral 
industry. The campaigns have dealt with illegal acts of unauthorized charging, forced tran saction, 
forced service, adding unreasonable trading conditions and setting industrial barriers to exclude 
competition in the public utilities sectors. From 2016 to 2017, a total of 1,510 cases concerning 
unfair competition in the category of competition r estriction were dealt with.  
                                                
102 See William Kovacic, "Competition Policy and  State -owned Enterprises in China" , World Trade Review 
(2017).  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.3.4.1.7   International cooperation  
3.171.   China participates in competition policy -related activities in the context of APEC, the OECD, 
and UNCTAD. It continues international cooperation on competition policy issues with the 
competition authori ties of other countries or groups of countries. The authorities stated that since 
2016, China has signed a memorandum of understanding on bilateral anti -monopoly cooperation 
with the United Kingdom, Brazil, and Spain. Additionally, China has also signed th e Memorand a of 
Understanding on Competition Laws and Policy Cooperation with BRICS countries.  In the China -
Korea FTA, the two countries agreed to carry out comprehensive cooperation and coordination in 
the implementation of competition policies. The China -Australia FTA recognizes the importance of 
competition policy and agrees to strengthen technical cooperation in this regard. The China -
Iceland and China -Switzerland FTAs also agree to conduct necessary consultations, information 
sharing and technical coope ration in competition policy enforcement. According to the authorities, 
in recent years the SAIC has also participated in negotiations between China, Japan and Korea, 
between China and the Eurasian Economic Union, between China and Singapore (Upgrading), 
between China and New Zealand (Upgrading), between China and Chile, between China and Peru 
(Upgrading), between China and Norway, and the China -EU Investment Agreement. China is not a 
member of the International Competition Network and, as was reported in t he previous Review, 
there is no clear timeline for China to consider joining the network.  
3.3.4.2   Price controls  
3.172.   The Price Law of the Peoples Republic of China allows for government -set or guided prices 
for a small number of commodities or services.103 Article 18 of the Price Law authorizes the 
competent authorities to carry out, when necessary,  price controls over: (i) products that have 
significant bearing on the national economy and people's livelihoods; (ii) a limited number of rare 
products; (iii) products of natural monopoly; (iv) key public utilities; and (v) key public services. 
Laws and regulations on specific industrial/service sectors may also contain provisions on price 
administration in their sectors, which reaffirm that relevant business op erators or service providers 
should follow the principles and rules set out by the Price Law. These laws and regulations include, 
among others, the Pharmaceutical Administration Law, the Railway Law, the Postal Law, the 
Compulsory Education Law, the Notary  Law, the Decision of the Standing Committee of the 
National People's Congress on the Administration of Judicial Authentication, the Civil Aviation Law 
and the Commercial Bank Law. Laws and regulations related to price controls are summarized in 
Table 3.16 . 
Table 3.16 Department rules related to price controls, 2017  
Laws/regulations  
Central Government Pricing Catalogue  NDRC Order [2015] No. 29  
Regulations on Government Pricing  NDRC Order [2017] No. 7  
Measures on Monitoring and Auditing the Costs in 
Government Pricing  NDRC Order [2017] No. 8  
Measures on Hearings in Government Pricing  NDRC Order [2008] No. 2  
Regulations on Prohibiting Low Price Dumping  State Planning Commission Ordera [1999] No.  2 
Regulations on Prohibiting Price Fraud  State Planning Commission Order [2001] No.  15 
Regulations on Implementing Marked Prices on 
Commodities and Services  State Planning Commission [2000] No. 8  
Administrative Measures on the Criteria of Levies on 
Pollutant Discharge (Nullified on 1  January  2018)  Order of the State Planning Commission, Ministry of 
Finance, Ministry of Environmental Protection, and 
State Economic and Trade Commission [2003] No. 31  
Provisions on Price Monitoring  NDRC Order [2003] No. 1  
Administrative Measures on the Price of Water 
Supplied by Conservancy Projects  NDRC and the Ministry of Water Resources Order 
[2003] No. 4  
a The State Planning Commission is the predecessor of the National Development and Reform 
Commission and was replac ed by the latter in 2008 in the internal reorganization of the State 
Council.  
Source:  Information provided by the authorities of China.  
                                                
103 MOFCOM online information. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300046121.shtml  
[11.04.2018] . WT/TPR/S/ 375/Rev.1  • China  
 
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  3.173.   Price controls take two forms: "government -set prices" or "government -guided prices". 
Government -set prices are fixed pr ices set by the competent authorities, while government -guided 
prices  are prices set by business operators within a range of prices set by the competent pricing 
departments or other related government departments, within which the real price is allowed to 
fluctuate.  The commodities and services subject to price controls are listed in a Central 
Government Pricing Catalogue and in Local Government Pricing Catalogues compiled by the 
provinces, autonomous regions and municipalities, and approved by the State Co uncil. The current 
Central Government Pricing Catalogue was issued by the NDRC on 8 August 2015 (NDRC 
Order  [2015] No. 29) and came into effect on 1  January  2016.104  
3.174.   The determination of government -set prices or government -guided prices varies in 
accordance with the type of product or service. The criteria used in their formulation include: the 
market situation, average social costs, as well as economic, regional and s easonal factors, and 
development and social needs. Adjustments to the prices of concerned products are announced by 
the State Council or relevant local authorities.  
3.175.   Following the liberalization of price controls over explosive materials, military goods, 
tobacco leaves, certain drugs, some competitive services in railway transportation, certain postal 
services, some construction projects, the price of common salt and the charges for authenticating 
citizens' identities have been removed from the Central Gover nment Pricing Catalogue and are no 
longer subject to government pricing since January 2017. Currently, products subject to 
government -set/guided prices include electricity, water supplied by conservancy projects, refined 
oil products, natural gas, special medicine, important postal business charge s, basic services of 
commercial banks, railway transportation, passenger fee rates of domestic civil air routes and the 
domestic section of international civil air routes (except for competitive areas), monopolisti c port 
services, etc. Currently less than 3% of the economy is covered by price controls (Table  3.17).  
Table 3.17 Products/ Services subject to price controls by the Central Government, 2017  
Product  Coverage/ rationale  
Government -set prices  
Electricity   Coverage of government pricing includes the prices for power transmission and 
distribution of the power grids at the provincial level or above and feed -in and 
users' sales tariffs when there is no market competition.  
Rationale: public utilities and natural monopoly. The authorities expect these 
prices to be gradually liberalized. Currently, 25% of electricity power is provided 
at prices determined by the market.  
Water supplied by 
conservancy projects  The price of water supplied by conservancy projects directly under the Central 
Government or cross -province (cross -district or cross -city) conservancy projects is 
set by the Government.  
Rationale: public utilities and natural monopoly.  
Commercial bank basic 
services and credit 
enquiry service charges, 
bank card transaction 
fees  Charges for remittance transfers, cash remittances, cash withdrawals, notes and 
other basic services of commercial banks are set by the Central Government; bank 
card transaction and credit enquiry service fees are subject to prices set or guided 
by the Government.  
Rationale: lack of effective competition in these types of business which are of a 
monopolistic nature.  
Charges for 
authenticating academic 
credentials , academic 
degree certificates  The charges for authenticating academic credentials and academic degree 
certificates are set by the Government.  
Rationale: public services.  
Important postal business 
charges  The prices of letter mailing, mailing of packages  with a single weight of no more 
than 10  kg, postal remittance and postal distribution of newspapers and 
periodicals are set by the Government.  
Rationale: the postal business is closely linked to people's livelihoods and is of a 
public service nature; and some postal enterprises conduct exclusive business 
operations.  
Special medicines and 
blood  The maximum ex -factory price and the maximum sales price of narcotic drugs and 
the first category of psychotropic drugs and the price of clinical blood supplied by 
blood stations are set by the Government.  
Rationale: the business is economically important, affects people's livelihoods and 
public interests, and lacks full market competition.  
                                                
 104 The Central Government Pricing Catalogue (in Chinese). Viewed at: 
http://jgs.ndrc.gov.cn/zcfg/201510/W020151021286335139043.pdf  [05.04.2018] . WT/TPR/S/ 375/Rev.1  • China  
 
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  Product  Coverage/ rationale  
Government -guided prices  
Refined oil products  The retail price of refined oil products is guided by the Government. It is 
determined based on the price of the crude oil in the international market and a 
processing fee, taxes and transportation costs in China.  
Rationale: lack of market competition.  
Natural gas  The gate station price of some types of onshore natural gas in all provinces and 
the price for cross -province long -distance pipeline transportation are guided or set 
by the Central Government. The distribution price and sale price of pipeline ga s 
are regulated by local governments and are generally subject to government 
pricing.  
Rationale: natural gas is of vital importance to the public and that the natural gas 
system needs to be reformed comprehensively before prices are liberalized.  
Railway t ransportation 
prices  Railway passenger fares and cargo and baggage transportation prices are mainly 
guided or set by the Government (except when there is competition).  
Rationale: public utilities and natural monopoly.  
Monopolistic port service 
fees The ch arges of the monopolistic services at fishing ports and main ports along the 
coast, the main trunk of Yangtze River, and all the other ports open to vessels of 
foreign nationality are subject to prices guided by the Government.  
Rationale: public utilities and natural monopoly.  
Passenger fee rates of 
domestic civil air routes 
and the domestic section 
of international civil air 
routes  The passenger fares of the domestic civil air routes are subject to prices guided by 
the Government (except for competitive areas). Airlines are permitted to raise the 
fare by no more than 25% of a benchmark fare, but there is no limit for the 
bottom fare.   
Rationale: lack of competition and natural monopoly of airports and related 
services.  
Source:  Information provided by the authorities of China; NDRC online information; and the 2016 Catalogue 
of Central Determined Prices (NDRC Order [2015] No. 29).  
3.176.   Products and services subject to prices set/guided by local governments remained 
unchanged during the review period (Table  3.18). The Government also maintains its minimum 
procurement price policy for unhusked rice and wheat in their main production areas.  
Table 3.18 Products/S ervices subject to price controls by local governments, 2017  
Product  Type of control/rationale  Regulation  
Environment 
protection charges  The compensated use and trading of pollutant 
discharge right and hazardous wastes disposal 
charges are subject to local government pricing 
regulation.  
Rationale: public utilities.  Measures for the Administration 
of Collection Standards for 
Pollutant Disch arge Feesa 
Urban household 
garbage disposal 
charges  Urban household waste charges are subject to local 
government pricing regulation.  
Rationale: public utilities.  Circular on Implementing Urban 
Household Garbage Disposal 
Charges and Promoting Garbage 
Disposal Industrializationb 
Sewage disposal 
charges  Sewage disposal charges are subject to local 
government pricing regulation.  
Rationale: public utilities.  Measures for the Administration 
of Collection Standards for 
Pollutant Discharge Fees  
Real estate pr ices 
and charges of 
related services  Economical housing, low -price house rental and 
property service charges are subject to local 
government -guided prices.  
Rationale: public service.  Administrative Measures on 
Economical Housingc 
Administrative Measures o n Low -
price House Rentald 
Entrance to 
sightseeing sites  Prices are subject to regulation of local government 
pricing or local government -guided prices.  
Rationale: public service.  Tourism Lawe 
a National Development and Plan Committee, Ministry of Finance, State Administration of Environment 
Protection, National Economy and Trade Committee Decree No. 31, 28 February, 2003. Viewed at: 
http://www.chinalaw. gov.cn/ .  
b Ji Jia Ge [2002] No. 872, 7 June 2002. Viewed at: http://www.mohurd.gov.cn/ . 
c Jian Zhu Fang [2007] No. 258, 19 November 2007. Viewed at: http://www.gov.cn/ .  
d Fa Gai  Jia Ge [2005] No. 405, 14 March 2005. Viewed at: http://www.sdpc.gov.cn/ .  
e Chairman Decree No. 3, 25 April 2013. Viewed at: http://www.gov.cn/ .  
Source:  Information provided by t he authorities of China.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.3.5   State trading, state -owned enterprises, and privatization  
3.177.   China provided its last full notification on state  trading enterprises (STEs) in 2015.105 The 
authorities indicate that a new notification is under preparation. The legislatio n regulating state 
trading has not changed since 2014, nor have the reasons for maintaining this practice or the 
products subject to it. According to the authorities, state trading remains in place to: ensure a 
stable supply and price of the products conce rned; safeguard food security; and protect 
exhaustible and non -recyclable natural resources, and the environment.  
3.178.   STEs in China have the exclusive right to import or export the following products: grain, 
sugar, tobacco, rice, corn, cotton, coal, crude oil,  processed oil, chemical fertilizers, tungsten, 
antimony and silver ( Section 4.2). The authorities indicate that state trading enterprises operate 
following the market mechanism, with no government interference.  
3.179.   During the period under review, China repli ed to the questions asked in the Working Party 
on State  Trading Enterprises. Questions were asked by Australia, the European Union , and the 
United States.106 In the Working Party, a Member submitted a counter -notification on Chinese 
STEs in December  2017, listing seven companies that it thinks should be considered as STEs.107  
3.180.   In China's economy, public ownership coexists with diverse forms of private ownership.  
State participation varies from whol ly state-owned enterprises and majority state -ownership to the 
State acting as another shareholder among others. The private sector is dominant in industries 
such as clothing, food, and assembly for export, while compan ies are predominantly state -owned 
in sectors such as energy; utilities; and transport, financial, telecom, education, and health care 
services. SOEs are divided into commercial entities and public welfare entities.  
3.181.   The number of state -owned industrial ente rprises has roughly remained constant during 
past years, whereas their share in total assets and profits has decreased (Table 3.19). SOE s and 
their subsidiaries with mixed ownership also play an important role on the stock markets. By 
end-2016, the number of SOE subsidiaries with mixed ownership accounted for 61% of total assets 
of all companies listed.  
3.182.   The State -Owned Asset Supervision and Administration (SASAC), as a representative of 
the Government, is in charge of contributing capital to and appointing  top managers in SOEs under 
its management. At end 2017 , the number of SOEs under SASAC's authority totalled 98 (down 
from 106 at end -2015), and 395 companies held by them were listed on national or international 
stock exchanges. The decline in the number of enterprises under SASAC's supervision is due to the 
ongoing restructuring of SOEs. As at mid -2017, the companies controlled by SASAC had some 11 
million employees; their total assets amounted to some RMB 50 trillion in 2016. No information 
was available  on the total amount of capital injections.  
3.183.   Of the ten largest SOEs, five are under SASAC's supervision (Table 3.20). The State 
remains a majority shareholder in all but one of the 100 largest publicly listed Chinese companies.  
3.184.   During the period under revi ew, SOE reforms have continued based on the Guiding Opinion 
on Deepening the Reform of SOEs issued by the Central Government and Sta te Council 
in August  2015.108 Pursuant to this document, the Government shall promote a shareholding 
system for commercial SOE s and encourage private investment, while at the same time 
maintaining the leadership in SOE governance. The Guiding Opinion calls for a policy environment 
                                                
105 WTO documents G/STR/N/10 -15/CHN, 19 October 2015, and G/STR/N/10 -15/CHN/Corr.1, 
2 December 2016. The notifying period is 2003 -14. 
106 WTO documents G/STR/Q1/CHN/3 -8, 10 March 2016 -16 March 2017.  
107 WTO documents G/STR/Q1/CHN/9 and G/C/W/749, 13 December 2017. According to the document, 
the following companies should be listed as STEs: China National Tobacco Import & Export Co. (later renamed 
China Tobacco International Inc.), China National Offshore Oil Corporation, Sinochem Group, China 
International Petroleum and Chemicals Co. Ltd., China N ational Agricultural Means of Production Group Co., 
Chinatex Corporation, and Xinjiang Yin Long International Agriculture Cooperation Co. Ltd.  
108 The Central Government and State Council, the Guiding Opinion on Deepening the Reform of SOEs, 
13 September 201 5. Viewed at: http://www.gov.cn/zhengce/2015 -09/13/content_2930440.htm .  WT/TPR/S/ 375/Rev.1  • China  
 
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  conducive to SOE reforms without, however, providing details regarding  how this is to be 
achieved.  
Table 3.19 SOEs in China's economy, 2009 -16 
Sector  2011  2012  2013  2014  2015  2016  
Industrial sectora       
Number of total enterprises  325,609  369,813  377,888  377,888  383,148  378,599  
Number of SOEsb 17,052  18,574  18,808  18,808  19,273  19,022  
% of SOEs  5.2 5.0 5.0 5.0 5.0 5.0 
Total assets (billion RMB)   67,580  87,075  95,678  95,678  102,340  108,587  
Total assets of SOEsb (billion RMB)   28,167  34,399  37,131  37,131  39,740  41,770  
% of SOEs  41.7 39.5 38.8 38.8 38.8 38.5 
Total profits (billion RMB)    6,140  6,838  6,815  6,815  6,619  7,192  
Total profits of SOEsb (billion RMB)    1,646  1,592  1,451  1,451  1,142  1,232  
% of SOEs   26.8  23.3 21.3 21.3 17.2 17.1 
Construction        
Number of enterprises  72,280  78,919  81,141  81,141  80,911  .. 
Number of SOEs  4,642  3,847  3,753  3,753  3,603  .. 
% of SOEs  6.4 4.9 4.6 4.6 4.5 .. 
Gross output  value (billion RMB)   11,646  15,931  17,671  17,671  18,076  .. 
Gross output value of SOEs (billion RMB)    2,044  2,616  2,207  2,207  2,177  .. 
% of SOEs   17.5  16.4 12.5 12.5 12.0 .. 
.. Not available.  
a Including mining, manufacturing, and production and supply of electricity, gas, and water.   
b Numbers referring to SOEs including state -holding enterprises.  
Source:  National Bureau of Statistics China, Statistical Yearbook (various issues).  
Table 3.20 China's ten largest state -owned enterprises, 2016  
Company name  Revenue (billion US$)  
1. China National Petroleuma 263 
2. Industrial and Commercial Bank of China  148 
3. China State Construction Engineeringa 144 
4. China Construction Bank  135 
5. Agricultural Bank of China  117 
6. Bank of China  114 
7. China Mobile Communicationsa 107 
8. China Life Insurance  105 
9. China Railway Engineeringa 97 
10. China Railway Constructiona 95 
a Under SASAC.  
Source:  Fortune Global 500.  
3.185.   In 2017, NDRC issued Opinions on the Key Work of Deepening Economic System 
Reform.109 It stipulated that China would keep a system of corporate, shareholding and mixed 
ownership, promote the M&A of the central enterprises, but also slim down supersized SOEs, so as 
to improve the efficiency and quality of SOEs. Furthermore, China Securities  Regulatory 
Commission also expresses its support to the M&A of state -owned enterprises. In 2016, 678 M&A 
deals were concluded among state -owned listed companies, with a transaction volume of 
RMB 1.02 trillion, accounting for 43% of total M&A volume.110  
3.186.   The authorities indicate that SOEs are subject to the same tax rates as private companies. 
The authorities also indicate that SOEs do not have preferential access to certain inputs such as 
electricity, land, raw materials, or credit.  
                                                
109 Opinions on the Key Work of Deepening Economic System Reform in 2017 (in Chinese), Guo Fa 
[2017] No. 27, 13 April 2017. Viewed at: http://www.gov.cn/zhengce/content/2017 -
04/18/content_5186856.htm  [10.04.2018] . 
110 Xinlang online news, 15 August 2017. Viewed at: http://news.sina.com.cn/c/2017 -08-15/doc -
ifyixipt1836540.shtml .  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.187.   Many SOEs continue to rec eive financial support. In 2016, around 3,000 companies listed 
in the Shanghai and the Shenzhen Stock Exchanges received government support, totalling 
RMB 123.215 billon111 (up from RMB 89.421 billon in 2014). Seven of the top 10 companies that 
received supp ort in 2016 were SOEs, compared to nine in 2014  (Table 3.21). Companies that 
received financial support  are mainly from chemical, automobile, excavation, and steel industries. 
Companies in the car manufacturing industry received an increasing amount of sup port, while the 
amount received by companies in steel industries decreased.  
Table 3.21 Top 10 companies listed in SSE/SZSE that received public support in 2016  
 Company  Government grant  
(RMB million)  Industry  State -owned  
1 Petro China  5,779  Petroleum  Yes  
2 China Petroleum & Chemical Corp.  3,987  Petroleum  Yes  
3 SAIC Motor Corp. Ltd  2,547  Automobile  Yes 
4 BOE Technology Group Co Ltd  1,915  Semiconductor  Yes 
5 Midea Group  1,330  Household appliances  No  
6 CRRC Corp. Ltd  1,325  Transportation equipment  Yes 
7 TCL Corp.  1,112  Electronics  No  
8 Offshore Oil Engineering Corp. Ltd  1,060  Excavation  Yes 
9 Yili Industrial Group Ltd  1,058  Food and beverage  Yes  
10 Focus Media  1,037  Information service  No  
Source:  Collected by the WTO Secretariat based on various sources (Caixin Media, iFinD database) which 
base their information on annual reports and financial statements of the concerned companies.  
3.188.   The China Structural Reform Fund, set up by ten SOEs in Se ptember 2016, aims at 
optimizing the management of central government enterprises, through the  financing of SOE 
restructuring, overseas M&A, and capacity adjustment. With this Fund, China expects to enhance 
industrial integration, and improve the performan ce and efficiency of capital operations. The paid -
in capital of the Fund was RMB 65 billion in January 2018.  
3.189.   The Anti -Monopoly Law (AML) allows SOEs to exercise exclusive activities in sectors 
considered vital for China's economy and to safeguard national  security ( Section 3. 3.4). Exclusive 
production and sales rights may also be granted in accordance with Article 7 of the AML.  
3.3.6   Government procurement  
3.3.6.1   Overview  
3.190.   According to data provided by the Chinese authorities, the total value of  government 
procurement in China was RMB 2.11 trillion in 2015 and RMB 3.11 trillion in 2016 (the latest year 
for which data were made available), accounting  for 3.1% and 4.2% of GDP, respectively 
(Table  3.22) . This relatively low ratio may reflect the fact that important infrast ructure projects 
implemented by SOEs are not covered by the Government Procurement Law. The majority of 
procurement takes place at the sub -central government level. Procurement by local entities 
accounted for 95% of China's total value of government procur ement in 2016; in the same year, 
procurement by the Central Government accounted for 5%.112  
Table 3.22 Government procurement by type of purchase, 2014 -16 
(RMB billion)  
 2014  2015  2016  
TOTAL  1,730.5  2,107.1  3,109.0  
Goods  523.0  657.1  724 
Central government entities  30.2 75.8 97.3 
Local government entities  492.8  581.3  626.7  
Construction and engineering services  1,014.1  1,115.5  1,363.1  
Central government entities  24.3 26.1 35.4 
                                                
111 Caixin online information, 2 May 2017. Viewed at: http://datane ws.caixin.com/2017 -05-
02/101085363.html . 
112 The top 10 local procuring entities are, among the 31 provincial -level governments that report 
procurement data to the Central Government, the provinces/municipalities of Guangdong, Jiangsu, Shandong, 
Zhejiang, He nan, Guangxi, Anhui, Chongqing, Shanghai and Jiangxi.  WT/TPR/S/ 375/Rev.1  • China  
 
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   2014  2015  2016  
Local government entities  989.8  1,089.4  1,327.7  
Other services  193.4  334.4  1,021.9  
Central government entities  8.4 14.0 22.8 
Local government entities  185.0  320.4  999.1  
Total procurement by the Central Government  62.9 115.9  155.5  
Total procurement by local government entities  1,667.6  1,991.1  2,935.5  
Source:  Information provided by the authorities of China.  
3.3.6.2   Legal and institutional framework  
3.191.   There have been no major changes to China's legislative and regulatory regime concerning 
government procurement  since its previous review. The Government Procurement Law (last 
amended in 2014113) and its Implement ing Regulation s (enacted on 1 March 2015) remain the 
primary legislation regulat ing government procurement  activities in China. The legislation sets out 
the general principles of government procurement, roles of parties involved in procurement 
activities, procurement methods  and procedures, contracting rules, the bid challenge mechanism, 
procurement supervisio n and monitoring duties of relevant government bodies, and the legal 
liability. Procurements either listed in the Centralized Procurement Catalogue or valued above the 
threshold114 are subject to the Law. The Law and its related regulation s are applied to st ate 
organs, public institutions and social organizations financed through regular fiscal funds; 
consequently, procurements by SOEs are not covered. The Law also provides that the following are 
not subject to its provisions : procurement conducted with loans  from foreign governments or 
international organizations ; emergency procurement for natural disasters or procurement related 
to national security ; procurement activities under the agreement reached between the lender 
and/or fund provider that ha ve no speci fic requirement for procurement ; and military 
procurement.  
3.192.   The Tendering and Bidding Law (implemented on 1  January 2000, three years prior to  the 
introduction of the Government Procurement Law) is, de facto , the law governing procurement by 
SOEs. Specifica lly, it provides that all construction works below the threshold value (including big 
infrastructure projects, public utility projects, projects fully or partially financed by the State or the 
State's financing programme, and projects financed by internati onal organizations and foreign 
governments by means of loans and aided funds ) should be subject to the Tendering and Bidding 
Law. The Implement ing Regulations of t he Government Procurement Law reaffirm that where 
tendering is used in the procurement of con struction works, the Tendering and Bidding Law shall 
apply with regard to tendering procedures. The Implemen ting Regulation s of the Tendering and 
Bidding Law, which came into effect on 1 February 2012, are currently under amendment with a 
view to facilitat ing the use of e -tendering and reflecting other developments in tendering practices. 
Proposed amendments were published by the NDRC for public comments on 29 August 2017.115 
                                                
113 The 2014 amendment cancelled the qualification accreditation system for government procurement 
agencies. A new registration system was established to replace the previous accreditation system, which 
simplifies the access requirements in this sector.  
114 There are no uniform thresholds across the country. The State Council publishes the thresholds for 
procurement at the central government level to which the Government Procurement Law shall apply, while 
different provinces, municipalities and autonomous regions promulgate their own thresholds. For example, for 
2017 and 2018, the thresholds at the central government level, issued by the General Office of the State 
Council on 21 December 2016, are RMB 1 milli on for goods and services, and RMB 1.2 million for construction 
works. The threshold for 2017, issued by the Tianjin Municipality Government on 30 August 2016, is 
RMB 200,000 thousand  for all goods, services and construction services. The threshold for decentralized 
procurement in 2017, issued by the Tianjin Municipality Government on 30 August 2016, is RMB 200,000 for all 
goods, services and construction works.  
115 The main proposed amendments to the Tendering and Bidding Law and its Implement ing Regulat ions 
include, among others: (1) encouraging the use of electronic means in tendering and bidding; and recognizing 
the equal legal validity of electronic documents and data with that of paper documents; (2) allowing inclusion 
of requirements on innovation, energy preservation and environment protection in tender documents; 
(3) adjusting the time -period for submitting tenders from no -less-than 20 days to no -less-than 10 days when 
conducted online; (4) clarifying that the lowest price criterion should only be used in tender evaluation where 
the concerned product is of common technical/performance standards or the procuring entity does not have 
special technical/performance requirements on the products; and (5) introducing a requirement on the 
publication of inf ormation on contract performance by the tenderer and bidder.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Other laws with a possible impact on government procurement include the Budget Law, the 
Contract Law, the Product Quality Law, the Price Law, and the Anti -Monopoly Law.  
3.193.   The Ministry of Finance has also issued a series of administrative measures on different 
aspects of government procurement in order to put in practice the principles and r ules set out by 
the Government Procurement Law and its Implement ing Regulations. The main measures include: 
(i) the Administrative Measures on Tendering and Bidding for Government Procurement of Goods 
and Services (MOF Order No. 18, 2004 as amended by MOF Order No. 87, 2017); (ii) the 
Administrative Measures on Non -Tendering Government Procurement Methods (MOF Order No. 74, 
2013, issued on 19 December 2013 and came into force on 1 February 2014); (iii) the 
Administrative Measures on Release of Government Pr ocurement Information (MOF Order No. 19, 
2004, issued on 11 August 2004 and came into force on 11 September 2004); and (iv) the 
Regulations on Procurement Questioning and Complaining Mechanism (MOF Order No.  94, 2017, 
issued on 26 December 2017 and came in to force on 1 March 2018).116 
3.194.   During the review period, the Administrative Measures on Tendering and Bidding for 
Government Procurement of Goods and Services was amended in 2017 to: (i) clarify the role of 
procuring entities in different stages of procuremen t in order to enhance their performance or 
responsibility, their discretion in procurement and the overall transparency of the procurement 
system; (ii) improve integrity, efficiency and application of the best-value -for-money principle in 
government procur ement; and (iii) reduce suppliers' costs in participating in government 
procurement. The amended Administrative Measures (MOF Order No. 87, 2017) came into force on 
1 October 2017.  
3.195.   The authorities have also been promoting the use of public -private partner ships (PPP) in 
the area of government procurement in recent years in order to motivate private funds' 
engagement in the Government's provision of public goods and services. On 31 December 2014, 
the Ministry of Finance published the Administrative Measures on Government Procurement of 
Public -Private Partnership Projects (MOF Circular Caiku No. 215, 2014). According to the 
authorities, these Administrative Measures mainly apply to the process of selection of private 
partners by procuring entities. The measure s were based on international best practices, in 
particular the UNCITRAL Model Legislative Provisions on Privately Financed Infrastructure Projects. 
The detailed rules for PPP projects are similar to those for conventional procurement. Meanwhile, 
they introduced higher requirements on transparency and monitoring in the procurement process.  
3.196.   According to relevant legislation, the MOF and the finance departments at different sub -
central levels of government are the authorities responsible for supervising gover nment 
procurement at their respective levels, including making relevant implementation rules, 
supervising procurement activities and handling suppliers' complaints. The SASAC and local state -
owned assets supervision and administration departments at differ ent levels are responsible for 
making rules for and supervising procurement by SOEs.  
3.3.6.3   Procurement methods and procedures  
3.197.   Procurement can be centralized or decentralized depending on whether or not it is included 
in the Centralized Procurement Catalogues. C entralized procurement is mandatory for goods, 
services and construction works specified in the Centralized Procurement Catalogues. The items 
included in the Catalogues are usually goods or services with unified technological standards. The 
purpose of cent ralized procurement is to reduce the cost through large -scale procurement. There 
is no uniform catalogue or threshold across the country. The State Council publishes and updates a 
single Centralized Procurement Catalogue for procurement at central -governme nt level, while the 
government s at provincial  level publish their own Centralized Procurement Catalogues for 
procurement at provincial and local  levels. Purchases of items listed in Centralized Procurement 
Catalogues must be carried out by designated agencies. The Procurement Law mandates that 
these agencies procure quality goods and services, at a lower -than-average -for-the-market price. 
For goods, services and constr uction works not included in the Catalogues, the procuring entities 
may conduct the procurement by themselves or through professional procuring agencies following 
the rules set by the Government Procurement Law or the Tendering and Bidding Law. In 2015, 
                                                
116 MOF online information. Viewed at: 
http://tfs.mof.gov.cn/zhengwuxinxi/caizhengbuling/201801/t201 80102_2791704.html  [03.04.2018] . WT/TPR/S/ 375/Rev.1  • China  
 
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  China adopted a national registration system for professional procuring agencies to be included in 
the list which can be used by procuring entities when decentralized procurement is conducted. 
Based on the provisions of the Interim Measures on Managing Agenc ies of Government 
Procurement (Cai Ku [2018] No.  2), to be included in the list, procuring agencies should submit 
their information at the provincial portal ( of the province where they have completed  commercial 
and industrial registration procedures) of th e Chinese Government Procurement website. By 
end-November 2017, more than 9,800 procuring agencies had registered online.117 According to 
data from related departments, 52.3% of the procurement amount was completed through 
centralized procurement from 2015 t o 2016.  
3.198.   The Government Procurement Law retained its "buy -domestic" (Article 10) provision when 
it was amended in 2014. The provision requires that procuring entities purchase domestic goods, 
construction projects and services, except in circumstances  where : (i) the goods, construction, or 
services required are unavailable in China or, if  available, cannot be procured on reasonable 
commercial terms; (ii) the goods, construction , and services are procured for use abroad; or 
(iii) where otherwise provided for by other laws and administrative regulations. While there have 
not been official criteria for defining domestic products, the authorities' state that the Government 
adopts the same rules when treating domestic and foreign -invested enterprises, and in pract ice 
China provides non -discriminatory and equal treatment to all products manufactured in China 
regardless  of the degree of foreign affiliation or ownership of producers.118 The Administrative 
Measures on Government Procurement of Imported Products (issued b y the Ministry of Finance, 
27 December 2017) require pre -approval for procurement of imported products.119 The authorities 
state that there are no data on actual government procurement, including goods, services and 
construction services that are sourced dom estically.  
3.199.   The Government Procurement Law, its Implementing  Regulations and relevant 
Administrative Measures provide for six procurement methods, namely: (i) public tendering; 
(ii) selective tendering; (iii) price inquiry; (iv) competitive negotiations; (v ) competitive 
consultations; and (vi) single -source procurement. The authorities' state that t hese methods are 
used both at the central and local levels. Detailed procedural rules related to public tendering and 
selective tendering are contained in the ame nded Administrative Measures on Tendering and 
Bidding for Government Procurement of Goods and Services (MOF Order No. 87, 2017) and rules 
for the other four methods are specified by the Administrative Measures on Non -Tendering 
Government Procurement Method s (MOF Order No. 74, 2013) and the Interim Measures for 
Administration of Competitive Consultation Method in Government Procurement (MOF Circular, 
Caiku No. 214, 2014).  
3.200.   Public tendering means a procurement method whereby the procuring entity invites, 
throu gh tender notice, non -specified suppliers to participate in a tender. It is the main 
procurement method, and is mandatory for procurement valued above the specific amount set 
forth in the Government Circulars .120 For instance, at the central government level  in 2017 -18, the 
value for public tendering of goods and services is RMB 2 million (up from RMB  1.2 million before); 
the value for construction works remained at RMB 2 million. Adopting methods other than public 
tendering for procurement valued above the s pecific amount requires  approval from relevant 
finance authorities.   
                                                
117 The website is: http://www.ccgp.gov.cn . 
118 The Ministry of Finance published draft Administrative Measures on Government Procurement of 
Domestic Products for public comments on 21 May 2010. The Draft Measures intended to define domestic 
products as products manufactured within the customs territor y of China, the  domestic contents  of which  
should exceed 50% of the total cost. There have been no further developments in this regard since then.  
119 The authorities confirmed that no changes have taken place to the procurement policies with regard 
to impor ted goods and services. To facilitate procurement of imported products, the General Office of the 
Ministry of Finance issued the Circular on Matters Related to Simplifying and Optimizing the Modification of 
Procurement Methods and the Pre -Approval and Revi ew of Imported Products by Centrally Financed Procuring 
Entities (MOF Circular Caibanku No.  416, 2016). The authorities do not have data on the percentage of 
imported goods and services in the total government procurement amount.  
120 The values for mandatory  public tendering are not uniformly defined across the country but are 
dependent upon the finance source. For procurements at the central level, the value is specified by the State 
Council; at sub -central and local level, it is specified by the provincial authorities. Below those values, 
procuring entities may use any procurement method at their discretion.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.201.   Selective tendering means that the procuring entity selects, by random, no less than three 
suppliers from qualified suppliers and then sends invitation letters to those selected suppliers  
asking them to participate in a tender. It may be used when the goods or services to be procured 
are special and can only be obtained from a limited number of suppliers or when the cost of 
holding a  public tender represents an excessive proportion of the total value of the procured items. 
The procuring entity can either conduct a pre-qualification check of suppliers by itself or through  a 
procuring agency based on the criteria specified in the published pre -qualification check notice, or  
it may  select suppliers from the multi -use list of qualified suppliers already established by the 
finance authorities. The procuring entity can also recommend qualified suppliers in writing. When 
the multi -use list or the list of recommended suppliers is used, t he number of suppliers in the list 
should be no less than twice the number of suppliers to be selected by random.  
3.202.   According to the 2017 Administrative Measures on Tendering and Bidding for Government 
Procurement of Goods and Services, the tender notice an d the pre -qualification notice should be 
published in media designated by the finance authorities above provincial  level. The publication 
period should be no less than five working days. The time  period from the publication of 
tender/pre -qualification noti ces to the deadline for acquiring tender/pre -qualification documents 
should also be no less than five working days. The amended Administrative Measures do not 
provide for the minimum time  period that should be observed for suppliers to submit their tenders  
or pre -qualification materials.121 There should be no less than three qualified suppliers/tenders 
competing for a tender. Where there are less than three qualified suppliers or tenders, the 
tendering shall be terminated.  
3.203.   The Measures allow for two types of tender evaluation methods: the lowest price method 
and the comprehensive rating method. The performance -price comparison method was abolished 
in the amendment. According to t he lowest price method , among tenders that mee t all the 
substantive requirements set out in the tender notice, the one with the lowest price will win the 
contract. This method applies to the procurement of goods or services of standard technical 
specifications. According to t he comprehensive rating me thod, factors other than price, such as 
technology level, capability of fulfilling the terms of the contract, and after -sale service, are also 
taken into consideration when ranking the tenders. Under  this method, the weight of price in the 
total score shou ld be no less than 30% for goods and no less than 10% for services. The tender 
with the  highest score will win the contract.  
3.204.   Non-tendering methods can be used when the procurement value is below the thresholds 
for the mandatory use of open tendering. In a ddition, they can also be used for procurement 
above the thresholds under particular circumstances with the pre -approval of the  relevant finance 
authorities. The competitive negotiation method can be used under circumstances  where : (i) after 
attempting a t endering process, no supplier has submitted an offer or no tender meets the tender 
requirement, or when a second tendering process has been attempted but has failed; (ii)  there is 
urgency and the tendering method cannot meet the time requirement; (iii) it is infeasible to 
formulate the specifications or requirements due to the technical complexity or special nature of 
the goods and services to be procured, or (iv) the total value of  the goods or services to be 
procured cannot be determined in advance. Under  this method, the negotiation team shall choose 
no fewer than three suppliers from among all qualified suppliers to participate in the negotiation. 
When the negotiation is concluded, the negotiation team shall request all participating suppliers to 
quote t heir final offering prices within a specified time limit. The supplier meeting the procurement 
needs at the lowest price will win the contract.  
3.205.   The competitive consultation method was introduced by the Interim Measures for 
Administration of Competitive Con sultation Procurement Method in Government Procurement on 
31 December 2014 (Circular of MOF, Caiku [2014] No. 214). This method is similar to the 
competitive negotiation method in most aspects except  the evaluation criteria. The competitive 
consultation me thod uses a comprehensive score criterion instead of the lowest price criterion. The 
Interim Measures require that at least three suppliers be invited to participate in the competitive 
consultation. The weight of price in the total score should be between 30 and 60% for the 
procurement of goods and between 10 and 30% for the procurement of services. This method can 
be applied to: (i) the procurement of services; (ii)  procurement for which detailed specifications or 
                                                
121 The 2004 Administrative Measures provided for a minimum period of 20 days for suppliers to submit 
their tenders.  WT/TPR/S/ 375/Rev.1  • China  
 
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  specific requirements cannot be determined  due to their technical complexity or special nature; 
(iii) procurement for which  the price cannot be calculated in advance; (iv) the procurement of 
artistic works, patents, and proprietary technologies; (v) scientific research projects for which 
market co mpetition is not sufficient; (v i) or construction projects not subject to bidding under the 
Tendering and Bidding Law and its implementing regulations.  
3.206.   The price inquiry method may be used for the procurement of goods with specifications 
and standards tha t are uniform and which are readily available on the spot at prices that fluctuate 
little. A price inquiry team is set up to inquire  with qualified suppliers  about prices. No less than 
three suppliers from the qualified suppliers should be contacted. The s upplier offering the lowest 
price will win the contract.  
3.207.   Recourse to the single -source procurement method may be made when goods or services 
can be procured from only one supplier, when they cannot be procured from other suppliers due to 
an unforeseeable e mergency, or when procurement of additional items or services from the same 
supplier is required to ensure consistence of products or services. To ensure transparency, 
information regarding the projects that cannot be subject to the standards for public te ndering 
should be published for public comments and submitted to relevant finance authorities for approval 
before conducting single -source procurement.  
3.208.   According to data provided by the authorities, procurement through public tendering 
accounted for 64.1%  of total procurement in 2016 , competitive negotiations for 4.2% , and 
selective tendering for 1% (Table  3.23).  
Table 3.23 Government procurement by procurement method, 2014 -16 
(RMB billion)  
Year Procurement method  
Total  Public 
tendering  Selective 
tendering  Competitive 
negotiations  Competitive 
consultations  Price 
inquiry  Single -
source 
procurement  
2014 1,730.5  1,462.1  45.8 72.1 .. 63.5 52.2 
2015 2,107.1  1,641.4  40.1 121.1  .. 78 122.3  
2016 3,109.0  1,992.9  31.1 130.6  .. .. .. 
..  Not available.  
Source:  Information provided by the authorities of China.  
3.209.   To enhance transparency and achieve effective public monitoring o f government 
procurement, in addition to the Administrative Measures on Release of Government Procurement 
Information (MOF Order No. 19, 2004), the Ministry of Finance issued the Circular on Making 
Efforts to Accomplish the Work of Government Procurement In formation Disclosure (MOF Circular, 
Cai Ku No. 135, 2015). The Circular requires that procuring entities publish government 
procurement and tendering information in media designated by the Ministry of Finance in a timely, 
comprehensive and standard manner.122 It sets out the scope, contents and requirements for the 
publication of information. The published information include s: (i) laws, regulations, administrative 
measures and rules related to government procurement; (ii) information related to a specific 
procurement  procedure , such as the procurement notices, procurement documents, budget value 
of a specific procurement  procedure , contract award notices, contracts, etc.; and (iii) information 
related to monitoring and penalties, such as decisions on tender c hallenges, penalty decisions 
made in procurement monitoring and supervision, results of the performance evaluation of 
appointed agencies for centralized procurement, records of illegal or dishonest behaviours, etc. 
The contract award decisions should be pu blished in designated media within two working days of 
being  made.  
                                                
122 The media designated by the Ministr y of Finance for publishing government procurement information 
include: the China Finance and Economic News, the China Government Procurement Newspaper, the China 
Government Procurement Magazine and the China State Finance Magazine. Nonetheless, to facilit ate access to 
government procurement information by interested parties, all information published in other media should be 
published on the China Government Procurement Website at the same time. Sub -central governments may 
designate their own media for pub lishing government procurement information. For procurement above 
RMB 5 million by sub -central government, the procurement information should be published on the main part 
of the China Government Procurement Website simultaneously.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.210.   To improve efficiency in government procurement, China promotes the use of information 
technology and the gradual adoption of e -procurement. China is also promoting the 
standardization of government procurement, as well as stepping up efforts to exercise supervision 
and inspection.  
3.3.6.4   Other policy considerations in government procurement  
3.211.   Article 9 of the Government Procurement Law provides that government procurement shall 
be carried out to fa cilitate the reali zation of the economic and social development policy goals of 
the State, including environmental protection, assistance to underdeveloped or ethnic minority 
regions, and promoting the development of SMEs.  
3.212.   The Interim Measures on Promotin g the Development of Small and Medium Enterprises 
through Government Procurement (MOF Circular Caiku No. 181, 2011) specify detailed policies in 
favour of SMEs, including set -aside, price preference and encouraging joint bidding and sub -
contracting. The se t-aside policy requires that budgetary authorities reserve no less than 30% of 
their annual procurement amount for SME suppliers. Among the reserved part, the share for small 
and micro enterprises should be no less than 60%. Under the price preference poli cy, small and 
micro enterprises are eligible for a 6 -10% price preference in tender evaluation.123 When small and 
micro enterprises and other enterprises submit a tender as a consortium and the small and micro 
enterprises' share in the total value of the ten der exceeds 30%, the consortium will be eligible for 
a 2-3% price preference. Large enterprises with government procurement contracts are also 
encouraged to sub -contract to SMEs.124  
3.213.   With regard to environmental protection, China adopts policies to provide m ore favourable 
treatment to energy -saving products and environmentally  friendly products in government 
procurement. The detailed policies are contained in the Circular of the General Office of the State 
Council on Establishing a Regime for Mandatory Govern ment Procurement of Energy -Saving 
Products (Guobanfa No. 51, 2007) and the Opinions of the Ministry of Finance and the General 
Administration of Environmental Protection on Implementing Government Procurement of 
Environmental Labelling Products (MOF Caiku No. 90, 2006). Relevant authorities issue and update 
the separate lists of energy -saving products and environment -friendly products regularly. Desktop 
computers and some other products must be placed  on these lists if th ey are to be procured. 
Procurement o f other energy -saving products and environmentally  friendly products is prioritized.  
3.214.   The authorities noted that since 2015, no conditions have been attached to government 
procurement regarding "indigenous innovation".  
3.3.6.5   Suppliers complaint mechanism  
3.215.   The Go vernment Procurement Law requires that the finance authorities at different levels 
of government be responsible for reviewing suppliers' complaints regarding  government 
procurement at their respective levels. Bidders may question the procuring entity's dec ision, 
complain to the finance departments, or bring a case to court. The detailed complaint procedures 
are set out in the Measures on Handling Complaints of Government Procurement Suppliers (Order 
No. 20 of the Ministry of Finance, 11 August 2004).  
3.216.   Accor ding to the Law and the Rules, where a supplier believes that the procurement 
documents, proceeding s or final results are detrimental to its own interest, it can make inquiries to 
the procuring entity or the procuring agency. If the supplier is not satisfi ed with the response or if 
there is no response, the supplier may make a complaint to the finance authority at the same level 
as that of the procuring entity. The finance authority shall investigate the complaint and make its 
decision within 30 working day s of receiving the complaint. If unsatisfied with  the decision of the 
finance authority or if the finance authority  does not make a decision within the prescribed period, 
the complainant may apply for administrative review or file judicial litigation.  
                                                
123 In tender evaluation,  the tender submitted by a small or micro enterprise will compete with other 
tenders based on a price 6 -10% lower than  the original price offered by this enterprise. When the contract is 
delivered, this enterprise will be paid the full original price.  
124 There is no price preference policy for encouraging sub -contracting. Nonetheless, the amount of sub -
contracts will be counted when calculating set -asides.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.217.   In 2015 (the latest year for which data were made available), the finance authorities at 
various levels all over China accepted 2,629 government procurement complaints raised by 
suppliers. The authorities noted that the finance authorities at various levels h ave continued to 
improve the complaint handling mechanism since the last Review, establishing a multi -
departmental cooperation and coordination mechanism and an offence -disclosing mechanism.  
3.3.6.6   Accession to the GPA and other international cooperation  
3.218.   China be came an observer to the GPA in 2002. It initiated its GPA accession negotiation in 
2007 and has subsequently submitted six market access offers offering gradually enlarged market 
opening commitments. Discussions dedicated to China's accession have taken pl ace on multiple 
occasions during 2008 -17. China's fifth revised offer, which was submitted on 
23 December  2014125, covers entities and projects of all types and makes improvements in the 
areas of key concern to various parties. For example, more local entities have been added, all 
construction services covered, and SOEs included for the first time in the offer. Nonetheless, 
significant gaps remain between this offer and certain GPA Parties' expectations, especially in 
terms of the coverage of non -sensit ive military procurements, sub -central government entities and 
SOEs. The Chinese delegation indicated in the course of several GPA Committee meetings held 
in 2017 that it would submit a further revised offer in due course to address GPA Parties' 
remaining concerns.126 The GPA Committee has mentioned several times its belief that China's 
GPA accession, on the right terms, will bring important advantages both to China itself and to the 
multilateral system.  
3.219.   China has not included or been negotiating any market access terms on government 
procurement in its free trade agreements with trading partners. According to the authorities, it 
remains China's priority to conclude its GPA accession before liberalizing its government 
procurement market through bilateral/regin al tracks.  
3.3.7   Intellectual property rights  
3.3.7.1   Overview  
3.220.   In 2016, the State Council approved the establishment of the system of Inter -Ministerial 
Joint Conference for Implementing National Intellectual Property Strategy composed of 
31 departments (previously 28 d epartments ).127 Under the leadership of the State Council, the 
Conference is responsible for overall planning and coordination of the implementation of the 
national IP Strategy.128 The Conference is convened by the Commissioner of the State Intellectual 
Proper ty Office (SIPO), which is under the State Council.129 In December 2016, the State Council 
issued the 13th National Five -Year Plan on Intellectual Property Protection and Utilization  
(Plan 2016), which set out ten goals to be achieved in IP protection and ut ilization by 2020.130 In 
accordance with the Action Plan 2014 -2020, the Opinions 2015 and the Plan 2016, the Conference 
issued the new annual Promotion Plan for the year 2017131 in April 2017.  
                                                
125 WTO document GPA/ACC/CHN/45, 5 January 2015.  
126 See the 2017 Annual Report of the GPA Committee: GPA/ 145, 16 November 2017.  
127 The Outline of the National Intellectual Property Strategy was issued on 5 June 2008. In 
November  2014, the General Office of the State Council issued the Action Plan for Deepening the 
Implementation of the National IP Strategy (20 14-2020). SIPO online information. Viewed at: 
http://english.sipo.gov.cn/news/ChinaIPNews/2015/201501/P020150114538677226855.pdf  [14.12.2017]. In 
December 2015, the State Council issued the Several Opinion s on Accelerating the Construction of the Nation 
with Strong IP Competence under the New Situation. SIPO online information. Viewed at: 
http://english.sipo.gov.cn/news/ChinaIPNews/2015/201512/P020151230397526248167.pdf  [29.03.2018].  
128 Chinese Government onl ine information. Viewed at: http://www.gov.cn/zhengce/content/2016 -
03/30/content_5059662.htm  [14.12.2017].  
129 Information on China's intellectual property strategy at the natio nal, regional, and industrial level can 
be found on the Office's website (in Chinese) at: http://www.nipso.cn . SIPO's website also provides 
information concerning China's IPR policies ( http://english.sipo.gov.cn ).  
130 SIPO online information. Viewed at: 
http://english.sipo.gov.cn/news/ChinaIPNews/2017/201701/P020170125311344929064.pdf , and 
http://www.sipo.gov.cn/tz/201708/t20170823_1317997.html . 
131 SIPO online information (in Chine se). Viewed at: 
http://211.157.104.86:8080/ogic/view/govinfo!detail.jhtml?id=3485  [11.04.2018] .  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.221.   The "China Manufacturing 2025" strategy highlights the importance o f IP protection and 
enforcement, in particular in Sections 2.4 and 4. 3.  
3.222.   Furthermore, o n 15 March 2017, the 5th Plenary Session of the 12th National People's 
Congress adopted General Provisions of Civil Law,  as a development of the PRC General Principles 
on Civil Law enacted in 1986. The Provisions  entered into force on 1 October 2017; according to 
the authorities, the Provisions are the first piece of Chinese legislation to explicitly mention  GIs 
and other IP subject matters .132 
3.223.   China's main laws and the respective amendments concerning IPR have remained largely 
unchanged since its previous Review (Table 3.24).133 
Table 3.24 Summary of IPR legislation in China, 2017  
Form  Main legislation  Coverage  Duration  
Patents  The Patent Law (last 
amended in 2008)  Inventions and utility models for which patent 
rights are to be granted shall be ones which 
are novel, creative and of practical use.  20 years from the date of 
filing  
Trademarks  The Trademark Law 
(last amended in 
August 2013)  An application may be made to register a mark 
as a trademark; such a mark include s any 
word, device, letter of the alphabet, number, 
three-dimensional symbol, colour combination, 
sound or any combination thereof that 
identifies and distinguishes the goods of a 
natural person, legal person or other 
organization from those of others.  10 years since the day the 
registration is approved  
Copyright 
and related 
rights  The Copyright Law 
(last amended in 
2010)  Works of literature, art, natural sciences, 
social sciences, engineering and technology, 
which are created in any of the following 
forms: (1) written works; (2) oral works; 
(3) musical, dramatic, quyi, choreographic and 
acrobatic works; (4) works of the fine arts and 
architecture; (5) photographic works; 
(6) cinematographic works and works created 
by a process analogous to cinematogra phy; 
(7) graphic works such as drawings of 
engineering designs and product designs, 
maps and sketches, and model works; 
(8) computer software; and (9) other works as 
provided for in laws and administrative 
regulations.  The term of copyright 
protection for natural 
persons is life plus 50 years; 
Works of a legal entity or 
other organization, 
cinematographic and 
photographic works are 
protected for 50  years;  
Software copyright exists 
from the date on which its 
development is completed;  
Audio and video 
produc tions, broadcasting, 
and public performances are 
granted protection for 
50 years from the first day 
of production, broadcasting, 
or performance;  
Typographical designs are 
protected for 10 years.  
Layout -
designs of 
integrated 
circuits  Regulations on the 
Protection of 
Layout -Designs of 
Integrated Circuits 
(promulgated in 
2001)  Any layout -design which is original in 
the sense that the layout -design is the result 
of the creator's own intellectual  effort, and is 
not commonplace among creators of layout -
design s and  manufacturers of integrated 
circuits at the time of its creation.  15 years after the date of 
the completion of its 
creation . 
New plant 
varieties  The Regulations on 
the Protection of 
New Varieties 
of Plants (last 
amended in 201 4) Artificially cultivated plant varieties, or ones 
developed from discovered wild plants, which 
possess novelty, distinctness, uniformity and 
stability, and which are duly named.  20 years from the date of 
authorization in the case of 
vines, forest trees, and 
ornamental t rees, and for 
15 years for other plants . 
Source:  Information provided by the authorities of China.  
3.224.   China  is a member of the World Intellectual Property Organization (WIPO), and 
participates in a number of international conventions and treaties related to intellectual property 
rights ( Table 3.25 ).  
                                                
132 Article 123, the Provisions.  
133 WTO document , IP/N/1/CHN/P/2 , IP/N/1/CHN/P/ 3, IP/N/1/CHN/C/1 (2001 Version), 
IP/N/1/CHN/L/1/Rev.1, IP/N/1/CHN/9 (2013 Amendment).  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 3.25 China's membership of international intellectual property rights conventions, 
as of mid -2017  
International 
Organization  Convention  Status  Date  of accession  (or 
signature , ratifi cation ) 
WIPO  WIPO Copyright Treaty  In force  09 June 2007  
WIPO Performances and Phonograms Treaty 
(WPPT)  In force  09 June 2007  
Strasbourg Agreement  In force  19 June 1997  
Locarno Agreement  In force  19 September 1996  
Madrid Protocol  In force  01 December 1995  
Budapest Treaty  In force  01 July 1995  
Nice Agreement  In force  09 August 1994  
Patent Cooperation Treaty (PCT)  In force  01 January 1994  
Phonograms Convention  In force  30 April 1993  
Berne Convention  In force  15 October 1992  
Madrid Agreement (Marks)  In force  04 October 1989  
Paris Convention  In force  19 March  1985 
WIPO Convention  In force  03 June 1980  
Beijing Treaty  Ratified  (ratified 9 July 2014)  
Marrakesh VIP Treaty  Signed  (signed 28 June 2013)  
Singapore Treaty  Signed  (signed 29 January 2007)  
Trademark Law Treaty (TLT)  Signed  (signed 28 October 1994)  
Washington Treaty  Signed  (signed 1 May 1990)  
UPOV  UPOV Convention  In force  23 April 1999  
UNESCO  Universal Copyright Convention  In force  30 October 1992  
Source:  WIPO online information. Viewed at: 
http://www.wipo.int/treaties/en/ShowResults.jsp?country_id=38C . 
3.3.7.2   Industry property  
3.3.7.2.1   Patent s 
3.225.   SIPO remains responsible for receiving and processing patent applications and granting 
patents. Local IPR administrative offices deal with hearing and settling disputes with respect to 
patents.  
3.226.   The legislative and regulatory framework of patent protection  for inventions, utility models, 
and industrial designs  is provided in t he Pate nt Law and the Rules for Implementation of the 
Patent Law.134  
3.227.   The process to follow for patent application  and registration, under the Patent Law, has not 
changed since the previous review. A substantive examination may be initiated by SIPO upon 
request of the applicant within three years of the date of filing (or the priority date), failing which 
the application is considered to have been withdrawn.  The average time required to complete a 
substantive examination for an invention patent was 21.8 months in 20 14. Decisions regarding 
patent applications may be re -examined by the Patent Re -Examination Board . Where an applicant 
requests SIPO to conduct a substantive review of his/her invention patent application, the request 
must be submitted within three years of the application date (or the priority date), otherwise the 
application shall be deemed to be withdrawn. In 2016, the Patent Re -Examination Board accepted 
13,107 requests for re -examination, 17,623 of which were conducted.  
3.228.   Parallel imports of patented goo ds are allowed, in accordance with Article 69 of the Patent 
Law.  
                                                
134 Other regulations dealing with patents include the Measures for the Filing of Patent Exploitation 
Licence Contracts; the Measures for Compulsory Licensing for Patent Im plementation; the SIPO Rules on 
Administrative Reconsideration; the Administrative Measures on Prioritized Examination of Invention Patent 
Applications; and the Measures for Patent Administrative Enforcement. WTO documents IP/N/1/CHN/3, 
15 December 2010; I P/N/1/CHN/P/2, 21 December 2010; IP/N/1/CHN/4, 24 August 2011; and 
IP/N/1/CHN/P/3, 26 August 2011.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.229.   Compulsory licences of patents may be granted in the public interest, or in the event of a 
national emergency or any extraordinary state of affairs.135 As of January 2018, China has never  
granted any compulsory licences .  
3.230.   During the period under review, SIPO formulated and revised several departmental rules 
(Table 3.26).  
Table 3.26 Recent changes in patent -related regulations, 2017  
Department rules  Main amendments  Date of entry 
into force  
Administrative Measures on 
Prioritized Examination of 
Patent  1. Extend ing the scope of the prioritized examination  
2. Improv ing the conditions for the priority review  
3. Simplif ying the processing of prioritized examinations  
4. Optimiz ing the examination process  1 August 2017  
Provisions on Regulating 
Patent Application Activities  1. Increas ing the types of behaviour classified as non-
normal patent applications  
2. Strengthen ing the non -normal patent application action 
measures  1 April 2017  
Patent Examination 
Guidelines  1. Modify ing "Function Module" to "Programme Module"  
2. Program me may be included into components of an 
explicit device (hard and soft)  
3. Clarifying the meaning of "computer programme  per 
se" 
4. Deleting "Case 9" in Section 3  1 April 2017  
SIPO Measures for 
Developing and Regulating 
Normative Documents  Strengthen the management of normative documents  1 February 2017  
Measures for Patent 
Administrative Law 
Enforcement  1. Emphasiz ing the principle s of rule of law  
2. Standardizing  law enforcement procedures  
3. Modifying related provisions to  adapt to the 
development of Internet  1 July 2015  
Measures for the 
Administration of Patent 
Agency  1. Abolishing the funding requirements for  setting up a 
patent agency  
2. Improving the patent agency information management  
3. Strengthening regulations on the patent agency  1 May 2015  
Source:  Information provided by the authorities of China, and Chinese Government and SIPO online 
information. Viewed at: http://www.gov.cn/zhengce/2017 -07/12/content_5209847.htm , 
http://www.gov.cn/xinwen/2017 -03/09/content_5175542.htm , 
http://www.sipo.gov.cn/zcfg/zcjd/201703/t20170331_1309157.html , 
http://www.sipo.gov.cn/zwgg/jl/201612/t20161216_1306658.html , 
http://www.si po.gov.cn/zcfg/zcjd/201506/t20150609_1128705.html , and 
http://www.sipo.gov.cn/zcfg/zcjd/201505/t20150518_1118734.html . 
3.231.   In 2016, SIPO issued the Implementation Plan for Patent Quality Improvement Projects. 
The Plan identified four key areas with respect to quality improvement: patent application, patent 
agency, patent examination, and patent protection and utilization.136  
3.232.   During the period under review, patent applications and grants continued to increase 
rapidly. In 201 6, Chinese citizens filed 1,204,981  patent applications for inventions, among which 
302,136 were granted; 631,949  patent application for industrial designs, among which 
429,710  were granted; and 1,468,295  applications for utility models. The number of patent 
applications filed by Chinese citizens through the Patent Cooperation Treaty increased from 30,548  
in 201 5 to 44,992 in 2016  (Table 3.27).   
                                                
135 A compulsory licence may also be granted if the patent owner, without justification, refused the 
requests for authorization to exploit its patents on reaso nable conditions, and has failed to sufficiently exploit 
the patent rights for three years or uses the rights in a manner that eliminates or restricts competition through 
the abuse of the IPR granted by the patent (WT/TPR/S/342/Rev.1).  
136 Chinese Government  online information (in Chinese). Viewed at: http://www.gov.cn/xinwen/2017 -
03/09/content_5175542.htm ; and  SIPO online information (in Chinese). Viewed at: 
http://www.sipo.gov.cn/mtsd/201711/t20171129_1320536.html  and http://www.gov.cn/xinwen/2017 -
06/09/content_5201134.htm . WT/TPR/S/ 375/Rev.1  • China  
 
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  3.233.   According to information from WIPO, there were 1,772,203  patents for inventions in force 
in Chin a in 201 6, thus China ranked 3rd among WIPO members . The main fields of patent 
applications for inventions received by SIPO during the period 2000-16 were: electrical machinery, 
apparatus, energy (6.7% of the total); computer technology (6. 45%), digital co mmunication 
(6.12%); measurement material (5. 95%); pharmaceuticals (5 .04%); and metallurgy (4. 18%), 
among others. Applications were spread widely across the different fields of technology, as 
witnessed by the fact that no individual field reaches 10% of th e total and the category "others" 
represented 4 8.84% of the total137 (Chart 3.5).  
Table 3.27 Recent changes in patent -related regulations, 2014 -16 
  2014  2015  2016  
Patent (inventions) applications  
Resident  801,135  968,251  1,204,981  
Non-resident  127,042  133,613  133,522  
International applications PCT system  26,169  30,548  44,992  
Patents (invention) granted  
Resident  162,680  263,436  302,136  
Non-resident  70,548  95,880  102,072  
Industrial design applications  
Resident  548,428  551,481  631,949  
Non-resident  16,127  17,578  18,395  
Industrial design registrations  
Resident  346,751  464,807  429,710  
Non-resident  14,825  17,852  16,425  
Utility model applications     
Resident  861,053  1,119,714  1,468,295  
Non-resident  7,458  7,863  7,682  
Source:  Data provided by the authorities of China; and WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_pr ofile/profile.jsp?code=CN . 
Chart 3.5 Patent applications by top fields of technology, 2002 -16 
 
 
Source:  WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN . 
3.3.7.2.2   Trademarks  
3.234.   The agency responsible for the examination of trademark applications, registration and 
administration remains the Trademark Office (TMO) under SAIC. Local enforcement authorities are 
responsible for the administration of trademarks at the provincial level and below. The  settlement 
of disputes regarding trademarks is the responsibility of the Trademark Review and Adjudication 
Board, which is also responsible for reviewing decisions made by the TMO and ruling on disputed 
cases on trademarks. The authorities i ndicate that it takes about eight months from the 
                                                
137 WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN . 
6.7%
6.45%
6.12%
5.95%
5.04%
4.29%
4.24%
4.18%
4.15%4.04%48.84%Electrical machinery, apparatus, energy
Computer technology
Digital communication
Measurement
Pharmaceuticals
Machine tools
Basic materials chemistry
Materials, metallurgy
Food chemistry
Other special machines
OtherChart 3.5    Patent applications by top fields of technology,  2002 -16
Source: WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN .WT/TPR/S/ 375/Rev.1  • China  
 
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  acceptance of an application to the notification of issuance of a certification, and the review period 
in trademark disputes is about 12 months.  
3.235.   The legal basis for trademark registration and protection re mains the Trademark Law, its 
Implementing Regulations and various rules issued by SAIC.138 During the review period, no 
amendments were made to the Trademark Law.139  
3.236.   Registration with the TMO is a prerequisite for protection under the Trademark Law. 
Foreign a pplicants must file applications on the basis of reciprocity between their country of  origin 
and China, or of any international treaty to which both are parties unless an agreement has been 
concluded between their country of origin and China. Registration may be rejected if the mark 
involves a copy, imitation, or translation of well -known brands that have not been registered in 
China for the same or similar goods and services, or if the mark involves a copy, imitation, or 
translation of well -known brands th at have been registered in China for goods and services that 
are not deemed identical or similar to the goods and services in question. Prior right -holders or 
relevant stakeholders have a five -year period to contest the registration of a trademark and 
request its revocation to the Trademark Review and Adjudication Board. This timeframe limitation 
does not apply in cases of abusive registration.  
3.237.   If the TMO refuses to register a trademark, the applicant may appeal the decision before 
the Trademark Review and Adjudication Board; the appeal must be presented within 15  days 
of receipt of the notification of the decision. The newly  amended Trademark Law specified time 
limits within which the Board must make its decision. If the Board upholds the TMO's decision, 
the applicant may take the case to court within 30 days of notification.  
3.238.   China's Trademark Law and Implementing Regulations of the Trademark Law currently 
contain no regulations/rules on issues related to parallel imports.  
3.239.   Trademark protection in e -commerc e is granted through a number of circulars or other 
type of measures, including SAIC's Circular of Opinions on Extending Cross -Provincial Enforcement 
to Commodities Trading on the Internet and its Related Services (Gong Shang Shi Zi 2011/11), 
issued on 27  May 2011, and amended Measures on Administration of Trading on the Internet, 
promulgated by SAIC in January 2014, as well as a judicial interpretation issued by the Supreme 
People's Court on the liability of Internet intermediaries (Rules of Supreme People 's Court on 
Several Issues Concerning the Application of Law in Adjudication of Civil Disputes Related to 
Infringement of the Right of Communication through Information Networks), effective 
1 January  2013. The authorities indicate that s ince 2014, the SAIC , together with other competent 
authorities, has conducted a series of special supervision campaigns to investigate such illegal acts 
as abusing, infringing or counterfeiting highly reputed trademarks, and foreign trademarks, and to 
crack down on online tr ademark infringement crimes, with priority given to online trading 
platforms, online trademark infringements and the sale of counterfeited or shoddy products.  
3.240.   During the period under review, several amendments were made to the regulations/rules 
with a view  to further strengthening trademark protection. The Supreme People's Court  issued a 
Judicial Interpretation  concerning the adjudication of administrative cases on authorization and 
affirmation of trademark related rights140, which entered into force on 1 Mar ch 2017. The 
Interpretation concerned the adjudication of administrative cases on trademark authorization and 
affirmation , including judgments of trademark 's distinctiveness , and the protection of well -known 
trademark s.  
                                                
138 The rules related to trademark administration in China. Trademark Office online information (i n 
Chinese). Viewed at: http://sbj.saic.gov.cn ; The Implementing Regulations of the Trademark Law, State 
Council Decree No. 651 (in Chinese). Viewed at: http://www.gov.cn/zhengce/2014 -
04/30/content_2670953.htm  [05.04.2018] . 
139 The Trademark Law was last amended in August 2013, entering into force in May 2014. The 
Regulations on the Implementation of the Trademark  Law were also revised in April 2014,  and the Rules for 
Trademark Review and Adjudication were revised in accordance with SAIC No. 65 of 28  May 2014. See 
WT/TPR/S/342/Rev.1 for details.  
140 Provisions of the Supreme People's Court on Several Issues Concerning the Adjudication of 
Administrative Cases on Authorization and Affirm ation of  Trademark -related Rights , the text of the Judicial 
Interpretation. Viewed at : http://www.court.gov.cn/zixun -xiangqing -34732.html . WT/TPR/S/ 375/Rev.1  • China  
 
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  3.241.   Article 13 of the Trademark Law provides that the holder of a trademark well known by the 
relevant public may file a request for its protection under the Law if he/she believes that there is 
any infringement. According to the authorities, in accordance wit h the Law, "cross -class 
protection" may be provided for relevant goods and services for well -known trademarks registered 
in China; if a trademark not registered in China is a well -known one, protection may be provided 
to similar goods.  
3.242.   The Chinese authori ties noted that, during the period under review, the priority was to 
facilitate trademark registration. On 14 July 2016, SAIC released Opinions on Strongly Promoting 
the Reform of Trademark Registration Facilitation141, aimed at simplifying the trademark 
registration procedures. On 4 January 2017, the TMO and the Trademark Review and Adjudication 
Board (TRAB) issued revised Examination and Trial Standards.142 On 30 March 2017, the TMO and 
TRAB issued the Announcement on Adjusting the Charging Standard of Tradem ark Registration, 
which announced that the trademark registration fees would be lowered by 50%.143 On 
14 November 2017, SAIC issued Opinions on Deepening the Reform of Trademark Registration 
Facilitation and Effectively Promoting Efficiency of Trademark Regi stration144 to further optimiz e 
the examination process and improv e examination efficiency . The TMO has been developing an 
online system, which aims to, inter alia,  enable online trademark application, inquiry, and 
announcements.  
3.243.   During the review period, trademark  applications and registration  continued to increase. 
In 2017, Chinese citizens filed 5,538,980 trademark  applications (Table 3.28). By the end of 
January 2016, TMO published 45 applications for sound marks since the sound mark was 
introduced into the Trademark Law in 2014.  
Table 3.28 Trademark applications and registrations, 201 5-17 
 2015  2016  2017   
Applications     
Resident  2,699,156 3,526,827  5,538,980  
Non-resident  116,687 112,347  141,951  
Madrid system  60,205 52,191  67,244  
Registrations     
Resident  2,077,037 2,119,032  2,656,039  
Non-resident  99,852 97,497  97,147  
Madrid system  49,552  38,416  41,886  
Source:  Data provided by the authorities of China; and WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/profile.jsp?code=CN . 
3.3.7.2.3   Geographical indications  
3.244.   In addition  to the General Provisions of Civil Law , SAIC,  AQSIQ and the Ministry of 
Agriculture provide protections for GIs of different types under their respective laws and 
regulations.145 SAIC protects GIs in the form of collective marks and certification marks  in 
accordance with the Trademark Law, the Implementing Regulations of the Trademark Law, and 
Procedures for the Registration and Administration of Collective Marks and Certification Marks.146 
AQSIQ  provides  protection of GI products in accordance with the Provisions on the Protection of 
                                                
141 SAIC online information (in Chinese). Viewed at: 
http://sbj.saic.gov.cn/zcfg/sbxzgz/201607/t20160726_232871.html  [11.04.2018].  
142 China Industry and Commerce, Annual Developmen t Report on China's Trademark Strategy of 2016. 
Viewed at: http://sbj.saic.gov.cn/tzgg/201712/W020171208360338316693.pdf  [11.04.2018].  
143 SAIC online information (in Chinese). Vie wed at: 
http://sbj.saic.gov.cn/tzgg/201703/t20170330_261012.html  [02/03/2018].  
144 SAIC online information (in Chinese). Viewed at: 
http://sbj.saic.gov.cn/tzgg/201711/t20171117_270420.html  [11.04.2018].  
145 WTO document WT/TPR/S/342/Rev.1, 12 October 2016.  
146 In addition, Measures for the Administration of Special Signs of Geographical Indication Products, 
issued by SAIC on 30 January 2007, identifies the specific signs of GIs granted by SAIC. SAIC online 
information (in Chinese). Viewed at:  http://sbj.saic.gov.cn/zcfg/sbgfxwj/200702/t200 70206_232898.html  
[14.12.2017] . WT/TPR/S/ 375/Rev.1  • China  
 
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  Geographical Indication Products147 and Implementing Rules for the Protection of Geographical 
Indication Products.148 The GIs of agricultural products may be registered at the Ministry of 
Agriculture in accordance with the  Measur es on the Administration  of Geographical Indications  of 
Agricultural Product s.149 
3.245.   On 28 March 2016, AQSIQ promulgated Measures for the Protection of Foreign 
Geographical Indications (Measures) on 28 March 2016150, with a view to enhancing the protection 
and ma nagement of foreign geographical indications. The Measures regulate, inter alia,  the 
application, examination and revocation of foreign GIs seeking protection in China. T he protection 
of GIs is granted on the basis of reciprocity , i.e. to products that ori ginate from a country that has 
established the corresponding communicative and cooperative relationship with China.151 AQSIQ  
also issued Special Action Plans for the Protection and Quality Enhancement of National 
Geographic Indications, with the aim of impro ving GI protection and promot ing cross-regional and 
international cooperation.152 
3.246.   Since 2016, in order to implement the Opinions of the State Commission Office of Public 
Sectors Reform on Perfecting the GI Protection and Administration Regime, SAIC has under taken 
relevant research, convened industry -wide coordination meetings and consulted with other 
competent authorities including the Ministry of Agriculture and the AQSIQ to discuss and establish 
a joint GI certification mechanism.  
3.3.7.3   Copyright and related righ ts 
3.247.   During the period under review, some notices were introduced regarding copyright 
protection of online works; these include the Notice on Strengthening the Administration of 
Copyrights in Online Literature , which entered in to force on 11 November 2016 .153 The Notice  
contains requirements on the strengthening of the administration of copyrights in cyber 
literature.154 In September 2017, the NCAC issued an Action Plan on IPR Protection in Foreign -
Funded Enterprises.155 
3.248.   The NCAC  continues to administer copyright on a national scale ; copyright registration and 
administration is also carried out by the respective local copyright administration offices  at the 
provincial level . 
3.249.   The legislative and regulatory framework  of copyright pr otection is provided in the 
Copyright Law and relevant regulations including the Regulations for the Implementation of 
Copyright Law, the Regulations for the Protection of Computer Software, the Regulations on 
Collective Copyright Management, the Regulatio ns on the Protection of the Right of Dissemination 
                                                
147 AQSIQ online information (in Chinese). Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/zjl/20052006/200610/t20 061027_239289.htm  
[11.04.2018].  
148 AQSIQ online information (in Chinese). Viewed at: 
http://kjs.aqsiq.gov.cn/dlbzcpbhwz/zcfg/zxzcxx/201011/t20101115_168661.htm  [11.04 .2018] . 
149 MOA online information (in Chinese). Viewed at: 
http://www.moa.gov.cn/zwllm/tzgg/bl/200801/t20080109_951594.htm  [11.04.2018] . 
150 AQSIQ online information (in Chinese). Viewed at: 
http://kjs.aqsiq.gov.cn/dlbzcpbhwz/zcfg/zxzcxx/201604/t20160413_464279.htm  [12.04.2018] . 
151 Article 6, Measures for  the Protection of Foreign Geographical Indication Products . 
152 AQSIQ online information. 
http://www.aqsiq.gov.cn/xxgk_13386/tzdt/zztz/201609/t20160921_474373.htm . 
153 NCAC online information (in Chinese). Viewed at: 
http://www.ncac.gov.cn/chinacopyright/contents/483/308182.html . In July 2015, the Notice on Prohibiting the 
Dissemination of Unlic ensed Music Work by Internet Music Service Providers entered into force. NCAC online 
information (in Chinese). Viewed at: http://www.ncac.gov.cn/chinacopyright/contents/483/2557 25.html  
[14.12.2017]. NCAC also issued the Notice on Regulating the Order of Copyright of Online Disk Service issued 
on 14 October 2015 with a view to strengthening the copyright management of online information storage 
services. NCAC online information (i n Chinese). Viewed at: 
http://www.ncac.gov.cn/chinacopyright/contents/483/266843.html  [14.12.2017].  
154 NCAC online information. Viewed at: 
http://www.ncac.gov.cn/chinacopyright/contents/483/308182.html  [29.03.2018].  
155 MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/article/ae/ai/201709/20170902645803.shtml  [29.03.2018] . WT/TPR/S/ 375/Rev.1  • China  
 
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  via Information Network, and the Interim Measures for the Payment of Remuneration for the 
Broadcast of Sound Recordings by Radio and Television Stations. Copyright covers: authorship; 
revision; integrity; reproduction; distribution; rental; exhibition; performance; presentation; 
broadcasting; network communication; cinematography; adaptation; translation; compilation; and 
other rights held by copyright owners. Copyright owners or owners of related rights ma y authorize 
collective non -profit copyright administration organizations to exercise their rights.  
3.250.   The procedure of application under the Copyright Law has remained unchanged since the 
previous review of China. The term of copyright protection for natural persons as well as certain 
works156 is life plus 50 years.157 Software copyright exists from the date on which its development 
is completed. The term of protection for typographical designs is 10 years.  
3.251.   Registration is voluntary and is not a requirement for co pyright protection.158 The 
Copyright Law provides for copyright licensing and transfer of rights, unchanged since the previous 
review of China. The breaching of copyright is punished with fines (also unchanged from the 
previous review).159  
3.252.   The 2010 Interim Me asures for the Payment of Remuneration by Radio and Television 
Stations for Broadcasting Sound Recordings continue to mandate that broadcasting organizations 
pay remuneration to copyright owners for broadcasting musical works. With the support and 
coordina tion offered by the NCAC, the Music Copyright Society of China carr ies out actions 
intended to safeguard its legal rights against the radio and television stations that have failed to 
pay remunerations for the works broadcast.  
3.253.   As of January 2018, there were five collective copyright management organizations in 
China160, among which the Images Copyright Society of China  is the largest one (by number of 
members) with more than 14,000 members. In 2017, the Music Copyright Society of China , with 
8,907 members,  received the highest annual income (licensing revenue) of RMB 200 million, 
followed by China Audio -Video Copyright Association , with 177 members , which collected about 
RMB 186 million. The China Written Works Copyright Society , with more than 9,260 member s, 
received RMB 5.2 million of royalties for written works in 2017, and t he China Film Copyright 
Association  has 86 members, with an annual income of RMB 160,000 in 2016.  
3.3.7.4   Other IPRs  
3.3.7.4.1   Layout -designs of integrated circuits  
3.254.   Layout -designs of integrated circui ts are protected under the Regulations on the Protection 
of Layout -Designs of Integrated Circuits and under the Rules for Implementing the Regulations on 
the Protection of Layout -Designs of Integrated Circuits, unchanged since the previous review of 
China.  SIPO is the agency responsible for the registration of layout -designs of integrated circuits.  
The term of protection is 10 years from the date of filing or the date of first  commercial 
exploitation anywhere in the world, whichever is earlier. A layout -design is protected up to 
15 years after the date of the completion of its creation, irrespective of whether it has been 
registered or commercially exploited. In special circumstances, or to remedy unfair competition 
practices, a "non -voluntary" licence may b e issued to exploit a layout -design. No "non -voluntary" 
licences have been issued to date.  
                                                
156 These include: works of a legal entity or other organization ; works created in the course of 
employment and the copyright of which is held by a legal entity or other organiz ation; and cinematographic 
and photographic works. Audio and video productions, broadcasting, and public performances are also granted 
protection for 50  years from the first day of production, broadcasting, or performance.  
157 In the case of more than one ri ght holder, protection is granted for fifty years after the death of the 
last surviving right holder.  
158 The copyright on the works of Chinese citizens, legal entities or other organizations are automatically 
protected; this also applies to the copyright of  foreigners whose works are first published in China. Copyright 
protection for works published abroad has remained unchanged since the previous review.  
159 WTO document WT/TPR/S/342/Rev.1, 12 October 2016.  
160 The Music Copyright Society of China, the China A udio-Video Copyright Association, the China Film 
Copyright Association, the China Written Works Copyright Society, and the Images Copyright Society of China.  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.3.7.4.2   New plant varieties  
3.255.   The legal basis for the protection of new plant varieties in China is provided in a number of 
laws or regulations (Table 3.29), largely unchange d since its previous review.161 Among these, the 
Regulations on the Protection of New Varieties of Plants govern the application and protection of 
new plant varieties; the Regulations provide for a period of protection of twenty years from the 
date of authorization in the case of vines,  forest trees, fruit trees, and ornamental trees, and of 
fifteen  years for other plants. The Implementation Rules (Agriculture Part) and the Implementation 
Rules (Forestry Part) stipulate rules for protection of new plant varieties in agriculture and fores try 
respectively, and Rules for the Review Board on New Plant Varieties regulate the review 
procedures for the authorization of new plant varieties.  
Table 3.29 General regulatory framework of new plant variet ies protection, 2017  
Laws/Regulations  Issuing authority  Latest 
amendment  
Regulations on the Protection of New Varieties of  Plants  State Council  29 July 2014  
Implementing Rules for the Regulations of the Protection of 
New Varieties of Plants (Agriculture Part) Ministry of Agriculture  25 April 2014  
Implementing Rules for the Regulations of the Protection of 
New Varieties of Plants (Forestry Part)  Ministry of Forestry  25 January 2011  
Administrative Execution Measures of the Protection of New 
Varieties of Forestry Plants  Ministry of Forestry  30 December 2015  
Rules for the Review Board on New Plant Varieties  Ministry of Agriculture  13 February 2001  
Interpretation of the Supreme People's Court concerning Some 
Issues on Disputes of Trial of Cases over New Pl ant Verities  The Supreme People's 
Court  5 February 2001  
Interpretation of the Supreme People's Court on Some Issues 
Concerning the Application of Law in the Trial of Cases 
Involving the Disputes over Infringement upon the Rights of 
New Plant Varieties  The Supreme People's 
Court  12 January 2007  
Seed Law  National People 's 
Congress Standing 
Committee  4 November 2015  
Provisions on Infringement Cases of New Plant Varieties in 
Agriculture  Ministry of Agriculture  12 December 2002  
Source:  Information provided  by the authorities of China.  
3.3.7.4.3   Undisclosed information and trade secrets  
3.256.   There are no specific laws or regulations governing the protection of  undisclosed 
information and trade secrets . A number of laws and regulations  provide related provisions for the 
protection of undisclosed information and trade secrets, including the Anti -Unfair Competition Law, 
the Criminal Law, the Labour Law, the Regulations for the Implementation of the Law on Drug 
Control, and the Regulations on Administration of Agricultural Che micals. An a mendment to the 
Anti-Unfair Competition Law was issued by the National People's Congress Standing Committee on 
4 November 2017  and entered into force on 1 January 2018.162 A number of amendments were 
made to the Law with a view to strengthening the protection of trade secrets, such as redefining 
trade secrets, identifying more infringement behaviours, and increasing penalties for trade secret 
infringement. The authorities s tate that the amendment: improved the definition  of trade secrets; 
added "fraud" to improper access to trade secrets; added a provision that the supervisory 
inspection departments and their employees shall have an obligation to keep confidential trade 
secrets known in their investigations; and strengthened administrative punishment of infringement 
of trade secrets and other acts of unfair competition by, for example, raising the amount of 
penalties.  
                                                
161 Changes in recent years include an amendment to the Regulations on the Protection of New Varieti es 
of Plants, issued by the State Council on 29 July 2014; it stipulates that the application for a new plant variety 
in a foreign country must be made to the agriculture or forestry administrations at the provincial level. The 
Amendment of the Seed Law, w hich entered into force on 1 January 2016, included an additional chapter on 
the "Protection of New Varieties of Plants", amending provisions on violation penalties and increasing the 
compensation for and penalties against infringements of the rights of ne w varieties of plants.  
162 NPC online information (in Chinese). Viewed at: http://www.npc.gov.cn/npc/xinwen/2017 -
11/04/content_2031432.htm  [12.04.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.257.   The Regulations for the Implementation of the Law on Drug  Control,  last amended in 
February 2016163, protect s test data and other data that are self -obtained, undisclosed, and 
submitted by manufacturers or sellers to obtain approval to manufact ure or sell a drug that 
contains new chemical entities. Such undisclose d test data and other data may not be used for 
improper commercial purposes. The protection term for the manufacturer or seller is six years 
from the approval to manufactur e or sell the drug. During this period, the authorities are 
mandated to deny approva l to other applications using the same data. A similar protection term is 
granted for undisclosed data on agro -chemicals under the Regulations on Administration of 
Agricultural Chemicals , which was last amended in March 2017.164  
3.258.   The SAIC is responsible for the administrative enforcement of the law or regulations 
related to undisclosed information and the protection of trade secrets. The Ministry of Public 
Security is in charge of criminal investigations.165 In addition, the Courts may handle both civil and 
criminal cases.  
3.3.7.5   Enforcement  
3.3.7.5.1   Overview   
3.259.   Enforcement of IPRs continues to be a major challenge for China. In China, enforcement of 
IPRs is conducted at the administrative and judicial levels whereby administrative enforcement is 
conducted  by the responsible gove rnmental agencies, while judicial enforcement is conducted  
through the public security authorities, procuratorial organs, and the courts.166 According to 
regulations, all public security authorities above the prefecture and city levels in China have IPR 
crime coordinating activities and lead organizations to arrange and coordinate action to crack down 
on infringement and counterfeiting activities. The Ministry of Public Security has also concluded 
coordination and cooperation agreements with other agencies, i ncluding Customs, to facilitate the 
timely reporting of IPR infringements and prompt intervention by the public security authorities. 
Table 3.30 gives an overview of enforcement actions taken by the authorities during the period 
under review.  
Table 3.30 Intellectual property enforcement, 2014 -17 
 2014  2015  2016  2017  
Cases  dealt with by governmental agencies 
(administrative level)      
Patents       
Number of disputes  24,479 35,844 48,916 .. 
Copyright       
Number of disputes /administrative penalties   4,728 3,477 3,065  .. 
Imposition of fines ( RMB million)   13.49  9.75 134.1  .. 
Cases transferred to judicial agencies  366 160 189 .. 
Business es inspected   1,063,061 846,140 878,013  .. 
Illegal operation units banned   8,686 9,340 6,243  .. 
Underground den s detected   482 392 325 .. 
Trademarks      
Number of disputes  37,200 30,700 28,000 26,985  
Cases transferred to judicial agencies   300 164 203 172 
Value of fine (RMB million)  490 501 350 443 
Cases handled by Customs at the border   23,860  23,227  17,496  .. 
Cases dealt with by courts      
First instance civil IPR cases accepted   95,522  109,386 136,534 201,039  
First instance civil IPR cases closed   94,501  101,324 131,813 192,938  
Patent cases accepted   9,195  11,607 12,357 .. 
Patent cases closed   9,174  10,182 11,738 .. 
Trademark cases accepted   23,272  24,168 27,185 .. 
                                                
163 Chinese Government onli ne information (in Chinese). Viewed at: 
http://www.gov.cn/gongbao/content/2016/content_5139391.htm  [14.12.2017].  
164 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2017 -04/01/content_5182681.htm  [12.04.2018].  
165 In addition, the People's Courts may try both civil and criminal cases related to undisclosed 
information and the protection of trade secrets.  
166 See WTO document WT/TPR/S/342/Rev.1 for details.  WT/TPR/S/ 375/Rev.1  • China  
 
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   2014  2015  2016  2017  
Trademark cases closed   22,358  22,289 26,692 .. 
Copyright cases accepted   51,351  66,690 86,989 .. 
Copyright cases closed   52,254  62,822 84,129 .. 
Technical contract cases accepted   949 1,480 2,401 .. 
Technical contract cases closed   908 1,292 2,004 .. 
Unfair competition cases accepted   1,302  2,181 2,286 .. 
Unfair competition cases closed   1,195  1,802 2,234 .. 
Other IPR cases accepted   2,304  3,260 5,316 .. 
Other IPR cases closed   2,211  2,937 5,113 .. 
Second instance civil IPR cases accepted   11,957  15,114 20,793 .. 
Second instance civil IPR cases closed   11,553  15,025 20,334 .. 
.. Not available.  
Source:  Information provided by the authorities of China.  
3.3.7.5.2   Administrative enforcement  
3.260.   The National Leading Group on the Fight against IPR Infringement and Counterfeiting 
(NLG)  has the responsibility  for organizing the campaign against IPR infringement and counterfeit 
goods, as well as studying and formulating relevant policies and measures.167 The NLG supervises 
the implementation of work by various regions and relevant departments, as well as the hand ling 
of major cases involving IPR infringement and counterfeit goods. In September 2017, NLG 
published its Report on the Latest Development in IPR Protection and Business Environment in 
China168, which summarized the work and experience of IPR protection in recent years.  
3.261.   During the review period, the authorities issued various notices and measures with a view 
to strengthening China's  capacity to protect and enforce IPRs. These include the Opinions on Strict 
Protection of Patents issued by SIPO in November 201 6; Opinions on Strengthening Work on 
Fighting IPR Infringements and Making and Sales of Counterfeit and Fake Commodities under the 
New Situation issued on 9 March 2017169; and the National Key Points in Fighting Infringements on 
Intellectual Property and Man ufacturing and Sales of Counterfeit and Fake Commodities (2017)170, 
announced on 15 May 2017, which identified key issues in combating infringement for the next 
period.  
3.262.   In September 2017, NGL issued the Action Plan for the Protection of Intellectual Propert y 
Rights Owned by Foreign -Invested Enterprises, which focused on, inter alia , fighting against 
infringements of trade secrets for foreign -invested enterprises, protecting foreign  trademarks, and 
combating internet piracy and other copyright violations.171  
3.263.   In August 2017, a special campaign of "Qingfeng Action on Silk Road" was launched by 
NLG to combat IP infringement and counterfeiting, involving 10 provinces and municipalities across 
the "Silk Road Economic Belt" region.172 According to the authorities, betw een July and 
November  2016, the NCAC, the National Internet Network Information Office, the MIIT, and the 
Ministry of Public Security (MPS) carried out a special action (Swordnet 2016) to crack down on 
unauthorized transmission of cyber literature, news , films and television and other infringement 
and piracy; between July and November 2017, they carried out Swordnet 2017 to rectify copyright 
issues in films and television, news, software application stores, and e -commerce platforms. 
According to the authori ties, during Swordnet 2017 actions, the local authorities inspected over 
                                                
167 The NLG is chaired by the Vice Premier of the State Council; it is comprised of the Supreme People's 
Court and Supreme People's Procuratorate and 30 agencies  including the State Council ministries and organs in 
charge of IPRs, quality supervision, market regulation and crime crackdown.  
168 NLG online information (in Chinese). Viewed at: 
http://www.ipraction.gov.cn/article/xxgk/wj/201709/20170900156759.shtml  [11.04.2018] . 
169 Chinese Government online information (in Chinese). Viewed at: 
http://www.g ov.cn/zhengce/content/2017 -03/22/content_5179592.htm  [11.04.2018].  
170 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2017 -05/31/content_5198504.htm  [12.04.2018] . 
171 MOFCOM online information (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/ae/ai/20 1709/20170902645803.shtml  [12.04.2018] . 
172 NLG online information. Viewed at: 
http://english.ipraction.gov.cn/article/TopNews/201708/20170800152006.shtml  [11.04.2018 ]. WT/TPR/S/ 375/Rev.1  • China  
 
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  60,000  websites, closed down over 2,500 infringing or pirating websites, deleted more than 
700,000 infringing or pirating links, took over more than 2.7 million infringing and pirated  products, 
filed and investigated more than 500 infringing cases, and solved, together with public security 
departments, over 50 criminal cases. The authorities consider that the local authorities focused on 
the key areas , such as source regulation, use ma nagement, examination and assessment, 
improved the long-term mechanism, and enhanced the use of licensed software.  
3.264.   SIPO provides guidance on administrative enforcement concerning patents across the 
whole country. In recent years, SIPO adopted a number of policies and measures to strengthen its 
own capacity to enforce IPR protection. During the review period, SIPO continued the special 
"convoy"  campaign, which aimed at carrying out intensive inspections and the rectification of law 
enforcement measures with  respect to the circulation, production, import and export of patent 
infringing goods. In 2016, SIPO issued a Notice on Deepening Collaborative Mechanism of Patent 
Law Enforcement in E -commerce, as the guidance for local intellectual property offices to es tablish 
a patent protection mechanism in e -commerce. SIPO also established the Collaborative Centre 
(Zhejiang) of Patent Law Enforcement in E -commerce responsible for collaborating with law 
enforcement organizations in cases of patent protection complaints  among e -commerce platforms 
in Zhejiang.  
3.265.   Regarding copyright, NCAC is the agency responsible for administrative enforcement. In 
2015, NCAC issued the 201 5 National Work Plan of Cracking Down on Copyright Infringement and 
Counterfeiting in the Sector of Press and Publishing (Copyright) with provisions to fight 
counterfeiting as well as privacy and copyright violations.173 NCAC has continued to conduct the 
"Netw ork Sword Campaign" through which cases of online copyright infringements and piracies 
were investigated by the local copyright authorities. According to the authorities, the 2017 
Network Sword Campaign focused on maintaining the order of online copyright.174 
3.266.   Under TMO's direction, industry, commerce and market regulatory departments at various 
levels engage in administrative enforcement on trademarks. The authorities indicate that these 
departments in China investigated and dealt with 26,985 cases of tradema rk infringement and 
counterfeiting  involving  RMB 333.5 million, confiscated RMB  443.1 million, and transferred 
172 criminal cases to judicial organs in 2017.  
3.267.   On 20 September 2017, the TMO launched a campaign of "Traceability" to combat 
trademark infringem ent. The campaign focused on the protection of well -known trademarks, GIs, 
foreign -related trademarks, and trademarks of time -honoured brands. The authorities consider 
that the campaign has effectively prevented and contained the regional and industrial ri sks of 
trademark infringement.  
3.3.7.5.3   Judicial enforcement  
3.268.   During the review period, China continued its efforts to strengthen  the capability of judicial 
enforcement  of IP protection. In July 2016, the Supreme People's Court issued Opinions of the 
Supreme People's Court on Promoting the "Three in One" Trial of Civil, Administrative and Criminal 
Cases Involving Intellectual Property Rights in Courts Nationwide175 with a view to optimizing the 
allocation of judicial resources and improving the overall effective ness of judicial protection. "Three 
in One" Trial refers to the unified trial of criminal, civil and administrative cases by the special 
tribunal for IPR. As of December 2017, 11 special tribunals for IPR were established by the 
Supreme People's Court in t he cities of Nanjing,  Suzhou,  Wuhan,  Chengdu,  Hefei,  Ningbo,  
Hangzhou,  Jinan,  Qingdao,  Fuzhou, and Shenzhen .176  
                                                
173 NCAC online information (in Chinese). Viewed at: 
http://www.ncac.gov.cn/chinacopyright/contents/483/252445.html  [12.04.2018] . 
174 NCAC online information (in Chinese). Viewed  at: 
http://www.ncac.gov.cn/chinacopyright/contents/10873/346912.html  [12.04.2018] . 
175 Supreme People's Court online information. Viewed at: 
http://gongbao.court.gov.cn/Details/8622d4b6e92256eb4cdfb4dcdd6585.html  [12.04.2018] . 
176 The dates on which the 11 tribunals were established are as follows: Nanjing (19 J anuary 2017), 
Suzhou (19 January 2017), Wuhan (22 February 2017), Chengdu (9 January 2017), Hefei (30 August 2017), 
Ningbo (8 September 2017), Hangzhou (8 September 2017), Jinan (28 September 2017), Qingdao 
(30 September 2017), Fuzhou (28 September 2017), and Shenzhen (26 December 2017).  WT/TPR/S/ 375/Rev.1  • China  
 
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  3.269.   In 2016, the Supreme People's Court issued the Outline of the Judicial Protection of 
Intellectual Property in China (2016 -2020). The Outline defi ned the principles for the judicial 
protection of intellectual property and proposed a number of measures focusing on establishing a 
coordinated and open intellectual property judicial protection policy system. According to the 
authorities, this is the fir st time that the Supreme People's Court has formulated and issued a 
protection outline targeted at the adjudication of  IP cases.  The Supreme People's Court continued 
issuing several annual reports regarding IP cases and the judicial enforcement of IPR s, including 
the Judicial Protection of Intellectual Property by Chinese Courts, Ten Major Cases and Fifty Model 
Cases on Intellectual Property Rights in Chinese Courts, and the Annual Report of the Supreme 
People's Court on Intellectual Property Cases.  
3.270.   The Supreme People's Court  promulgated a number of provisions and measures for the 
operation of the IPR courts. These include: the Guidance of Election for Technical Ombudsman of 
IPR Courts (Trial); the Interim Provisions of the Supreme People's Court on Sev eral Issues 
concerning the Participation of the Technical Investigators of Intellectual Property Courts in Legal 
Proceedings; and Opinions on Selecting and Appointing Judges for Intellectual Property Right 
Courts (Trial).  
3.3.7.5.4   Customs law enforcement  
3.271.   China Cus toms is in charge of IPR enforcement at the border  in accordance with the 
Customs Law, the Regulations on Customs Protection of Intellectual Property, and Rules of the 
Customs for Implementing the Regulations on Customs Protection of Intellectual Property.  Right 
holders of trademark s, copyrights, copyright -related rights, and patent rights protected under the 
laws and regulations and related to the import or export of goods may apply to Customs for the 
detention of suspected infringing goods. Where the righ ts have been recorded with the General 
Administration of Customs, Customs have the authority to suspend the infringing goods involving 
such rights by ex officio action.  
3.272.   GACC issued the Implementing Rules on the Disclosure of the Information about 
Administ rative Penalty Cases Concerning the Import and Export of Products Infringing Intellectual 
Property Rights by China Customs in Accordance with the Law (Trial) in April 2014; the Rules 
required the disclosure of information regarding  administrative penalty c ases concerning IPR on 
the web portal of China Customs. In 2015, China Customs disclosed information regarding  more 
than 1,000 administrative penalty cases concerning IPR, and this figure reached 1,900  in 2016.177 
3.273.   With a view to encouraging enterprises to fi le with Customs for IPR protection, GACC has 
cancelled the customs filing fee for IPR protection (RMB 800/piece) since 1 November 2015.  
3.274.   Since 2015, Customs have been conducting the special campaign of "QingFeng" to combat 
IPR infringement at the border to  intensify risk analysis and control on key commodities, such as 
food, pharmaceuticals, automobile parts, mechanical and electrical products, mobile phones and 
parts, and medical equipment, as well as on key shipping routes and ports, so as to combat IPR 
infringement in a more focused and targeted way.178 Between 2015 and 2017, China Customs 
seized about 53,300 shipments of infringing goods, valued at around RMB 520 million. According 
to the authorities, with a view to further combatting cross border infringe ment, China Customs 
conducted, in 2016 -17, four special operations with US Customs, two special operations with 
Russia Customs, as well as over ten special operations with "Hong Kong Customs" and "Macao 
Customs"; China Customs has also finalized an Action Plan concerning EU -China Customs 
Cooperation on Intellectual Property Rights (2018 -2020) with EU Customs, and discussed a 
bilateral cooperative document with Kazakhstan Customs.  
3.275.   In July 2016, a High -Level Conference on Intellectual Property for Countries along the Belt 
and Road was held.179 The 48 countries that attended the conference adopted the Common 
Initiatives for Strengthening Cooperation between Countries along the "Belt and Road" in the field 
                                                
177 Information and data provided by China authorities.  
178 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce /content/2015 -04/09/content_9585.htm  [12.04.2018].  
179 SIPO online information. Viewed at: http://english.sipo.gov.cn/specialtopic/tbar  [11.04.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  of Intellectual Property.180 In May 2017, the SIPO and the World Intellectual Property Organization 
(WIPO) signed an Agreement on Enhancing "Belt and Road" Intellectual Property Cooperation 
between the Government of the People's Republic of China and WIPO to share information and 
experience on IPR protection and r aise the awareness of IPR protection among the enterprises of 
the countries concerned.181 
 
 
                                                
180 SIPO online information. Viewed at: 
http://english.sipo.gov.cn/specialtopic/tbar/headlines/201607/t20160727_1282731.html  [11.04.2018].  
181 WIPO online information. Viewed at: http://www.wipo.int/about -
wipo/en/offices/china/news/2017/news_0001.html  [11.04.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  4  TRADE POLICIES BY SE CTOR  
4.1  Agriculture, Forestry, and Fisheries  
4.1.1   Features and market development  
4.1.  Although the value of production in the farming, animal husbandry, forestry and fisheries 
sector grew during the period 2013 -17, it was at a slower pace than other sectors; as a 
percentage of GDP, it declined from 9.6% in 2013 to 8.2% in 2017 (Table 4.1). At the same time, 
employment in the sector continued to drop from 31.4% in 2013 to 27.0% in 2017.  
Table 4.1 Principal indicators for agriculture, animal husbandry, forestry and fisheries, 
2013 -17 
 2013  2014  2015  2016  2017  
Contribution to current GDP (%)  9.6 9.3 9.1 8.9 8.2 
Real growth rate (%)  4.0 4.2 4.0 3.5 4.1 
Employment (percentage of total employment)a 31.4 29.5 28.3 27.7 27.0 
Share of gross output value (%)b      
 Farming  55.1 55.7 56.1 55.3 56.5 
 Forestry  4.2 4.3 4.3 4.3 4.6 
 Animal husbandry  30.4 29.5 29.0 29.6 27.6 
 Fishery  10.3 10.5 10.6 10.8 11.3 
a Percentage of employment of the primary industry in total employment including mining; 
employment data for employment in agriculture, forestry, animal husbandry and fisheries, 
respectively, were not available.  
b Including auxiliary services.  
Source:  National Statistics of China online information.  
4.2.  The value of production of agricultural basic products continued to increase during the 
period  2013-16, reaching RMB 10,055 billion in 2016 (Table 4.2). The comparative evolutions of 
volume and value during the period varied considerably depending of the product (Charts 4.1 
and 4.2). For pigs, the increased value was due to higher prices, while production slightly declined 
from its peak in 2014. In the case of corn, the volume remained largely stable since 20 13, while 
the value of production increased steadily. In the case of cotton, the value fell more than the 
volume. No data were made available by the authorities on the volume of production of cereals, 
fruits and nuts, and vegetables.  
Table 4.2 Agricultural production , 2013 -17 
 Value of 
production of 
agriculture, 
forestry, animal 
husbandry and 
fishery  Corn Cereal s Pigs Poultry  Fruit s 
and nut s Vegetable s Cotton  
RMB 1 million         
2013 8,736,069  475,520  601,460  1,256,060  703,221  696,898  1,626,247  142,203  
2014 9,189,183  479,173  619,302  1,229,759  739,378  1,011,947  1,757,014  130,934  
2015 9,617,574  431,493  612,906  1,285,965  739,547  1,115,353  2,009,154  104,142  
2016 10,054,073  372,268  608,911  1,439,154  761,912  1,150,096  2,141,818  93,049  
1,000 tons         
2013 .. 218,489  .. 54,930  17,984  .. .. 6,299  
2014 .. 215,646  .. 56,714  17,507  .. .. 6,178  
2015 .. 224,632  .. 54,865  18,263  .. .. 5,603  
2016 .. 219,552  .. 52,991  18,882  .. .. 5,299  
2017 .. 215,891  .. 53,401  18,972  .. .. 5,486  
.. Not available.  
Source:  Information provided by the authorities.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Chart 4.1 Value of production  
(RMB million)   
 
Source:  Data provided by the authorities.  
Chart 4.2 Volume of production  
(2005 = 100)  
 
Source:  Data provided by the authorities.  
4.3.  China continues to be a net importer of agricultural products, although imports of them 
represented only 6.3% of total merchandise imports in 20 17, and the value of imports (in US 
dollar terms) declined during the period 2013 -16 (before rebounding in 2017). The top 
five agricultural exports by tariff lines (at HS  four-digit level) were fruits and vegetables; they 
WT/TPR/S/ 375/Rev.1  • China  
 
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  represented less than 30% of all a gricultural exports. For imports, soya beans represent ed about 
one third of all imports of agricultural products , and the next four tariff lines combined only 
one eighth (Table 4.3) .  
Table 4.3 Main agricultural exports and imports of China, 2013 -17 
 2013  2014  2015  2016  2017  
Exports       
Agricultural products (US$ million)  47,625.4  50,440.5  50,585.9  52,646.3  54,689.2  
 Top five exports at HS 4-digit level (% of 
total):        
  0712 Dried vegetables  4.8  4.8  5.6  6.2  7.3  
  0703 Onions  3.8  3.8  4.7  6.0  5.0  
  2008 Fruit, nuts, preserved, n.e.s.   5.6  5.3  5.1  4.8  5.0  
  2005 Other prepared/preserved vegetables  3.6  3.7  3.7  3.8  3.9  
  0808 Apples, pears and quinces, fresh  2.9  2.7  2.9  3.7  3.7  
Agricultural products (% of total exports)  2.2  2.2  2.2  2.5  2.4  
Agricultural products (growth rate, %)  7.2  5.9  0.3  4.1  3.9  
Fishery (US$ million)   20,263.3  21,698.4  20,333.0  20,737.8  21,150.1  
Fishery (% of total exports)   0.9  0.9  0.9  1.0  0.9  
Fishery (growth rate, %)  7.2  7.4  -6.2  2.2  2.0  
Imports       
Agricultural products (US$ million)  112,483.8  114,731.2  109,407.0  103,574.6  116,418.5  
 Top five imports by HS 4 -digit level (% of 
total):        
  1201 Soybeans  33.8  35.1  31.8  32.8  34.0  
1901 Food preparations of cereals, flour or 
milk 1.8  1.8  2.6  3.3  3.8  
  0203 Meat of swine  1.0  0.9  1.3  3.1  1.9  
  1511 Palm oil and its fractions  4.4  3.8  3.4  2.8  3.0  
  0206 Edible offals (excluding poultry)  1.4  1.3  1.2  2.4  1.9  
Agricultural products (% of total imports)   5.8  5.9  6.5  6.5  6.3  
Agricultural products (growth rate, %)  6.3  2.0  -4.6  -5.3  12.4  
Fishery (US$ million)  8,638.0  6,827.8  6,556.2  7,086.9  8,285.4  
Fishery (% of total imports)  0.3  0.3  0.4  0.4  0.4  
Source:  Information provided by the authorities.  
4.1.2   Policy objectives and administration  
4.4.  The Government is responsible for establishing the general agricultural policy framework and 
the rules for its implementation. The Ministry of Agriculture , together with other institutions, inter 
alia, the NDRC, the Ministry of Finance, and MOFCOM, are in charge of implementing agricultural 
policy. The legal framework regulating the sector has not undergone any major changes since the 
previous Re view.  
4.5.  The broader policy goals stated in the 12th Five-Year Plan (2011 -2015) and the 13th Five-Year 
Plan (2016 -2020) of accelerating modernization in the sector to improve farmers' well -being was 
reiterated in the CPC Central Committee No.  1 Document of 2 017. This document calls for 
deepening the supply -side structural reform in agriculture, by improving structures, promoting 
"green" production, extending the sector's industrial and value chain, boosting innovation and 
consolidating shared rural developmen t. In that context, national grain security must be 
guaranteed . China plans to deepen the reform on pricing mechanisms for major farm products to 
strengthen the role of market mechanisms, so as to assure that farmers sell their harvest at 
reasonable prices . A key goal is to increase the output of high -quality products based on green and 
innovative production. To achieve that goal, China is to maintain its zero increase in the usage of 
pesticides and fertilizers, vigorously control water usage in the sector,  and enhance research.  The 
reform also aims to refine the quality supervision and standard s system for farm produce, control 
soil pollution and encourage agricultural businesses to gain international certifications. China plans 
to promote the export of competitive farm produce and the cross-border operation of agricultural 
enterprises.   
4.6.  Rural dev elopment and continuous income increases for farmers are also key goals of 
agricultural policy. The Government intends to increase fiscal spending , and loans for farmers and 
for the development of agriculture and the countryside. Migrant workers, from rura l to urban 
areas, are encouraged to return to rural areas and start businesses, while training for professional WT/TPR/S/ 375/Rev.1  • China  
 
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  farmers, including professional agricultural managers, is to be stepped up , in addition to support 
with financing, land use and social insurance . Local governments are encouraged to start business 
parks and incubators for the returnees.  
4.7.  During the period under review , China's land management system has remained unchanged1, 
except for the charging of a land user fee since 2015. However, Central Doc ument No. 1 of 2017 
indicates that a rural land reform is to be implemented based on pilot programmes and 
experiences .2 This reform is aimed at ensuring the separation of collective ownership, contracting 
rights of farmer households, and operating rights o f rural land , thereby allowing farmers to earn 
more by transferring their land rights to individuals or conglomerates.3  
4.1.3   Policy instruments   
4.1.3.1   Border measures   
4.1.3.1.1   Measures affecting imports  
4.8.  Agricultural products (WTO definition) are, with the exception of some animal products, 
all subject to ad valorem  applied rates.4 In 2017, the average tariff on agricultural products 
remained unchanged , at 14.8%. The product groups subject to higher -than-average tariff 
protection included sugars and confectionary (30.9%); cereals and preparations (23.3%); cotton 
(22.0%); beverages, spirits and tobacco (21.8%); and coffee and tea (14.9%). The simple 
average tariff for oilseeds, fats, and oils (including soyb eans, one of China's major imports) was 
the lowest among agricultural products, at 10.5% ( Table  A3.2) . In addition, the variability of 
agricultural tariffs, with a standard deviation of 11.3, was higher than non -agricultural products 
(standard deviation of  6.3), and variability was particularly high for: cereals and preparations 
(standard deviation 20.6); and sugars and confectionary (standard deviation 16.7). In 2017 , the 
simple average applied MFN tariff for wood and forestry5 was 0.6% , and for fish and f ishery 
products it was 10.1%.  
4.9.  China continues to make use of tariff rate quotas (T RQs). Since its previous Review, there 
have been no substantial changes regarding the products subject to T RQs, the tariff rates applied, 
or the system to allocate them (Tabl e 4.4). In -quota and out -of-quota rates have not changed; 
they are all ad valorem , with the exception of the out -of-quota rate for one type of cotton 
(HS 52.01.00.00). Out -of-quota imports of this type of cotton may be subject to a sliding duty that 
depend s upon the price of cotton, but that cannot exceed 40% (i.e. the bound rate for cotton). 
Under this system, China fixes a threshold price (RMB 15/kg in 2015 ). If the price of imports is 
equal to or higher than the threshold price , a specific duty of RMB 0. 57/kg is levied, and if the 
import price is lower than the threshold price, an ad valorem  rate based on the formula applies ).6 
Out-of-quota rates for other products are , in most cases , equal to bound rates.  
                                                
1 Farmland is owned by village collectives, which extend contracts to individual households, current ly for 
"at least 30 years". Within the period of the contract, individual farmers are guaranteed the right to occupy, 
use and profit from the tenure of the land (WTO (2014), Trade Policy Review  – China ). 
2 Based on the "Opinions of the General Office of th e CPC Central Committee and the General Office of 
the State Council on Improving the Measures for Separating Rural Land Ownership from Contracted 
Management Right" of October 2016. While maintaining the principle of the collective ownership of land, the 
reform is to loosen the control on land operating rights. The owners of land operating rights shall be entitled to 
occupy, cultivate and seek profits from the land within a certain period. The land operating rights obtained 
through transfer contracts shall b e protected equally to ensure stable operating revenues, provided that the 
ownership of collective and contracting rights of farmers are protected according to law. In addition, the reform 
is to clarify numerous issues occur ring after the expiration of contracts , encourage the exploitation of land at 
an appropriate scale , and prevent land division through the encouragement of land transfers, share purchases, 
trusteeships and withdrawals.  
3 Conglomerates are defined as " corporate or unincorporated bodies tha t are independently involved in 
production and operating activities that conform to provisions of Chinese laws and regulations".  
4 These products are six tariff lines of HS Chapter 02 (meat and edible offal of poultry) and one tariff 
line of  HS Chapter 05 (products of animal origin).  
5 This includes HS 4401, 4402, 4403, 4406, 4407, 4409, 4501, 4502, and 47.  
6 The variable rate is calculated according to a formula, which may be viewed in: Ministry of Finance 
(2015), Customs Tariff of Import and Export of the  People's Republic of China 2015  (The Legal Texts), Beijing, 
p. 442.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 4.4 Tariff rate quotas on agricultural products and their utilization, 2015 -16 
Products  Out-of-
quota 
rates  In-quota 
rates  Tariff 
quota 
quantity  In-quota imports  
2015  2016  
(%) (tonnes)  
Wheat (7 lines)    9,636,000  5,535,000  3,004,000  
Wheat and meslin (4 lines)   65 1    
Wheat or meslin flour (1 line)  65 6    
Groats and meal of wheat (1  line)  65 9    
Pellets of wheat (1 line)   65 10    
Corn (5 lines)    7,200,000  3,266,000  2,599,000  
Maize (corn) seed (1 line)  20 1    
Maize (corn) other than seed 
(1 line) 65 1    
Maize (corn) flour (1 line)   40 9    
Groats and meal of corn (1 line)   65 9    
Pellets of corn (1 line)   65 10    
Rice (14 lines)     5,320,000  2,271,000  2,579,000  
Rice (10 lines)   65 1    
Rice flour (2 lines)   40 9    
Meal of rice (2 lines)   10 9    
Sugar (7 lines)   50 15 1,945,000  1,945,000  1,945,000  
Wool, not carded or combed (6  lines)   38 1 287,000  287,000  287,000  
Cotton (2 lines)  40 1 894,000  894,000  894,000  
Note:  The n umber of tariff lines in brackets refers to the 2015 tariff schedule.  
Source:  WTO document G/AG/N/CHN/30, 2 February 2016; and Ministry of Finance (2015), Customs Tariff of 
Imports and Export of the People's Republic of China , 2015.   
4.10.   The NDRC is responsible for allocating TRQs for  grains and cotton, and MOFCOM allocates 
the rest. Some products subject to TRQs (i.e. grains, cotton, and sugar) are also subject to state 
trading. In these cases, one part of the quota is allocated to state -trading enterprises and the 
other part to other  enterprises. The administration methods of the TRQs as described by China in 
its notification to the WTO (MA:1 G/AG/N/CHN/2) have remained unchanged.  
4.11.   The importation of grain (wheat, maize, rice), sugar, tobacco and cotton is subject to state 
trading.7  
4.12.   The VAT rate on agricultural domestic and imported goods stood at 11% i n 2017.8 However, 
agricultural goods produced and sold directly by farmers remain exempt from VAT. Tobacco leaf 
(i.e. sun -dried leaf tobacco and toasted leaf tobacco) purchased in China  is subject to a 
20% tobacco leaf tax.9 The authorities state that this tax is not levied on imported tobacco leaf.  
4.13.   There have been no major changes to China's import licensing regime on agricultural 
products since 2015.10  
4.1.3.1.2   Measures affecting exports  
4.14.   China does not maintain , and has not introduced , export subsidies on agricultural products.  
In addition, China has indicated in its reply to the questionnaire on export competition , circulated 
on 31 October 201611, that it provides export financing programmes (i. e. export credit, export 
credit guarantees and insurance programmes) covering , inter alia , agricultural products .  
                                                
7 See WTO documents G/STR/N/10 -15/CHN, 19 October 2015, and G/STR/N/10 -15/CHN/Corr.1, 
2 December 2016. The notifying period is 2003 -14. 
8 The State Administration of Taxation, together wi th the Ministry of Finance, issued the Circular on 
Policies for Simplifying and Consolidating Value -added Tax (VAT) Rates (Cai Shui [2017] No. 37) , which 
reduced the applicable tax rate from 13% to 11% for agricultural products.  
9 State Council Decree No.  464 [2006], Interim Regulations on Leaf Tobacco Tax. Viewed at: 
http://www.gov.cn/zwgk/2006 -05/10/content_277505.htm .  
10 MOFOM and GACC Announcement No. 34 [2015 ]. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201508/20150801078101.shtml  [05 April 2018].  
11 Document G/AG/W/125/Rev.7/Add.2.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.15.   The authorities stated that China did not provide food aid in 2015. In 2016, in response to 
the appeal of the United Nations or at the reques t of recipient countries, China provided food aid to 
a total value of US$12.5 million through  the World Food Programme (WFP) and the International 
Committee of the Red Cross (ICRC) to Ethiopia, Jordan,  Lebanon, Somalia and Syria.  The types of 
food provided were decided by the WFP and the ICRC in order to meet the nutrition needs of the 
recipient countries. All food aid was provided in cash and re -exports were not allowed.  
4.16.   In general, exports of agricultural goods are not subject t o export taxes. In 2018, for 
agricultural products, 5 eight -digit tariff lines are subject to export tax. These products are not 
subject to export tax reimbursement.12 
4.17.   Exports of cotton, rice, maize, and tobacco are subject to state trading. These products,  
except for tobacco, are also subject to export quotas, which are managed by the NDRC , and are 
allocated only to state trading enterprises. Wheat is also subject to export quotas.  
4.18.   Destination -specific quotas remain in place for exports of live cattle, swi ne, and  chicken to 
the Hong Kong SAR and the Macao SAR. These quotas are distributed through an export licensing 
system. From 2013 to 2017, annual quotas for live cattle were 1,882,400 heads, live swine , 
57,200  heads, and live chicken s, 6.4 million. There are other products subject to export quotas 
and other restrictions, which are also administered through licences (Table 4.5). In 201 7, export 
licensing applied to  73 tariff lines (71  in 2013) at the HS eight-digit level covering agricultural 
products; thes e accounted for 19% of total goods subject to export licences  (15.8% in 2013).13 
Table 4.5 Agricultural products subject to export quotas and licensing in 2017  
Products  Type of 
licence  Comment  
Goods subject to  quota and licensing  
Rice, maize, wheat and cotton  Export quota 
licensing  The quota is allocated by  the 
NDRC , and the licence is 
issued by MOFCOM  
Live cattle, swine and fowl (for export to Hong Kong, China;  
and Macao, China); and maize, rice and wheat  Export quota 
licensing  The quota is allocated 
by MOFCOM  
Goods subject to licensing  
Live cattle, swine and fowl (for markets other than Hong 
Kong, China;  or Macao, China); and frozen and chilled beef, 
pork and chicken meat  Export 
licence  A licence is granted if the 
exporter has the relevant 
export contract  
Source:  MOFCOM GACC Decree [201 7] No. 88. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201712/20171202690523.shtml . 
4.19.   Table 4.6 describes the size of the quotas for corn flour, wheat flour and rice flour from 
2013 to 2017  
Table 4.6 Size of the export quotas for corn flour, rice flour and wheat flour, 2013 -17  
(Tonnes)  
Prod uct 2013  2014  2015  2016  2017  
Corn flour  25,000  25,000  6,400  1,000  1,050 
Rice flour  25,000  23,300  1,050  1,000  700 
Wheat flour  403,300  394,700  470,000  248,000  258,400  
Source:  Information provided by the authorities.  
                                                
12 Namely, 03019210 (eel fry), 050610 00 (acid -treated ossein and bones), 05069011 (bone meal and 
bone waste with the content from cattle and sheep), 05069019 (other bone meal and bone waste), and 
05069090 (other bone and horn).  
13 The Catalogue of Goods Subject to Export Licence of 2015, MOFCO M GACC Decree [2014] No.  94. 
Viewed at: http://www.mofcom.gov.cn/article/b/c/201412/20141200854859.shtml ; and the Catalogue of 
Goods Subject to Export Licence of 2016, MOFCOM GACC Announcement [2015] No.  76. Viewed at: 
http://wms.mofcom.gov.cn/article/zcfb /g/201512/20151201225345.shtml , 
http://www.mofcom.gov.cn/article/b/c/201412/20141200854859.shtml , and 
http://wms.mofcom.gov.cn/article/zcfb/g/201512/20151201225345.shtml . WT/TPR/S/ 375/Rev.1  • China  
 
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  4.20.   In 2017, general export prohibitions  continue d to apply to eight agricultural products14, 
while others may not be exported if processed "under processing trade".15 
4.1.3.2   Internal measures   
4.1.3.2.1  Support measures   
4.21.   In 2015, China made a notification to the WTO Agriculture Committee regarding the support 
given to the agriculture sector before 2010.16 Support programmes covering the period 2009 
to 2014 were notified by China under the SCM  Agreement (Table 4. 7).17 
Table 4.7 Legal basis for support to agriculture, forestry, and fisheries, 2009 -14 
Description  Starting 
year Form of 
subsidy  Legal basis  
Subsidy for promoting superior 
strains and seeds  2002 Financial 
appropriations  MOF Circulars Cai Nong No s. 16 and  17 
of 2004 
MOF Circular Cai Nong No.  440 of 2009  
Comprehensive subsidies for  
agricultural inputs  2006 Financial 
appropriations  General Office of the State Council Circular 
Guo Ban Fa No. 16 of 2006  
MOF Circular Cai Jian No.  1 of 2009 [2009]1  
Direct subsidy to farme rs 2004 Financial 
appropriations  State Council Circular Guo Fa No. 17 of  2004 
Subsidy for purchasing 
agricultural machinery and tools  2004 Financial 
appropriations  MOF Circular Cai Nong No. 11 of 2005  
Comprehensive Agricultural 
Development  1988 Financial 
appropriations  MOF Decree No. 84  
Fund for specialized economic 
cooperatives of farmers  2003 Financial 
appropriations  MOF Circular Cai Nong No.  87 of 2004 
MOF Circular Cai Nong No.  156 of 2013  
Fund for subsidizing the training 
of the rural migrant labour force  2004 Financial 
appropriations  MOF Circular Cai Nong No.  18 of 2005 
Subsidy fund for transforming 
agricultural scientific 
achievements and promoting 
technical services  1999 Financial 
appropriations  MOST Circular Guo Ke Ban Cai Zi No. 417 
of 2001 
MOF Circular Cai Nong No. 81 of 2004  
MOF Circular Cai Nong No. 31 of 2014  
Subsidy fund for small farmland 
water conservancy facilities , and 
key national construction projects 
on water and soil conservation  1983 Financial 
appropriations  MOF Circular Cai Nong No. 335 of 2009  
MOF Circular Cai Nong Zi No. 54 of 2012  
Subsidy for disaster prevention 
and relief in agricultural 
production  2001 Financial 
appropriations  MOF Circular Cai Nong No. 232 of 2001  
MOF Circular Cai Nong No. 3 of 2013  
Subsidy for prevention and  
control of  pests and disease in 
forestry  1980 Financial 
appropriations  MOF Circular Cai Nong No. 44 of 2005  
Subsidy fund for agricultural 
resources and ecological 
protection  1984 Financial 
appropriations  MOF Circular Cai Nong No . 139 of 2004  
MOF Circular Cai Nong No. 32 of 2014  
                                                
14 These products are: bezoar, black moss, bones, ivory, musk, some plants used to mak e perfumes 
(2 HS tariff lines), and some plants for medicinal use (WTO (2014), Trade Policy Review – China , Geneva).  
15 These products are: some products of animal origin, beverages (e.g. mineral water and alcoholic 
spirits), raw  fur skins, and silk -worm cocoons (WTO (2014), Trade Policy Review – China , Geneva).  
16 China's most recent notification regarding domestic support  covers the period 2009 -10 (WTO 
document G/AG/N/CHN/28, 6 May 2015).  
17 WTO documents G/SCM/N/220/CHN, G/SCM/N/253/CHN and G/SCM/N/284/CHN, 30 October 2015.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Description  Starting 
year Form of 
subsidy  Legal basis  
Reductions or exemptions of 
corporate income tax for 
enterprises engaged in 
agricultural, forestry, animal and 
fishery projects meeting the 
relevant standards  2008 Enterprise 
income tax 
exemption 
and reduction  Law of the People's Republic of China on  
Enterprise Income Tax (2007)   
Regulations for the Implementation of the 
Law of the People's Republic of China on 
Enterprise Income Tax (2007)   
MOF Circular Cai Shui No.  149 of  2008  
supplementary notice on  scope of agricultural 
products preliminary processing enjoying 
preferential policies for corporate income 
(Cai Shui No. 26 of 2011)  
Preferential tax policies for the 
imports of China Grain Reserves 
Corporation  2009 Import VAT 
exemption  Circular on Export Taxation Policy of State 
Grain and Oil During the 13th Five -Year Plan 
by the Ministry of Finance,  
General Administration of Customs and State 
Administration of Taxation (Cai Guai Shui 
[2016] No. 12).  
Preferential tax treatment for tea 
sold in the border areas  1994 VAT 
exemption  MOF Circular Cai Shui No. 60 of 1994  
MOF Circular Cai Shui No. 71 of 2001  
MOF Circular Cai Shui No. 103 of 2006  
MOF Circular Cai Shui No. 141 of 2009  
MOF Circular Cai Shui No. 89 of 2011  
MOF Circular Cai Shui No. 73 of 2016 
Preferential tax treatment for 
imported products for the 
purpose of replacing the planting 
of poppies  2000 Tariff and 
import VAT 
exemption  MOF Circular Cai Shui No.  63 of 2000  
Preferential tax policies on 
imports of seeds (seedlings), 
breeding stock (fowl), fish fries 
(breeds) and wild animals and 
plants kept as breeds during the 
period of the "11th Five-Year Plan" 
and the "12th Five-Year Plan"  2006 Import VAT 
exemption  Circular on Provenance Taxation Policy of 
Imported Seeds During the 13th Five-Year 
Plan by Ministry of Finance  
State Administration of Taxation (Cai Guai 
Shui [2016] No. 26)  
Source:  WTO document s G/SCM/N/220/CHN, G/SCM/N/253/CHN and G/SCM/N/284/CHN, 30 October 2015 , 
and information provided by the authorities.  
4.22.   The subsidy for promoting superior strains and seeds, the direct subsidy to farmers (rice, 
wheat and corn), and the comprehensive subsidy for agricultural inputs were combined, on a pilot 
basis, into a new "agriculture support and preservation subsidy". The pilot phase to ok place in 
2015 in five  provinces: Anhui, Zhejiang, Hunan, Shandong and Sichuan. The aim s of the reform 
were the preservation of farmland productivity and the appropriate realization of economies of 
scale in the management of arable land.  Subsidy criteria  were formulated according to local 
conditions. Subsidy amounts were linked to the cultivated land area contracted by farmer 
households, and not to product varieties. In 2016, this reform was extended nationwide by the 
Ministry of Finance, along with other  departments such as the Ministry of Agriculture, based on the 
results of the pilot phase.  
4.23.   In 2017, 19 "special transfer payment programmes" were combined into 10 programmes. 
The "large special programmes + task list" management model will be explored and implemented. 
According to the authorities, t he aims of the reform are to regroup program mes under  large 
umbrella program mes, to disperse funds once rather than by instalments , and to delegate 
execution to local governments through the establishment of "tas ks lists" , allowing local 
governments to adapt policies to local conditions, while improving budgeting performance 
management mechanisms, and to change the modalities of certain policies so as to switch them 
from a WTO point of view from the amber box to t he green one. No information was made 
available regarding  how the subsidies schemes notified to WTO (described above in Table 4. 7) 
would be converted and regrouped into these new programmes. However , based on the successive 
budgets allotments for agricultu ral programmes for 2014 -17, the Secretariat has compiled the 
evolution of the programmes and the amount allotted to each programme. These data may , 
however , not be fully exhaustive. This information is detailed in Table 4. 8. WT/TPR/S/ 375/Rev.1  • China  
 
- 119 - 
 
  Table 4.8 Support programmes and budget outlays, 2014 -17 
(RMB 100 million)  
2014  2014  2015a, 2016  2015b 2016c 2017d 2017e 
Agriculture  
Subsidy fund 
for insurance 
premium of 
agriculture and 
forestry  119.83  Subsidy fund 
for insurance 
premium of 
agriculture and 
forestry  125.30  135.67  Subsidy fund for insurance 
premium of agriculture and 
forestry  146.70  
Comprehensive 
Agricultural 
Development 
Fund 341.00  Comprehensive 
Agricultural 
Development 
Fund 365.00  383.00  Comprehensive Agricultural  
Development Fund  365.00  
Subsidy fund 
for agricultural 
resources and 
ecological 
protection  179.85  Subsidy fund 
for agricultural 
resources and 
ecological 
protection  199.92  230.42  Subsidy fund for agricultural 
resources and ecological protection  218.60  
Fund for 
subsidizing the 
prevention of 
animal 
epidemic s 50.18  Fund for 
subsidizing the 
prevention of 
animal 
epidemic s 59.27  60.06  Fund for subsidizing the prevention 
of animal epidemic s 60.11  
Fund for 
disaster 
prevention and 
relief in 
agricultural 
product ion 31.71  Fund for 
disaster 
prevention and 
relief in 
agricultural 
production  34.67  34.53  Fund for disaster prevention and 
relief in agricultural production & 
the Control of Super -large Flood 
and the Relief of Super -large 
Drought  (a new programme)  73.00  
The Control of 
Super -large 
Flood and the 
Relief of 
Super -large 
Drought   28.45  The Control of 
Super -large 
Flood and the 
Relief of 
Super -large 
Drought  28.60  37.50  
Fund for the 
Development 
of Modern 
Agricultural 
Production  130.10  Fund for the 
Development 
of Modern 
Agricultural 
Production  201.70  198.50  Fund for the Development of 
Agricultural Production  
(This fund is designed to cover 
several previous subsidies and 
funds.)f (a new programme)  1,913.10  
Subsidy for 
purchasing 
agricultural 
machinery and 
tools 227.55  Subsidy for 
purchasing 
agricultural 
machinery and 
tools 227.55  228.09  
Subsidy fund 
for 
transforming 
agricultural 
scientific 
achievements 
and promoting 
technical 
services  126.14  Subsidy fund 
for 
transforming 
agricultural 
scientific 
achievements 
and promoting 
technical 
services  152.45  152.30  
Fund for 
supporting 
livestock 
development  39.83     
Fund for 
supporting the 
training of 
farmers  11.00 Fund for 
supporting the 
training of 
farmers  11.00  13.90  
Fund for 
Specialized 
Economic 
Cooperatives 
of Farmers  20.00     
Comprehensive 
subsidies for 
agricultural 
inputs  1,077.15  Agriculture 
Support and 
Preservation 
Subsidy  
(According to 
the reform of 
"the three 1,434.91  1,404.91  
Subsidy for 
promoting 
superior 207.23  WT/TPR/S/ 375/Rev.1  • China  
 
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  2014  2014  2015a, 2016  2015b 2016c 2017d 2017e 
strains and 
seed subsid ies", the 
Subsidy for 
Promoting 
Superior 
Strains and 
Seeds, the 
Direct Subsidy 
to Farmers 
(rice, wheat 
and corn), and 
the 
Comprehensive 
Subsidy for 
Agricultural 
Inputs were 
combined into 
the Agriculture 
Support and 
Preservation 
Subsidy .)g  Direct subsidy 
to farmers 
(rice, wheat 
and corn)  
(*This subsidy 
belonged to 
another special 
transfer 
programme , 
expenditures 
on grain and 
oil material 
reserve, thus 
was not 
included in  the 
19 agricultural 
special transfer 
programmes. 
It was added 
here to 
illustrate the 
reform of the 
three 
subsidies.)  .. 
Loan-oriented 
subsidies to 
rural financial 
institutions  26.19  Special fiscal 
fund for 
inclusive 
financial 
developmenth 157.74  162.74  Special fiscal fund for inclusive 
financial development  152.50  
Incremental 
incentives for 
financial 
institutions 
engaged in 
agriculture 
loans at county 
level 26.03  
Subsidy fund 
for small 
farmland water 
conservancy 
facilities and 
key national 
construction 
projects on 
water and soil 
conservation  228.08  Subsidy fund 
for farmland 
water 
conservancy 
facilities and 
key national 
construction 
projects on 
water and soil 
conservation  436.06  392.43  Fund for the development of 
water  conservancyi 651.53  
Special fiscal 
fund to 
alleviate 
poverty  424.55       
Fund for 
subsidizing 
local water 
resource s        
  Subsidy for 
target price s 356.84  538.49  Subsidy for target price s 603.68  
  Subsidy funds 
for the 
confirmation, 
registration 
and issuance 
of certificates 
on the right to 
contracted 
management 
of rural land  45.80  60.00  Subsidy funds for the confirmation, 
registration and issuance of 
certificates on the right to 
contracted management of rural 
land 54.36  
Forestry and water conservancy  
Fund for 
subsidizing 
forestry  301.90  Fund for 
subsidizing 
forestry  350.55  418.37  Fund for the reform and 
development of forestry  464.23  WT/TPR/S/ 375/Rev.1  • China  
 
- 121 - 
 
  2014  2014  2015a, 2016  2015b 2016c 2017d 2017e 
Fund for the 
comprehensive 
renovation of 
river and lake 
reservoir s 322.84  Fund for the 
comprehensive 
renovation of 
river and lake 
reservoir s 288.86  182.80  Fund for the development of 
water  conservancyj 651.53  
Fund for the 
prevention and 
control of 
nationwide 
flood disaster s 40.14  Fund for the 
prevention and 
control of 
nationwide 
flood disaster s 41.06  14.50  
Fund for large 
and medium -
sized reservoir 
resettlement s 34.00  Fund for large 
and medium -
sized reservoir 
resettlement s 36.40  36.40  Fund for large and medium -sized 
reservoir resettlement s 36.40  
     Fund for the ecological protection 
and restoration of forestry  410 
.. Not available.  
a 2015 Government budget, http://yss.mof.gov.cn/2015czys/201503/t20150324_1206399.html  (in Chinese).  
b http://yss.mof.gov.cn/2015js/201607/t20160713_2354962.html  (in Chinese).   
c http://yss.mof.gov.cn/2016js/201 707/t20170713_2648693.html  (in Chinese).  
d 2017 government budget, http://yss.mof.gov.cn/2017zyys/201703/t20170324_2565746.html  (in Chinese).  
e Figures for 2017 are drawn from the  proposed budget for 2017.  
f http://www.mof.gov.cn/zhengwuxinxi/caizhengwengao/2017wg/wg201706/201708/t20170818 
_2676160.html , http://www.mof.gov.cn/zhengwuxinxi/caizhengwengao/wg2016/wg201608/ 
201612/t20161215_2483056.html  (in Chinese).  
g Http://www.moa.gov.cn/zwllm/zcfg/qnhnzc/201604/t20160426_5108762.htm  (in Chinese).  
h Http://jrs.mof.gov.cn/zxzyzf/p hjrfzzxzj/201612/t20161229_2508630.html  (in Chinese).  
i Http://www.mof.gov.cn/zhengwuxinxi/caizhengwengao/201708/t20170814_2672544.html  (in Chinese).  
j Http://www.mof.gov.cn/gp/xxgkml/nys/201612/t20161212_2512266.html  (in Chinese).  
Source:  Information compiled by the WTO Secretariat . 
4.24.   In addition, a series of new programmes were set up during the period under review , and 
experimented in various provinces or agricultural zones. Table 4. 9 describes the main features of 
those new programmes and the corresponding budgetary outlays.  
Table 4.9 New subsidies programmes experimented during the period under review  
Programme  Objective  Pilot/target 
regions/zones  Surface 
area 
concerned  Tools/ 
mechanisms  Budgetary 
allotments  
The Plan for the 
Exploration and 
Implementation of 
Trials of Crop Rotation 
and Fallow Systems  - To promote 
the 
rehabilitation 
of land and 
agricultural 
sustainable 
development  
- To resolve 
disparities 
between 
grain supply 
and demand  
- To stabilize 
farmers' 
income  - Northeast 
cold/cool areas  
- Northern agro -
pastoral 
transitional z ones 
(including the 
Inner Mongolia 
Autonomous 
Region, Liaoning 
Province, Jilin 
Province and 
Heilongjiang 
Province)  
- Groundwater 
funnel areas, 
areas 
contam inated 
with heavy metals  
- Southwest rocky 
desertification 
areas (Guizhou 
Province and 
Yunnan Provinc e) 
- Northwest areas 
of severe 
ecological 
degradation 
(Gansu Province)  2016: 6.16 
million mua 
 
2017: 
12.00  
million mu  Subsidies in the 
form of 
compensation 
mechanisms 
ensuring that 
farmer s 
undertaking crop 
rotation or 
fallow do not 
incur loss of 
revenues  
- Prescribed 
time periods and 
prescribed 
regions will be 
decided on the 
Government's 
instructions but 
there shall be 
local 
differentiations 
and coercion will 
be avoided  .. WT/TPR/S/ 375/Rev.1  • China  
 
- 122 - 
 
  Programme  Objective  Pilot/target 
regions/zones  Surface 
area 
concerned  Tools/ 
mechanisms  Budgetary 
allotments  
Pilot project of the 
integrated development 
of primary, secondary, 
and tertiary in dustries 
in rural areas. (Guiding 
Opinions of the General 
Office of the State 
Council on Facilitating 
the Integrated 
Development of 
Primary, Secondary and 
Tertiary Industries in 
Rural Areas (Guo Ban 
Fa [2015] No. 93)  - To increase 
farmers' 
income  
- To extend 
the 
agricultural 
industry 
chain  E.g. Meitan 
county tea project   Subsidies and 
incentives for 
scientific 
research 
institutions, 
industry 
associations, 
and leading 
enterprises  
Incentives and 
subsidies for 
financial 
institutions  From 2015 
to 2017:  
RMB 5.7  
billion  
New round of grassland 
ecology conservation 
subsidy and reward 
policies (Circular on 
Issuing the General 
Plan for a New Round of 
Returning Cultivated 
Lands to Forests by the 
National Development 
and Reform 
Commission, the 
Ministry of Finance, the 
State Forestry 
Administration, the 
Ministry of Agriculture 
and the Ministry of Land 
and Resources) (2016)  - To increase 
vegetation 
cover  
- To 
decrease 
water and 
soil loss and 
the hazards 
of sand 
storms  Areas with large 
grassland in 
Zhangjiakou City 
and C hengde 
City, so as to 
build and 
strengthen the 
ecological barrier 
for the integrated 
development of 
Beijing and 
Tianjin  From 2014 
to 2017: 
42.4 million 
mu Compensation 
schemes to 
offset the loss of 
revenue incurred 
by herdsmen as 
a consequence 
of grazing 
prohibitions and 
restrictions  RMB 1,500 
per mu for 
forest and 
RMB 800 per 
mu for 
grasslands , 
raised in 
2016 to 
RMB 1,000 
per mu for 
grasslands , 
and in 2017 
to RMB 
1,600 per 
mu for forest  
Subsidy fund for 
farmland water 
conservancy facilities 
and water and  soil 
conservation (Circular 
of the Ministry of 
Finance and the 
Ministry of Water 
Resources on Printing 
and Distributing the 
Administrative 
Measures for the Use of 
the Subsidy Fund for 
Farmland Water 
Conservancy Facilities 
and Water and Soil 
Conservation ( Cai Nong 
[2015] No. 226))  - To support 
the 
construction 
of farmland 
water 
conservancy 
projects  
– To improve 
farmland 
irrigation 
and drainage 
conditions    In 2017, the 
Subsidy Fund for 
Farmland Water 
Conservancy 
Facilities and 
Water and Soil 
Conservation 
was 
incorporated 
into the Water 
Conservancy 
Development 
Fund. 
Administrative 
measures for 
the Fund are set 
forth in the 
Circular of the 
Ministry of 
Finance and the 
Ministry of 
Water Resources 
on Printing and 
Distributing the 
Administrative 
Measures for the  
Use of the Water 
Conservancy 
Development 
Fund (Cai Nong 
[2016] No. 
181).  2016: RMB 
39.997 
billion  
Improvement of fiscal 
policies for a new round 
of efforts to return 
cultivated land to  No regional 
differentiations  From 2014 
to 2017: 
3.72 million 
mu   2017: RMB 
21.1 billion  
The subsidy 
was raised WT/TPR/S/ 375/Rev.1  • China  
 
- 123 - 
 
  Programme  Objective  Pilot/target 
regions/zones  Surface 
area 
concerned  Tools/ 
mechanisms  Budgetary 
allotments  
forests and to grassland  from RMB 
800 per mu 
to RMB 
1,000 in 
2016, and 
was to  be 
raised from 
RMB 1,500 
to 
RMB 1,600 in 
2017.  
.. Not available.  
a 1 mu = 0.06 hectare.  
Source:  Information provided by  the authorities.  
4.1.3.2.2   Price controls and market price support systems  
4.25.   With effect from 1 January 2016, agricultural products (grains, cotton, edible vegetable oil, 
sugar, and silk) and tobacco leaf were removed from the list of products subject to price 
contro ls.18  
4.26.   Although price controls on tobacco leaf have been removed, the State continues to hold the 
monopoly for administer ing the right to produce, manufacture, sell, transport, and import and 
export tobacco and tobacco products. Private entities may import or export these products under a 
licence issued by the State Tobacco Monopoly Administration/China National Tobacco Corporation. 
The purchase of tobacco leaf and the allocation of tobacco leaf and re -dried tobacco leaf amongst 
the provinces and other juris dictions take place according to a plan designed by the planning 
department of the State Council. The total annual production of cigarettes and cigars by each 
province and other jurisdiction is also determined by a plan.  
4.27.   Apart from the list of products sub ject to price controls, minimum purchase prices remain in 
place for rice and wheat in major producing areas (Table 4. 10).19 These prices are set on a yearly 
basis by the NDRC in consultation with the Ministry of Agriculture and other government agencies. 
In 2015, after several years of incremental increases, the minimum purchase price for rice was not 
raised compared to the previous year , and reductions were applied in the years that followed. 
Similarly, the minimum purchase price for wheat was reduced  to RM B 2,300  for 2018 , after four 
years at RMB  2,36 per tonne. The state -owned company Sinograin is required to purchase grains 
at the minimum purchase price when the market price falls below the minimum price for 
three  consecutive days. Sinograin may also entr ust other state -trading entities to do so.20  
  
                                                
18 NDRC Document [2015] No. 29, 8 October 2015. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/201510/t20151020_755152.html  [05 April 2018] .  
19 I.e. for wheat , the 6 provinces of Hebei, Jiangsu, Anhui, Shandong, Henan and Hubei; for early 
non-glutinous indica rice, the 5 province s/regions of Anhui, Jiangxi, Hubei, Hunan and Guangxi; and for 
medium -late rice (including medium -late non-glutinous rice and round -grained non -glutinous rice) , the 
11 provinces/regions of Liaoning, Jilin, Heilongjiang, Jiangsu, Anhui, Jiangxi, Henan, Hube i, Hunan, Guangxi 
and Sichuan.  The total acreage and output of these wheat - and rice -producing areas account for around 
70-80% of the nationwide figures.  
20 OECD (2013), Agricultural Policy Monitoring and Evaluation 2013 – OECD Countries and Emerging 
Economies,  OECD publishing, Paris, p. 123. Viewed at: http://dx.doi.org/10.1787/agr_pol -2013-en 
[Decemb er 2017].  WT/TPR/S/ 375/Rev.1  • China  
 
- 124 - 
 
  Table 4.10 Minimum purchase prices 2012 -18 
(RMB/tonne)  
Minimum purchase price  
(RMB/tonne)  2012  2013  2014  2015  2016  2017  2018  
Wheat  2,040  2,240  2,360  2,360  2,360  2,360  2,300  
Rice - early long grain non –glutinous  2,400  2,640  2,700  2,700  2,660  2,600  2,400  
Rice - late long -grain non -glutinous  2,500  2,700  2,760  2,760  2,760  2,720  2,520  
Rice - round-grained non -glutinous  2,800  3,000  3,100  3,100  3,100  3,000  2,600  
.. Not available.  
Source:  Information provided by the authorities; and FAO Food Policy and Market Developments. Viewed at: 
http://www.fao.org/giews/food -prices/food -policies/en/  [Decemb er 2017].  
4.28.   Grain reserves of maize, rice, soya beans and wheat  maintained by the central and local 
authorities are used to regulate the supply and demand of grains, stabilize the grain market , and 
cope with major natural disasters or other emergencies.21 The criteria used to set and adjust the 
level of the stocks include population, output, consumption, and import and export. For the 
Government's grain stocks, the total rotation amounts to around 30% of the total stocks 
each year.  
4.29.   Regarding cotton, in 20 14, China stopped the procurement price system and the 
stockholding programme. They were replaced, on a pilot basis, in the Xinjiang Autonomous Region, 
by a mechanism that sets a target price for cotton. In 2014 , the target price for cotton was 
RMB 19,800 per tonne ; in 2015 , it was RMB 19,100 ; and in 2016 and 2017 , it was RMB 18,600. 
Through the new mechanism, if the market price falls below the target price, the central 
Government provides a subsidy to cotton farmers.  During the pilot reform on target cott on price s, 
the market price for cotton fell to  below that of  the target price , a situation which triggered the 
subsidy mechanism. Data on the corresponding expenditures were not made available at the time 
of writing of the present report. As of 2017, a lim it was set whereby only 85% of the national 
cotton production benefits from the mechanism. At this stage, there is no plan for the 
generalization of this pilot scheme , and there are no measures to specifically support cotton 
production in other regions.  
4.30.   A similar subsidy programme was put in place, in 2014, for soya beans in four provinces: 
Inner Mongolia, Liaoning, Jilin and Heilongjiang. In 2014, 2015 and 2016, the target price for soya 
beans was RMB  4,800/tonne.  In 2017, the policy of target price s for soya bean was cancelled. In 
2016, it was reported that the temporary stockpiling scheme for maize was to be discontinued.22 
4.31.   It has been reported that relatively high levels of domestic production, imports and the 
operation of minimum purchase price and inventory systems resulted in significant stockpiles of 
some products (Chart 4.3). The wheat stockpile was estimated to have reached 
111 million  tonnes , and the milled rice stockpile , 86.5 million tonnes , at the start of the 
2017/18  marketing year. On the other hand, the stockpiles of cotton and maize have declined 
from the peaks in 2015/16 and 2016/17 , respectively.23 Furthermore, the minimum support prices 
for rice and wheat have been reduced , while the reform of the system s of collection, storage, and 
price-formation of agricultural products will continue.24 
                                                
21 Temporary stockpiling procurement price schemes for rapeseed, potato es, highland barley and pigs 
have all been abolished.  
22 FAO Food Price Monitoring and Analysis online information. Viewed at: 
http://www.fao.org/giews/food -prices/food -policies/detail/en/c/409952/  [December 2017].  
23 USDA Foreign Agricultural Service. Online PS&D database. Viewed at: 
https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery  [March 2018].  
24 The 2018 No. 1 Document of the CCCPC and the State Council, 4 February 2018.  WT/TPR/S/ 375/Rev.1  • China  
 
- 125 - 
 
  Chart 4.3 Stocks of selected commodities at beginning of marketing years 2005/06 – 
2016/17  
'000 tonnes, except cotton ('000 480 lb bales)  
 
Source:  Online information. Viewed at: Https://apps.fas.usda.gov/psdonline/app/index.html#/app/advQuery  
[March 2018].  
4.1.3.2.3   Other measures  
4.32.   Under a subsidized agricultural insurance scheme, insurance premiums are subsidized by 
the central and local governments , so that farmers pay only a balance of 20 -30% of the premium. 
The insurance scheme covers natural disasters such as rainstorms, floods and droughts , but not 
income or levels of production . The distribution of the financing between the central Government 
and local governments varies according to the crop (Table 4.1 1).  
Table 4.11 Distribution  of the financing of the agricultural insur ance scheme between 
central and local authorities , and total public expenditure s on the scheme  
 Crops  Breeding  Non- 
commercial 
forestry  Commercial 
forestry  Tibetan 
varieties & 
natural rubber  Total 
expenditures  
Central 
Government  40% in 
central and 
western 
regions ; 
35% in the 
eastern 
region  50% in 
central and 
western 
regions ; 
40% in the 
eastern 
region  50% 30% 40% 2015: 
RMB 14.73 
billion  
2016: 
RMB 15.83 
billion  
Local 
governments  25% 30% 40% 25% 25% n.a. 
n.a. Not available.  
Source:  Information provided by the authorities.  
4.33.   In addition to the support granted to rural households through access to insurance, the 
People's Bank of China (PBOC)  has continued to take measures to increase financial deepening in 
rural areas by promoting innova tion of rural financial products and services. The outcome of these 
and other policies has been that agriculture -related loans have increased. In 2014, agriculture -
 - 20,000 40,000 60,000 80,000 100,000 120,000
Corn
Cotton
Rice, Milled
WheatWT/TPR/S/ 375/Rev.1  • China  
 
- 126 - 
 
  related loans accounted for 28% of the total loans of the banking system  (26.5% in 2015), 
amounting to RMB 23.6 trillion (RMB  26.3 trillion in 2015), an increase of 13% year -on-year.25 In 
addition, t he PBOC has set benchmarks on new deposits granted by financial institutions at the 
county  level. Financial institutions will have more flexibility in  restructuring and writing off non -
performing agro -linked loans. As a result,  in 2014, t he PBOC reduced by 0.5 percentage point s the 
reserve requirement for commercial banks that met its prudential requirements and that reached a 
certain ratio in their len ding to agriculture, rural areas and farmers.26  
4.34.   Regarding rural development, in 2016, the Government increased the lending capabilities of 
rural financial institutions by granting targeted financial subsidies for financial institutions, and 
setting up thre e special transfer payment funds for guaranteeing interest rate subsidies. In 
addition, new government and social capital cooperation (PPP) projects were integrated into 
subsidized funds, and special funds for inclusive financial development were set up.  
4.1.3.3   Levels of support  
4.1.3.3.1   WTO notifications  
4.35.   The most recent notification on domestic support from China covered the calendar 
years  2009 and 2010.27 This notification showed no support under the Blue Box (production 
limiting programmes) , and that support notified un der the Green Box had fallen to RMB 534 billion 
from a peak of RMB 593 billion in 2008 (Chart 4.4). General services were the biggest category of 
support , representing between 47% and 61% of total support notified under the Green Box, and 
under general ser vices, infrastructure services was the biggest category of support.  
4.36.   Support notified under the Amber Box (including de minimis ) had continued to increase , 
reaching RMB 123 billion in 2010 , and in no case was the administered price less than the fixed 
repre sentative price – as had been the case for some products in earlier years. In addition, while 
some food grains (wheat, rice, maize and soya beans) and cotton had been covered by 
programmes in the early 2000s, they were joined by rapeseed (in 2005), pigs (2 007), 
potatoes  (2009), and peanuts and barley (2010).   
4.1.3.3.2   OECD estimates of support  
4.37.   Compared to the methodology used to calculate the level of support provided under the 
Amber, Blue, and Green Boxes in the WTO, the OECD's annual monitoring and evaluation repo rts 
on agricultural policies in OECD countries use a different methodology to calculate the value of 
support which is expressed in a number of indicators, including: the Producer Support Estimate 
(PSE) for gross transfers from consumers and tax payers to a gricultural producers; the Total 
Support Estimate (TSE) for transfers to the agricultural sector in general; and the Single 
Commodity Transfers (SCT) for transfers to specific commodities. As previously noted, the PSE 
represents the value of transfers to p roducers, unlike support under the Amber, Blue and Green 
Boxes which measure compliance with WTO commitments. Therefore, the value of support as 
notified to the WTO is neither compatible nor comparable with the values calculated by 
the OECD.28  
4.38.   According to  the OECD, total support to agriculture increased steadily from RMB 807 billion 
in 2011 to RMB 1,727 billion 2015 , and then declined to RMB 1,641 billion in 2016. Most of the 
total support to agriculture is from market price support arising from tariff pro tection, government 
purchases and other programmes (Chart 4.5). As a result, domestic prices are, in general, greater 
than import prices, particularly for wheat and milk where the producer nominal protection 
co-efficients (the ratio of the price received b y producers to the border price) were 1.78 and 1.73 , 
                                                
25 Guo, Pei (2015), Agricu lture Finance for Sustaining Food Security. Viewed at: 
http://www.fao.org/fsnforum/sites/default/files/files/120_FSN_APEC/Sep_9a.pdf ; and information provided by 
the authorities.  
26 People's Bank of China (2015), Annual Report 2014 . Viewed at:  
http://www.pbc.gov.cn/eportal/fileDir/image_public/UserFiles/english/upload/File/20146.15.pdf . 
27 WTO document G/AG/N/CHN/28, 6 May 2015.  
28 OECD (2017), Agricultural Policy Monitoring and Evaluation 2017 , OECD Publishing, Paris. Viewed at: 
http://dx.doi.org/10.1787/agr_pol -2017-en [December 2017].   WT/TPR/S/ 375/Rev.1  • China  
 
- 127 - 
 
  respectively. The producer support estimate (PSE) was 14.5% of gross farm receipts in China, 
compared to 18.8% for OECD countries as a whole.  
4.39.   The extent to which public policy has been used to reduce price fluctuations can be seen 
from the evolution of the producer NPC , which was 0.99 in 2008 when commodity prices were 
relatively high, indicating that domestic prices were below import prices for  that year. 
Furthermore, M arket Price Support  (MPS) and Single Commodity Transfer ( SCT) were negative for 
several products, including milk, soya beans, rice, and maize , implying that policy measures 
reduced producers ' incomes in some years (Table 4.1 2).  
Chart 4.4 Green and Amber Box support, 2004 -10 
 
 
 
Source:  WTO Secretariat based on notifications   
 - 100,000 200,000 300,000 400,000 500,000 600,000 700,000
2004 2005 2006 2007 2008 2009 2010Green Box support 2004 -2010
Decoupled income support,
domestic food aid
Regional assistance
programmes
Payments for relief from
natural disasters
Public stockholding
Environmental programmes
All other general services
Research, pest and disease
control, training
Extension and advisory
services
Infrastructure services
-40,000-20,000020,00040,00060,00080,000100,000120,000140,000
2004 2005 2006 2007 2008 2009 2010Amber Box support 2004 -2010
Pigs
Peanuts, potatoes,
highland barley
Rapeseed
Cotton
Wheat
Corn (maize)
Rice
Non product-specificWT/TPR/S/ 375/Rev.1  • China  
 
- 128 - 
 
  Chart 4.5 OECD measurement of support 2004 -16 
(RMB million ) 
 
Source:  OECD PSE database. Viewed at: http://www.oecd.org/tad/agricultural -
policies/producerandconsumersupportestimatesdatabase.htm  [December 2017 ]. 
Table 4.12 OECD indicators for support to agriculture in China, 20 07-16 
(RMB million, except NPC)  
 2007  2008  2009  2010  2011  2012  2013  2014  2015  2016  
Total value 
of 
production  4,078.4  4,862.8  5,024.6  5,776.7  6,775.9  7,413.0  7,993.3  8,372.8  8,741.6  9,327.3  
TSE  568.4  370.4  719.2  884.7  806.7  1,276.4  1,431.4  1,500.6  1,727.3  1,640.8  
PSE  430.8  235.2  559.1  738.0  654.6  1,096.1  1,228.6  1,267.7  1,431.7  1,409.9  
MPS  187.5  3.1 284.6  499.0  376.0  772.1  888.6  914.9  1,037.8  1,018.8  
Producer 
NPC  1.05  0.99  1.06  1.09  1.05  1.12  1.13  1.13  1.14  1.12  
Wheat            
Value of 
production  166.0  186.2  212.8  228.1  244.1  262.2  287.3  304.4  303.1  282.3  
SCT  55.3 64.5 65.2 64.4 34.8 78.7 82.4 103.2  109.2  123.7  
MPS  55.3 64.5 65.2 64.4 34.8 78.7 82.4 103.2  109.2  123.7  
Producer 
NPC  1.50  1.53  1.44  1.39  1.17  1.43  1.40  1.51  1.56  1.78  
Maize            
Value of 
production  191.5  232.8  248.2  314.4  405.7  466.3  472.8  473.7  450.7  382.4  
SCT  32.9 -36.1 40.5 50.0 6.6 64.2 110.4  125.4  143.3  107.9  
MPS 32.9 -36.1 40.5 50.0 6.6 64.2 110.4  125.4  143.3  107.9  
Producer 
NPC  1.21  0.87  1.19  1.19  1.02  1.16  1.30  1.36  1.47  1.39  
Rice            
Value of 
production  315.3  365.0  386.6  462.0  540.8  564.0  555.9  580.8  591.7  581.0  
SCT  -2.3 -240.4  -168.6  -2.3 -56.3 162.1  176.3  185.2  210.8  168.4  
MPS  -2.3 -240.4  -168.6  -2.3 -56.3 162.1  176.3  185.2  210.8  168.4  
Producer 
NPC  0.99  0.60  0.70  1.00  0.91  1.40  1.46  1.47  1.55  1.41  
01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,00010,000,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Total value of production (at
farm gate)
Producer support estimate
 Market price support
Total support estimateWT/TPR/S/ 375/Rev.1  • China  
 
- 129 - 
 
   2007  2008  2009  2010  2011  2012  2013  2014  2015  2016  
Soya beans            
Value of 
production  43.5 55.3 52.4 55.9 57.8 60.9 54.0 51.0 41.0 45.9 
SCT  3.7 -4.7 12.2 10.1 7.3 14.5 12.6 11.2 16.6 17.2 
MPS  3.7 -4.7 12.2 10.1 7.3 14.5 12.6 11.2 13.6 14.3 
Producer 
NPC  1.09  0.92  1.30  1.22  1.15  1.31  1.30  1.28  1.50  1.45  
Milk            
Value of 
production  75.9 95.1 97.6 111.5  124.5  136.7  143.5  154.9  147.1  142.0  
SCT  -22.0 -21.2 32.7 16.2 24.3 45.1 42.3 46.8 73.2 58.1 
MPS  -22.5 -21.9 32.0 16.2 24.3 45.1 42.3 46.8 73.2 58.1 
Producer 
NPC  0.78  0.81  1.52  1.18  1.25  1.51  1.44  1.46  2.05  1.73  
Beef and veal           
Value of 
production  109.5  156.3  165.9  184.8  225.9  300.7  346.8  341.5  330.5  334.1  
SCT  -1.9 1.8 19.8 23.8 29.9 38.5 44.1 43.4 41.4 42.3 
MPS  -1.9 1.8 19.8 23.8 29.9 38.5 44.1 43.4 41.4 42.3 
Producer 
NPC  1.00  1.00  1.16  1.16  1.16  1.16  1.16  1.16  1.16  1.16  
Pig meat            
Value of 
production  907.2  856.1  722.3  798.4  1,155.3  1,069.0  1,092.1  1,024.3  1,132.4  1,214.0  
SCT  -2.6 134.7  100.1  99.5 158.8  112.3  109.3  101.6  111.0  132.2  
MPS  -7.8 126.4  89.6 99.5 158.8  112.3  109.3  101.6  111.0  132.2  
Producer 
NPC  1.00  1.16  1.16  1.16  1.16  1.16  1.16  1.16  1.16  1.16  
Poultry meat           
Value of 
production  286.1  281.2  283.2  331.2  363.9  375.0  374.8  386.3  387.0  398.5  
SCT  41.5 42.2 40.8 43.7 52.8 47.6 45.0 49.2 48.0 51.7 
MPS  41.5 42.2 40.8 43.7 52.8 47.6 45.0 49.2 48.0 51.7 
Producer 
NPC  1.17  1.17  1.17  1.17  1.17  1.17  1.17  1.18  1.18  1.18  
Source:  OECD PSE database. Viewed at: http://www.oecd.org/tad/agricultural -
policies/producerandconsumersupportestimatesdatabase.htm  [December 2017].  
4.2  Mining and Energy  
4.2.1   Mining  
4.40.   China's main mining production  is described in Table 4.1 3.  
Table 4.13 China's main mining production, 2014 -16 
Mineral products  2014  2015  2016  
Crude oil (million tonnes)  211  215  200  
Natural gas (billion m3) 130.2  134.6   136.9   
Shale gas (billion m3) 1.247  4.425  7.882  
Coal (billion tonnes)  3.87  3.75  3.41  
Ferrous metals (billion tonnes)  
 of which iron ore (billion tonnes)  1.523  
1.514  1.386  
1.381  1.287  
1.281  
Non-ferrous metal (million tonnes)  325  323  291  
Precious metal (million tonnes)  134  125  122  
Rare elements, rare earth elements and scattered elements (million tonnes)  31  20  23  
Metallurgical auxiliary materials (e.g. cannonite) (million tonnes)  103  106  105  
Chemical materials (million tonnes)  262  258  263  
Construction materials and other non -metal mineral (billion tonnes)  3.924  3.587  3.627  
Underground water and mineral water (million tonnes)  13  14  13  
Source:  Information provided by the authorities of China.  
4.41.   The main laws and regulations related to mining are: the Mineral Resources Law (amended 
on 27  August 2009); the Law on the Exploration and Development of Resources in Deep Seabed 
Areas  (effective as of 1 May 2016); the Rules for the Implementation of the Mineral Re sources Law 
(Decree No. 152 of the State Council, 26 March 1994) ; the Regulations for Registering to Explore 
for Mineral Resources Using the Block System (Decree No. 240 of the State Council, 
12 February  1998; amended on 29 July 2014); the Procedures for A dministration of Registration of WT/TPR/S/ 375/Rev.1  • China  
 
- 130 - 
 
  Mining of Mineral Resources (Decree No. 241 of the State Council o f 12 February  1998; amended 
on 29 J uly 2014); the Measures for the Administration of Transfer of Mineral Exploration Right and 
Mining Right (Decree No. 242 o f the State Council of 12  February 1998; amended on 
29 July 2014); the Regulation on the Exploitation of Continental Petroleum Resources in 
Cooperation with Foreign Enterprises (Decree No. 131 of the State Council of 7 October 1993, 
amended on 18 July 2013 ); the Regulations on the Exploitation of Offshore Petroleum Resources in 
Cooperation with Foreign Enterprises (amended on 18  July 2013) ; and the Provisional Regulations 
on Resource Tax of 25  December  1993 (amended on 30 September 2011, and implemented fro m 
1 November 2011).  
4.42.   Under the laws and regulations,  exploration permits or licences are  issued to licensees  by 
the central or the provincial Bureau of Land and Resources , with a validity of three  years, except 
exploration licences for petroleum and/or gas,  which are valid for seven years.29 Exploration 
licensees have a priority to obtain the "mining right" within the area under the exploration right 
upon discovery of mineral resources30; the holder of such permit may transfer the exploration 
permit subject to approval and compliance with the conditions for transfer.  
4.43.   The obligations of exploration permit holders include committing scheduled minimum 
exploration expenditure and paying schedul ed exploration permit fees.31 The holder must also 
commence and complete the exploration work within the term of the exploration permit subject to 
authorized extension.32  
4.44.   In applying for the exploration right, the applicant shall submit the implementation s cheme 
of its exploration and survey as well as the appended maps and other relevant data for 
examination by local authorities. After completing the survey of the major minerals, a preliminary 
comprehensive assessment shall be made on the industrial perspec tive of the mineral deposits in 
the explored area.33  
4.45.   Extraction activities require the granting of a mining right. The mining right holder is called 
a "concessionary ". The duration of a mining licen ce is determined according to the size of the mine: 
30 yea rs for large -sized mines , 20 years for medium -sized mines and 10 years for small -sized 
mines . The definition of large , medium and small size mines varies according to the minerals and 
the technologies of extraction concerned.34 The concession aries can sell the mineral products on 
the Chinese internal market.  Exports of coal, crude oil, processed oil, tungsten, antimony and 
silver are subject to state trading requirements ( Section 3.3.5).35 Export quotas on rare earth have 
been removed and replaced by an expor t licensing regime  (Section 3.2.3);  rare earth and related 
products remain subject to export inspection and interim export duties .36 
                                                
29 If the exploration licensee seeks an extension of the period of exploration, it shall, within 30 days 
prior to the expiration of the exploration licence,  file for such an extension with the licensing authorities. 
Extension of the exploration licence shall not exceed two years each time.  
30 The basic geographical unit for exploration and survey is an area of 1' longitude x 1' latitude. The 
maximum size for a n exploration and survey project is of 40 -basic units for metal minerals, non -metal minerals 
and radioactive minerals and of 2,500 -basic units for petroleum and natural gas minerals.  
31 The fee is currently set at RMB 100 per sq. km per annum (pa) for the f irst three years, which will 
increase by an additional RMB 100 per sq. km pa from the fourth year onwards. The maximum fee is capped at 
RMB 500 per sq. km pa.  
32 The exploration work should be carried out in accordance with the exploration plan. The holder  must 
ensure that no unauthorized mining activities are carried out in the designated exploration areas.  
33 In conducting exploration for fragile non -metallic minerals, fluid minerals, combustible, explosive and 
soluble minerals or minerals containing radio active elements, the permit holder must use methods prescribed 
by the relevant departments and install necessary safety equipment. Exploration results and statistics of 
reserves of various kinds of minerals shall be subject to centralized management, and s hall therefore be 
collected or compiled for submission to the competent authorities. Prospecting reports on mineral deposits and 
other exploration data shall be provided for use to the authorities without compensation. During the period of 
validity of the permit, the holder of the permit may sell geological data to private users against payment at a 
price negotiated by the parties.  
34 The mining right holder may seek an extension of its licen ce by applying to the registration 
department concerned 30 days pri or to the expiration of the validity of the mining licen ce. 
35 See WTO documents G/STR/N/10 -15/CHN, 19 October 2015, and G/STR/N/10 -15/CHN/Corr.1, 
2 December 2016. The notifying period is 2003 -14. 
36 WTO document WT/TPR/S/342 /Rev.1, 12 October 2016 . WT/TPR/S/ 375/Rev.1  • China  
 
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  4.46.   Additional and alternative specific conditions apply to the oil and gas sectors. For instance, 
in order to apply for an exploration licen ce for petroleum and/or gas, the applicant must also 
present a document by the State Council approving the establishment of a petroleum company or 
approving the exploitation of petroleum or natural gas, as well as a certificate attesting t he legal 
person status of the mining enterprise. Currently, the petroleum companies approved by the State 
Council for oil and/or gas exploitation include China National Petroleum Corporation (CNPC), China 
Petrochemical Corporation (SIONPEC), China National  Offshore Oil Corporation (CNOOC) and 
Shaanxi Yanchang Petroleum (Group) Co., Ltd.  
4.47.   In May 2017, the State Council issued "Several Opinions on Deepening Oil and Gas System 
Reform", which allow, in principle, "qualified market actors" that satisfy access re quirements (to be 
defined) to participate in conventional oil and/or gas exploitation. According to the authorities, t he 
aim of the reform is to gradually move away from an exploitation system led by large state -owned 
oil/gas companies towards the particip ation of multiple economic actors in the sector. The precise 
modalities of this opening to the private sector are now under study.  
4.48.   China implement s a mineral resource royalty system. The main applicable taxes include the 
resources tax, mining rights occupy ing fees and mining rights transfer gains. Currently, a 
5-10% resource tax is levied on the exploitation of crude oil and natural gas on the basis of the 
sales amount.  
4.49.   Table 4.1 4 describes the investment regime applicable to the mining sector during the 
period under review and its recent partial liberalization.   
4.50.   There is no specific mining investment regime for Pilot Free Trade Zones (PFTZs); extraction 
of mineral resources outside the territory of a PFTZ by a mining company based in the PFTZ shall 
comply with the laws and regulations on the extraction of mineral resources and relevant 
administration policies. A company cannot extract oil and gas resources outside the territory of a 
PFTZ under  the conditions applicable within the PFTZ.  
4.51.   China allows foreign companies, enterprises and other economic organizations as well as 
individuals to invest in exploration and exploitation of the mineral resources within its territory and 
sea areas under its jurisdiction. Foreign direct investment and foreign participation  are present in 
the exploration and exploitation of minerals.  
4.52.   International oilfield service companies are providing conventional and unconventional 
services and technical equipment relating to  oil-gas exploration and development. Foreign oil and 
gas companies are not entitled to independent exploration and development of domestic oil and 
gas blocks. Instead, they are required  to sign Production Sharing Contracts (PSC) with domestic oil 
and gas enterprises. Multinational corporations have entered the upstream oil and gas market in 
China through this legal vehicle.  
4.53.   Coal is the object of a specific policy of capacity reduction ( Section 1.1). During the period 
under review, the State Council issued  on 1 February 2016 the " Guidelines on Addressing 
Overcapacity in the Coal Industry"  (Guo Fa [2016] No. 7). The guidelines specify that, in addition 
to obsolete production capacities already eliminated, efforts will be made as of the beginning of 
2016 to e liminate another approximately  500 million tonnes of production capacity. In addition, 
they stipulate that further reductions will be achieved through a restructur ing and mergers 
process. As of October 2017, a reduction of around 440 million tonnes of prod uction capacity  had 
been achieved (Table 4.1 5). The goal of another 150 million tonnes of capacity reduction for 2018 
was set in the Annual Report on the Work of the Government delivered in March 2018.37 
                                                
37 2018  Annual Report on the Work of the Government . Viewed at:  
http://www.gov.cn/zhuanti/2018lh/2018zfgzbg/zfgzbg.htm  (in Chinese).  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 4.14 Mining industry investment regime , 2015 and 2017  
 2015  2017  
Encouraged  Exploration and exploitation of oil and natural 
gas (including unconventional oil gas, such as 
oil shale, oil sand, shale gas and coal -bed gas) 
and utilization of mine gas (limited to Chinese -
foreign equity or contractual joint ventures)  Exploration and exploitation of oil and natural gas as 
well as utilization of mine gas  
Improvement in enhanced oil recovery (in the 
form of engineering services) as well as 
development and  application of related new 
technologies  Improvement in enhanced oil recovery (in the form of 
engineering services) as well as development and 
application of related new technologies  
Development and application of new 
technologies for oil exploration and  
exploitation in areas such as geophysical 
prospecting, drilling, well logging, mud 
logging, and down -hole operation  Development and application of new technologies for 
oil exploration and exploitation in areas such as 
geophysical prospecting, drilling, we ll logging, mud 
logging, and down -hole operation  
Development and application of new 
technologies for enhancing utilization rate of 
mine tailings and the comprehensive 
application of ecological restoration technology 
in mining areas  Development and applic ation of new technologies for 
enhancing utilization rate of mine tailings and the 
comprehensive application of ecological restoration 
technology in mining areas  
Exploration and exploitation of mines in short 
supply in  China  (such as mines of sylvite and 
chromite) and mineral separation  Exploration and exploitation of mines in short supply 
in China  (such as mines of sylvite and chromite) and 
mineral separation  
Restricted    Exploration and exploitation of oil and natural gas 
(including coal -bed gas and exc luding oil shale, oil 
sand, shale gas and so on) (limited to Sino -foreign 
equity or contractual joint ventures)   
Exploration and exploitation of special and rare 
kinds of coal (with Chinese party as the 
controlling shareholder ) Exploration and exploitation of special and rare kinds 
of coal (with Chinese party as the controlling 
shareholder)  
Exploration and exploitation of graphite  Exploration and exploitation of graphite  
Smelting and separation of rare earth (limited 
to Sino -foreign equity or contractual joint 
ventures); smelting of tungsten  Smelting and separation of rare earth (limited to Sino -
foreign equity or contractual joint ventures); smelting 
of tungsten  
Exploration and exploitation of noble metals 
(gold, silver, the platinum family)   
Mining and ore dressing of lithium   
Smelting of molybdenum, tin (except for tin 
compounds), antimony (including antimony 
oxide and antimony sulfide) and other rare  
earths   
Prohibited  Exploration and exploitation of tungsten, 
molybdenum, tin, stibium and fluorite  Exploration and exploitation of tungsten, 
molybdenum, tin, stibium and fluorite  
Exploration, exploitation and ore dressing of 
rare earth  Exploration, exploitation and ore dressing of rare 
earth 
Exploration, exploitation and ore dressing of 
radioactive minerals  Exploration, exploitation and ore dressing of 
radioactive minerals  
Source:  MOFCOM and NDRC, Catalogue for the Guidance of Foreign Investment I ndustries 2017 and 2015, 
(in Chinese). Viewed at: http://www.mofcom.gov.cn/article/b/c/201706/20170602600841.shtml , 
and http://www.mofcom.gov.cn/article/b/c/201503/20150300911 747.shtml . 
Table 4.15 Coal capacity reduction , 2016 -18 
(Million tonnes)  
 Objectives  Actual implementation  
2016 250a 290a 
2017 150b 150c 
2018 150d .. 
.. Not available.  
Source:  a: National Development and Reform Commission online information. Viewed at: 
http://www.ndrc.gov.cn/524_848401.html  (in Chinese); b: Attachment 2, 2017 Coal Production Capacity 
Reduction  Plan. Viewed at:  http://www.chinatax.gov.cn/n810341/n810755/c2665717/content.html  (in 
Chinese); c: According to the authorities, as of October 2017, the goal for 2017 of redu cing 150 million 
tonnes of capacity production was achieved. Viewed at: 
http://finance.people.com.cn/n1/2017/1213/c1004 -29702767.html  or 
http://www.stats.gov.cn/tjsj/sjjd/201801/t20180118_1575270.html  (in Chinese); d: 2018 Annual Report 
on the Work of the Government . Viewed at:  http://www.gov.cn/zhuanti/2018lh/2018zfgzbg/zfgzbg.htm  (in 
Chinese).  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.2.2   Energy  
4.2.2.1   Overview including environmental policy  
4.54.   China is the world largest consumer of energy. Total energy consumption reached 
3 billion  kilotonnes of oil equivalent (KTOE) in 2016 and is forecasted to grow to 3.3  KTOE 
by 2021. While China's per capita energy consumption is about half of that of Japan and one third 
of that of the United States, it is steadily growing.  
4.55.   In 2016, China's net energy imports amounted to 544 million tonnes of oil equivalent, net 
energy exports hit 84 million tonnes of oil equivalent, and total energy consumption amounted to  
3,051  million tonnes of oil equivalent. Chart 4.6 describes in more detail the net imports, 
production and consumption of energy by source in 2016.  
4.56.   Chart 4.7 describes the energy mix of the total primary supply of energy in China, and its 
consumption by ty pe of users.  
Chart 4.6 Net imports, production and consumption of energy, 2016  
 
Note:  Net imports of electricity equal -2.8 MTOE.  
Source:  WTO calculations, based on data provided by the authorities of China.  
Chart 4.7 Structure of energy production and consumption, 2015  
 
Source:  WTO calculations, based on data provided by the authorities.  
02004006008001,0001,2001,4001,6001,8002,000ThousandsNet importsEnergy available for 
consumptionChart 4.6 Indicators of the energy sector, 2016  
ConsumptionProduction
Source:  WTO calculations, based on data provided by the authoritieis.Note: Net imports of electricity equals to -2.8 MTOE.Electricity Natural gas Oil CoalMTOE
Chart 4.7   Structure of energy production and consumption, 2015 
Oil
18.3%Consumption by economic activity Production
Coal
63.7%
Natural gas
5.9%Primary electricity &
other energies
12.1%
Source:  WTO calculations, based on data provided by the authoritiesTotal:  3,009 MTOETotal:  3,009 MTOE Building
1.8% 
Industry
68.0%
Agriculture, 
forestry, & fishing
1.9%Transportation
8.9% 
Commerce
2.7%
Other
5.1% Living 
consumption
11.7% WT/TPR/S/ 375/Rev.1  • China  
 
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  4.57.   Coal, an abundant and relatively cheap resource in China, represents a decl ining but still 
large part of this primary energy mix. Its share was 62% in 2016 (down from 63.7% in  2015) 
thereby achieving the target set in 2013 by the Air Pollution Prevention and Control Action Plan to 
decrease it to less than 65% by 2017. The same pl an sets a target of 13% for non-fossil energy's 
share in China's  energy mix for 2017.  
4.58.   Similarly, the Law on the Prevention and Control of Atmospheric Pollution, amended in 2015, 
contains specific measures on the prevention and control of atmospheric pollution caused by 
burning coal and other energy. It stipulates inter alia  that central and  local authorities shall adopt 
measures to improve energy structure; optimize the utilization of coal so as to make it cleaner and 
more effective; and gradually reduce the proportion of coal in primary energy consumption. One of 
the concrete measures stemm ing from the law was the prioritization of power plants using clean 
energy for electricity dispatch.38  
4.59.   The Government has also taken voluntary measures to reduc e coal production capacities 
and has adopted,  through the five -year plan for energy 2016 -2020 is sued in January 2017, a 
series of measures aimed at diminishing the share of coal in China's energy mix. These measures 
include: encouragement at city -cluster level for a shift from coal to natural gas consumption; a 
toughening of air quality standards; an d the suspension of the development of over 100 coal -fired 
plants already planned. From 2014 to 2016, China closed outdated coal -fired power generators 
with high levels of power consumption and pollution amounting to a reduction  of 15 million kWh. A 
Workin g Plan was issued to promote the transformation of coal -fired generators for low emission 
and energy -saving purposes. By the end of 2017, China had completed the transformation of 
generators amounting to 700 million k Wh, accounting for 71% of the total ins talled capacity of 
coal-fired generators.  
4.60.   The wider objectives set by the plan are that by 2020, the proportion of non -fossil energies 
in total primary energy consumption should be around 15%, the proportion of natural gas 
consumption should reach 10%, an d the carbon dioxide emission per unit of GDP should decrease 
by 40% -45% as compared to  2005.39  
4.61.   China is actively pursuing a policy of decoupling of economic growth and energy 
consumption through increased energy efficiency.  For the 13th Five-Year Plan per iod (2016 -2020), 
the national objective for the reduction of energy consumption per unit of GDP is 15%, and 
intermediary objectives are set on an annual basis. In 2015, energy consumption per unit of GDP 
dropped by 5.6%, surpassing  the objective of 3.1%, and in 2016 it dropped by 5% (objective of 
3.4% ). In the first three quarters of 2017,  energy consumption per unit of GDP dropped by 3.8%.  
4.62.   In December 2017 , the NDRC issued the  Carbon Emission Trading Market Construction 
Scheme (Power Generation Industry ). This emission trading scheme defines the guiding principles 
for the construction of a unified carbon market in China in order to effectively control and 
gradually reduce carbon/greenhouse gas emissions in China, and to promote green and low -carbon 
devel opment. The guiding principles foresee that the Scheme shall be market -oriented, 
government -led, and based on a step -by-step approach, unified standards, extensive participation, 
equality and transparency. It mandates the launch of a national carbon emissi on trading system 
for the power generation industry, and the construction of a carbon market in three steps.40  
                                                
38 Other measures include: enhanced supervision and monitorin g of the environmental performances of 
eight provinces and municipalities in Beijing -Tianjin -Hebei, the Yangtze River Delta and Pearl River Delta, and 
28 key cities along the Beijing -Tianjin -Hebei atmospheric pollution transmission channel; the elaboration  of a 
scheme to prevent waste heat supply by residents; and a programme to encourage the development and 
utilization of geothermal energy in particular in the northern part of China.  
39 By 2030, the proportion of non -fossil energy consumption should be abou t 20%; the proportion of 
natural gas consumption should be around 15%; the carbon dioxide emission per unit of GDP should decrease 
by 60% -65% over 2005; carbon emission should reach its peak by around 2030, and best efforts will be made 
to realize the targ et earlier.  
40 The Scheme also set requirements for carbon emission monitoring, reporting and checking system, 
key emission units quota management system, market trading -related systems, carbon emission data 
reporting system, carbon emission right registrat ion system, carbon emission trading system and carbon 
emission trading settlement system.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.63.   On 29 December 2016 , the NDRC and the National Energy Administration issued a strategy 
document with a wider time horizon and even vaster objecti ves: the Energy Production and 
Consumption Revolution Strategy (2016 -2030). The document plans the advent of an "energy 
revolution" in China and put forward the strategic goal of building a green, low -carbon and highly 
efficient modern energy system.41  
4.2.2.2   Coal 
4.64.   As described above, coal is an essential part of the primary energy mix as well as of the 
electricity mix of China. Its consumption is nearly equally split between industrial uses (notably in 
the cement, fertilizer and steel industries) and electricit y generation. Hence most of the energy -
related environmental measures are geared at diminishing its overall production and its relative 
share in the various energy mixes of China. The legal framework for foreign investment in the coal 
industry is described  in the mining section of the report.  
4.2.2.3   Oil 
4.65.   China is the world's second largest consumer of oil after the United States and the world 's 
largest importer. Transportation is one the main drivers of oil demand.  
4.66.   In 2016, Russia overtook Saudi Arabia to become the largest oil exporter to China. In 2017, 
China imported 59,538 million tonnes of crude oil from Russia, an increase of 13.5% year on year. 
Saudi Arabia and Angola ranked respectively in second and third pl ace after Russia, exporting 
52,181 million and 50,418  million tonnes, up 2.3% and 15.3% on a year -on-year basis. The three 
countries accounted for 38.7% of China's  total oil import s in 2017. Among the top -ten oil 
exporters to China, Iran, Oman and the Unit ed Arab Emirates have respectively seen a decrease in 
their export s to China, down 0.5%, 11.6% and 16.6% respectively as illustrated by Table  4.16.  
Table 4.16 China's key trading partners for oil imports , 2017 
Ranking  Trading 
partners  Quantities 
(10,000 tonnes)  Year -on-year 
growth rate (%)  Value (US$100 
million)  Year -on-year 
growth rate (%)  
1 Russia  5,953.8  13.5 237.8  40.8 
2 Saudi Arabia  5,218.1  2.3 205.2  31.8 
3 Angola  5,041.8  15.3 199.1  43.6 
4 Iraq 3,681.6  1.7 138.1  29.5 
5 Iran 3,115.4  -0.5 119.3  27.5 
6 Oman  3,100.7  -11.6 122.6  9.9 
7 Brazil  2,309.3  20.6 90.2 49.3 
8 Venezuela  2,176.3  8.0 65.5 42.8 
9 Kuwait  1,824.3  11.7 70.7 46.4 
10 UAE 1,015.9  -16.6 41.5 7.3 
 Total 41,947.5  10.1 1,629.0  39.6 
Source:  Information provided by the authorities of China.  
4.67.   The government policy on oil is defined in the 13th Five-Year Plan for Energy (2016 -2020). 
The aims of the Plan are to increase crude oil reserves and the recovery efficiency of traditional oil 
fields as well as to speed up the development of shale oil an d oil sand and to extend the 
corresponding pipeline network for crude oil and refined products. To encourage th ese 
developments, the 2013 Catalogue of Investments Projects subject to the Approval  of the 
Government has suppressed the preliminary approval by the State Council for oil and gas 
development projects by companies possessing concession rights and replaced it with an obligation 
to file the project with the relevant government institutions . 
                                                
41 It links the goal of the construction of an "ecological civilization" with that of the "energy revolution". 
It contains 13 strategic energy actions to that effect, namely the Nation of Energy Savers Initiative, the Total 
Energy Consumption and Strength Control Initiative, the Near -zero Carbon Emissions Zone Demonstration 
Initiative, the electricity Demand Side Management Initiative, the Coal Clean Utilization Initiat ive, the Natural 
Gas Promotion and Utilization Initiative, the Non -fossil Energy Leaping Development Initiative, the Rural Area 
Renewable Energy Initiative, the Energy Internet Promotion Initiative, the Energy Key and Core Technology 
and Equipment Breakthr ough Initiative, the Energy Supply Side Structural Reform Initiative, the Energy 
Standard Improvement and Upgrade Initiative and the "Belt and Road" Energy Cooperation Initiative.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.68.   Foreign investment in the exploration and development of oil is encouraged; it is limited to 
Sino-foreign equity/co -operative joint ventures or other forms of Sino -foreign co -operation, 
including Production Sharing Contracts (PSC)  – a legal institution allowing  China to retain 
exploration rights and where foreign parties may manage the exploration, development and 
production as partners. These limitations were abolished for oil shale and oil sand by the 
2017 Investment Catalogue.  
4.69.   A few SOEs dominate the upstream conventional oil and gas market sector. Foreign capital 
can only participate in the conventional upstream market by entering into production sharing 
contracts (PSCs) with those companies. Only the China National Petroleum Corporation (CNPC), 
China  Petrochemical Corporation (SINOPEC) and China National Offshore Oil Corporation (CNOOC) 
are authori zed to co -operate with foreign investors in onshore and offshore oil exploitation. Under 
the PSC structure, the Chinese partners hold the exploration and ex ploitation rights while the 
foreign partners serve as the operator managing the exploration, development and production of 
the venture. Conventional oil and gas PSCs entered into between SOEs and their foreign partners 
do not require MOFCOM approval.  
4.70.   In 2013, China's domestic downstream refining capacity was 14 million barrels/day, of 
which 11 million barrels/day were produced by SOEs. Foreign investors can participate in refining 
projects and are not subject to limitations in terms of legal forms. Some  foreign investors are 
present in this sector.  
4.71.   Distribution of gasoline/petrol is mostly controlled by the China National Petroleum 
Corporation (CNPC) and the China Petroleum and Chemical Corporation (SINOPEC). Foreign 
investors can participate in the retail distribution sector. A single  foreign investor cannot establish 
more than 30 gasoline station branches. If the same foreign investor sets up a chain of gasoline 
stations with more than 30 branches that sell different types and brands of processed oil from a 
number of suppliers, the construction and operation of the gas stations should be controlled by the 
Chinese party. Some  foreign investors are present in this sector.  
4.2.2.4  Gas 
4.72.   China is the world 's third largest gas consumer ; while the share of gas in e lectricity 
generation currently stands at 6%. In 2015, the volume of gas used for power generation 
accounted for 16% of the total gas consumption, and increased to 17% in 2016. In addition to 
power generation, gas is mainly used for urban heating and cooki ng, transport, as well as the 
manufacturing of chemical raw materials and chemicals. In  2015, the production of liquefied 
natural gas (LNG) was 6.378 million tonnes of oil equivalent, the imported volume was 
24.13  million tonnes of oil equivalent and the e xported volume was null. The production of 
liquefied petroleum gas (LPG) was 35.21 million tonnes of oil equivalent, the imported volume was 
14.29  million tonnes of oil equivalent and the exported volume was 1.73 million tonnes of oil 
equivalent. In additi on to its LPG and LNG production, China has considerable potential in 
unconventional gases , i.e. shale gas and coal bed methane gas . Foreign investment requirements 
were liberalized in 2017 in these areas so as to encourage their development.  
4.73.   Distribution of natural gas is mostly controlled by the China National Petroleum Corporation 
(CNPC) and the China Petroleum and Chemical Corporation (SINOPEC), while private companies 
play a more substantial role in the gas retail sector. Investors from ot her WTO Members, notably 
from Hong Kong, China, are present in both the importing segment and in the urban gas retail 
distribution segment.  
4.2.2.5  Electricity  
4.74.   Chart 4.8 describes electricity production, by source of primary energy, and electricity 
consump tion, by type of economic activity, in 2015.  
4.75.   Chart 4.9 describes the installed generation capacities by type of source for 2015 while 
Table 4.1 7 describes  the investment in generation capacity by type of source for 2015 and  2016.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Chart 4.8 Structure of electricity production and consumption, 2015  
 
 
 
a Thermal power includes coal, oil, natural gas, and biomass fuel.  
Source:  WTO calculations, based on data provided by the authorities of China.  
Chart 4.9 Installed generation capacities by type of primary energy, 2015  
 
Source:  NBS (2016).  
Table 4.17 Investment in power generation capacity by type of source , 2015 and 2016  
Indicator   Unit (million RMB)  2015  2016  
Investment in power 
generation capacity  Hydropower  100 789 612 
Thermal power  100 1,163  1,174  
Nuclear power  100 565 506 
Wind power  100 1,200  896 
Solar power generation  100 218 .. 
.. Not available.  
Source:  Information provided by the authorities of China.  
4.76.   The present and future investment policy in electric plants is geared at raising the share of 
non-fossil (including nuclear) and renewable energies. Newly  installed capacity accounts for 
around 40% of the world 's total , and the installed capacities of hydropower, wind power and 
photovoltaic power under construction continued to rank first in the world.  
4.77.   The foreign investment regime in the electricity sector is determined by the 
2017 Investment Catalogue, which stipulates that the construction and operation of grids falls 
Chart 4.8    Structure of electricity production and consumption, 2015
Thermal powera
73.7%Consumption by economic activity Production by source
Solar power
0.7%Hydropower
19.4%
Wind power
3.2%
Source:  WTO calculations, based on data provided by the authoritiesTotal:  5,815 TWh Total:  5,802 TWh  Nuclear energy 
2.9%
a  Thermal power includes coal, oil, natural gas, and biomass fuel.   Agriculture, forestry, & 
fishing  1.8%Living 
consumption
13.0%Building  1.2%
Other sectors
6.8%Industry 
71.6%
Business  3.7%Transportation  1.9%
Chart 4.9   Installed generation capacities by type of primary energy, 2015
Oil 0.3% Total
1,490 GW
Source:  NBS (2016).Nuclear power  1.8%
Gas
4.4%Solar energy 2.8%Coal 
60.4%
Wind power
8.8% Hydropower
21.4%WT/TPR/S/ 375/Rev.1  • China  
 
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  within the restricted category and should be controlled by Chin a. The "grid" in this context includes 
both transmission and distribution networks. Foreign investors c an participate in the construction 
and operation of grids through partnerships with Chinese companies, but the grids should be 
controlled by China. Currently, Chinese grid companies include State Grid Corporation, China 
Southern Power Grid, Inner Mongolia Power (Group) Co., Ltd. as well as a number of provincial 
grid enterprises.  
4.78.   Table 4.1 8 describe s in more detail the foreign investment regime in the electricity sector 
and its recent developments . 
Table 4.18 Investment regime for electricity, 2015 and 2017  
 2015 Catalogue  2017 Catalogue  
Encouraged  Construction and operation of ultra -supercritical 
unit power station with the capacity of a single unit 
of 600,000 kilowatt or more   Construction and operation of ultra-
supercritical unit power station with the 
capacity of a single unit of 600,000 
kilowatt or more  
Construction and operation of back -pressure 
(extraction type) combined heat and power 
stations, combined cooling, heating and power 
stations, and combined heat and power stations 
with capacity of 300,000 kilowatt or more  Construction and operation of back -
pressure combined heat and power 
stations, combined cooling, heating and 
power stations, and combined heat and 
power stations with capacity of 300 ,000 
kilowatt or more  
Construction and operation of large air cooling unit 
power stations with the capacity of a single unit of 
600,000 kilowatt or more in water -deficient areas  Construction and operation of large air 
cooling unit power stations with the  
capacity of a single unit of 600,000 
kilowatt or more in water -deficient areas  
Construction and operation of integrated 
gasification combined cycle power generation and 
other clean coal power generation projects  Construction and operation of integrated 
gasification combined cycle power 
generation and other clean coal power 
generation projects   
Construction and operation of power generating 
projects of a single unit of 300,000 kilowatt or 
more by using fluidized bed combustion bolters 
and coal gangue an d coal slime, etc.  Construction and operation of power 
generating projects of a single unit of 
300,000 kilowatt or more by using 
fluidized bed combustion bolters and coal 
gangue and coal slime, etc.  
Construction and operation of hydropower stations 
for the primary purpose of power generation   Construction and operation of hydropower 
stations for the primary purpose of power 
generation  
Construction and operation of nuclear power 
stations (with Chinese party as the controlling 
shareholder)  Construction an d operation of nuclear 
power stations  
Construction and operation of new energy power 
stations (including but not limited to solar energy, 
wind energy, geothermal energy, tidal energy, 
tidal current energy, wave energy, and biomass 
energy  Construction and  operation of new energy 
power stations (including but not limited to 
solar energy, wind energy, geothermal 
energy, tidal energy, tidal current energy, 
wave energy, and biomass energy  
Construction and operation of power grid (with 
Chinese party as the controlling shareholder)  Construction and operation of power grid  
Seawater utilization (direct utilization of seawater 
or seawater desalination)   Seawater utilization (direct utilization of 
seawater or seawater desalination)  
Construction and operation of water supply plants  Construction and operation of water supply 
plants  
Construction and operation of renewable water  Construction and operation of renewable 
water  
Construction and operation of sewage treatment 
plants  Construction and operation of sew age 
treatment plants  
Construction and operation of vehicle charging 
stations and battery replacement stations   Construction and operation of vehicle 
charging stations and battery replacement 
stations  
 Construction and operation of hydrogen 
refuelling stations   
Restricted   Construction and operation of nuclear 
power stations (with Chinese party as the 
controlling shareholder)   
 Construction and operation of power grid 
(with Chinese party as the controlling 
shareholder)   WT/TPR/S/ 375/Rev.1  • China  
 
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   2015 Catalogue  2017 Catalogue  
Construction and management of conventional 
coal-fired power of condensing steam plants whose 
unit installed capacity is 300,000 kW or below, and 
coal-fired power of condensing -extracted steam 
plants with dual use unit cogeneration whose unit 
capacity is 100,000 kW within the small p ower grid   
Construction and operation of pipeline networks for 
gas, heat, and water supply and sewage in cities 
with a population of more than 500,000 (with 
Chinese party as the controlling shareholder)   Construction and operation of pipeline 
networks for gas, heat, and water supply 
and sewage in cities with a population of 
more than 500,000 (with Chinese party as 
the controlling shareholder)  
Prohibited  Construction and management of conventional 
coal-fired power of condensing steam plants whose 
unit c apacity is not more than 300,000 kW, within 
the large power grid, and the coal -fired power of 
condensing -extraction steam plants with dual use 
unit cogeneration with unit capacity of not more 
than 200,000  kW   
Source:  MOFCOM and NDRC, Catalogue for the Guidance of Foreign Investment Industries 2017 and 2015, 
(in Chinese). Viewed at: http://www.mofcom.gov.cn/article/b/c/201706/20170602600841.shtml , 
and http://www.mofcom.gov.cn/article/b/c/201503/20150300911747.shtml . 
4.79.   In March 2015, the CPC Central Committee and the State Council issued the document 
"Several Opinions on Further Deepening the Reform of the Electric Power System " (Zhong Fa 
[2015] No. 9) .42 This document aims at liberalizing power  generation and utilization , according to 
market -oriented principles  while taking due account of public interest.43 
4.80.   The reform liberalizes electricity prices (notably industrial ones) except for transmission and 
distribution (T and D) and for public welfare purposes (i.e. residential , agricultural, and important 
utilities uses, and other public welfare purposes determined by the government) . Transmission and 
distribution tariffs (T and D) are to be set according to the principle of "cost + reasonable profit" at 
different voltages.  In 2017, the State completed the approval of the transmission and distribution 
tariffs of the totality of the 33 provincial grids thereby cutting a total of RMB 48 billion of grid 
access fees for industrial and commercial enterprises. Under the reform, l arge industrial and 
commercial consumers (for the time being over 110 KW of consumption) are encouraged to buy 
electricity from generation companies based on direct electricity purchase agreements at 
negotiated prices; cross subsidies are to be reduced, and a r eal time electricity trading platform is 
to be tested . 
4.81.   The "Management Rules for Entry and Exit of Electric Power Companies and Management 
Rules for Orderly Liberalizing of Power Distribution Businesses" issued by the NDRC and the NEA 
in October 2016 (Fa G ai Jing Ti No. 2120 of 2016) have opened the retail market to non -state 
owned investors.44 As at the end of 2017, there were about 3,000 electric power companies 
registered with the power trading agency of China. The minimum assets required to set up an 
electric power company are RMB 20 million. The five existing distribution companies were also 
allowed to set up their own retail companies . 
4.82.   To link the grids and the retail distribution companies  and to trade electricity on a market 
basis, trading agencies  have been established in all provinces . Two national trading agencies 
(Beijing Trading Centre and Guangzhou Trading Centre)  and a National Coalition of Power Trading 
                                                
42 NDRC online information (in Chinese). Viewed at: 
http://tgs.ndrc.gov.cn/zywj/201601/t20160129_773852.html  [06.04.2018].  
43 The orientations of the reform were subsequently elaborated by six Supportive Documents for 
Electricity M echanism Reform issued by the NDRC and the National Energy Administration (Fa Gai Jing Ti 
No. 2752 of 2015) as well as by numerous implementing regulations and pilot projects. Notably:  the Notice of 
NDRC and NEA on Standardizing the Pilot for Incremental Power Distribution Reform (Fa G ai Jing Ti No. 2480 of 
2016), the Reply of NDRC General Office and NEA General Affairs Division on Agreeing with the Establishment 
of Incremental Power Distribution Reform Pilot in Ningdong (Fa Gai Ban Jing Ti No. 570 of 2017) and the Notice 
of NDRC and NE A on Standardizing the Second Batch of Pilot for Incremental Power Distribution Reform of 
21 November 2017.  
44 NEA online information (in Chinese). Viewed at: http://www.nea.gov.cn/2016 -
10/11/c_135746081.htm  [06.04.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  Agencies  have also  been created. In addition, eight provinces or autonomous regions, such  as 
Yunnan and Shanxi, have set up joint -stock trading agencies.  Except for those eight cases, power 
trading agencies are public, not -for-profit entities. They provide open and transparent power 
trading services for the market actors under the regulatory s upervision of the Government. The 
trading agencies are mainly responsible for the construction, operation and management of trading 
platform s, the organization of market trading, the provision of settlement evidence and relevant 
services, the registration of bilateral contracts signed by the power users and generation 
companies, the registration and management of market actors, and the disclosure and release of 
market information.  In 2017, the volume of market -oriented power trading in China reached 
1,630  TWh, an increase of 45% over the previous year, accounting for 26% of the total power 
consumption.  
4.83.   The trial of "pilot spot markets ", where  trading of electricity takes place on a spot basis 
instead of a medium - to long term contracts, began  in August 2017,  in Guangdong, Zhejiang, 
Shanxi, Shandong, Fujian, Sichuan and Gansu.  
4.3   Manufacturing  
4.3.1   Recent developments  
4.84.   According to the China  Statistical Yearbook 2017, manufacturing45 in China accounted for 
around 33.3% of its GDP in 2016, compared with 34.3% in 2015; its share in employment  in 
urban areas was around 27.3% in 2016, compared with 28.0% in 2015.46  
4.85.   The Government's main initiatives in recent years to promote manufacturing in China 
included the adoption of the "China Manufacturing 2025" plan, which was issue d on 8 May 201547; 
it is a 10 -year national plan aimed at comprehensively upgrading China's manufacturing sector. 
The authorities state that the plan include s strategies for various industries including "strategic 
emerging industries", which had been announ ced previously.48 The plan identified a three -step 
strategy, nine priority tasks49, ten key sectors50 and five major projects.51 Its guiding principles are 
for manufacturing  to be innovation -driven, emphasize quality over quantity, achieve green 
development, optimize the structure of Chinese industry, and nurture human talent. The 
three -step strategy aims at  China: becoming a strong manufacturing country by 2025 (step 1); 
being able to compete with develo 2ped manufacturing powers by 2035 (step 2); and becoming  a 
leading manufacturing power by the year 2049 (step 3). In order to implement the strategy, China 
plans to set up pilot projects in cities and city clusters as well as nat ional demonstration zones for 
the implementation of the "China Manufacturing 2025 " plan. China also plans, inter alia,  to launch 
a special project to increase diversity and improve quality. The authorities state that the plan will 
be implemented on an equa l basis for all enterprises established in China. At the time of writing 
this report, no pilot projects or other policy measures had been  implemented yet.  
4.86.   The authorities recognize the issue of excess capacity in some manufacturing sectors, such 
as iron a nd steel, and have made efforts to reduce capacity in recent years.  
                                                
45 Categorized as "industry" in the Yearbook.  
46 National Bureau of Statistics online information, China Statistical Yearbook. Viewed at: 
http://www.stats.gov.cn/tjsj/ndsj/2017/indexeh.htm  [15.03.2018].  
47 Chinese Government online information (in Chinese), China Manufacturing 2025. Viewed at: 
http://www. gov.cn/zhengce/content/2015 -05/19/content_9784.htm  [15.03.2018].  
48 NDRC online information (in Chinese). Viewed at: 
http://www.ndrc.gov.cn/zcfb/zcfbgg/201303/t20130307_531611.h tml [15.03.2018].  
49 The nine priority tasks are: improving manufacturing innovation; strengthening the industry base; 
enforcing green manufacturing; advancing restructuring of the manufacturing sector; internationalizing 
manufacturing; integrating informat ion technology and industry; fostering Chinses e brands; promoting 
breakthroughs in the key sectors; and promoting services -oriented manufacturing and manufacturing -related 
service industries.  
50 These are: new information technology; numerical control tools  and robotics; aerospace and 
aeronautical equipment; ocean engineering equipment and high -tech ships; modern railway equipment; energy 
saving and new -energy vehicles; power equipment; agricultural machinery; new materials; and biological 
medicine and medic al device.  
51 These are: construction project of manufacturing innovation centre (industrial technology research 
base); intelligent manufacturing project; industrial foundation improvement project; green manufacturing 
project; and high -end equipment innovat ion project.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.87.   China is a participant in the Information Technology Agreement (ITA) and has agreed on the 
expansion of the ITA.52 
4.88.   In 2016 (the latest year for which data were available), manufactures acc ounted for 93.7% 
of China's exports and 64.9% of its imports. The simple applied MFN tariff for manufactures 
(ISIC  3) was 9.5% in 2017.  
4.89.   China promotes Research and Development (R&D). When calculating taxable income tax , 
150% of real R&D expenditure used t o develop new technologies, products and techniques can be 
deducted in the same year if tangible assets are not included in the current profit and loss; if 
tangible assets are formed, 150% of the cost of intangible assets will be amortized within a period 
of not less than ten years. In addition, for expenditure in R&D activities of technology -oriented 
SMEs, if tangible asset s are yet to be included in the current profit and loss, another 75% of the 
actual real R&D expenditure will be deducted before tax. If  tangible assets are formed, 175% of 
the cost of intangible assets will be amortized before tax during the above period.  
4.90.   Deduction from the tax base for R&D cost is available with a view to supporting 
R&D activities in China. Data on the amount of revenue foregone as a result of the tax deduction 
were not available at the time of completion of this Report.  
4.91.   The MIIT is the main regulator for the manufacturing sector; it is responsible for developing 
industrial strategies, making industry plans and standards , and monitoring the operation of the 
industry. The DNRC is also responsible for coordinating industry development, promoting the use 
of key technology and equipment, and developing industry upgrade strategies. The Ministry of 
Science and Technology (MOST)  is also involved in industrial policies for high -tech manufacturing.  
4.3.2   Selected subsectors  
4.3.2.1   Automobiles, automotive parts, and components  
4.92.   In 2016, the prime operating revenues of large automobile manufacturers amounted to  
RMB 8,134.7  billion, compared with RMB 7,106.9 billion in 2015.53 Importation of certain 
automobiles is subject to an automatic import licence requirement.54 In accordance with the 
Automobile Trade Policy issued in 2005, the importation of used vehicles and  parts and 
components is prohibited.55  
4.93.   The p roduction of automobiles , including "new -energy cars" , is subject to approval by the 
NDRC and the MIIT. The MIIT issued Provisions on the Access Administration of New Energy 
Vehicle Manufacturers and Products (Ac cess Provisions) on 6 January 2017; the Provisions entered 
into force on 1 July 2017.56 The Provisions require manufacturers of new energy vehicles to master  
the technologies necessary for the develop ment and manufactur e of new energy vehicles. The 
Provisio ns apply equally to all firms operating in China, whether domestic or foreign. According to 
the authorities, there is no provision requiring foreign companies to transfer technology. On 
27 September  2017, the MIIT issued the Administrative Measures for Imp lementing Parallel 
Policies including Calculation of Passenger Vehicles' Corporate Average Fuel Consumption and New 
Energy Vehicle Points.57 
                                                
52 WTO document WT/L/956, 28 July 2015.  
53 National Bureau of Statistics online information, China Statistical Yearbook. Viewed at: 
http://www.stats.gov.cn/tjsj/ndsj/2016/indexeh .htm and http://www.stats.gov.cn/tjsj/ndsj/2017/indexeh.htm  
[20.03.2018].  
54 Catalogue of Goods Subject to Automatic Import Licensing (2017), MOFCOM GACC Joint 
Announcement [2016] No. 84 (in  Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201612/20161202454762.shtml  [19.03.2018].  
55 MOFCOM online information, Automobile Trade Policy (in Chinese). Viewed at: 
http://www.mofcom.gov.cn/article/swfg/swfgbh/201101/20110107348825.shtml  [19.03.2018].  
56 MIIT online information. Viewed at: 
http://www.miit.gov.cn/n1146290/n4388791/c5466114/content.html  [15.03.2018].  
57 MIIT online information. Viewed at: 
http://www.miit.gov.cn/n1146295/n1146557/n1146624/c5824932/content.html  [29.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.94.   On 2 June 2015, the Provisions on the Administration of Newly Established Pure Electric 
Passenger Vehicle Enterprise s (Order No. 27 of the NDRC and the MIIT) were issued.58 The 
Provisions include conditions for obtaining government approval to establish a company producing 
electric passenger vehicles . For example, relevant Chinese - and foreign -funded enterprises are 
required to  have sufficient R&D experience for pure electric passenger vehicles and  to master 
relevant technologies and abilities in order to  apply for investment projects  in the establishment of 
pure electric passenger vehicle manufacturers or production of pure electric passenger vehicles.  
4.95.   In March 2017, China announced a plan to promote vehicle power battery industry 
development.59 The plan aims, inter alia,  to: establish a Power Battery Innovation Centre  and 
implement a Power Battery Upgrade Project.  
4.96.   In April 2017, China announced an automobile mid - and long -term development plan . The 
plan aims, inter alia,  to: improve the innovation system and enhance the motivation for 
independent development; strengthen the basic capabilities through an industrial ch ain system; 
achieve a breakthrough in key areas , such as  New Energy Vehicles, smart network cars, and 
energy saving cars.60  
4.97.   In the 2017 Foreign Investment Catalogue, the production of complete automobiles was 
categorized in the "restricted" category ( Section 2. 4).61 Since July 2017, foreign -funded 
enterprises investing in joint ventures producing complete pure electric vehicle products are no 
longer limited by a provision that an FIE can only establish up to two joint ventures producing 
complete vehicles (in  which the Chinese party shall hold no less than 50% of shares).  
4.3.2.2   Electronics and information technology (IT)  
4.98.   Data provided by the authorities indicate that SOEs and FIEs accounted for 0.5% and 
58.7% (in 2015 ) and 0.5% and 53.5% (in 2016 ) of the electronic s and IT sector's main business 
income.  In "China Manufacturing 2025 "62, the IT industry was classified in one of ten key sectors 
highlighted as a development priority.  
4.99.   On 9 February 2015, a revised Circular on Enterprise Income Tax Policies for Further 
Encouragement to Development of Integrated Circuit Industry was issued by the Ministry of 
Finance (MOF) and State Administration of Taxation (SAT) (MOF & SAT 2015 No. 6)63, which 
expanded the scope of beneficial enterprises receiving preferential tax treatm ent, such as income 
tax exemptions and reductions, as previously described by a previous Circular issued on 
20 April 2012 (MOF & SAT 2012 No. 27).64 On 4 May 2016, the authorities released the Circular on 
Enterprise Income Tax Policies for Software Industry  and Integrated Circuit Industry (MOF & 
SAT 2016 No. 49), which redefined the four types of enterprises in MOF & SAT 2012 No. 27.65 For 
enterprises producing integrated circuits with a line width of, or less than, 0.8μ, a preferential 
period was calculated from the profitable date to 31 December 2017. Corporate income tax is 
                                                
58 MIIT online information. Viewed at: 
http://www.miit.gov.cn/n1146295/n1146557/n1146624/c4446472/content.html  [15.03.2018].  
59 MIIT online information (in Chinese). Viewed at: 
http://www.miit.gov.cn/n1146285/n1146352/n3054355/n3057585/n3057589/c5505312/content.html  
[19.03.2018].  
60 MIIT online information (in Chinese). Viewed at: 
http://www.miit.gov.cn/n1146290/n4388791/c5600433/content.html  [19.03.2018].  
61 In the 2017 Catalogue, manufacturing of automobile whole vehicles and special -use vehicles is 
classified in the "restricted category" . 
62 Chinese Government online informat ion. Viewed at: http://www.gov.cn/zhengce/content/2015 -
05/19/content_9784.htm  [19.03.2018].  
63 State Administration of Taxation online information (in Chinese). Viewed at: 
http://www.chinatax.gov.cn/n810341/n810765/n1465977/n1466052/c1677269/content.html  [20.03.2018].  
64 The circular specified four types of enterprises in software i ndustry and integrated circuit industry 
which could be accorded respective preferential tax treatment. State Administration of Taxation online 
information (in Chinese). Viewed at: 
http://www.chinatax.gov.cn/n810341/n810765/n812151/n812421/c1083639/content.html  [20.03.2018].  
65 Ministry of Finance online information (in Chinese). Viewed at: 
http://www.mof.gov.cn/zhengwuxinxi/caizhengwengao/wg2016/wg201607/201611/t20161129_2469122.html  
[20.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  exempted from the first to the second year; from the third to the fifth year, half of the 25% 
statutory corporate income tax is collected.66  
4.100.   The authorities state that the Government pro vides no subsidies specific to the electronics 
and IT sector. The Development Fund for Electronics, which was established in 1986 with a view to 
supporting R&D activities in software, integrated circuits and other IT industries67, was abolished in 
early 201 5.  
4.101.   The Outline for Promoting the Development of the National Integrated Circuit Industry was 
published on 24 June 201468, which identified the goals of : raising revenue of the integrated circuit 
industry to over RMB 350 billion by 2015; an annual rate of r evenue growth of over 20% by 2020; 
and becoming the leading power in the integrated circuit industry. The Outline also highlighted 
priority tasks, including  the establishment of the National Leading Group for the Development of 
Integrated Circuits Industry , the initiation of the National Integrated Circuit Industry Investment 
Fund, and the promotion of safe and reliable hardware and software. In accordance with the 
Outline, the National IC Industry Investment Fund was established on 24  September 2014 to 
finance the IC industry.69 The authorities state that the Fund is a private equity fund, and the goal 
of the Fund is to deliver profits for shareholders ; investment decisions are accountable to 
shareholders.  
4.102.   The State Council issued the Guidelines on Actively  Promoting the Actions of Internet Plus 
on 4 July 2015.70 According to the Guidelines, "Internet Plus" referred to the deep integration of 
the Internet and other economic and social areas, with the aim of promoting technological 
innovation and enhancing eco nomy productivity. The Guideline identified 11 key initiatives that 
would be integrated with  the Internet, including manufacturing, modern agriculture, intelligent 
energy, inclusive finance, logistics, e -commerce, artificial intelligence , entrepreneurial i nnovation, 
social services, transportation, and green ecology. On 20 May 2016, the Guidelines on Deepening 
the Integrated Development of the Manufacturing Industry and the Internet were issued by the 
State Council with a view to deepening the integration o f manufacturing and the Internet.71 
According to the authorities, manufacturing is the key industry for economic development and thus 
among the "Internet Plus" initiatives, the integration of manufacturing and Internet was set as a 
priority. The Guidelines for Manufacturing and Internet specified goals and main tasks for the 
initiatives of Internet  Plus Manufacturing with the purpose of establishing a manufactur ing 
power.72 
4.103.   The State Council issued the Outline of National Informatization Development Strategy on 
28 July 201673, to guide the development of national informatization in the next ten years. 
According to the authorities, the Outline sets the overall goal of building an Internet power with 
three steps: core technologies reach ing international advanced level by 2020; the establishment of 
mobile communications network to be completed by 2025; and national informatization to be fully 
accomplished, making China an Internet power by the middle of the century. On 
15 December  2016, the State Council issued the  13th Five-Year Plan for the National 
                                                
66 Enterprises  are required  to pay  15% of the corporate income tax if they  produc e integrated circuits 
with a line width  of less than 0.25μ or  if the total investment is more than RMB 8 billion, after being certified. 
For enterprises with an operation period of more than 15 years, the pref erential period is calculated from the 
profitable date to 31 December 2017. Corporate income tax is exempted from the first to the fifth year; from 
the sixth to the tenth year, half of the 25% statutory corporate income tax is collected.  
67 Ministry of Fina nce online information (in Chinese). Viewed at: 
http://www.mof.gov.cn/zhengwuxinxi/caizhengwengao/caizhengbuwengao2008/ caizhengbuwengao20081/200
805/t20080519_29013.html  [19.03.2018].  
68 MIIT online information (in Chinese). Viewed at: 
http://www.miit.gov.cn/n1146295/n1652858/n16 52930/n3757021/c3758335/content.html  [20.03.2018].  
69 Ministry of Finance online information (in Chinese). Viewed at: 
http://www.mof.gov.cn/zhengwuxinxi/caizheng xinwen/201410/t20141014_1149902.html  [19.03.2018].  
70 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2015 -07/04/content_10002.ht m [20.03.2018].  
71 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2016 -05/20/content_5075099.htm  [20.03.2018].  
72 Guidance of the State Council on Actively Promoting "Internet Plus" Actions, State Council No. 40,  
01.07.2015.  
73 Xinhuanet online information (in Chinese). Viewed at: http://news.xinhuanet.com/info/2016 -
07/28/c_135546104.htm  [20.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  Informatization74, which identified the specific goals for national informatization, including  raising  
the Internet penetration rate to 70%, and e -commerce sales to over RMB 38 trillion.  
4.104.   Guided by the above policies, th e authorities promulgated a set of action plans for IT and 
its sub -sectors from 2016 to 2020 (Table 4.19).  
Table 4.19 Action plans for IT and its sub -sectors for the period between 2016 and 2020  
Plans  Goals ( by 2020)  Date of issue  
Information Industry 
Development Guide  Revenue of the information industry will reach 
RMB 26.2 trillion ( up 8.9% from 2015); Exports of 
electronic information products will account for 30% 
of the industry exports ( up 4.5% from 2015)  16 January 2017  
Plan for the Development of the 
Information and Communication 
Industry  (2016 -2020)  ICT revenue will reach RMB 3.5 trillion  (up 15.5% 
from 2015)  17 January 2017  
Plan for the D evelopment  of the 
Software and Information 
Technology Services (2016 -
2020)  Revenue of software and IT will reach RMB 8 trillion, 
with an annual growth rate of 13%, account ing for 
30% of the information industry. Exports of 
softwar e products will exceed  US$ 68 billion  17 January 2017  
Plan for the D evelopment  of the 
Large Data Industry (2016 -2020)  Revenue of large data -related products and services 
will exceed RMB 1 trillion, with an annual growth 
rate of 30%  17 January 2017  
Three -Year Action Plan  for the 
Development of Cloud Computing 
(2017 -2019)  By 2019, cloud the computing industry will reach 
RMB 430 billion  30 March 2017  
Three -Year Action Plan  for the 
development of Industrial 
Electronic Commerce  E-commerce purchase s will amount to RMB 9 trillion 
and e -commerce sales to RMB 11 trillion  25 September 2017  
Information Industry 
Development Guide  Revenue of the information industry will reach 
RMB 26.2 trillion ( up 8.9% from 2015); Exports of 
electronic information products will account for 30% 
of the industry 's exports ( up 4.5% from 2015)  16 January 2017  
Source:  Information provided by the authorities of China.  
4.3.2.3   Machinery and equipment  
4.105.   The Ministry of Agriculture issued the 13th Five-Year Plan for the Agricultural Mechanization 
Development on 29 December 2016, which identified  the goal of increasing the mec hanization rate 
in main crop planting and harvesting to 70% by 2020.75 In China Manufacturing 2025, agricultur al 
machinery was highlighted as one of the ten priority sectors.76  
4.106.   On 26 April 2016, the authorities issued the Robotics Industry Development Plan for 
2016-2020.77 The plan proposed policy measures in six areas: (1) strengthening overall planning 
and resources integration; (2) increasing financial  support; (3) expanding financial channels; 
(4) building a good market environment; (5) reinforcing the development of talent; and 
(6) expanding international exchanges and cooperation. According to the authorities, these policies 
treat domestic and foreign -invested enterprises equally. The purpose of these policies is to guide 
enterprises in develop ing robots efficiently  and promot ing healthy and orderly development of the 
industry. The Plan identified the specific goals of producing 100,000 robots per year and increasing  
the market share of key components to 50% by 2020.  
                                                
74 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2016 -12/27/content_5153411.htm  [20.03.2018].  
75 Ministry of Agriculture online information. Viewed at: 
http://www.moa.gov.cn/zwllm/ghjh/201701/t20170105_5424545.htm  [20.03.2018].  
76 Chinese Government online information (in Chinese), China Manufacturing 2025. Viewed at: 
http://www.gov.cn/zhengce/content/2015 -05/19/content_9784.htm  [20.03.2018].  
77 NDRC online i nformation (in Chinese). Viewed at: 
http://www.ndrc.gov.cn/zcfb/zcfbghwb/201604/t20160427_799898.html  [20.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.107.   On 17 October 2017, the MIIT issued the Guiding Opinions on Accelerating the 
Development of Environmental Protection Equipment Manufacturing Industry.78 The Opinions set 
the goal of reaching a production value  of RMB 1 trillion for environmental equipment 
manufacturing by  2020.  
4.108.   On 31 October 2017, the MIIT issued the Action Plans for High -End Smart 
Remanufacturing (2018 -2020)79, which , inter alia,  identified the goal of setting up standards 
concerning high -end intelligent remanufacturing management, technology, equipment and 
evaluation.  
4.109.   On 8 D ecember 2017, the Plan of Intelligent Manufacturing Development (2016 -2020) was 
issued by MIIT and MOF with a view to guiding the development of intelligent manufacturing.80 The 
Plan, inter alia,  sets the goal of completing the digitalization of traditional  manufacturing sectors 
by 2020; and establishing the intelligent manufacturing support system by 2025.  
4.3.2.4   Iron and steel  
4.110.   According to data provided by the authorities, in 2016, China exported 108 million tonnes 
of steel materials (including steel billets) an d imported 13.5 million tonnes, with net crude steel 
exports of 98.55 million tonnes, accounting for 12.2% of China's total crude steel output.  
4.111.   The iron and steel sector in China has continued to be characterized by excess capacity 
over recent years. Acco rding to the Global Forum on Steel Excess Capacity (GFSEC)81, the country 
"plays an important role in global efforts to reduce overcapacity". Cognizant of the situation, the 
authorities have been making efforts to, inter alia,  reduce production capacity, su ch as setting 
targets to reduce domestic crude steel capacity and implementing policies to limit capacity 
additions in the iron and steels sector. According to a report for the GFSEC, in 2016, China's crude 
steelmaking capacity amounted to 1,073 million to nnes, registering a decline since 2014 
(Table  4.20).82 China accounts for the largest share of capacity within the GFSEC (52.8%) in 2016.  
4.112.   The main measures adopted by China have been to: (1) set clear goals for reducing excess 
capacity, i.e. to reduce crude  steel capacity by 100-150 million tonnes between  2016 and 2020; 
(2) adopt market -based and legal means to reduce capacity through facilitating the exit of 
capacities that do not meet the legal and administrative requirements on environmental 
protection, e nergy consumption, quality, safety and technology standards, and encouraging the 
exit of inefficient capacities based on market principles; and (3) take a series of policy measures, 
such as : establish ing an inter -ministerial joint mechanism comprising of 2 5 ministries and 
agencies, eliminat ing obsolete capacity and projects violating laws and regulations, allocat ing 
RMB 100 billion to a special fund to relocate workers affected by capacity reduction in the steel 
(and coal) sectors, enhanc ing supervision and  inspection to prevent reopening of shut -down 
capacity, and prohibit ing new capacity investments violating laws and regulations.83 
                                                
78 MIIT online information. Viewed at: 
http://www.miit.gov.cn/n1146290/n4388791/c5874413/content.html  [20.03.2018].  
79 MIIT online information. Viewed at: 
Http://www.miit.gov.cn/n1146290/n4388791/c5901644/content.html  [20.03.2018].  
80 MIIT online information. Viewed at: 
http://www.miit.gov.cn/n1146295/n1652858/n16 52930/n3757018/c5406111/content.html  [20.03.2018].  
81 The Global Forum was established by G20 Leaders at their Hangzhou summit in September 2016. It 
consists of 33 Members.  
82 G20 Germany 2017, Report - Global Forum on Steel Excess Capacity, 30 November 201 7. Federal 
Ministry for Economic Affairs and Energy online information. Viewed at: 
http://www.bmwi.de/Redaktion/EN/Downloads/g lobal-forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [06.03.2018].  
83 G20 Germany 2017, Report - Global Forum on Steel Excess Capacity, 30 November 2017.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 4.20 Figures for crude steelmaking capacity in selected GFSEC steel producers, 
2014 -16 
(1,000 tonnes)  
 2014  2015  2016  
Chinaa 1,128,510  1,126,880  1,073,330  
European Unionb 235,351  227,951  223,569  
Japan  132,636  131,532  129,940  
India 109,851  121,971  126,331  
United States  113,950  111,775  113,225  
Russia  87,369  87,369  87,869  
Korea  79,964  80,244  80,744  
Turkey  50,213  50,439  51,506  
Brazil  47,412  47,457  51,450  
Mexico  26,555  29,105  29,505  
GFSEC total  2,075,140  2,077,470  2,031,416  
a Aggregate capacity figures provided by China are based on companies whose revenues are  
above  20 million  RMB. 
b The European Union's figure includes the capacities of all European Union Member States.  
Source:  Global Forum on Steel Excess Capacity Report , 30 November 2017. Viewed at: 
http://www.bmwi.de/Redaktion/EN/Downloads/global -forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [27.03.2018].  
4.113.   According to the authorities, between 2010 and 2015, China's production capacity was 
reduced by 90.89 million tonnes for iron an d 94.86 million tonnes for steel. In 2016, around 
65 million tonnes of crude steel capacity was eliminated; crude steel capacity decreased by 4.8% 
compared to the previous year, while the production of crude steel increased by 0.5% on a 
year-on-year basis.  In 2015 and 2016, the production of crude steel was 804 million tonnes and 
808 million tonnes , respectively. Between 2014 and 2016, China's new additions of crude steel 
capacity amounted to 42.1 million tonnes (51.2% of the total new additions among the G FSEC 
member economies) (Table 4.21); 90% of total newly installed capacity involved blast furnace 
(BF) and basic oxygen furnace (BOF) technology. On the other hand,  among the 137 million 
tonnes of capacity closed across  all the  GFSEC member economies  betwe en 2014 and 2016, 
82.6% took place in China (Table 4.22).  
Table 4.21 New capacity additions in GFSEC selected steel producers, 2014 -16 
(1,000 tonnes)  
 2014  2015  2016  Total  % of total  
China  22,580  19,480  .. 42,060  51.2 
India 7,591  12,120  4,360  24,071  29.3 
Brazil  .. .. 4,200  4,200  5.1 
Indonesia  150 180 3,050  3,380  4.1 
Turkey  974 298 1,242  2,514  3.1 
Korea  .. 1,100  700 1,800  2.2 
United States  .. .. 1,450  1,450  1.8 
Saudi Arabia  200 250 600 1,050  1.3 
Russia n Federation  .. .. 500 500 0.6 
Japan  .. 350 .. 350 0.4 
GFSEC total  31,812  34,016  16,282  82,110  100.0%  
.. Not available.  
Source:  Global Forum on Steel Excess Capacity Report , 30 November 2017. Viewed at: 
http://www.bmwi.de/Redaktion/EN/Downloads/global -forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [27.03.2018].  
4.114.   According to the authorities, China intends to adhere to the working concept of "capacities 
cut instead of production cut, with the production decided by the market". According to a GFSEC 
report, 94% of China's existing production capacity uses the BF and BOF technology. Within the 
GFSEC economies , BF and BOF capacities are mainly concentrated in China, as the share of 
China's installed BF/BOF capacity relative to the total BF/BOF installed capacity of all GFSEC 
members combined amounted to around 67% in 20 16, compared with China's total share of crude 
steel capacity among GFSEC member economies (52.8%). Regarding the electric arc furnace (EAF) 
process, in 2016, China accounted for 13.7% of all EAF facilities among GFSEC member 
economies.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table 4.22 Permanent capacity closures in GFSEC selected steel producers, 2014 -16 
(1,000 tonnes)  
 2014  2015  2016  Total  % of total  
China  31,130  17,060  65,000  113,190  82.6 
European Union  1,685  7,400  4,382  13,467  9.8 
Korea  4,700  820 200 5,720  4.2 
United States  450 2,175  0 2,625  1.9 
Japan  296 0 484 780 0.6 
South Africa  0 1,000  0 1,000  0.7 
Brazil  0 0 210 210 0.2 
GFSEC total  38,261  28,455  70,276  136,992  100.0%  
Note:  The economies listed in the table reported capacity closures. Other GFSEC members indicated   that 
they did not have capacity closures.  
Source:  Global Forum on Steel Excess Capacity Report , 30 November 2017. Viewed at: 
http://www.bmwi.de/Redaktion/EN/Downloads/global -forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [27.03.2018].  
4.115.   In October 2013, the State Council issued Guidelines on Eliminating Production 
Overcapacity (Guo Fa [2013] No.  41). The Guidelines indicated that China should curb the blind 
expansion of industries with excess capacity (including the iron and steel industry) and eliminate 
production capacity that is built in violation of  rules, and p hase out outdated capacity. For new iron 
and steel projects, there must be a capacity swap plan to ensure that the total capacity does not 
increase. In February 2016, the State Council issued the Opinions on Reducing Overcapacity in the 
Steel Industry to A chieve Development by Solving Difficulties (Guo  Fa [2016] No. 6). The Opinions 
prohibit building up of any new steel capacity and aim at further eliminat ing excess capacity.84 At 
the same time, the authorities intend to strictly enforce all laws, regulation s, and industry policies 
on environmental protection, energy consumption, quality, safety, and technologies; steel capacity 
that fails to meet standards or requirements shall be eliminated according to relevant laws or 
regulations. China also intends to en courage enterprises to eliminate part of their steel capacity 
through, inter alia : proactive capacity elimination; mergers and acquisitions and restructuring; 
transformation and conversion of production lines; relocation and reconstruction; and global 
cooperation in production capacity. China plans to cut additional crude steel capacity by 
100-150 million tonnes between  2016 and 2020 ; this would be a reduction of between 9% and 
13% to 977 -1,027 million tonnes, resettling around 500,000  workers, and bringing  capacity closer 
to consumption.85  
4.116.   With a view to facilitating restructuring, China has adopted policies to facilitate enterprises 
in meeting their  social obligations  in the case of closure of  plants, provide incentives to assist steel 
workers and promote re-employment . Regarding policies and measures related to steel -specific 
corporate restructuring measures, China adopted measures to facilitate changes in ownership 
structure.86 China has also adopted policy measures related to the sector's upgrading and 
innovation, such as those related to the encouragement of product specialization and initiatives 
aimed at upgrading workers' skills.  
4.117.   The authorities indicate that China's state -owned steel enterprises87 are subject to the 
same reporting requirements as listed  private enterprises and there are  explicit guidelines or 
                                                
84 Chinese Government online information (in Chinese). Viewed at: 
http://www.gov.cn/zhengce/content/2016 -02/04/content_5039353.htm  [20.03.2018].  
85 Global Forum on Steel Excess Capacity Report, 30 November 2017. Viewed at: 
https://www.bmwi.de/Redaktion/EN/Downloads/global -forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [29.03.2018].  
86 Global Forum on Steel Excess Capacity Report, 30 November 2017. Viewed at: 
https://www.bmwi.de/Redaktion/EN/Downloads/global -forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [29.03.2018].  
87 The legal definition of SOEs in China is provided in Article 5 of the Law on the State -owned Assets of 
Enterprises, which stipulates that the state -invested enterprises refer s to a wholly state -owned enterprise or 
company with the state being the sole investor, or a company in which the state has a stake, whether 
controlling or non -controlling. Global Forum on Steel Excess Capacity Report, 30 November 2017. Viewed at: 
https://www.bmwi.de/Redaktion/EN/Downloads/global -forum -on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [29.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  targets for the disbursement of dividends by state -owned steel companies; they must earn a rate 
of return comparable to private enterprises.88 
4.4  Services  
4.4.1   Telecommunications  
4.4.1.1  Statistical overview  
4.118.   The main economic characteristics of the telecommunications sector in China and its recent 
evolution are described in Box 4.1, while Table 4.2 3 provides average telecom prices in 2016 in 
China computed by the International Telecommunication Union (ITU) as a percentage of the gross 
national income per capita.  
Box 4.1 Economic characteristics and evolution of the telecommunications sector  
Penetration rates (2016)  
Telephone subscribers  (total and per 100 inhabitant s): 1,569.9 million households (113.5 sets/100 inhabitants)  
Mobile phone subscribers  (total and % of total telecom subscribers): 1,363.28 million households (86.8%)  
Internet users : 731 million  
Broadband Internet subscribers : 324.6 million households  
Main actors  
Number of companies providing value -added telecom services : 30,547  
Names and market shares of the leading companies for fixed telecom services  (2016 ):  
China Telecom: 63.8%, China Unicom: 32.2%, China Mobile: 4%  
Name and market shares of the leading companies for mobile telephones service s (2016 ): 
China Mobile: 63.3%, China Unicom: 19.1%, China Telecom: 14.6%  
Name and market share s of the leading companies for broadband Internet services  (2016 ): 
China Telecom: 44.7%, China Mobile: 24.1%, Chin a Unicom: 23.3%  
Foreign ownership participation in telecom companies :  
- In the basic telecommunications sector, respectively 17.15%, 27.28% and 25.64% of the public shares of 
China Telecom, China Mobile and China Unicom are held by institutions overseas . 
- In the value -added telecommunications sector, there are 78 foreign -invested enterprises having obtained the 
business certificate for telecommunications business, with foreign investment ranging from 7% to 100%. 
Foreign investment mainly comes from countr ies and regions such as: Hong Kong, China; the United States; 
Europe (Ireland, Finland); and Japan  
State ownership : 
The state owns 82.85%, 72.72% and 61.94% of the shares of China Telecom, China Mobile and China Unicom, 
respectively.   
Establishment of new  companies, mergers or closures since the last Review  
In May 2016, a fourth basic telecom licen ce was granted by the Ministry of Industry and Information 
Technology (MIIT) to the state -owned broadcaster China Broadcasting Network (CBN). CBN will not provid e 
voice-calling services but only domestic data transmission services on Internet nationwide and domestic 
communications facility services. The aim is to promote the integration of three networks （telecom, radio and 
TV and Internet).  
Source:  Information pr ovided by the authorities of China.  
Table 4.23 Telecom prices in China as a percentage of the gross national income per 
capita  
 China  Asia and Pacific  World  
Mobile -cellular prices (% GNI per capita)  0.6 3.2 5.2 
Fixed -broadband prices (% GNI per capita)  2.4 14.5 13.9 
Mobile -broadband prices , 500 MB (% GNI per capita)  0.7 2.7 3.7 
Mobile -broadband prices , 1 GB (% GNI per capita ) 1.1 5.4 6.8 
Source:  ITU (as of June 2017).  
                                                
88 Global Forum on Steel Excess Capacity Report, 30 November 2017. Viewed at: 
https://www.bmwi.de/Redaktion/EN/Downloads/global -forum-on-steel-excess -capacity -
report.pdf?__blob=publicationFile  [29.03.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.4.1.2  Regulatory framework  
4.119.   The regulatory framework for telecommunication s services in China has been described in 
detail in recent Trade Policy Review reports and has only marginally changed since the last 
Review.89 The main changes concern the following areas: foreign investment regime, classification 
of telecom services, cybersecurity regulation and virtual priv ate network use rules (limitations and 
prohibitions) enforcement.  
4.120.   The regulations governing foreign inve stment in telecommunication s services in China are 
stipulated in inter alia  the Catalogue of Industries for the Guidance of Foreign Investment 
(2017  Revision) (Table 4.2 4).90 
Table 4.24 Telecom services opened to foreign investment  
Telecom investment regime according to 2017 Investment 
Catalogue  Exceptions according to other 
notices or regulations  
Encouraged industries  No telecom service in this category  No exception  
Restricted industries  (Limited to 
telecom services under WTO 
commitments)  For basic telecom services, foreign 
shareholding cannot exceed 49% No exception  
For value -added telecom services 
(VATS), foreign shareholding 
cannot exceed 50%, except for 
electronic commerceb In the China (Shanghai) Pilot Free 
Trade Zone ( CSPFTZ)a, five sub -
sectors allowed foreign capital 
participation up to 100%  
 
(a) Store and forward services  
(b) Information services 
 (Application store services 
 only) 
(c) Call centre services  
(d) Internet access services  for 
 Internet users  (B2C) 
(e) Domestic multiparty 
 communications services  
 
(Note: (a) and (b) were previously 
included in WTO commitments as 
up to 50% of foreign capital 
participation; (c), (d), (e) are 
newly liberali zed sectors.)  
 
A one sub-sector, which was not 
included in the WTO commitments, 
is now open to foreign investment 
in CSPFTZ, with foreign 
shareholding ratio not exceeding 
50%: CSPFTZ  - Domestic Internet 
Protocol Virtual Private Network 
(IP-VPN) Services  
 
Nationwide, one sub-sector 
allowed foreign shareholding up to 
100%: Online data processing and 
transaction processing services 
(operational electronic commerce)  
                                                
89 Notably in 2016: WT/TPR/S/342/rev.1, paragraphs 4.29 to 4.43; in 2014: WT/TPR/S/300/Rev.1, 
paragraphs 4.37 to 4.47; in 2012: WT/TPR/S/264/Rev.1, paragraphs 165 to 204; and 2010 : 
WT/TPR/S/230/Rev.1, paragraphs 83 to 98.  
90 NDRC online information (in Chinese). Viewed at: 
http://www.ndrc.gov.cn/zcfb/zcfbl/201706/t20170628_852857.html . WT/TPR/S/ 375/Rev.1  • China  
 
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  Telecom investment regime according to 2017 Investment 
Catalogue  Exceptions according to other 
notices or regulations  
Prohibited industries  Internet news information services, 
online publishing services, online 
audio and video p rogrammes, 
business premises for Internet -
access services, Internet cultural 
business (excluding music), and 
online public information publishing 
services  No exception   
a Opinions on Further Liberalization of the Value -Added Telecommunication Services in China 
(Shanghai) Pilot Free Trade Zone, 6 January 2014 (in Chinese). Viewed at: 
http://www.miit.gov.cn/n1146295/n1652858/n1652930/n3757020/c3764637/content.html . 
b There exists however no precise definition yet of electronic commerce as the E-commerce Law  of 
China is under development.  
Source:  Information provided by the authorities of China.  
4.121.   An amended Catalogue of Telecommunications Services was released in December 2015.91 
Compared with the 2003 Catalogue, the 2015 Catalogue : (1) tracks the basic structure laid down 
in the 2003  Catalogue ; (2)  re-define s the sub -categories under the value -added 
telecommunications services ("VATS", including Type I VATS and Type II VATS) so that Type I 
VATS are now services based on facilities and resources, and Type II VATS are services based on 
public applicat ion platforms; (3) define s "content distribution network services" and "coding and 
protocol conversion services", and refine s the categories of Internet data centre services, call 
centre services and information services; (4) remove s three sub -categories, i.e. public telegraph 
and user telegraph services, analogue trunking communication services, and wireless data 
transmission services. Enterprises that had obtained the corresponding licen ces were allowed to 
continue providing these services.  
4.122.   The correspon dences between China's GATS commitments in telecommunication services 
and the new telecom catalogue are described in Table 4.2 5. 
Table 4.25 China's GATS commitments in telecommunication services and their 
correspondence in the new telecom catalogue  
WTO Schedule of commitments  2015 Classification catalogue 2015  
1. Basic telecom services   
- Mobile voice and data services  A12. Cellular mobile communication service  
- Domestic services   
(a) Voice services  
(c) Circuit -switched data transmission services  
(f) Facsimile services  A11-1 Fixed network for local communication services  
A11-2 Fixed network for domestic long -distance 
communications services  
(b) Packet -switched data transmission services  A24 The second type of data communications services  
(g) Domestic private leased circuit services  A26 Facilities services for domestic communications  
- International services   
(a) Voice services  
(c) Circuit -switched data transmission services  
(f) Facsimile services  
(g) International closed user group voice services  A11-3 Fixed network for international long distance 
communication services  
(g) International closed user group data services 
(based on Internet)  A14-1 Internet international data transmission  
(g) International closed user group data services 
(based on international private leased circuit)  A14-4 International data communication services  
(b) Packet -switched data transmission services  A14-1 Internet international data transmission  
A14-4 International  data communication services  
                                                
91 MIIT online infor mation (in Chinese). Viewed at: 
http://www.miit.gov.cn/n1146295/n1652858/n1652930/n4509627/c4564595/content.html  [06.04.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  WTO Schedule of commitments  2015 Classification catalogue 2015  
2. Value -added telecom services   
(h) Electronic mail  
(i) Voice mail  
(l) Enhanced/Value -added facsimile services 
 (including store and forward, store and retrieve)  B23. Store and forward services  
(j) Online information and database retrieval  B25. Information services  
(k) Electronic data interchange  
(n) Online information and/or data processing 
(including transaction processing)  B21. Online data processing and transaction 
processing services  
(m) Code and protocol conversion  B26. Coding and protocol conversion services  
Source:  WTO document GATS/SC/135, 14 February 2002; Catalogue of Telecomm Services Classification 
(2015 Version), 28 December 2015 (in Chinese). Viewed at: 
http://www.miit.gov.cn/n1146295/n1652858/n1652930/n45 09627/c4564595/content.html  
[05.04.2018].  
4.123.   On 3 July 2017, the MIIT issued the Administrative Measures on Operating Licensing of 
Telecommunications Business (MIIT Decree No. 42.), which entered into force on 
1 September  2017. The Administrative Measures on Operating Licensing of Telecommunications 
Business (Decree No.  5), issued  by MIIT on 5 March 2009 , were simultaneously  abolished. The 
amended version mainly deals with the application, approval, utilization, change, monitor ing and 
examination , and legal re sponsibility of telecommunications business  operating licen ces. 
4.124.   The main amendments brought about by the new licensing regulation are the following: 
(1) the abolition of a series of filing/licensing requirements concerning , inter alia : licensing of basic 
telecommunications business and cross -region value -added telecommunications business; the 
submission of a financial statement and qualification report and the submission of a "Quasi 
Approval Report of Company Name" when applying for an  operating licence; and the stipulation 
that the telecommunications business operating licen ce is the prerequisite for registering change s 
of information with industrial and commercial authorities; (2) the establishment of  an online 
system for the applicat ion, approval and management of operating licen ces as well as for 
information announcement, search and sharing; (3) the establishment of a credit rating, 
performance -based mechanism as part of the supervision system of telecommunications operators; 
(4) the  establishment of an annual information report and publicity system for all telecom 
operators, under which they will be held responsible for the authenticity of the information 
contained in their annual reports, and the annual operating licen ce examination  system will take 
into account this information; (5) the establishment of a sanction system whereby 
telecommunications operators that were subject to administrative sanctions by the competent 
administrative authorities or fail ed to submit an annual report on time will be placed on a bad -
performing operators list92; (6) the improvement of the on -the-spot and post facto  supervision 
system by creating a random inspection system to examine information in annual reports, daily 
operating activities, and implementa tion of regulations by telecommunications operators93; and 
(7) the alleviation, or the abolition, of restrictive requirements on the approval of shareholder and 
shareholding changes and , on approval, on the calculation of shareholding ratio and authorized 
operation of value -added telecommunications business so as to facilitate investment and financing 
in the value added telecom sector.  
4.125.   Regarding the transition between the old and the new licensing system s, the 
telecommunications business licen ces issued prev iously remain valid within the original scope and 
period of the licen ce. If an enterprise needs to change the licen ce within the validity period of the 
original licen ce, a new telecommunications business licen ce can be issued upon application. 
According to the Provisions on Administration of Telecommunication Enterprises with Foreign 
Investment  (Decree No. 534 of the State Council), a foreign -owned company is required to obtain 
the Approval of Telecommunication Servi ces with Foreign Investment  and the Approval Certificate 
of Foreign -Invested Enterprises  prior to application for a telecommunications business licence.  
                                                
92 Operators having received orde rs to stop business for internal rectification, having had their operating 
licence revoked or facing other sanction s by the MIIT will be included in a defaulters list. Operators listed in the 
defaulters list cannot apply for telecommunications operating li cences. 
93 It sets out detailed inspection methods, including inspection of written materials, on -the-spot 
inspection and online supervision with corresponding sanctions in case of breaches of regulations.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.126.   There has been no change during the period under review regarding the fixed 
interconnection regime.  
4.127.   Following earlier local pilot experiences held in 2010 and 2104, the number portability 
experimental programme now extends , as at end -June 2017 , to five  provinces and cities and 
790,000  users. On facility sharing, the MIIT has continued to promote the co -construction and 
sharing of basic telecommunications facilities, requiring basic telecommunications enterprises , to 
carry out construction , including the construction of pole line and pipeline on local ring road s, in 
accordance with the requirements of sharin g or co -construction when applicable.  
4.128.   As far as universal service is concerned, there have been no changes to the legal 
framework since the previous review of China. In terms of results for rural areas of China, as of 
the end of 2016, the reachability of t elephones and broadband has been achieved in every 
township ; the same goes for the reachability of telephones in all administrative villages. In 
addition , 95% reachability of broadband in all administrative villages  has been achieved ; 
81% reachability was achieved for  optical fibre. The next target is to achieve a 98% reachability of 
optical fibre by 2020.  
4.129.   Regarding Mobile Virtual Network Operators (MVNO), China has pursued its pilot scheme of 
mobile communication resale business initiated in May 2013. At present, 42 private enterprises in 
total have obtained a pilot approval. As at the end of 2016, the cumulative number of users 
exceeded 43 million. In addition, the pilot scheme now allows private firms to buy mobile telecom 
services (self -checking and sel f-correcting, standardization and rectification services for real -name 
registration, junk short messages, and unwanted calls) from incumbent operators and sell them to 
end users.  
4.130.   China and its operators have continued the deployment of the LTE/4G network.  As of 
April 2017, the number of 4G users in China reached 849 million; the number of LTE base stations 
in China exceeded 2.6 million, accounting for over 60% of world capacity. The LTE network is 
evolving into an LTE-Advanced network. Regarding broadband access speed, the target for 2017 is 
that over 85% of fixed broadband users will be able to use broadband access services with a speed 
of more than 20  Mbps, and over 50% of users will be able to use broadband access services with a 
speed of more than 50Mbp s.  
4.131.   China cancelled the long distance roaming fees for domestic mobile phone calls in  2017.  
4.132.   In recent years, China's cloud service market has developed rapidly. In order to strengthen 
and improve the regulation and the management of the cloud service marke t, following a wide 
consultation process, the MIIT is in the process of formulating a new legal framework for these 
services (the "notice on standardizing cloud service market and facilitating the sound development 
of the industry"). There is no schedule  established yet for the publication of the notice.  
4.133.   According to the authorities, t he notice , while instituting new access thresholds and adding 
other restrictions, is in line with China's existing laws and regulations and its WTO commitments. 
Foreign -funded enterprises will be allowed to carry out technical cooperation with Chinese 
enterprises with relevant licen ce qualifications provided they abide by the regulation.  
4.134.   In recent years, big data and the three types of internet services as classified by 
China - Internet Data Centre (IDC), Internet Access Service (ISP) and Content Distribution 
Network (CDN) – have also been experiencing rapid development. However, according  to the 
authorities, illegal practices such as unlicensed business activities, sub -letting and illegal self -
building of network infrastructures have emerged. Therefore, the MIIT released the "MIIT Notice 
on Cleaning Up and Regulating the Internet Access Se rvice Market" (MIIT Telecom. Dept. 
Doc. No. [2017] 32, dated 17 January 2017 and released on 22 January 2017 , hereinafter referred 
to as "the Notice"), which draws on the earlier "Measures on Administration of International 
Communication Import and Export Board" (Decree No. 22 of  the former Ministry of Information 
Industry of 2002).  
4.135.   The provisions of the Notice dealing with cross -border business activities target enterprises 
or individuals that rent international private lines or VPN and carry out cross -border 
telecommunications business activities without the authorization or the approval of the Chinese WT/TPR/S/ 375/Rev.1  • China  
 
- 153 - 
 
  telecommunications authorities and without the qualification s for practicing international 
telecommunications business. The notice stipulates that foreign t rade enterprises and multinational 
enterprises, due to their demands for special lines for cross -border networking, may rent VPN 
services from a telecommunications services operator recognized by law by the International 
Communication Import and Export Boa rd. According to the authorities, their normal operation will 
not be affected by the provisions of the Notice. In that regard, differing views have been 
expressed, notably by foreign business associations established in China and by other WTO 
Members in th e Council of Trade in Services.94  
4.136.   On 7 November 2016 , a new cybersecurity law was adopted. This law entered into force on 
1 June 2017. Its aims, as enunciated by its article 1, are "to ensure network security, to safeguard 
cyberspace sovereignty, national security and the societal public interest, to protect the lawful 
rights and interests of citizens, legal persons and other organizations, and to promote the healthy 
development of economic and social informatization."  This law applies to "the construction,  
operation, maintenance and usage of networks, as well as to the network security supervision and 
management (article 2), and to the 'network operators' which involve 'network owners, managers 
and network service providers' (article 76 -3)". 
4.137.   A key provision  of the cybersecurity law is article 21, which institutes a "tiered system of 
network security protection" in which network operators are required  to perform a certain number 
of security protection duties "to ensure that  the network avoids interference, da mage or 
unauthorized visits, and to prevent network data leaks, theft or falsification ". These include: 
(1) formulating internal security management systems and operating rules, determin ing persons 
responsible for network security, and implement ing network security protection responsibility; 
(2) adopt ing technological measures to prevent computer viruses, network attacks, network 
intrusions and other actions endangering network security; (3) adopting technological measures 
for monitoring and recordi ng network operational statuses and network security incidents, and 
follow ing relevant provisions to store network logs for at least six months; (4) adopting measures 
such as data classification, back -up of important data, and encryption; and (5) abiding b y other 
obligations established by law or administrative regulations.  
4.138.   Another key provision of the law is its article 23 whereby "critical network equipment and 
specialized network security products shall follow the national standards and technical regulat ions 
and be security certified or tested by a qualified establishment, before being sold or provided" . 
Article 23 also stipulates that "the state network information departments, together with the 
relevant departments of the State Council shall formulate a nd release a catalogue of critical 
network equipment and specialized network security products, aimed at promoting reciprocal 
recognition of safety certifications and security inspection results and at avoiding duplicative 
certifications and inspections".  This Catalogue was released in June 2017.95 
4.139.   In its article 31, the law stipulates that the "state implements key protection of public 
communication and information services, power, traffic, water infrastructure, finance, public 
service, electronic governanc e and other critical information infrastructure that if destroyed, losing 
functions or leaking data might seriously endanger national security, national welfare and the 
people's livelihood, or the public interest, on the basis of their tiered protection sy stem". The same 
article indicates that the State Council will formulate the specific scope and security protection 
measures for critical information infrastructure.  These measures have been subject to a public 
consultation process and are now in the final drafting phase.  
4.140.   The network operators of critical information infrastructure are subject to reinforced 
obligations. In particular: (1) they are required to  set up specialized security management bodies 
and persons responsible for security management, and c onduct security background checks on 
those responsible persons and personnel in critical positions; periodically conduct network security 
education, technical training and skills evaluations for employees; conduct disaster recovery 
backups of important sys tems and databases, formulate emergency response plans for network 
security incidents, and periodically organize drills (article 34 of the law); (2) critical information 
infrastructure operators purchasing network products and services that might impact na tional 
                                                
94 See WTO documents S/C/W/376, 23 February 2018, an d S/C/M/134, 5 April 2018.  
95 MIIT online information (in Chinese). Viewed at: 
http://www.miit.gov.cn/newweb/n1146290/n4388791/c5679459/content.html  [06.04.2018].  WT/TPR/S/ 375/Rev.1  • China  
 
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  security are required to  go through a national security review organized by the State network 
information departments and relevant departments of the State Council (article 35); and (3) at 
least once a year, they are required to  conduct an inspectio n and assessment of their networks ' 
security and risks that might exist, either personally, or through retaining a network security 
services establishment, and submit a network security report on the circumstances of the 
inspection and assessment as well a s improvement measures to the relevant department 
responsible for critical information infrastructure security protection efforts (article 38). In 
addition, they will be subject to spot testing of critical information infrastructure security risks by 
the competent authorities (article 39.1) . 
4.141.   Another key provision of the law is its article 37 relating to data localization whereby 
"personal information and other important data gathered or produced by critical information 
infrastructure operators during operat ions within the mainland territory of China shall be stored 
within mainland China. Where due to business requirements it is truly necessary to provide these 
data and information outside the mainland, they shall follow the measures jointly formulated by 
the State network information departments and the relevant departments of the State Council to 
conduct a security assessment; but where laws and administrative regulations provide otherwise, 
they shall follow those provisions".  
4.142.   Detailed and heavy fines are fo reseen by the law in case of breach of its provisions. 
Article  58 of the law stipulate s that "to fulfil the need to protect national security and social public 
order, and respond to major social security incidents, the State Council, or the governments of 
provinces, autonomous regions and municipalities, with the approval of the State Council, may 
take temporary measures regarding network communications in certain regions, such as restricting 
them". In the Council of Trade in Services, other WTO Members hav e made comments on the 
potential implications of that new legislation.96 
4.4.2   Financial services  
4.143.   The financial services regime in China has been described in detail in previous Trade Policy 
Review reports, notably in 2016, 2014, 2012 and 201097, and has remained largely unchanged. 
The description will therefore focus on the regulatory developments that have occurred during the 
period under review.  
4.4.2.1   Market overview  
4.144.   The main economic characteristics of China's financial services sector are described in 
Box 4.2. 
Box 4.2 Financial services: statistical overview  
General  
Share of financial services in GDP : 
8.4% in 2015 (of which insurancea: 3.53%); 8.3% in 2016 (of which insurance: 4.16%)  
Share of financial services in total employment :  
2015: 6.068 million; 2016: 6.652 million (of which insurance: 2.672  million)  
Banking services  
Number of financial institutions with legal personality : 2014: 4,089; 2016: 4,399  
Number and type of commercial banks  (excluding policy banks and small financial institutions in rural areas  –
end-2016): 5 large -scale commercial banks, 3 policy -based banks, 12 stock -holding banks, 134 city 
commercial banks, 1,114 rural commercial banks, 40 rural cooperative banks, 1,443 ru ral banks, 1 postal 
savings bank, and 39  foreign -invested banks and 121 branches of foreign banks.  
                                                
96 See WT O documents S/C/W/374 and S/C/M/133 and 134.  
97 See WT/TPR/S/342/Rev.1, paragraphs 4.44 to 4.84 ; WT/TPR/S/300/Rev.1, paragraphs 4.48 to 4.84; 
WT/TPR/S/264/Rev.1, paragraphs 96 to 164; and WT/TPR/S/230/Rev.1, paragraphs 47 to 82.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Concentration/share of the various types of banks in the total balance sheet for banks (2016 ): 
Total assets of the banking system: RMB 232.3 trillion. Tota l debts of the banking system: RMB 214.8 trillion  
- large-scale commercial banks: 37.3% of the assets and 37.2% of the debts  
- joint-stock commercial banks: 18.7% of the assets and 19% of the debts  
- city commercial banks: 12.2% of the assets and 12.3% of  the debts  
- rural commercial banks: 12.9% of the assets and 12.9% of the debts  
- foreign -invested banks (including foreign -controlled banks and branches of foreign banks ): 1.3% of the 
assets and 1.2% of the debts  
 of which:  - foreign -controlled banks : 1.06% of the assets and 1,02% of the debts  
  - branches of foreign banks : 0.24% of the assets and 0.18% of the debts  
Securities activities  (securities, holding bonds, and stocks by commercial banks):  
2014: RMB 20.52 trillion; 2015: RMB  25.29 trillion, 2 016: RMB 30.5 trillion 2014  
Insurance  
Number of insurance companies (2015 ): 
- Chinese -owned insurance companies: 11 group s of companies, 49 life insurance companies (4 health 
insurance companies, 6 pension insurance companies), 52 property insurance companies, 3 reinsurance 
companies and 20 asset management companiesb. 
- Foreign -owned insurance companies: 28 life insurance co mpanies, 22 property insurancec companies, 
6 reinsurance companies and 1 asset management company.  
Total balance sheet of the insurance sector (end -2016): 
RMB 15.12 trillion, among which life insurance accounts for 82%, property insurance 16%, and 
reinsur ance 2%. 
Concentration : (cumulative market share of the top 5 companies, 2016):  
49.32% of the life insurance market, and 73.68% of the property insurance market  
Pensions funds  
Number of qualified institutions to manage enterprise annuity : 35, of which 22 with foreign investors.   
Stock exchange and securities  
Capitalization of the companies listed : 
2015: RMB 53,146.27 billion, accounting for 77.13% of GDP  
2016: RMB 50,824.51 billion, accounting for 68.30% of GDP  
 
Gross value of publicly issued bonds : 
2015: RMB 619.86 billion, of which, foreign borrowers issued RMB 1.5 billion (panda bonds ) 
2016: RMB 1.370,19 trillion, of which, foreign borrowers issued RMB 82.1 billion (panda bonds)  
 
Securities turnover on the Stock Exchange (secondary ma rket):  
 
2015: the share turnover of Shanghai and Shenzhen Stock Exchange (secondary market) was 
RMB 253.25  trillion (of which, A -share turnover was RMB 252.88 trillion, and B -share turnover was 
RMB 0.37 trillion); bond (cash bond and repurchase) turnover was RMB 131 trillion; gross turnover of primary 
market fund (including closed -end fund, ETF, LOF, transactional money fund) was RMB 15.27 trillion.  
 
2016: the share turnover of Shanghai and Shenzhen Stock Exchange (secondary market) was 
RMB 127.38  trillion (of which, A -share turnover was RMB 127.24 trillion, and B -share turnover was 
RMB 0.15 trillion); bond (cash bond and repurchase) turnover was RMB 239 trillion; gross turnover of primary 
market fund was RMB 11.14 trillion.  
a Measured by the share of premiums income in GDP.  
b i.e. managing assets for other insurance companies.  
c Both life insurance companies and property companies offer short -term health care insurance.  
Source:  Information provided by the authorities of China.  
4.4.2.2   Regulatory developments f or banking services  
4.145.   Since 2015, there have been no significant changes in general qualification requirements, 
additional qualification requirements for foreign banks, the licensing authority, the statutory 
maximum delay to process licen ce applications, the validity of licen ces, restrictions on banks 
selling or transferring licen ces, minimum capital requirements for obtaining a licen ce, or other 
licensing aspects.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.146.   In May 2015, the State Council approved the "three -year pilot programme of the city of 
Beijing  to further open up a number of services sectors". Regarding banking, this pilot programme 
allowed foreign financial institutions to establish foreign banks and set up joint -venture banks with 
Chinese private capital. In a second phase, all types of capita l fulfilling the relevant entry 
conditions were allowed to create non -bank financial institutions such as consumer finance 
companies, auto finance companies and financial leasing companies. Additional measures were 
also taken to facilitate the establishmen t of branches of foreign banks in Beijing as well as of 
joint-venture banks between Chinese private enterprises and foreign banks.  
4.147.   On 8 June 2016, the Administrative Measures for Bank Card Clearing Institutions (Order 
No. 2 of 2016 of the People's Bank of China and the China Banking Regulatory Commission) 
became effective. These administrative measures constitute the implementin g regulation s of the 
Decision of the State Council on the Market Access Administration of Bank Card Clearing 
Institutions (Guo  Fa No. 22 of 2015).98 They stipulate that , in principle, an overseas institution 
that only provides bank card clearing services in foreign currencies for cross -border transactions 
(hereinafter referred to as the " overseas institution") is not obligated to estab lish a bank card 
clearing institution within the territory of China.  
4.148.   However, the administrative measures also stipulate that if the overseas institution exerts 
significant impact on the sound operation of the domestic bank card clearing system or public 
payment confidence, it shall establish a legal entity within the territory of China and obtain a bank 
card clearing business permit pursuant to the relevant regulations. The criteria that will be used 
for assessing the existence of such an impact for a giv en provider are notably the development of 
its cross -border business, its business scale, its market share, the guarantees it can provide in 
terms of risk prevention and information security, its implementation of anti -money laundering 
and anti -terrorist f inancing measures, as well as the protection it grants to the rights of card 
holders and merchants. So far, no individual decision has been taken.  
4.149.   An overseas bank card clearing institution wishing to engage in RMB -denominated bank 
card clearing business s hall apply for a licen ce to establish a bank card clearing institution within 
the territory of China pursuant to the law. Domestic and foreign investors applying to establish 
bank card clearing institutions are equally treated and subject to uniform requir ements in terms of 
establishment conditions, application procedures and business.  
4.150.   These administrative measures were complemented in June 2017 by the PBOC "Guidelines 
on Providing Bank card Clearing Services", which contain provisions on the opening, oper ation and 
termination of bank card clearing services, as well as on the application process, materials to be 
submitted, deadlines, licensing procedures and rights and obligations of applicants.   
4.151.   The Circular of the General Office of China Banking Regulator y Commission (CBRC) on 
Matters Concerning the Operation of Certain Businesses by Foreign -invested Banks, dated 
10 March 2017, eased approval requirements for foreign -owned banks to supply certain 
investment banking services in the country and to invest in domestic banking institutions in China. 
Approval from the CBRC is no longer required for foreign -invested banks (which include foreign -
invested legal entity banks and onshore branches of foreign banks) to provide the following 
services: underwriting of tre asury bonds, custodian services, and financial advisory and 
consultancy services (beyond those services only related to traditional banking). Instead, foreign -
invested banks are now only required to report to the CBRC within five  days upon commencement 
of the relevant business, subject to the administrative approval of other regulatory authorities 
where applicable. In addition, the Circular allows foreign -invested banks to make onshore 
investments in domestic banks. The general equity restrictions (i.e. the  limitation of a single 
foreign investor stake in a Chinese bank to 20% and of aggregate foreign ownership of any 
banking institutions to 25%) continue to apply to those investments. The qualification 
requirements to be allowed to make such an investment a re the following: first , the total assets of 
the investor should be no less than US$10 billion; second , it should be recognized as having a 
good rating for the last two years by the international rating agencies recognized by the PBOC ; 
third, it should hav e recorded a profit in the last two years ; fourth , the capital adequacy ratio for 
the bank should reach the average level of the place of registration or a least no less than 10.5% ; 
                                                
98 WTO, Trade Policy Review – China (2016).  WT/TPR/S/ 375/Rev.1  • China  
 
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  and fifth , the total assets for non -banking institutions should be no less  than 10% weighted risk 
asset volume.  
4.152.   The 2017 version of the Investment Catalogue does not contain any changes, as compared 
to the 2015 version regarding foreign shareholding ratio for banks. It contains however a new 
provision whereby the foreign investors and sole or controlling shareholders of foreign bank 
branches, wholly foreign -funded bank s and Chinese -foreign joint -venture banks may only  be 
foreign commercial banks, while other foreign financial institutions can only hold non -controlling 
shares.  
4.153.   In June 2017, the State Council released the 2017 Negative List/ Catalogue for Free Trade 
Zones, replacing the catalogue issued in 2015.99 This 2017 FTZ Negative List extends the 
geographical scope of the FTZ regime from 4 FTZs (Shanghai, Guangdong, Tia njin, and Fujian) 
to 11 FTZs in total, by adding 7 new FTZ s: Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan 
and Shaanxi ( Section 2.4.1) . In addition , the 2017 FTZ catalogue contains  in the field of banking 
services,  the following liberalization measu res: (1) branches of foreign banks are now allowed to 
engage in agent issuing, agent cashing and underwriting of governmental bonds' activities; 
(2) foreign banks do not anymore have to meet a minimum operating period requirement for 
operating in RMB; and (3) foreign investors are no longer required to meet  the requirement of 
having a certain total asset value for investing in a financial asset management company.  
4.154.   Through the PBOC Announcement No.  7/2017, dated 3 July 2017, China allowed foreign 
institution s to operate rating agencies and permit ted foreign -based agencies to provide rating 
services for the domestic market. Under the previous framework, global rating agencies could only 
have minority stakes in joint venture operations and could not issue ratin gs on local bonds.  
4.155.   In November 2017, China announced that regulators would abolish restrictions limiting a 
single foreign investor stake in a Chinese bank to 20% and capping total foreign ownership of any 
banking institutions to 25%. No schedule  was howev er indicated.  
4.156.   The prudential regulations of China were assessed in October 2017 by the IMF and the 
World Bank in the context of the Financial Sector Assessment Program (FSAP).100 The main 
conclusions of this report are that the China Banking Regulatory Comm ission (CBRC) has 
maintained its momentum in regulation and supervision in the face of the exceptional growth in 
scale and increasing complexity of the banking system and has achieved a high degree of 
compliance with the Basel Core Principles for Effective  Banking Supervision (BCPs) . The IMF and 
the World Bank also state that although market entry to new products and business lines is tightly 
controlled, widening of financial groups and cross sectoral activities present the most significant 
challenges to the CBRC's effectiveness . They finally consider that while the CBRC has performed 
well, in terms of evolving its regulatory standards to meet the growing complexity of the system, 
several dimensions of credit risk, including treatment of problem assets, co ncentration risk and 
related party exposures remain challenges.  
4.157.   Regarding anti -money laundering, the PBOC has issued further rules, regulations and 
normative documents to further improve surveillance. In particular, in December 2016, the PBOC 
revised and issued the "Measures for Report Administration of Large -amount Transactions and 
Suspicious Transactions of Financial Institutions" (PBOC Decree [2016] No. 3) and a series of 
supporting normative documents, which require financial institutions to establish a sound 
transaction supervision standard to address  money laundering and the risk of terrorist financing, 
to enhance the automatized detection and analysis of abnormal transactions, to report suspicious 
transactions based on "reasonable suspicion", and to improve the effectiveness of reporting work 
of large -amount transactions and suspicious transactions.  
4.158.   In January 2017, the PBOC issued the "Measures for Administration of Anti -Money 
Laundering Classification Rating by Legal Person Financial Institution (T rial)" (YF  [2017] No. 1) to 
                                                
99 State Council online information. Viewed at: 
http://english.gov.cn/policies/latest_releases/2017/06/16/content_281475687826506.htm  [11.1 2.2017].  
100 Online information. Viewed at : 
http://documents.worldb ank.org/curated/en/596881512550833789/pdf/121862 -WP-P157065 -PUBLIC -ADD-
FSAP-SERIES -Financial -Sector -Assessment -Program -FSAP-China -FSAP-2017-DAR-BCP.pdf . WT/TPR/S/ 375/Rev.1  • China  
 
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  further improve the evaluation of compliance and effectiveness of anti -money laundering work 
carried out by financial institutions, to further put legal person supervision principles into practice, 
and effectively implement the anti-money laundering supervision carried out by financial 
institutions.  
4.159.   Recently, the PBOC and the members of inter -ministerial joint conference of anti -money 
laundering drafted the "Opinion on Improving the Supervision System and Mechanism of 
Anti-money  Laundering, Anti -terrorist Financing, and Anti -tax Evasion", which has been approved 
by the ministries and agencies concerned, and is to be published and issued in the form of a joint 
regulation. The Opinion contains significant guidance material for the establishment of China's 
anti-money laundering, anti -terrorist financing, and anti -tax evasion mechanisms.  
4.4.2.3   Regulatory developments for insurance services  
4.160.   Subject to the I nsurance Company Mergers and Acquisitions Regulations , issued by the 
China Insurance Regulatory Commission (CIRC) , and entered into force on 1 June 2014 , the 
purchaser of an insurance company may control two insurance companies operating similar 
businesses upon completion of the acquisition with the approval of the CIRC.  While th e regulati ons 
present opportunities for foreign investors, foreign investors who will hold more than 25% of the 
equity or shares in a target insurance company following an acquisition or merger will still need to 
comply with the existing qualification requirements u nder the Administrative Regulations of 
Foreign -Invested Insurance Companies . The requirements are that: (1) the foreign investor has 
been operating in the insurance business for at least 30 years ; (2) the foreign investor has 
established a representative o ffice within China for at least 2 years ; (3) the total assets of the 
foreign investor as at the end of the previous year are not less than US$5  billion ; (4) the country 
or region from which the foreign investor originates has a sound insurance regulatory s ystem and 
the investor is subject to effective regulation under relevant competent authorities ; (5) the foreign 
investor meets the solvency standards of its country or region of origin ; (6) the competent 
authorities of the country or region from where the foreign investor originates has consented to 
the filing of the M&A transaction in China ; and (7) the foreign investor satisfies any other 
prudential requirements prescribed by CIRC. In addition, foreign investors will need to comply with 
all relevant forei gn investment rules, including the current limitation against owning more than 
50% of a domestic life insurer.  
4.161.   In 2015, the CIRC submitted a draft revision to the Insurance Law to the State Council. 
This draft law is under review.  
4.162.   On 22 July 2015, the CIR C released the "Interim Measures for Regulating the Internet 
Insurance Business", which took effect on 1 October 2015. The measures allow both domestic and 
foreign insurance companies to engage in Internet insurance business. In addition, for selected 
insurance products (e.g. accident insurance, some life insurance policies, home property 
insurance, liability insurance, credit insurance, and property insurance) the measures allow 
insurers to expand their operations to provinces without the need to establish  a licensed branch 
office.  
4.163.   The 10 July 2017 Special Administrative Measures (Negative List) for Foreign Investment 
Access to Pilot Free Trade Zones (2017 Revision)101 of the State Council abolished the restrictions 
preventing foreign insurance companies from engaging in reinsurance with affiliated enterprises.  
4.4.2.4   Regulatory developments for stock markets  
4.164.   Regarding the trading of shares, on 17 August 2016, the China Secur ities Regulatory 
Commission (CSRC) and the Securities and Futures Commission of the Hong Kong Special 
Administrative Region announced the creation of the "Shenzhen and Hong Kong Stock 
Connectivity" scheme, which is in addition to the Shanghai -Hong Kong sto ck connect scheme .102 It 
opened officially on 20 September 2016. This new scheme does not set a maximum amount of 
                                                
101 Online information. Viewed at: http://www.scmp.com/news/china/economy/article/2098807/beijing -
cuts-list-restrictions -foreign -direct -investment -free. 
102 WTO ( 2016), Trade Policy Review – China.  WT/TPR/S/ 375/Rev.1  • China  
 
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  overall transacti ons. The same decision of the C SRC also abolished the limit on the maximum 
amount of overall transactions for the Shanghai -Hong Kong Stock Connectivity scheme.  
4.165.   Regarding the bond market, the PBOC issued in June 2015 the "Circular on Engagement of 
Offshore RMB Clearing Banks and Offshore Participating Banks in Bond Repurchase Business in the 
Inter-bank Bond Market" in order to fur ther open up the domestic bond market. The Circular, 
which is part of China's efforts to encourage greater global use of the renminbi , provides, 
inter alia, that foreign banks allowed to engage in the bond repurchase business must be approved 
by the PBOC t o enter the inter -bank bond market and must fall into one of the following 
categories:  (1) The offshore RMB clearing banks authorized by the PBOC, which engage in the 
RMB clearing business in the overseas regions (including Hong Kong, China; Macao, China; and 
Chinese Taipei) with established overseas RMB clearing arrangement; and/or (2) the foreign 
participating banks , i.e. the offshore commercial banks (including in Hong Kong, China; Macao, 
China; and Chinese Taipei) which carry out the cross -border RMB se ttlement business in line with 
the relevant provisions.   
4.166.   Furthermore, the "Announcement on Issues relating to Investment by Foreign Institutional 
Investors in Interbank Bond Market" (Announcement No. 3, the "2016 PBOC Announcement), 
dated 17  February 2016 , broadened the scope of foreign investors qualified to invest in the 
Chinese Interbank Bond Market (CIBM), and removed quotas. Most types of foreign institutional 
investors (including "commercial banks, insurance companies, securities firms, fund managemen t 
companies and other asset management institutions, pension funds, charity funds, endowment 
funds" and "other mid -term or long -term institution investors recognized by PBOC") are now 
allowed to invest in the CIBM as "Foreign Institutional Financial Invest ors".  
4.167.   Prior to the Announcement, access to the CIBM was limited to foreign Central Bank -type 
institutions (including foreign central banks or monetary authorities, international financial 
organizations and sovereign wealth funds), clearing banks for RMB b usiness, foreign participating 
banks for RMB settlement of cross -border trade, foreign insurance companies in some regions, 
qualified foreign institutional investors (QFIIs) and RMB qualified foreign institutional investors 
(RQFIIs). Foreign Institutional Financial Investors must be "mid -term or long -term investors 
recognized by PBOC", and are not subject to investment quotas.  
4.4.2.5   Regulatory developments for mutual funds and asset management  
4.168.   Since the previous TPR of China, the regulatory framework of mutual funds/asset 
management has remained largely unchanged. The only notable development concerns the 
licensing procedure. On 15 July 2016, the CSRC decided to adjust the procedure for examinat ion 
and approval of the establishment of publicly offered funds management companies from an a 
posteriori  approval system to an a priori  approval system; previously, the applicant set up a 
company which  was then approved after an on -site examination by the  CSRC. With the new 
system, the establishment is first approved by the CSRC and only then can the applicant set up a 
company and start business after an on -site examination by the CSRC.  
4.4.2.6   Regulatory developments for pension funds  
4.169.   The main regulation regardin g pension funds is the Interim Measures on Qualification 
Recognition of Fund Management Institution of Enterprise Annuity (Decree No. 24 of the Ministry 
of Human Resources and Social Security, issued on 31 December 2004) . This regulation was 
revised in Apr il 2015, in technical areas such as the requirements for the registered capital of the 
trustee, the account manager and the investment manager , as well as the accounting and auditing 
rules applying to the firm.  
4.170.   In terms of market access , the situation rem ains unchanged ; all financial institutions with 
their places of registry within the territory of China and having obtained the approval of the 
financial regulation authority, including commercial banks, securities companies, securities 
investment fund management companies and insurance companies, can apply for the qualification 
of "enterprise annuity fund management institution" on the basis of t he relevant regulations of 
qualification. The qualification requirement for enterprise annuity management is 
non-discriminatory . Several institutions holding  the enterprise annuity management qualification 
do have foreign shareholding.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.4.2.7   Regulatory developme nts concerning e -payments  
4.171.   The first regulation on electronic payments in China was the Electronic Payment Guidelines 
(Announcement No. 1/ 23 of the PBOC), issued on 26 October 2005. These guidelines define 
electronic payment, as well as the norms on initiat ion and acceptance of the electronic payment 
order, safety controls and error handling. They were followed by the " Administrative Measures for 
the Online Payment Services of Non -banking Payment Institutions" (Announcement No. 4/43 of 
the PBOC, issued on 28  December 2015). These measures set rules on : the management of 
customers, activities and risks ; the protection of customers' rights ; the supervision of non -banking 
payment institutions engaged in online payment services ; and the legal liabilities of these  
institutions.  
4.172.   None of these two regulations stipulate market access conditions for foreign operators. In 
that regard, the Administrative Measures for the Payment Services Provided by Non -Financial 
Institutions indicate that "the business scope of the pay ment institutions invested by the foreign 
operators, qualifications and ratio of investments for the foreign investors shall be separately 
stipulated by the PBOC, and submitted to the State Council for approval". The PBOC is presently 
preparing the relevan t regulations.  
4.4.3   Legal services  
4.173.   Since the beginning of the open door policy in the eighties, legal services, which were 
virtually entirely state owned, have emerged as one of the major professional services 
indispensable to the functioning of a dynamic marke t, whose legal framework is in constant 
evolution and whose judicial system is developing . There are at present 340,000 Chinese qualified 
lawyers practicing in 27,600 firms , 1,270 of which (i.e. 4.6%) are state owned. The number of 
Chinese qualified lawyer s is in constant progression, increasing by about  20,000  persons a year on 
average, with a record increase of 30,000 persons in 2016.  
4.174.   The basic legislation on legal services is the Lawyers Law of 26 October 2012. The national 
judicial examination is open only to applicants with Chinese nationality and to permanent residents 
of the Hong Kong Special Administrative Region and the Macao Special Administrative Region. 
China has not concluded mutual recognition agreements on qualifications in legal services nor has 
it autonomously recognized legal qualification obtained in other countries or regions.  
4.175.   The 2012 law, echoing the GATS commitments, prohibits the employment of Chinese 
qualified lawyers by foreign firms, unless those lawyers relinquish their right to p ractice. In 
addition, the 2001 regulations on the administration of Foreign Law Firms' Representatives Offices 
in China, which  came into force on 1 January 2002 , stipulate that Chinese supporting staff in 
foreign law firms cannot provide legal service s to clients.  
4.176.   In 2017, there were 244 foreign representative offices employing 594 foreign lawyers. 
Their total turnover in 2016 reached RMB 6,373 million. China has allowed foreign lawyers to be 
hired as foreign legal consultants by Chinese law firms in Beiji ng, Shanghai and Guangdong, a 
measure which is still in a pilot stage. At present, no foreign lawyers have served as legal 
consultants for Chinese law firms.  
4.177.   The business scope of foreign  representative offices of law firms in China is defined by 
Article 15 of the Regulation on Administration of Foreign Law Firm's Representative Offices in 
China. This article stipulates that  "a representative office and its representatives may only conduct 
the following activities that do not encompass Chinese legal affair s103: (1) providing  clients with 
consultancy on the legislation of the country where the lawyers of the law firm are permitted to 
                                                
103 "Chinese legal affairs" being in turn defined by Article 32 of this regulation as "(1) participating in 
litigious activities as a lawyer within Chinese borders; (2) providing observations or proofs to specific issues 
that are subject to Chinese laws in terms of contracts, agreements, regulations and rules or other written 
documents; (3) providing observations and proofs to behaviours or incidents that are subject to Chinese laws; 
(4) providing agency opinions regarding the applicability of Chinese laws as an agent in arbitration activ ities 
and (5) representing the bailor to go through the processes of registration, alteration, application, filing and 
other formalities with government authorities or other organizations au thorized by laws and regulations with 
the function of public administration".  WT/TPR/S/ 375/Rev.1  • China  
 
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  engage in lawyer's professional work, and on international conventions and international practices; 
(2) handling , when entrusted by clients or Chinese law firms, legal affairs of the country where the 
lawyers of the law firms are permitted to engage in lawyer's professional work; (3) entrusting , on 
behalf of foreign clients, Chinese law firms to deal with the Chines e legal affairs; (4) entering  into 
contracts to maintain long -term entrustment relations with Chinese law firms for legal affairs; and 
(5) providing  information on the impact of the Chinese legal environment ". Representative offices 
may directly instruct l awyers in the entrusted Chinese law firms, as agreed between both parties. 
A representative office and its representatives shall not conduct any legal service activities or other 
for-profit activities other than those set forth in the first paragraph and t he second paragraph of 
this Article.  
4.178.   The regime for legal services bound by China in its GATS commitments stipulates no 
restrictions for WTO/CPC 861 legal services (excluding Chinese law practice) for cross border 
delivery and consumption abroad. As far a s commercial presence is concerned, the only legal form 
allowed is representative offices. A representative office can engage in profit -making activities. The 
business scope bound for representative offices is based on the status quo since it  reflects that  of 
the applied regime described above.  
4.179.   This regime has not been liberalized erga omnes  since the entry into force of the 
commitments. The applied regime corresponds therefore to the multilaterally bound regime, 
except in three cases: the two Closer Econom ic Partnership Arrangements (CEPAs)  with the 
Hong Kong SAR and the Macao SAR, and within the China (Shanghai) Pilot Free Trade Zone.  
4.180.   As far as the CEPAs with the Hong Kong SAR and the Macao SAR are concerned, law firms 
in the Hong Kong SAR and the Macao SAR may establish partnership operation s with mainland law 
firms. Residents of the Hong Kong SAR and the Macao SAR with Chinese citizenship  may take part 
in the uniform  national legal qualification examinations . Law firms of the Hong Kong  SAR and the 
Macao  SAR can engage in partnership with law firms in mainland China. Chinese citizens among 
Hong Kong SAR and Macao  SAR permanent residents can take the uniform  national legal 
professional qualification examination and those who pass the examination can apply to practic e as 
lawyers in mainland China . The representatives of the representative offices of law firms from the 
Hong Kong SAR and the Macao SAR operating in mainland China a re not limited in regard to  the 
time of residence.  
4.181.   Two liberalization measures were taken in January 2014 in the China (Shanghai) Pilot Free 
Trade Zone. They are to allow legal firms to: (1) enter into an agreement with a Chinese law firm 
to mutually dispatch lawyers to the other firm; and (2) set up a joint operation in the FTZ with a 
Chinese law firm whereby they would provide legal services to Chinese and foreign clients based 
on the Chinese and foreign laws in accordance with the rights and obligations stipulated in their 
agreements, if the firms have a lready established representative offices in China.  
4.182.   Like for the establishment of domestic firms, the establishment of representative offices of 
foreign firms must be approved by judicial administrative authorities. The Regulations on 
Administration of Rep resentative Office of Foreign Legal Firm in China (Decree No. 338 of the State 
Council) stipulate the procedures and conditions for representative offices set  up in China by 
foreign legal firms.  
4.183.   Every representative in the representative office must:  be a practicing lawyer and a 
member of the lawyers' association of the country where he /she acquired his /her practice 
qualification; have practiced as a lawyer for no less than two  years outside the territory of China ; 
and not have been punished due to  a violation of lawyers' professional ethics or practice 
disciplines. Among the representatives, the chief representative shall have practiced as a lawyer 
for no less than three years outside the territory of China, and shall be a partner of the foreign law 
firm o r a person holding the same post. There shall be an actual need for such a firm. However, 
according to the authorities, so far,  China has never rejected an establishment application of a 
representative office on the basis of "actual needs".  
4.184.   Foreign represe ntative offices must have three years of presence in one location before 
being allowed to open a second office in another city.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.185.   In terms of procedure, a foreign law firm shall, when applying to establish a representative 
office in China, submit application  documents to the judicial administration department of the 
government of the province, autonomous region or municipality directly under the Central 
Government where the proposed representative office is to be domiciled. The judicial 
administration departm ent of the government of a province, autonomous region or municipality 
directly under the Central Government shall, within three months of receiving the application 
documents, complete the examination, and submit the examination opinion and the documents t o 
the judicial administration department under the State Council for examination. The judicial 
administration department of the State Council shall render a decision within six  months; and shall 
grant a law practice licence  to the representative office tha t has been approved and a law practice 
certificate to its representative.  
4.4.4   Accounting, auditing and bookkeeping services  
4.186.   Accounting services emerged in China as a professional services sector in the eighties as a 
consequence of the open door policy and of i ts encouragement of foreign investment, as joint 
ventures needed an international type of accountancy. This type of accountancy was then 
generalized to the whole of the Chinese economy and adapted to the specific characteristics 
thereof, hence fostering th e development of the accountancy profession, institutions, studies and 
standards.  
4.187.   There are at present more than 8,500 accounting firms (including branches) in total in 
China, with approximately 110,000 professional Certified Public Accountants (CPA), amon g which 
there are about 20 professional CPAs of foreign nationalit y. These foreigners having obtained the 
occupational qualification of CPA of China are mainly distributed in Beijing, Jiangsu, Shanghai, 
Fujian, and Sichuan. Although major large -scale accou nting firms have joined international 
accounting networks, they are Chinese entities independent in law and do not have a relationship 
of subordination with foreign accounting firms. The total revenues of the sector were estimated at 
US$11.6  billion in 201 6, US$8.2 billion of which stemm ed from audit activities.  In 2016, the total 
revenue of the whole industry was 15.4% higher than in  2015, with an average growth rate of 
11.5% from 2011 to 2016.  
4.188.   The basic legislation and regulations for the profession are: the Accounting Law (2017), 
the Certified Public Accountants Law (2014), the Measures for the Licensing, Supervision and 
Administration of Accounting Firms (Decree No. 89 of MOF, 2017), the Measu res for the 
Administration of Accounting Archives (Decree No. 79 of MOF, 2015), and the Measures for the 
Administration of Agency Bookkeeping (Decree No. 80 of MOF, 2016). Unlike for legal services, 
there is no specific legislation regarding foreign accoun tancy firms, whose status is hence 
governed by the general legislation.  
4.189.   There are no state -owned accounting/auditing/bookkeeping firms. As enshrined in the 
additional commitments section of China's GATS commitments, foreigners can sit the Chinese 
national  CPA examination and, if they pass, will be granted national treatment in terms of issuance 
of licence s. As mentioned above, there are at present twenty such foreign holders of the Chinese 
CPA qualifications. Up to now, China has not concluded mutual recog nition agreements on 
qualifications in accounting services or autonomously recognized accounting qualification s obtained 
in other countries or regions.  
4.190.   As far as foreign accounting auditing and bookkeeping firms are concerned, the regime 
bound by China in  its GATS commitments is the following: for cross -border and consumption 
abroad, there are no restrictions ; and  commercial presence partnerships and incorporated 
accounting firms are limited to Certified Public Accountants (CPAs) licensed by the authoritie s of 
China.  
4.191.   In China, accounting firms can take two legal forms: partnership (including the general 
and special partnerships) and limited liability companies (i.e. the "incorporated accounting firms" 
mentioned in China's GATS commitments). According to cu rrent laws and regulations, all 
accounting firms must be initiated and established by a natural person having obtained the 
practicing qualification of CPA of China and having two years of practice. There are no restrictions 
on the nationality of these natu ral persons since the Chinese CPA qualification is open to 
foreigners. The above -mentioned regulations on legal forms of the accounting firms are applicable WT/TPR/S/ 375/Rev.1  • China  
 
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  to both domestic and foreign -funded accounting firms. There are no restrictions on the number  of 
service providers, the value  or quantity  of services , the number of employees , or on capital  for the 
foreign funded accounting firms.  
4.192.   China has also subscribed additional commitments whereby: (1) foreign accounting firms 
are permitted to affiliate with Chin ese firms and enter into contractual agreements with their 
affiliated firms in other WTO Members; (2) issuance of licence s to those foreigners who have 
passed the Chinese national CPA examination shall be accorded national treatment and applicants 
will be informed of results in writing no later than 30 days of submission of their applications; 
(3) accounting firms providing services can engage in taxation and management consulting 
services without being subject to the legal form limitations applicable to th ese services; and 
(4) existing contractual joint venture accounting firms are not limited only to CPAs licensed by the 
authorities of China.  
4.193.   Regarding the latter additional commitments (the so -called "big four grandfathering"), the 
situation has evolved si nce the accession of China. First the "big four" changed their legal form in 
2012 from Chinese -foreign cooperative organizations to that of "general partnership". Second, the 
notion of Sino-foreign cooperative accounting firm/organization was removed  from the law on CPA  
in 2014. Third, in accordance with the "Scheme for the Localization Restructuring of Chinese -
Foreign Cooperative Accounting Firms" jointly issued by five departments, the "big four " have 
progressively lowered the proportion of partners not h olding a Chinese CPA qualification: as of 
31 December 2017, this proportion cannot exceed 20%.  
4.194.   Additionally, during the period under review, new autonomous liberalization measures 
were decided; the nationality clause stipulating that "the person whose prin cipal partner of a 
special general partnership with an accounting firm (or performs other duties of the highest 
administrative duties) shall be of Chinese nationality" was deleted in the newly issued Special 
Management Measures for Foreign Investment in Pi lot Free Trade Zone (Negative List) 
(2017  edition) and on the whole Chinese territory by the Guidance Catalogue of Foreign -invested 
Industry (2017 revision).  
4.195.   There is no specific preferential treatment regarding accounting services in China' s FTAs 
includin g in the CEPAs with Hong Kong, China and Macao, China.  
4.196.   Foreign firms, in particular the "big four", dominate the market of the audits of Chinese 
companies listed on international stock exchanges, whereas local firms dominate that of 
companies listed on lo cal stock exchanges.  The total annual business revenue of the " big four" 
accounting firms was about US$2.1 billion in 2016, accounting for about 18.5% of the total 
revenue of China's CPA industry. Although the major large accounting firms have already join ed or 
created international accounting networks, they are legally separate entities, and are not 
subordinate to any foreign accounting firms or part of any foreign accounting firms.  
4.197.   The procedures and conditions for licensing accounting firms are the same  for all 
accounting firms. The conditions for establishing firms are defined by the Measures for the Practice 
Licensing and Supervision and Administration of Accounting Firms.104  
4.198.   The provincial finance departments are responsible for licensing. A licence  is obtained 
usually within 30 workdays of the date of acceptance of an application. In terms of supervision and 
regulation, China combines administrative regulation and self -discipline; the financial department 
of the State Council and the provincial fina nce departments are responsible for the administrative 
supervision. The Chinese Institute of Certified Public Accountant s and the provincial institute of 
Certified Public Accountant s are responsible for self -discipline.  
                                                
104 For "ordinary partner accounting firms", the conditions are that there shall be: (1) more than two 
partners, (2) a written partnership agreement, and (3) an available business site. For "special ordinary partner 
accounting firms", the conditions are that there shall be: (1) more than 15 partners, (2) more than 60 Certified 
Public Accountants; (3) a written partnership; and (4) an available business site. For "accounting firms wi th 
limited liability" the conditions are that there shall be: (1) more than five shareholders, (2) a registered capital 
of no less than RMB 300,000, (3) articles of incorporation jointly formulated by shareholders, and (4) an 
available business site.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.4.5   Taxation services  
4.199.   The development o f taxation services in China has largely followed the same paths as that 
of legal services and accounting services to which it is deeply linked. Since, like in all jurisdictions, 
it is a less tightly regulated sector than the other  two and an activity ofte n practiced in conjunction 
with those two, relatively less information on firms and markets are available on it.  
4.200.    The basic legislation and regulations governing the sector are the Administrative Law on 
Tax Revenue Collection of 28 April 2001, last amende d on 24 April 2015, the Enforcement 
Regulations of Law on Tax Revenue Collection of 7 September 2007, last amended on 
6 February  2016, and the Regulations on Tax -Related Professional Services (under trial 
implementation). These regulations open the taxatio n services market, with a harmonized 
regulation, to a whole series of actors namely certified tax agencies, accounting firms, legal 
offices, accounts keeping agencies, tax agencies, and financial and taxation consulting companies. 
Their regulatory system i s based on post –fact evaluation. The "trial implementation" status of the 
regulations means that they can further be revised and adapted to realities in the future rather 
than being implemented on a pilot basis in limited regions.  
4.201.   China's taxation service market is open to all legal persons and individuals including 
foreign ones. There are no access restrictions.  Foreign firms providing taxation services are not 
obliged to employ uniquely qualified Chinese nationals . No licence s are required for either 
individuals or firms.  
4.202.   The regime bound by China in its GATS commitment is liberal: for cross -border and 
consumption abroad , there are no restrictions ; and for commercial presence , there are  no 
restrictions either , as six years after China's accession , foreign firms were permitted to establish 
wholly foreign -owned subsidiaries. The applied regime corresponds to the multilateral bound 
regime.  
4.203.   China has not concluded mutual recognition agreements on qualifications in taxation 
services nor has it autonomously reco gnized taxation qualification s obtained in other countries.  
4.4.6   Engineering and integrated engineering services  
4.204.   Engineering services are among the key professional services for China as they are a 
decisive input for manufacturing and for construction105, two major components of China's GDP 
and exports.  
4.205.   Engineering services are defined in the present context in a narrow sense, as engineering 
activities provided on a fee or contract basis, as engineering as a whole, including in -house/own 
account engineer ing, is a much vaster universe. In 2015, the revenue estimations available for 
those two groups of activities stood at US$30 billion (with 550,000  employees and 
68,000  companies) for engineering on fee or contract basis106 and US$1,161 billion for mechanical  
engineering as a whole.107 Using a narrower definition of "engineering survey and design 
enterprises", in 2016, there were 21,983 qualified enterprises (including 219 from other WTO 
Members) employing 348,520  registered professionals. Foreign -invested enter prises are present in 
21 provinces.  
4.206.   The basic laws and regulations governing the sector are the following: the Construction 
Law of 1 March 1998, the Law on Tendering and Bidding of 1 January 2000, the Rules on 
Registered Architect of 23 September 1995, the  Regulations on Quality Management of 
Construction Project of 30 January 2000, the Regulations on Survey and Design Management of 
Construction Project of 25 September 2000 and the Regulations on Management of Safe 
Production of Construction Project of 1 Fe bruary 2004, the Interim Provisions on Management of 
                                                
105 The regime of construction services in China was described in detail in the 2014 Report 
WT/TPR/S/300/Rev.1, dated 7 October 2014, Section 4.2.3.2.  
106 Online information. Viewed at: https://www.ibisworld.com/industry -trends/international/china -
market -research -reports/scientific -research -technical -service -geologic -prospecting/ engineering -services.htm . 
107 Online information. Viewed at: https://www.statista.com/statistics/263269/size -of-the-chinese -
market -for-mechanica l-engineering/ . WT/TPR/S/ 375/Rev.1  • China  
 
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  Foreign Enterprises Engaged in Design Activity of Construction Engineering within the Territory of 
the People's Republic of China  (JS [2004] No.  78) and the Regulations on the Law on Tendering 
and Biddin g of 1  February, 2012). The scope of this legislation extends well beyond construction 
and corresponds to the WTO/CPC definition of engineering services (CPC 8672).  
4.207.   Appropriate  qualifications are required for companies providing engineering design service s 
within the territory  of China. These qualifications are of a non -discriminatory nature. They relate 
notably to personnel, technical equipment, and enterprise performance. They  are granted by the 
housing and urban -rural development departments at provincia l level. The legal audit period is  
20-35 workdays starting from the day of acceptance (excluding the expert review period). The 
result must be published within 10 workdays of the day on which a decision is made. All the 
applicants that qualified after the audit shall be approved. The rejection ratio is unavailable.  
4.208.   As far as Chinese nationals are concerned, only survey and design engineers that have 
passed the national examination may work on engineering investigation, design and relevant 
business activitie s after registration. The examination is not open to individuals from other WTO 
Members except for Hong Kong, China; Macao, China; and Chinese Taipei. The examination is held 
by the Ministry of Human Resources and Social Security once a year. The registrat ion and approval 
authority is the Ministry of Housing and Urban -Rural Development. The registration certificate is 
valid for three years. The survey and design engineer professional qualification examination 
consists of a basic examination and a profession al examination, and th ose who pass both parts  can 
apply for a registered practice. Foreign engineers can work in China but cannot sign professional 
documents or be legally responsible for works undertaken. These tasks require the presence of a 
Chinese qual ified engineer.  
4.209.   China has not concluded mutual recognition agreements on qualifications in engineering 
design with other countries or regions, nor has it  autonomously recognized engineering design 
qualification s obtained in other countries or regions.  
4.210.   As far as foreign engineering services providers are concerned, according to China's GATS 
commitments, for cross -border services, cooperation with Chinese professional organizations is 
required except for scheme design.108 This mode 1 restriction is reflected in the applied regime.109  
4.211.   There are no restrictions for consumption abroad. For commercial presence, wholly foreign 
owned enterprises are allowed and foreign services suppliers shall be registered 
architects/engineers, or enterprises engaged in architectural/engineering/urban planning services 
in their home country. The bound regime corresponds to the applied regime, which has not been 
liberalized further by any of the FTAs signed by China, including the CEPAs with Macao , China and 
Hong Kong, China. However, the requirement that foreign services suppliers shall be registered 
architects/engineers, or enterprises engaged in architectural/engineering/urban planning services 
in their home country, which is reflected in China' s WTO commitments, has been waived in the 
context of the Shanghai Pilot Free Trade Zone . 
4.212.   As mentioned above, foreign companies providing engineering services are subject, like 
Chinese companies providing the same services, to a non –discriminatory qualifica tion and 
registration procedure.  
                                                
108 Define d by the "D etailed  Regulations on Construction Engineering Design Document Preparation", 
(JZH [2016] No. 247).  As "the design specification, the general plan and related construction design drawings, 
design commission or perspective , aerial view, models, etc. stipulated in the design contract".  
109 In accordance with the provisions specified in the Interim Provisions on Management of Foreign 
Enterprises Engaged in Design Activity of Construction Engineering within the Territory of the  People's Republic 
of China (Jian Shi (2004) No. 78), a foreign enterprise, which undertakes design (except scheme design) of 
construction engineering within the territory of the People's Republic of China, must choose at least one 
Chinese design enterpris e with the design qualification for construction engineering issued by a competent 
administrative authority of construction, to cooperate as regards design, and undertake design business within 
the scope permitted in the qualification of the chosen Chinese  design enterprise.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.4.7   Pipeline services  
4.213.   The total length of the pipeline network in China was 112,000 km in 2015, of which 
64,000  km was for gas, 27,000 km for crude oil, and 21,000 km for refined oil. In July 2017, the 
NDRC and the National E nergy Administration (NEA) unveiled a plan to expand the network of oil 
and gas pipelines, under which the network should reach 169,000  km by 2025, of which 
104,000  km for natural gas, 32,000 km for crude oil and 33,000 km for refined oil. One of the 
plan's target s is to connect all Chinese cities with a population of at least 1 million people to a 
pipeline for refined oil and to connect all cities with more than 500,000  residents to a gas pipeline 
so as to achieve another target: an increase in the share o f natural gas in China's energy mix from 
6.5% in 2017 to 10% by 2020.  
4.214.   The Chinese pipeline network is connected to various pipeline networks in Russia, Central 
Asian countries, and Myanmar. China is also a party to ongoing international pipeline projects and 
new interconnection projects with foreign pipeline networks. Th ese international pipelines involve 
both Chinese state -owned companies and Chinese private companies and are managed under 
commercial and conventional terms with the country(ies) partners ' operators. They are subject to 
third-party access in case of excess capacity.  
4.215.   Currently, not all the pipelines for oil and gas are state owned. Pipeline assets are 
diversified and the main owners of pipeline assets are central enterprises, local state -owned 
enterprises, private capital and foreign enterprises. Foreign participation in pipelines for oil and gas 
is encouraged by the 2017 Catalogue on Guidance of Foreign Investment.  
4.216.   The sector is highly concentrated with only 52 companies and with the top fou r players 
accounting for nearly 90% of the revenues. The revenue forecast of the sector for 2017 is 
US$13.5  billion , with an annualized revenue growth of 8.7% over the last five years. Profit is 
estimated at 14.6% of the revenues. The sector employed 543,2 41 persons in 2017.110The 
B2B/trunk/wide -diameter/high -pressure pipelines are largely dominated by three state -owned 
enterprises.111 These state -owned enterprises have subsidiaries listed in stock markets; there is a 
certain degree of foreign ownership through  foreign shareholders.  
4.217.   Regarding the regulatory regime of the sector, China did not undertake any GATS 
commitments regarding pipeline transport services at the time of its WTO accession, nor did it 
make  an offer on the sector in the context of the Doha De velopment Agenda.  
4.218.   The applied regime contains no restrictions on investment in pipeline projects. However, 
according to the provisions of the Catalogue of Investment Projects subject to Government 
Approval (2016 version), cross -border and inter -provincial  pipeline projects for oil and gas are 
examined and approved by the State; other pipeline projects are examined and approved by local 
governments. In such cases, the authority for examining and approval can be further 
decentralized. The examination and app roval process applies to all investors. Regarding existing 
pipelines, when a foreign investor acquires pipelines for oil and gas from a domestic enterprise, a 
safety review shall be conducted by the State.  
4.219.   According to the authorities, there are no limita tions on the volume or value of services, or 
on assets detained or legal forms. There are no subsidies or tax rebates reserved for nationals, no 
nationality or residency requirements, no discriminatory licensing and qualification requirements, 
no discrimin atory registration requirements or authorization requirements, no technology transfer 
or training requirements, and no ownership of property or land requirements applicable only to 
foreigners.  
                                                
110 The "Detailed Regulations on Construction Engineering Design Document Preparation", (JZH [2016] 
No. 247).  
111 These are China National Offshore Oil Corporation (CNOOC), China National Petroleum 
Corporation/Petrochina (CNPC), and China P etrochemical Corporation/Sinopec (CPCC)). They are dominant in 
all three sub -segments i.e. for crude oil (where of a total length of 25,300 km , CNPC owns 18,100 km and 
CPCC 7,200 km), for refined oil (where of a total length of 21,200 km , CNPC owns 10,000  km, CPCC  
10,800  km and CNOOC 300 km) and for natural gas (where of a total length of 58,700  km, CNPC owns 
50,800  km, CPCC 7,200km and CNOOC 700 km).  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.220.   Regarding participation of foreign capital, the 2017 Investment  Catalogue classifies 
pipelines as an "encouraged industry" and allows wholly foreign -owned pipelines. This acquisition 
is subject to a national security review if it falls within the scope of the Notice of the General Office 
of the State Council on Establ ishing Security Check Mechanism for Foreign Investors to Merge with 
or Acquire Domestic Enterprises (Guo Ban Fa [2011] No. 6) .112 However, in the case of the 
construction and management of gas, heating, water supply and sewage pipeline networks of cities 
with populations above 500,000, the Chinese party shall control the company.  
4.221.   In 2014, China created a third -party access regime through the promulgation of the 
Management Measures of Natural Gas Infrastructure Construction and Operation (NDRC Decree 
[2014] No. 8), and the Measures for the Supervision and Management of the Fair Opening of 
Pipeline Facilities for Oil and Gas (Trial) ( Guo Neng Jian Guan  [2014] No.  84). These measures are 
a trial version with a validity period of five years.113  
4.222.   The measures provi de that pipeline and facility operators must open in a fair and impartial 
manner pipeline networks and associated facilities to third parties and provide transportation, 
storage, gasification, liquefaction and compression and other services, if they have s urplus 
capacity. Excess capacity is measured through daily notification of capacity utilizations to the 
National Energy Administration (NEA) and through their daily publication on the website of the 
operator concerned. Users can also complain that excess c apacity is not offered on a third party 
basis, in which case the NEA will instruct and adjudicate the complaint. In order to do so, a natural 
gas infrastructure operator shall, in accordance with the regulations, publish the conditions for the 
provision of  services, the procedures for obtaining services and the excess capacity. The facilities 
to be opened include not only trunk pipelines and branch pipelines for crude oil, refined oil and 
natural gas (including the pipeline networks within the province with  transportation functions), but 
also the relevant associated facilities including ports, receiving terminals, and liquefaction, 
compression and storage facilities.114 Eligible upstream and downstream users must be enterprises 
registered in China. Where there  are multiple users of the pipeline networks and associated 
facilities, operators must open access to users on an equal basis without discrimination, but giving 
priority to contracts in place (and where there is more than one, based on the date of signing 
chronologically).  
4.223.   As far as pricing is concerned, applicable rules are: the Circular of National Development 
and Reform Commission on Printing and Issuing the Measures for the Management of Natural Gas 
Pipeline Transportation Prices (Trial) and the Measur es for the Supervision and Examination of the 
Pricing Cost of Natural Gas Pipeline Transportation (Trial) (NDRC Pricing Rule [2016] No. 2142), 
the Guiding Opinions on Strengthening Supervision and Control over the Price of Gas Distribution 
(NDRC Pricing [2 017] No. 1171). They are based on the principle of "allow ing cost plus reasonable 
profits". They define the methods and procedures of price formulation and adjustment, based on 
some core indicators (detailed provisions of permissible rate of return, load r ate, etc.) . They 
require that the costs of transportation of natural gas pipelines be separately calculated and 
checked, and define the specific standards for the major indicators that constitute the cost of 
pricing such as employee compensation, managemen t fees and sales expense s.  
4.224.   In terms of rate of return, the Management Methods on Transportation Price of Natural 
Gas Pipeline (Trial)  set the after -tax rate of return on full investment of trans -provincial long -
distance pipeline at 8%, while requiring a pipe load rate of no less than 75%. The Guidance Notes 
on Enhancing Gas Distribution Price determine that the after -tax rate of return on full investment  
of municipal gas distribution shall not be higher than 7% in view of the lower risks involved.  
                                                
112 This regulation defines the relevant scope as "mergers or acquisitions by foreign investors of 
domestic military enterprises and their affiliates, enterprises surrounding key and sensitive military facilities, as 
well as other enterprises concerning national defen ce security; domestic enterprises concerning agricultural 
products, energy and resources, basic infrastructure, transportation service, technology and manufacturing 
among other areas of key significance, in which the actual control may be acquired by foreign investors."  
113 Lexology online information. Viewed at: https://www.lexology.com/library/detail.aspx?g=6d54b447 -
a503-4175-b075-5aaafb663c1c  [04.04.2018].  
114 This should apply also in the medium term to crude oil and refined oil pipelines, for which, fo r the 
time being, there is less demand for third -party access.  WT/TPR/S/ 375/Rev.1  • China  
 
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  4.225.   The May  2017 joint guidelines by the State Council and the CPC central committee 
"measures for deepening the reform of the oil and gas sector" set eight "tasks" to reform the oil 
and gas industry , including  a detailed plan to reinforce sanctions in case of denial  of open access 
and an unbundling strategy whereby midstream pipeline owners would be "encouraged" to split 
gas sales from pipeline transportation business, so as to avoid the formation  of a monopoly and to 
channel more capital into the construction of pip elines. The legal modalities of this planned 
unbundling are still under discussion.  
 
 
 WT/TPR/S/ 375/Rev.1  • China  
 
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  5  APPENDIX TABLES  
Table A1. 1 China's merchandise exports by group of products, 2013 -16 
  2013  2014  2015  2016  
Total exports (US$ billion)  2,209.0  2,342.3  2,273.5  2,097.6  
 (% of total)  
Exports under processing trade  39.0 37.8 35.1 34.1 
Total primary products  5.9 5.9 5.6 6.0 
  Agriculture  3.2 3.2 3.2 3.6 
    Food 2.7 2.7 2.8 3.2 
    Agricultural raw material  0.5 0.5 0.4 0.4 
  Mining  2.7 2.7 2.4 2.4 
    Ores and other minerals  0.2 0.2 0.1 0.1 
    Non-ferrous metals  1.0 1.1 1.0 1.0 
    Fuels 1.5 1.5 1.2 1.3 
Manufactures  94.0 94.0 94.3 93.7 
  Iron and steel  2.5 3.1 2.8 2.6 
  Chemicals  5.4 5.7 5.7 5.8 
  Other semi -manufactures  8.1 8.2 8.6 8.2 
  Machinery and transport equipment  47.1 45.8 46.7 47.0 
    Power generating machines  1.2 1.2 1.2 1.3 
    Other non -electrical machinery  6.2 6.4 6.4 6.8 
    Office machines & telecommunication equipment  26.9 25.4 25.9 25.8 
      7643 - Transmission apparatus for radio -telephony, radio -
telegraphy, radio -broadcasting or television, whether or not 
incorporating reception apparatus or sound -recording or 
reproducing apparatus  4.3 5.0 5.5 5.5 
      7522 - Digital automatic data -processing machines, contai ning 
in the same housing at least a central processing unit and an 
input and output unit, whether or not combined  5.2 4.8 4.1 3.9 
      7649 - Parts and accessories suitable for use solely or 
principally with the apparatus of division 76  2.8 2.6 2.8 3.0 
      7764 - Electronic integrated circuits and microassemblies  4.0 2.7 3.1 3.0 
      7611 - Television receivers, colour (including video monitors 
and video projectors), whether or not incorporating radio -
broadcast receivers or sound - or video -recording or reproducing 
apparatus  1.0 1.1 1.1 1.2 
      7599 - Parts and accessories (other than covers, carrying cases 
and the like) suitable for use solely or principally with the 
machines of subgroups 751.1, 751.2, 751.9 and group 752  1.3 1.3 1.3 1.2 
      7763 - Diodes, transistors and similar semiconductor devices; 
photosensitive semiconductor devices (including photovoltaic 
cells, whether or not assembled in modules or made up into 
panels); light -emitting diodes  1.1 1.2 1.3 1.2 
      7527 - Storage units, whether or not presented with the rest of 
a system  0.8 0.7 0.7 0.8 
    Other electrical machines  7.7 7.7 7.9 8.1 
      7712 - Other electric power machinery; parts of the electric 
power machinery of group 771  1.2 1.0 1.0 1.0 
      7731 - Insulated (including enamelled or anodized) wire, cable 
(including co -axial cable) and other insulated electric 
conductors, whether or not fitted with connectors; optical fibre 
cables made up of individually sheathed fibres, whether or not 
assembled with  0.9 0.9 0.9 1.0 
      7758 - Electrothermic appliances, n.e.s.  0.8 0.8 0.8 0.9 
    Automotive products  2.1 2.2 2.2 2.3 
      7843 - Other parts and accessories of the motor vehicles of 
groups 722, 781, 782 and 783  1.2 1.2 1.2 1.3 
    Other transport equipment  3.0 2.9 3.1 2.8 
      7932 - Ships, boats and other vessels (other than pleasure 
craft, tugs, pusher craft, special -purpose vessels and vessels for 
breaking up)  1.0 0.8 0.9 0.9 
  Textiles  4.8 4.8 4.8 5.0 
  Clothing  8.0 8.0 7.7 7.5 
      8453 - Jerseys, pullovers, cardigans, waistcoats and similar 
articles, knitted or crocheted  0.9 0.9 0.9 0.8 WT/TPR/S/ 375/Rev.1  • China  
 
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    2013  2014  2015  2016  
  Other consumer goods  18.2 18.5 18.0 17.6 
      8131 - Lamps and lighting fittings (including searchlights and 
spotlights), n.e.s.  0.9 1.3 1.5 1.4 
      8719 - Liquid crystal devices, n.e.s.; lasers (other than laser 
diodes); other optical appliances and instruments, n.e.s.  1.7 1.5 1.5 1.4 
      8211 - Seats (other than those of heading 872.4), whether or 
not convertible into beds, and parts thereof  1.0 1.0 1.0 1.0 
      8513 - Footwear, n.e.s., with outer soles and uppers of rubber 
or plastics  1.0 1.1 1.1 1.0 
      8942 - Children's toys  0.6 0.6 0.7 0.9 
Other  0.1 0.1 0.1 0.3 
Note:  Data for 2017 not available at the time of finalization of this report.  
Source:  UNSD, Comtrade database (SITC Rev.3) . 
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  Table A1. 2 China's merchandise imports by group of products, 2013 -16 
  2013  2014  2015  2016  
Total imports (US$ billion)  1,950.0  1,959.2  1,679.6  1,587.9  
 (% of total)  
Imports under processing trade  25.5 26.8 26.6 25.0 
Total primary products  36.4 35.6 30.7 30.3 
  Agriculture  8.5 8.7 9.5 9.8 
    Food 5.1 5.4 6.1 6.3 
2222 - Soya beans  1.9 2.1 2.1 2.1 
    Agricultural raw material  3.4 3.3 3.4 3.5 
  Mining  27.9 26.9 21.2 20.5 
    Ores and other minerals  9.1 8.2 6.8 6.9 
2815 - Iron ore and concentrates, not agglomerated  5.2 4.6 3.3 3.6 
2831 - Copper ores and concentrates  1.0 1.1 1.1 1.3 
    Non-ferrous metals  2.6 2.5 2.6 2.5 
6821 - Copper, refined and unrefined; copper anodes for 
electrolytic refining; copper alloys, unwrought  1.5 1.5 1.4 1.4 
    Fuels 16.2 16.2 11.8 11.1 
3330 - Petroleum oils and oils obtained from bituminous 
minerals, crude  11.3 11.7 8.0 7.3 
Manufactures  58.2 60.2 64.2 64.9 
    Iron and steel 1.1 1.1 1.2 1.2 
    Chemicals  9.7 9.8 10.2 10.3 
5112 - Cyclic hydrocarbons  1.2 1.1 1.0 1.0 
    Other semi -manufactures  2.8 4.1 3.1 3.1 
    Machinery and transport equipment  36.4 37.0 40.7 41.5 
      Power generating machines  0.7 0.8 0.8 0.8 
      Other non -electrical machinery  5.1 5.4 5.6 5.5 
 7284 - Machinery and mechanical appliances specialized for 
particular industries, n.e.s.  1.0 1.2 1.3 1.5 
      Office machines & telecommunication equipment  20.2 19.3 22.8 23.3 
7764 - Electronic integrated circuits and microassemblies  11.9 11.1 13.7 14.3 
 7649 - Parts and accessories suitable for use solely or 
principally with the apparatus of division 76  2.5 2.4 2.9 3.1 
7763 - Diodes, transistors and similar semiconductor devices; 
photosensitive semiconductor devices (including photovoltaic 
cells, whether or not assembled in modules or made up into 
panels); light -emitting diodes  1.1 1.2 1.3 1.3 
7527 - Storage units, whether or not presented with the rest of 
a system  1.0 1.0 1.0 1.1 
7599 - Parts and accessories (other than covers, carrying cases 
and the like) suitable for use solely or principally with the 
machines of subgroups 751.1, 751.2, 751.9 and group 752  0.9 1.0 1.0 0.8 
      Other electrical machines  4.8 4.8 5.1 5.1 
7725 - Electrical apparatus for switching or protecting electrical 
circuits, or for making connections to or in electrical circuits 
(e.g. switches, relays, fuses, surge suppressors, plugs, 
sockets, lamp -holders, junction boxes) for a voltage not 
exceeding 1,000  0.7 0.8 0.8 0.9 
7722 - Printed circuits  0.7 0.7 0.7 0.6 
      Automotive products  4.0 4.8 4.3 4.8 
7812 - Motor vehicles for the transport of persons, n.e.s.  2.4 3.0 2.6 2.8 
 7843 - Other parts and accessories of the motor vehicles of 
groups 722, 781, 782 and 783  1.2 1.4 1.4 1.6 
      Other transport equipment  1.7 2.0 2.1 2.0 
7924 - Aeroplanes and other aircraft, mechanically -propelled 
(other than helicopters), of an unladen weight exceeding 
15,000 kg  1.0 1.3 1.4 1.2 
    Textiles  1.1 1.0 1.1 1.1 
    Clothing  0.3 0.3 0.4 0.4 
    Other consumer goods  6.8 6.7 7.5 7.4 
 8719 - Liquid crystal devices, n.e.s.; lasers (other than laser 
diodes); other optical appliances and instruments, n.e.s.  2.8 2.6 2.8 2.4 
Other  5.4 4.2 5.1 4.8 
9710 - Gold, non-monetary (excluding gold ores and 
concentrates)  0.0 0.0 4.7 4.0 
Note:  Data for 2017 not available at the time of finalization of this report . 
Source:  UNSD, Comtrade database (SITC Rev.3).   WT/TPR/S/ 375/Rev.1  • China  
 
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  Table A1. 3 China's merchandise exports by destination, 2013 -16 
  2013  2014  2015  2016  
Total exports (US$ billion)  2,209.0  2,342.3  2,273.5  2,097.6  
 (% of total)  
Americas  24.1 24.0 25.1 25.1 
 United States  16.7 17.0 18.0 18.4 
 Other America  7.4 7.1 7.1 6.7 
  Mexico  1.3 1.4 1.5 1.5 
  Canada  1.3 1.3 1.3 1.3 
Europe  16.5 17.0 16.8 17.3 
 EU-28 15.4 15.8 15.7 16.2 
  Germany  3.0 3.1 3.0 3.1 
  Netherlands  2.7 2.8 2.6 2.7 
  United Kingdom  2.3 2.4 2.6 2.7 
  Italy 1.2 1.2 1.2 1.3 
  France  1.2 1.2 1.2 1.2 
 EFTA 0.3 0.3 0.3 0.3 
 Other Europe  0.8 0.9 0.9 0.9 
Commonwealth of Independent States (CIS)  3.8 3.7 2.6 3.0 
  Russian Federation  2.2 2.3 1.5 1.8 
Africa  4.1 4.4 4.7 4.3 
Middle East  4.4 5.0 4.9 4.6 
  United Arab Emirates  1.5 1.7 1.6 1.4 
Asia 47.1 45.8 45.9 45.6 
 Japan  6.8 6.4 6.0 6.2 
 Other Asia 40.3 39.4 39.9 39.5 
  Hong Kong, China  17.4 15.5 14.5 13.7 
  Korea, Republic of  4.1 4.3 4.5 4.5 
  Viet Nam  2.2 2.7 2.9 2.9 
  India 2.2 2.3 2.6 2.8 
  Singapore  2.1 2.1 2.3 2.1 
  Chinese Taipei  1.8 2.0 2.0 1.9 
  Malaysia  2.1 2.0 1.9 1.8 
  Australia  1.7 1.7 1.8 1.8 
  Thailand  1.5 1.5 1.7 1.8 
  Indonesia  1.7 1.7 1.5 1.5 
  Philippines  0.9 1.0 1.2 1.4 
Other  0.0 0.0 0.0 0.1 
Memorandum:      
APEC 65.0 63.8 63.7 63.8 
ASEAN  11.0 11.6 12.2 12.2 
Note:  Data for 2017 not available at the time of finalization of this report.  
Source : UNSD, Comtrade database (SITC Rev.3).  
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  Table A1. 4 China's merchandise imports by origin, 2013 -16 
  2013  2014  2015  2016  
Total imports (US$ billion)  1,950.0  1,959.2  1,679.6  1,587.9  
 (% of total)  
Americas  15.6 15.9 16.5 16.1 
 United States  7.9 8.2 8.9 8.5 
 Other America  7.8 7.7 7.7 7.6 
  Brazil  2.8 2.6 2.6 2.9 
  Chile 1.1 1.1 1.1 1.2 
  Canada  1.3 1.3 1.6 1.2 
Europe  14.6 15.0 15.3 16.0 
 EU-28 11.3 12.5 12.4 13.1 
  Germany  4.8 5.4 5.2 5.4 
  France  1.2 1.4 1.5 1.4 
  United Kingdom  1.0 1.2 1.1 1.2 
 EFTA 3.1 2.3 2.7 2.7 
  Switzerland  2.9 2.1 2.5 2.5 
 Other Europe  0.3 0.2 0.2 0.2 
Commonwealth of Independent States (CIS)  3.6 3.4 3.2 3.0 
  Russian Federation  2.0 2.1 2.0 2.0 
Africa  5.9 5.8 4.1 3.5 
  South Africa  2.5 2.3 1.8 1.4 
Middle East  8.0 8.2 6.0 5.4 
  Saudi Arabia, Kingdom of  2.7 2.5 1.8 1.5 
Asia 43.8 44.1 46.1 47.8 
 Japan  8.3 8.3 8.5 9.2 
 Other Asia 35.5 35.8 37.6 38.6 
  Korea, Republic of  9.4 9.7 10.4 10.0 
  Chinese Taipei  8.0 7.8 8.5 8.7 
  Australia  5.1 5.0 4.4 4.5 
  Malaysia  3.1 2.8 3.2 3.1 
  Thailand  2.0 2.0 2.2 2.4 
  Viet Nam  0.9 1.0 1.8 2.3 
  Singapore  1.5 1.6 1.6 1.6 
  Indonesia  1.6 1.2 1.2 1.3 
  Philippines  0.9 1.1 1.1 1.1 
Other  8.3 7.5 8.6 8.1 
 Free Zone Chinaa 8.1 7.4 8.5 8.1 
Memorandum:      
APEC 63.4 62.7 67.3 60.1 
ASEAN  10.2 10.6 11.6 12.4 
a  Includes goods that have been exported from China and thereafter re -imported into China.  
Note:  Data for 2017 not available at the time of finalization of this report.  
Source:  UNSD, Comtrade database (SITC Rev.3).  
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  Table A1. 5 Inward foreign direct investment, 2013 -16 
(US$ billion)  
 
2013  2014  2015  2016  
 % of total 
FDI 
Total 117.59  119.56  126.27  126.00   
Hong Kong, China  78.30  85.74  86.39  81.47  64.7 
British Virgin Islands  .. .. 7.39 6.74 5.3 
Singapore  7.33 5.93 6.90 6.05 4.8 
Cayman Islands  .. .. 4.03 5.15 4.1 
Korea, Rep. of  3.06 3.97 3.20 4.75 3.8 
Japan  7.06 4.33 2.09 3.10 2.5 
Germany  2.10 2.07 1.99 2.71 2.2 
United States  3.35 2.67 1.56 2.39 1.9 
Chinese Taipei  5.25 5.18 1.54 1.96 1.6 
Luxembourg  .. .. 1.44 1.39 1.1 
United Kingdom  1.04 1.35 1.22 1.35 1.1 
Samoa  .. .. 0.89 0.87 0.7 
Other  10.10  8.32 7.63 8.08 6.4 
.. Not available.  
Note:  Figures refer to foreign capital actually used.  
Source:  Data provided by the authorities of China.  
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  Table A1. 6 Inward foreign direct investment by sector, 2013 -16 
(US$ billion)  
 
2013  2014  2015  2016  
 % of 
total FDI  
Total   117.59   119.56   126.27   126.00   100.0  
Agriculture, forestry and fishery    1.80    1.52    1.53    1.90    1.5  
Mining    0.36    0.56    0.24    0.10    0.1  
Manufacturing   45.55   39.94   39.54   35.49    28.2  
Electricity, gas and water    2.43    2.20    2.25    2.15    1.7  
Construction    1.22    1.24    1.56    2.48    2.0  
Wholesale and retail trade   11.51    9.46   12.02   15.87    12.6  
Transport, storage and post    4.22    4.46    4.19    5.09    4.0  
Hotels and catering service    0.77    0.65    0.43    0.37    0.3  
Information transmission, computer and software    2.88    2.76    3.84    8.44    6.7  
Financial intermediation    2.33    4.18   14.97   10.29    8.2  
Real estate   28.80   34.63   28.99   19.66    15.6  
Leasing and business services   10.36   12.49   10.05   16.13    12.8  
Scientific research, technical services and 
geological prospecting    2.75    3.25    4.53    6.52    5.2  
Water conservancy, environment and public 
facilities    1.04    0.57    0.43    0.42    0.3  
Other    1.56    1.65    1.68    1.11    0.9  
Note:  Figures refer to foreign capital actually used.  
Source:  Data provided by the authorities of China.  
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  Table A1. 7 Main destinations of outward foreign direct investment, 2016  
Destination  Value (US$ billion)  
Total  170.12  
Hong Kong, China  86.20  
United States  19.50  
Cayman Islands  17.68  
British Virgin Islands  10.38  
Singapore  4.21 
Australia  3.68 
Germany  2.95 
Canada  2.28 
Indonesia  1.62 
United Kingdom  1.21 
India 1.06 
Thailand  0.83 
Netherlands  0.82 
Korea, Rep. of  0.78 
New Zealand  0.68 
Malaysia  0.67 
Iran 0.63 
Viet Nam  0.59 
Bermuda Islands  0.58 
Laos 0.58 
Other  13.17  
Source:  Data provided by the authorities of China.  
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  Table A1. 8 Outward foreign direct investment by sector, 2015  
Destination  Value (US$ billion)  
Total  145.67  
Agriculture, forestry and fishery  2.57 
Mining  11.25  
Manufacturing  19.99  
Electricity, gas and water  2.14 
Construction  3.74 
Wholesale and retail trade  19.22  
Transport, storage and post  2.73 
Hotels and catering service  0.72 
Information transmission, computer and software  6.82 
Banking  24.25  
Real estate  7.79 
Leasing and business services  36.26  
Scientific research, technical services and geological prospecting  3.35 
Water conservancy, environment and public facilities  1.37 
Other  3.49 
Source:  Data provided by the authorities of China.  
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  Table A2. 1 Main notifications under WTO Agreements  (1 January 2015 -31 March 2018)   
Agreement  Requirement/content  Document symbol and date of  latest 
notification  
Agreement on Agriculture  
Articles 10 and 18.2  Table ES:1 – Export subsidies for 2013 
and 2014  G/AG/N/CHN/29, 02/02/2016  
Article 18.2  Table MA:2 – Tariff quotas  G/AG/N/CHN/30, 02/02/2016  
Article 18.2  Table DS:1 – Domestic support  G/AG/N/CHN/28, 06/05/2015  
Article XXIV of GATT 1994  
Article XXIV:7(a) of GATT 1994 
and Article V:7(a) of  GATS  Free Trade Agreement between Australia 
and China  WT/REG369/N/1 -S/C/N/858, 
27/01/2016  
Article XXIV:7(a) of GATT 1994 
and Article V:7(a) of  GATS  Free Trade Agreement between Republic 
of Korea and  China  WT/REG370/N/1 -S/C/N/854, 
02/03/2016  
Enabling Clause  
Enabling Clause – LDCs Duty-free treatment for LDCs  WT/COMTD/N/39/Add.2, 21/11/2016  
Agreement on Implementation of Article VI of the GATT 1994 (Anti -Dumping)  
Article 16.4  Semi-annual reports of anti -dumping 
actions (taken within the preceding six 
months)  G/ADP/N/265/CHN, 23/01/2015;  
G/ADP/N/272/CHN, 09/10/2015;  
G/ADP/N/280/CHN, 10/03/2016;  
G/ADP/N/286/CHN, 07/09/2016;  
G/ADP/N/294/CHN, 15/03/2017;  
G/ADP/N/300/CHN, 04/08/2017  
General Agreement on Tariffs and Trade (GATT) 1994  
Article XVII:4(a)  Notification under the Understanding on 
the Interpretation of Article XVII, on 
state trading  
for the period 2003 -2014 G/STR/N/10/CHN -G/STR/N/11/CHN -
G/STR/N/12/CHN -G/STR/N/13/CHN -
G/STR/N/14/CHN -G/STR/N/15/CHN, 
19/10/2015  
G/STR/N/10/CHN/Corr.1 -
G/STR/N/11/CHN/Corr.1 -
G/STR/N/12/CHN/Corr.1 -
G/STR/N/13/CHN/Corr.1 -
G/STR/N/14/CHN/Corr.1 -
G/STR/N/15/CHN/Corr.1, 02/12/2016  
General Agreement on Trade in Services  
Article V:7(a) of GATS  
(already referred to)  Notification of RTA – China and the 
Republic of Korea  S/C/N/854, 02/03/2016  
Article V:7(a) of GATS  
(already referred to)  Notification of RTA – Australia and China  S/C/N/858, 27/01/2016  
Services LDC waiver  Notification of China's preferential 
treatment to services and services 
suppliers of least developed countries  S/C/N/809, 23/07/2015  
Agreement on Import Licensing Procedures  
Article 7.3  Replies to questionnaire on import 
licensing procedures  G/LIC/N/3/CHN/14, 29/11/2016  
Article 7.3  Replies to questionnaire on import 
licensing procedures  G/LIC/N/3/CHN/15, 12/01/2018  
Quantitative Restrictions  
QR - (G/L/59) - biennial  Notification of quantitative restrictions  G/MA/QR/N/CHN/1, 24/04/2015;  
G/MA/QR/N/CHN/2, 24/04/2015;  
G/MA/QR/N/CHN/3, 24/04/2015  
Agreement on Rules of Origin  
Article 5 and Paragraph 4 of 
Annex  II Notification of preferential rules of origin 
for least developed countries  
 
Preferential and non -preferential rules of 
origin  G/RO/LDC/N/CHN/1, 10/07/2017;  
G/RO/N/132, 07/09/2015  
 
G/RO/N/137, 11/04/2016;  
G/RO/N /138, 11/04/2016  
Agreement on Safeguards  
Article 12.1(a) -(c) Safeguard investigations, findings, and 
decisions  G/SG/N/6/CHN/2, 26/09/2016;  
G/SG/N/8/CHN/2, 27/04/2017;  
G/SG/N/8/CHN/2/Suppl.1, 
G/SG/N/10/CHN/2, G/SG/N/11/CHN/2, 
23/05/2017  
Agreement on the  Application of Sanitary and Phytosanitary Measures  
Article 7 and Annex B  Notifications in 2017 =  7 G/SPS/N/CHN/1062 -1069 
Article 7 and Annex B  Notifications in 2017 =  8 G/SPS/N/CHN/1054 -1061 
Article 7 and Annex B  Notifications in 2016 =  12 G/SPS/N/CHN/1042 -1053 
Article 7 and Annex B  Notifications in 2015 =  339 G/SPS/N/CHN/703 -1041 WT/TPR/S/ 375/Rev.1  • China  
 
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  Agreement  Requirement/content  Document symbol and date of  latest 
notification  
Agreement on Subsidies and Countervailing Measures  
Article 25.1  Programmes granted or maintained at 
the central government level during the 
period from  2001 to  2014 G/SCM/N/220/CHN/Suppl.1 – 
G/SCM/N/253/CHN/Suppl.1 –  
G/SCM/N/284/CHN/Suppl.1,  
29/07/2016;  
G/SCM/N/220/CHN – 
G/SCM/N/253/CHN – 
G/SCM/N/284/CHN, 30/10/2015  
 Programmes granted or maintained at 
the sub -central government level during 
the period from 2001 to 2014   G/SCM/N/95/CHN/Suppl.1 
G/SCM/N/123/CHN/Suppl.1  
G/SCM/N/155/CHN/Suppl.1 
G/SCM/N/186/CHN/Suppl.1  
G/SCM/N/220/CHN/Suppl.1 
G/SCM/N/253/CHN/Suppl.1  
G/SCM/N/284/CHN/Suppl.1, 
29/07/2016  
Article 25.11  Semi-annual report on countervailing 
duty actions  G/SCM/N/321/CHN, 07/08/2017  
Agreement on Technical Barriers to Trade (TBT)  
Article 2.10  Diesel fuels for motor vehicles  
Gasoline for motor vehicles  
Formaldehyde emission limit of wood -
based panels and finishing products  
Plastic waste  G/TBT/N/CHN/1190, 08/02/2017; 
G/TBT/N/CHN/1191, 08/02/2017;  
G/TBT/N/CHN/1201, 29/05/2017;  
 
G/TBT/N/CHN/1211, 18/07/2017  
Article 2.9  Notification of technical regulations:   
 Notifications in 2018 = 9  G/TBT/N/1247 -1252, 1254, 1258, 
18/01/2018;  
G/TBT/N/CHN/1259, 31/01/2018  
 Notifications in 2017 = 56  G/TBT/N/CHN/1189 -1220, 04/01/2017 -
13/10/2017;  
G/TBT/N/CHN/262/Rev.1, 17/02/2017  
G/TBT/N/CHN/1222, 03/11/2017;  
G/TBT/N/CHN/1224 -1245, 15/11/2017 -
30/11/2017;  
G/TBT/N/1236/Corr.1, 05/12/2017  
 Notifications in 2016 = 33  G/TBT/N/CHN/1162 -1188, 07/01/2016 -
05/12/2016;  
G/TBT/N/CHN/1152/Rev.1, 08/01/2016  
G/TBT/N/CHN/45/Rev.2, 28/04/2016;  
G/TBT/N/CHN/228/Rev.1, 28/04/2016;  
G/TBT/N/CHN/690/Rev.1, 28/04/2016;  
G/TBT/N/CHN/391/Rev.1, 30/09/2016;  
G/TBT/N/C HN/683/Rev.1, 03/10/2016  
Article 5.6  Smart mobile terminals  
Drugs  
Light-duty vehicles  
Medical devices  
Drugs  
Vehicle emissions  
Drugs  
Medical devices  
Medical devices  
Medical devices  
Medical devices  
Medical devices  
Drugs  
Biological products  
Helmets for motorcyclists  
Electrically heating blankets, etc . 
Drugs  
Drugs  
Food 
Drugs  
Drugs  
Drugs  
Drugs, medical devices  
Drugs  G/TBT/N/CHN/1171, 07/04/2016; 
G/TBT/N/CHN/1173, 13/05/2016;  
G/TBT/N/CHN/1178, 07/07/2016;  
G/TBT/N/CHN/1179, 07/07/2016;  
G/TBT/N/CHN/1180, 14/09/2016;  
G/TBT/N/CHN/930/Rev.1, 03/10/2016;  
G/TBT/N/CHN/1182, 12/10/2016;  
G/TBT/N/CHN/1183, 28/11/2016;  
G/TBT/N/CHN/1184, 28/11/2016;  
G/TBT/N/CHN/1185, 30/11/2016;  
G/TBT/N/CHN/1186, 30/11/2016;  
G/TBT/N/CHN/1024/Rev.1, 30/11/2016;  
G/TBT/N/CHN/1192, 10/01 /2017;  
G/TBT/N/CHN/1198, 27/02/2017;  
G/TBT/N/CHN/1213, 28/07/2017;  
G/TBT/N/CHN/1214, 28/07/2017;  
G/TBT/N/CHN/1221, 03/11/2017;  
G/TBT/N/CHN/1223, 08/11/2017;  
G/TBT/N/CHN/1246, 09/01/2018;  
G/TBT/N/CHN/1253, 18/01/2018;  
G/TBT/N/CHN/1254, 18/01/2018;  
G/TBT/N/C HN/1255, 18/01/2018;  
G/TBT/N/CHN/1258, 18/01/2018;  
G/TBT/N/CHN/1257, 18/01/2018  WT/TPR/S/ 375/Rev.1  • China  
 
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  Agreement  Requirement/content  Document symbol and date of  latest 
notification  
Agreement on Trade -Related Aspects of Intellectual Property Rights  
Article 63.2  Replacement or consolidation of the 
Trademark Law  
Regulations for the Implementation of 
the Trademark Law  
Regulations for the implementation of 
the copyright law  
Regulations on computer software 
protection  
Regulations on protection of new 
varieties of plants  IP/N/1/CHN/5; IP/N/1/CHN/T/3, 
02/12/2016  
IP/N/1/CHN/6; IP/N/1/CHN/T/4, 
02/12/2016  
IP/N/1/CHN/7; IP/N/1/CHN/C/4, 
19/10/2017  
IP/N/1/CHN/8; IP/N/1/CHN/C/5, 
19/10/2017;  IP/N/1/CHN/9 
IP/N/1/CHN/P/4, 19/10/2017  
Trade Facilitation Agreement  
Trade Facilitation Agreement  Notification of category A commitments 
under the TFA  
Notification of category B commitments 
under the TFA  
Notification under Article 1.4 of the TFA  
Notification of category A commitments 
under the TFA  
Notification of category B commitments 
under the TFA   
Notification under Article 1.4 of the TFA  WT/PCTF/CHN/1, 01/06/2014;  
 
G/TFA/N/CHN/1, 06/06/2017;  
 
G/TFA/N/CHN/2, 01/11/2017;  
G/TFA/N/CHN/1/Add.1, 24/11/2017;  
 
G/TFA/N/CHN/1/Add.2, 14/02/2018  
 
G/TFA/N/CHN/2/Rev.1, 19/13/2018  
Source:  WTO Secretariat.  
  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table A2. 2 WTO dispute settlement cases involving China, 1 January 2016  - 
31 March  2018  
Subject  Respondent/  
complainant  Request for 
consultation 
received  Status (as 
at 11 
December 
2017)  WTO 
document 
series  
China as respondent      
Certain Measures Concerning the Protection 
of Intellectual Property Rights  China/  
United States  23/03/2018  In 
consultations  WT/DS542  
Subsidies to Producers of Primary 
Aluminium  China/  
United States  12/01/2017  In 
consultations  WT/DS519  
Tariff Rate Quotas for Certain Agricultural 
Products  China/  
United States  15/12/2016  Panel 
established  WT/DS517  
Domestic Support for Agricultural Producers  China/  
United States  13/09/2016  Panel 
composed  WT/DS511  
Duties and other Measures concerning the 
Exportation of Certain Raw Materials  China/  
European Union  19/07/2016  Panel 
established  WT/DS509  
Export Duties on Certain Raw Materials  China/  
United States  13/07/2016  Panel 
established  WT/DS508  
China as complainant      
Measures Related to Price Comparison 
Methodologies  United States/  
China  12/12/2016  In 
consultations  WT/DS515  
Measures Related to Price Comparison 
Methodologies  European 
Union/  
China  12/12/2016  Panel 
established  WT/DS516  
Source:  WTO Secretariat.  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table A2. 3 Industries in which FDI was/is restricted, 2015 and/or 2017  
2015  2017  
Agricultur al, forestry, livestock and fishery in dustries  
Selection and cultivation of new varieties of crops, and 
production of seeds (with Chinese parties as the 
controlling shareholders)  Selection and cultivation of new varieties of crops, and 
production of seeds (with Chinese parties as the 
controlling shareholders)  
Mining industries  
 Exploration and development of oil and gas (including 
coalbed methane, but excluding oil shale, oil sands or 
shale gas) (limited to Sino -foreign equity/cooperative 
joint venture operations)  
Exploration and mining of special and rare kinds of coal 
(with Chinese parties as the controlling shareholders)  Exploration and mining of special and rare  kinds of coal 
(with Chinese parties as the controlling shareholders)  
Exploration and mining of noble metals (gold, silver and 
platinum group)   
Exploration and mining of graphite  Exploration and mining of graphite  
Mining and mine selection of lithium mines   
Manufacturing industries  
Processing of edible oils and fats from soybean, 
rapeseed, peanut, cottonseed, camellia seed, sunflower 
seed, palm (with Chinese parties as the controlling 
shareholders), processing of rice, flour and crude sugar, 
and deep  processing of corn   
Production of biological liquid fuels (fuel ethanol and 
biodiesel) (with Chinese parties as the controlling 
shareholders)   
Printing of publications (with Chinese parties as the 
controlling shareholders)  Printing of publications (with  Chinese parties as the 
controlling shareholders)  
Smelting of rare metals including tungsten, molybdenum, 
tin (excluding tin compounds), antimony (including 
antimony oxides and antimony sulphides)   
Smelting and separation of rare earth (limited to Sino-
foreign equity/cooperative joint venture operations)  Smelting and separation of rare earth (limited to Sino -
foreign equity/cooperative joint venture operations), 
smelting of tungsten  
Manufacturing of automobile whole vehicles, special -use 
vehicles an d motorcycles: Chinese parties shall hold at 
least 50% of the shares. One foreign investor may 
establish two or less equity joint ventures in mainland 
China to manufacture the same category of whole vehicle 
products (i.e. the category of passenger cars, th e 
category of commercial vehicles or the category of 
motorcycles), provided that the foregoing restrictions on 
the maximum of two joint ventures are not applicable if 
the same foreign investor engages in the merger of other 
domestic auto manufacturers join tly with its Chinese joint 
venture partners  Manufacturing of automobile whole vehicles and special -
use vehicles: Chinese parties shall hold at least 50% of 
the shares. One foreign investor may establish two or less 
equity joint ventures in mainland China t o manufacture 
the same category of whole vehicle products (i.e. the 
category of passenger cars or the category of 
commercial), provided that the foregoing restrictions on 
the maximum of two joint ventures are not applicable if 
the same foreign investor eng ages in the merger of other 
domestic auto manufacturers jointly with its Chinese joint 
venture partners or produces pure electric car whole 
vehicles  
Repair, design and manufacture of vessels (including 
sections) (with Chinese parties as the controlling 
shareholders)  Repair, design and manufacture of vessels (including 
sections) (with Chinese parties as the controlling 
shareholders)  
 Design, manufacture and maintenance of mainline and 
regional aircraft, design and manufacture of the 
helicopter for 3 ton an d above, design of ground and 
surface effect aircraft, and design and manufacture of the 
UAV and float (with Chinese parties as the controlling 
shareholders)  
 Design, manufacture and maintenance of general aircraft 
(limited to Sino -foreign equity/cooperat ive joint venture 
operations)  
Production of satellite telecasting ground receiving 
facilities and key components  Production of satellite telecasting ground receiving 
facilities and key components  
Industries o f production and supply of power, thermal power, gas and w ater 
Construction and operation, in small grids, of power 
plants using coal -fired and steam condensation thermal 
generator sets with a single generator capacity of 
300,000 kW or less, and thermoelectric power stations 
using coal -fired, ste am condensation and extraction 
thermal generator sets with a single generator capacity of 
100,000 kW or less   
 Construction and operation of nuclear power station (with 
Chinese parties as the controlling shareholders)  
 Construction and operation of state  grid (with Chinese 
parties as the controlling shareholders)  WT/TPR/S/ 375/Rev.1  • China  
 
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  2015  2017  
Construction and operation of pipeline networks for gas, 
heat, water supply and sewage in cities with a population 
over 0.5 million (with Chinese parties as the controlling 
shareholders)  Construction and operation of pipeline networks for gas, 
heat, water supply and sewage in cities with a population 
over 0.5 million (with Chinese parties as the controlling 
shareholders)  
Transportation , storage & warehousing and postal services in dustries  
 Construction and operation of the railway network (with 
Chinese parties as the controlling shareholders)  
Railway passenger transport companies (with Chinese 
parties as the controlling shareholders)  Railway passenger transport companies (with Chinese 
parties as the controlling shareholders)  
Highway passenger transport companies   
Water transport companies (with Chinese parties as the 
controlling shareholders)  Domestic water transport companies (with Chinese 
parties as the controlling shareholders), international 
maritime transport companies (limited to Sino -foreign 
equity/cooperative joint venture operations)  
 Construction and operation of the civil airport (with 
Chinese parties as the relative controlling shareholders)  
 Public air transport company (with Chinese parties as the 
controlling shareholders, the investment ratio of a foreign 
enterprise and its affiliated enterprises shall not exceed 
25%, and the legal representative shall be of Chinese 
nationality)  
General av iation companies for business flights, air 
sightseeing tours, photography, prospecting and 
industrial purposes (with Chinese parties as the 
controlling shareholders)  General aviation companies (the legal representative shall 
be of Chinese nationality). The  general aviation 
companies for agricultural, forestry and fishery industries 
are limited to Sino -foreign equity. In other cases, Chinese 
parties shall be the controlling shareholders  
Informatio n transmission, software and information technology service i ndust ries 
Telecommunications companies: value -added 
telecommunications services (with the proportion of 
foreign investment not exceeding 50%, excluding 
e-commerce); basic telecommunications services (with 
the proportion of foreign capital not exceeding 49%)  Telecommunications companies: limited to the business 
that has already achieved the WTO commitments, value -
added telecommunications services (with the proportion 
of foreign investment not exceeding 50%, excluding 
e-commerce); basic telecommunications services (with 
Chinese parties as the controlling shareholders)  
Wholesale and  retail industries  
Purchase of grains, wholesale of grains and cotton, and 
construction and operation of large -scale agricultural 
products wholesale markets  Purchase and wholesa le of rice, wheat and corn  
Vessel agencies (with Chinese parties as the controlling 
shareholders) and ocean shipping tally companies 
(limited to Sino -foreign equity/cooperative joint venture 
operations)  Vessel agencies (with Chinese parties as the control ling 
shareholders)  
Construction and operation of gas stations (in the case of 
those having established more than 30 chain gas stations 
funded by the same foreign investors and selling product 
oil of different varieties and brands from multiple 
suppliers, the Chinese parties shall be the controlling 
shareholders)  Construction and operation of gas stations (in the case of 
those having established more than 30 chain gas stations 
funded by the same foreign investors and selling product 
oil of different varieti es and brands from multiple 
suppliers, the Chinese parties shall be the controlling 
shareholders)  
Finance industries  
Banks (a single overseas financial institution and the 
affiliated parties under its control or joint control are only 
allowed to invest in not more than 20% of the shares of a 
single Chinese -funded commercial bank as promoters or 
strategic investors; multiple overseas financial 
institutions and the affiliated parties under their control 
or joint control are only allowed to invest in a tota l of not 
more than 25% of the shares of a single Chinese -funded 
commercial bank as promoters or strategic investors; 
and, overseas financial institutions investing in rural small 
and medium -sized financial institutions shall be banking 
financial institutio ns) Banks (a single overseas financial institution and the 
affiliated parties under its control or joint control are only 
allowed to invest in not more than 20% of the shares of a 
single Chinese -funded commercial bank as promoters or 
strategic investors; m ultiple overseas financial institutions 
and the affiliated parties under their control or joint 
control are only allowed to invest in a total of not more 
than 25% of the shares of a single Chinese -funded 
commercial bank as promoters or strategic investors;  
overseas financial institutions investing in rural small and 
medium -sized financial institutions shall be banking 
financial institutions; and, foreign investors, the unique or 
controlling shareholders establishing foreign bank 
branches, foreign -funded ban ks and Sino -foreign joint 
venture banks must be foreign commercial banks. The 
non-controlling shareholders can be foreign financial 
institutions)  
Insurance companies (in the case of life insurance 
companies, the proportion of foreign investment shall not 
exceed 50%)  Insurance companies (in the case of life insurance 
companies, the proportion of foreign investment shall not 
exceed 50%)  WT/TPR/S/ 375/Rev.1  • China  
 
- 184 - 
 
  2015  2017  
Securities companies (at the time of establishment, it is 
limited to engaging in the underwriting and sponsorship 
of ordin ary RMB -dominated shares, foreign shares, 
treasury bonds and corporate bonds, the brokerage of 
foreign shares, and the brokerage and proprietary trading 
of treasury bonds and corporate bonds, and may apply 
for expanding its business scope two years after 
establishment if it satisfies relevant conditions. The 
proportion of foreign investment in a securities company 
shall not exceed 49% ), and securities investment fund 
management companies  (with the proportion of foreign 
investment not exceeding 49%)  Securiti es companies (at the time of establishment, it is 
limited to engaging in the underwriting and sponsorship 
of ordinary RMB -dominated shares, foreign shares, 
treasury bonds and corporate bonds, the brokerage of 
foreign shares, and the brokerage and proprieta ry trading 
of treasury bonds and corporate bonds, and may apply 
for expanding its business scope two years after 
establishment if it satisfies relevant conditions with 
Chinese parties as the controlling shareholders ), and 
securities investment fund managem ent companies (with 
Chinese parties as the controlling shareholders)  
Futures companies (with Chinese parties as the 
controlling shareholders)  Futures companies (with Chinese parties as the 
controlling shareholders)  
Leasing an d commercial services industr ies 
Market investigations (limited to Sino -foreign 
equity/cooperative joint venture operations; specifically, 
Chinese parties shall be the controlling shareholders for 
survey of television and radio programme ratings)  Market investigations (limited to Sin o-foreign 
equity/cooperative joint venture operations; specifically, 
Chinese parties shall be the controlling shareholders for 
survey of television and radio programme ratings)  
Credit investigation and rating service companies   
Scientific  research and technological services in dustries  
Surveying and mapping companies (with Chinese parties 
as the controlling shareholders)  Surveying and mapping companies (with Chinese parties 
as the controlling shareholders)  
Education  
Institutions of higher learning (limited to cooperation led 
by the Chinese side (i.e. the president of the key 
administrative personnel shall have the Chinese 
citizenship, and Chinese people shall be no less than half 
in the board of trustees, board of directors, or joint  
management committee of the Sino -foreign joint 
ventures education institutions))  Pre-school education institutions/Ordinary senior high 
schools/Institutions of higher learning (limited to 
cooperation led by the Chinese side (i.e. the president of 
the key administrative personnel shall have the Chinese 
citizenship, and Chinese people shall be no less than half 
in the board of trustees, board of directors, or joint 
management committee of the Sino -foreign joint 
ventures education institutions))  
Ordinary sen ior high schools (limited to Sino -foreign 
cooperative joint venture operations led by Chinese 
parties)   
Pre-school education institutions (limited to Sino -foreign 
cooperative joint venture operations led by Chinese 
parties)   
Health an d social wo rk 
Medical institutions (limited to Sino -foreign 
equity/cooperative joint venture operations)  Medical institutions (limited to Sino -foreign 
equity/cooperative joint venture operations)  
Cultural,  sports and entertainment in dustries  
Production of radio and te levision programmes and 
movies (limited to Sino -foreign cooperative joint venture 
operations)  Production of radio and television programmes and 
movies (limited to Sino -foreign cooperative joint venture 
operations)  
Construction and operation of cinemas  (with Chinese 
parties as the controlling shareholders)  Construction and operation of cinemas  (with Chinese 
parties as the controlling shareholders)  
Construction and operation of large theme parks   
Performance agency institutions  (with Chinese parties as 
the controlling shareholders)  Performance agency institutions  (with Chinese parties as 
the controlling shareholders)  
Source:  Catalogue of Industries for the Guidance of Foreign Investment (2015 Revision) and Catalogue of 
Industri es for the Guidance of Foreign Investment (2017  Revision).  WT/TPR/S/ 375/Rev.1  • China  
 
- 185 - 
 
  Table A2. 4 Industries in which FDI was/is prohibited, 2015 and/or 2017   
2015  2017  
Agricultural, forestry, livestock and fishery indu stries  
Research and development, breeding and planting of 
China's rare and special varieties, and production of 
relevant breeding materials (including quality genes in 
planting industry, husbandry and aquaculture)  Research and development, breeding and planting of 
China's rare and special varieties, and production of 
relevant breeding materials (including quality genes in 
planting industry, husbandry and aquaculture)  
Seed selection of the genetically modified varieties of 
crop seeds, breeding livestock and poul try, and aquatic 
fingerlings, and the production of their genetically 
modified seeds (seedlings)  Seed selection of the genetically modified varieties of 
crop seeds, breeding livestock and poultry, and aquatic 
fingerlings, and the production of their geneti cally 
modified seeds (seedlings)  
Fishing in the sea area and inland waters under China's 
jurisdiction  Fishing in the sea area and inland waters under China's 
jurisdiction  
Mining industries  
Exploration and mining of tungsten, molybdenum, tin, 
stibonium a nd fluorite  Exploration and mining of tungsten, molybdenum, tin, 
stibonium and fluorite  
Exploration, mining and selection of rare earth elements  Exploration, mining and selection of rare earth elements  
Exploration, mining and selection of radioactive minerals  Exploration, mining and selection of radioactive minerals  
Manufacturing industries  
Processing of traditional Chinese medicinal materials 
listed in the Regulations on the Administration for 
Protection of Wild Medicinal Resources and the Catalogue  
of China's Rare and Endangered Plants under Protection   
Application of such processing techniques as steaming, 
stir-frying, moxibustion, and calcination for making small 
pieces of ready -for-use traditional Chinese medicines; 
and production of traditional  Chinese patent medicine of 
secret prescriptions  Application of such processing techniques as steaming, 
stir-frying, moxibustion, and calcination for making small 
pieces of ready -for-use traditional Chinese medicines; 
and production of traditional Chinese patent medicine of 
secret prescriptions  
Radioactive mineral smelting and processing, and nuclear 
fuel production  Radioactive mineral smelting and processing, and nuclear 
fuel production  
Manufacturing of weapons and ammunition  Manufacturing of weapons and  ammunition  
Ivory carving   
Tiger bone processing   
Production of Xuan paper and Chinese ink ingot  Production of Xuan paper and Chinese ink ingot  
Power, thermal power, gas and water production and supply industries  
Construction and operation, within large grids, of power 
plants using coal -fired and steam condensation thermal 
generator sets with a single generator capacity of 
300,000  kW or less, and thermoelectric power stations 
using coal -fired, steam condensation and extraction 
thermal generator sets  with a single generator capacity of 
200,000  kW or less   
Transportation, storage & warehousing and postal services industries  
Air traffic control  Air traffic control  
Postal companies; domestic express delivery service of 
mail Postal companies; domestic express delivery service of 
mail 
Wholesale and retail industries  
Wholesale and retail of tobacco leaves, cigarettes, re -
dried tobacco leaves and other tobacco products  Wholesale and retail of tobacco leaves, cigarettes, re -
dried tobacco leaves and other tobacco products  
Leasing and commercial services industries  
Social investigations  Social investigations  
Consulting on Chinese legal affairs (excluding the 
provision of information on the environmental impact of 
Chinese laws)  Consulting on Chinese legal affairs (excluding the 
provision of information on the environmental impact of 
Chinese laws)  
Scientific research and technological services industries  
Development and application of human stem cell and 
genetic diagnosis and treatment technology  Developme nt and application of human stem cell and 
genetic diagnosis and treatment technology  
Geodetic surveying, marine charting, aerial photography 
for surveying and mapping purposes, administrative 
boundary surveying and mapping, compilation of 
topographic maps, maps of world political zones, national 
administrative divisions and administrative divisions at 
and below the provincial level, national teaching maps, 
local teaching maps and true three -dimensional maps, 
compilation of electronic maps for navigatio n purposes, 
regional geological mapping, mineral geology, 
geophysics, geochemistry, hydrogeology, environmental 
geology, geological disasters, geological remote sensing 
and other surveys  Geodetic surveying, marine charting, aerial photography 
for surveying  and mapping purposes, Ground motion 
management, administrative boundary surveying and 
mapping, compilation of topographic maps, maps of world 
political zones, national administrative divisions and 
administrative divisions at and below the provincial level , 
national teaching maps, local teaching maps and true 
three-dimensional maps, compilation of electronic maps 
for navigation purposes, regional geological mapping, 
mineral geology, geophysics, geochemistry, 
hydrogeology, environmental geology, geological 
disasters, geological remote sensing and other surveys  
Water conservancy, environmental, and public facilities management industries  
Construction and operation of natural reserves and 
internationally important wetlands   
Development of wild animal and pla nt resources 
originated in and protected by China  Development of wild animal and plant resources 
originated in and protected by China  WT/TPR/S/ 375/Rev.1  • China  
 
- 186 - 
 
  2015  2017  
Education  
Compulsory education institutions, education institutions 
in military affairs, police, politics and other special fields, 
and party schools  Compulsory education institutions  
Cultural, sports and entertainment industries  
News organizations  News organizations (including, but not limited to news 
agency)  
Publishing of books, newspapers, and periodicals  Editing and publishing of books, newspapers, and 
periodicals  
Publishing and production of audio -visual products and 
electronic publications  Editing and publishing and production of audio -visual 
products and electronic publications  
All radio stations, television stations, radio and television 
channels (frequencies), radio and television transmission 
and coverage networks (transmitting stations, relay 
stations, radio and television satellites, satellite uplink 
stations, satellite receiving and transmitting stations , 
microwave stations, monitoring stations, and cable radio 
and television transmission and coverage networks) at all 
levels  All radio stations, television stations, radio and television 
channels (frequencies), radio and television transmission 
and coverage  networks (transmitting stations, relay 
stations, radio and television satellites, satellite uplink 
stations, satellite receiving and transmitting stations, 
microwave stations, monitoring stations, and cable radio 
and television transmission and coverage n etworks) at all 
levels,  
broadcast (TV) video on demand services and installation 
services of signal -receiving facilities  
Radio and television programme production and operating 
companies  Radio and television programme production and operating 
(including import business) companies  
Movie production companies, distribution companies and 
cinema chains  Movie production companies, distribution companies and 
cinema chains  
Operation of news websites, online publication services, 
online audio and video programme  streaming services, 
business premises for Internet access services, and 
Internet cultural business (excluding music)  Digital news information services, online publication 
services, online audio and video programme streaming 
services, business premises for  Internet access services, 
internet cultural business (excluding music), and internet 
public release information service  
Auction houses and cultural relics shops engaging in the 
auction of cultural relics  Auction houses and cultural relics shops engaging in the 
auction of cultural relics  
Construction of golf courses and villas   
Other  industries  
Projects endangering the safety and performance of 
military facilities   
Gambling and lottery industry (including horse race 
tracks for gambling purposes)   
Pornography industry   
Other industries prohibited by state laws and regulations or by international treaties china has concluded 
or acceded to 
 Humanities and social sciences research institute  
Source:  Catalogue of Industries for the Guidance of Foreign Investment (2015 Revision) and Catalogue of 
Industries for the Guidance of Foreign Investment (2017  Revision).  
  WT/TPR/S/ 375/Rev.1  • China  
 
- 187 - 
 
  Table A3. 1 China's preferential rules of origin, 2017  
Agreement/Party  Rules  
APTA Wholly obtained or produced  in the country; or  the value of non -originating parts or 
components used in the manufacture must not exceed  55% of the f.o.b.  value of the 
product (or 65% for LDCs); or  cumulation allowed, i.e. cumulation in terms of materials 
and components between the p arties must be no lower than 60% of the f.o.b.  value of 
the product (50% for LDCs); and the country of origin is defined as the country where 
the last manufacturing operation takes place . Requirements on direct consignment must 
be complied with.  
ASEAN  Wholly obtained or produced  in ASEAN countries; or the content of products originating 
in any one of the ASEAN countries must be no less than 40% of total content; or the 
value of the non -originating parts or components used in the manufacture of the 
product s must be no more than 60% of the f.o.b.  value of the product. The country of 
origin is defined as the country where the last manufacturing operation takes place, or in 
accordance with p roduct -specific rules.  
Requirements on direct consignment must be com plied with.  
Australia  Wholly obtained or produced in one party; or, exclusively from originating materials; or 
produced entirely in a party using non -originating materials. Bilateral cumulation is 
allowed.  
Least developed 
countries  Wholly obtained or produced  in the beneficiary country ; or the non -originating parts 
must have undergone substantial transformation. "Substantial transformation" means 
change of tariff heading or the value of non -originating parts used in the manufacture of 
the good do es not exceed 60% of the f.o.b.  value of the product;  or in accordance with 
product specific rules. The final stage of processing must be in the country of origin, and 
requirements on direct consignment must be complied with.  
Hong Kong, China  Wholly obtained o r produced in Hong Kong, China , or the non -originating parts must 
have undergone substantial transformation. "Substantial transformation"  is defined in 
product specific rules, which includes the following criteria:  
1. change of tariff heading;  
2. a regional value content of equal to or more than 30% of the f.o.b. value of the 
product;  
3. specific process or production;  
4. other criteria; or  
5. combination of the above criteria.  
The final stage of processing must be carried out in Hong Kong, China. Goods must enter 
China directly.  
Macao, China  Wholly obtained or produced in Macao, China , or the non -originating parts must have 
undergone substantial transformation. "Substantial transformation"  is defined in product 
specific rules, which includ e the following criteria:  
1. change of tariff heading;  
2. a regional value content of equal to or more than 30% of the f.o.b. value of the 
product;  
3. specific process or production;  
4. other criteria; or  
5. combination of the above criteria.  
The final stage of processing must be carried out in Macao, China. Goods must enter 
China directly.  
Chile Wholly obtained or produced entirely in the territory of one party; or produced entirely in 
the territory of one or both parties exclusively from originating material; or produced in 
the territory of one or both parties, using non -originating materials that confo rm to a 
regional value content not less than 40%, except for the goods listed in product specific 
rules, which must comply with the requirements specified therein; or product specific 
rules. Bilateral cumulation is allowed.   
Tolerance rule: for tariff classification change criterion, non -originating materials can 
represent a maximum of 8% of the f.o.b.  value of product.  
Requirements on direct transport must be complied with.  
Republic of Korea  Wholly obtained or produced in one party; or produced in one party, exclusively from 
originating materials; or produced entirely in a party using non -originating materials in 
conformity with Annex 3A of the Agreement.  WT/TPR/S/ 375/Rev.1  • China  
 
- 188 - 
 
  Agreement/Party  Rules  
New Zealand  Wholly obtained or produced in the territory of one party; or produced entirely in the 
territory of one or both parties exclusively from originating materials; or product specific 
rules:  
- wholly obtained or entirely produced in New Zealand; or   
- a change of ta riff classification  applies (at HS 2-digit, 4-digit or 6 -digit level);   
- regional value content of 30%, 40%, 45%, or 50% applies to some products ; or  
- specific process.  
Bilateral cumulation is allowed.   
Tolerance rule: for tariff classification change criterion, non -originating materials can 
represent a maximum of 10% of the f.o.b. value of product.  
Requirements on direct consignment must be complied with.  
Pakistan  Wholly obtained or produced in Pakistan, or the content of the product originating in 
Pakistan must be no less than 40% of total content; or t he non -originating parts must 
have undergone substantial transformation as defined in Product Specific Rules.  
Bilateral cumulation is allowed.  
No tolerance rule is applied.   
The final stage of processing must be carried out in Pakistan.   
Requirements on direct consignment must be complied with.  
Singapore  Wholly obtained or produced in Singapore, or a  regional value content of no less than 
40%, except for the goods listed in product specific ru les, which must comply with the 
requirements specified therein ; or product specific rules.   
Bilateral cumulation is allowed.  
Tolerance rule: for tariff classification change criterion, non -originating materials can 
represent a maximum of 10% of the  f.o.b.  value of product.  
Requirements on direct consignment must be complied with.  
Peru  Wholly obtained or produced in Peru; or p roduced entirely in the territory of one or both 
Parties exclusively from originating material; or p roduct specific rules.   
Bilateral cumulation is allowed.  
Tolerance rule: for tariff classification change criterion, non -originating materials can 
represent a maximum of 10% of the value of product (pursuant to regional value 
content).  
Requirements on direct transport must be complied with.  
Switzerland  Wholly obtained in a party; or produced exclusively from originating materials; or  
non-originating materials have undergone substantial transformation . 
Iceland  Wholly obtained in a party; or produced exclusively from originating materials; or  
non-originating materials have undergone substantial transformation . 
Georgia  Wholly obtained or produced entirely in a party; or produced exclusively from originating 
materials from one or both parties; or produced in one or both parties using non -
originating materials with a regional value content of less than 40%; or non -originating 
materials used have undergone substantial transformation in one of the parties.  
Costa Rica Wholly obtained or produced in Costa Rica ; or p roduced entirely in the territory of one or 
both parties exclusively from originating material; or p roduct specific rules.   
Bilateral cumulation is allowed.  
Tolerance rule: for tariff classification chang e criterion, non -originating materials can 
represent a maximum of 10% of the f.o.b. value of product (pursuant to regional value 
content).  
Requirements on direct transport must be complied with.  
Source:  Information provided by the authorities of China.  
  WT/TPR/S/ 375/Rev.1  • China  
 
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  Table A3. 2 Summary of China's MFN applied tariff, 2017  
  Number 
of lines  Average 
(%) Range (%)  Standard 
deviation  Duty 
free 
(%) MFN 
applied  Bound  
Total  8,547  9.5 0-65 0-65 7.5 9.8 
HS 01 -24 1,410  13.7 0-65 0-65 10.4 8.7 
HS 25 -97 7,137  8.6 0-50 0-50 6.5 10.0 
By WTO category        
WTO agricultural products  1,171  14.8 0-65 0-65 11.3 8.0 
 Animals and products thereof  170 12.7 0-25 0-25 7.5 18.2 
 Dairy products  21 12.1 2-20 6-20 3.8 0.0 
 Fruit, vegetables, and plants  391 13.8 0-30 0-30 7.5 6.1 
 Coffee and tea  31 14.9 2-32 8-32 7.2 0.0 
 Cereals and preparations  127 23.3 0-65 0-65 20.6 7.9 
 Oils seeds, fats, oil and their products  108 10.5 0-30 0-30 7.0 12.0 
 Sugars and confectionary  19 30.9 8-50 8-50 16.7 0.0 
 Beverages, spirits and tobacco  66 21.5 0-65 0-65 14.6 1.5 
 Cotton  5 22.0 10-40 10-40 14.7 0.0 
 Other agricultural products, n.e.s.  233 12.0 0-38 0-38 7.9 6.4 
WTO non -agricultural products  7,376  8.6 0-50 0-50 6.3 10.1 
 Fish and fishery products  348 10.1 0-23 0-23 4.3 8.3 
 Minerals and metals  1,256  7.5 0-50 0-50 6.3 8.8 
 Chemicals and photographic supplies  1,421  6.2 0-47 0-47 3.8 5.3 
 Wood, pulp, paper and furniture  421 3.9 0-20 0-20 3.9 40.6 
 Textiles  521 9.6 2-38 2-38 3.9 0.0 
 Clothing  299 15.6 7-25 14-25 2.5 0.0 
 Leather, rubber, footwear and travel goods  226 12.4 0-25 0-25 6.0 0.4 
 Non-electric machinery  1,040  7.5 0-35 0-35 5.1 13.6 
 Electric machinery  467 8.1 0-35 0-35 7.6 26.8 
 Transport equipment  412 15.1 0-45 0-45 9.7 0.2 
 Non-agricultural products, n.e.s.  615 10.6 0-35 0-35 7.4 14.1 
 Petroleum  20 4.8 0-9 0-9 3.0 15.0 
By ISIC sector        
 ISIC 1 - Agriculture, hunting and fishing  670 10.5 0-65 0-65 9.7 21.9 
 ISIC 2 – Mining  123 1.7 0-6 0-8 1.7 40.7 
 ISIC 3 – Manufacturing  7,753  9.5 0-65 0-65 7.3 8.3 
 Manufacturing excluding food processing  6,931  8.8 0-50 0-50 6.4 9.0 
 ISIC 4 - Electrical energy  1 0.0 0 0 0.0 100.0  
By stage of processing        
 First stage of processing  1,186  9.2 0-65 0-65 9.5 20.4 
 Semi-processed products  2,611  7.0 0-65 0-65 5.6 5.7 
 Fully processed products  4,750  10.9 0-65 0-65 7.5 9.4 
By HS section        
 01 Live animals and products  529 11.4 0-25 0-25 6.0 12.5 
 02 Vegetable products  515 14.1 0-65 0-65 12.9 10.9 
 03 Fats and oils  56 12.6 2-30 5-30 5.9 0.0 
 04 Prepared food, beverages and tobacco  310 17.3 0-65 0-65 11.5 0.3 
 05 Mineral products  201 3.0 0-11 0-12 2.6 27.4 
 06 Chemicals and products thereof  1,345  6.3 0-50 0-50 4.7 5.6 
 07 Plastics, rubber, and articles thereof  279 9.2 0-25 0-25 4.3 0.4 
 08 Raw hides and skins, leather, and its products  106 11.7 3-20 5-23 5.2 0.0 
 09 Wood and articles of wood  235 3.9 0-20 0-20 4.2 42.1 
 10 Pulp of wood, paper and paperboard  161 5.2 0-7.5 0-7.5 3.1 21.7 
 11 Textiles and textile articles  1,147  11.3 1-40 3-40 5.0 0.0 
 12 Footwear, headgear, etc.  73 17.1 10-25 10-25 5.8 0.0 
 13 Articles of stone, plaster, cement  204 13.0 0-28 0-28 5.4 0.5 
 14 Precious stones and metals, pearls  90 10.0 0-35 0-35 12.5 38.9 
 15 Base metals and articles thereof  770 7.0 0-30 0-30 4.3 3.1 
 16 Machinery, electrical equipment, etc.  1,542  7.7 0-35 0-35 6.2 18.5 
 17 Transport equipment  427 14.9 0-45 0-45 9.7 0.2 
 18 Precision equipment  335 9.0 0-30 0-30 6.4 10.1 
 19 Arms and ammunition  21 13.0 13-13 13-15 0.0 0.0 
 20 Miscellaneous manufactured articles  191 10.5 0-25 0-25 8.9 35.1 
 21 Works of art, etc.  10 7.1 0-14 0-14 5.6 20.0 
Note:  Calculations are based on national tariff line level (8 -digit); excluding in -quota rates and including 
AVEs for non -ad valorem  rates provided by the authorities of China.  
 Interim duty rates are used for the calculations when fully applied at the 8 -digit level.  
Source:  WTO Secretariat calculations, based on data provided by the authorities of China.  
  WT/TPR/S/ 375/Rev.1  • China  
 
- 190 - 
 
  Table A3. 3 Sub-central subsidy programmes notified to the WTO in 2016  
Provincial -level 
administrative 
division  Programme  Forms of 
subsidy  Authority for the 
subsidy  Period/  
Validity  
Beijing  1. Special fund for the design, 
research and development of 
integrated circuit  Financial 
appropriations   2001-2014 
2. Incentive for projects 
transformed from high and new 
technological achievements  Financial 
appropriations   2002-2011 
3. Support  fund for corporate 
financing  Financial 
appropriations  Beijing Zhongguancun 
Science and Technology 
Park 13.09.2011  
- 
01.01.2015  
4. Support fund for the credit loans 
of science and technology SMEs  Financial 
appropriations  Beijing Zhongguancun 
Science and Technology 
Park 2011 
- 
01.01.2015  
5. Support fund for trade financing  Financial 
appropriations  Beijing Zhongguancun 
Science and Technology 
Park 30.01.2010  
- 
01.01.2015  
6. Support fund for equity pledge 
loans Financial 
appropriations  Beijing Zhongguancun 
Science and Technology 
Park 01.09.2011  
- 
01.01.2015  
7. Subsidy for intermediary services 
for enterprise mergers and 
acquisitions (M&As)  Financial 
appropriations  Beijing Zhongguancun 
Science and Technology 
Park 15.08.2011  
- 
01.08.2014  
8. Subsidy for the restructuring and 
listing of enterprises  Financial 
appropriations  Beijing Zhongguancun 
Science and Technology 
Park 15.08.2011  
- present  
Fujian  9. Subsidy for the sale of household 
electric appliances in rural areas  Financial 
appropriations   February 
2011 
- 
31.01.2015  
10. Subsidy for automobile trade -in Financial 
appropriations   01.06.2009  
- 
31.05.2010  
11. Incentive fund for famous -brand 
products  Financial 
appropriations  Nanping  2007-2008 
12. Incentive fund for famous -brand 
products  Financial 
appropriations  Fengze District, Quanzhou  09.03.2008  
- 
18.03.2009  
13. Incentive fund for key 
enterprises  Financial 
appropriations  Fengze District, Quanzhou  2009 
14. Incentive fund for famous -brand 
products  Financial 
appropriations  Xiamen  2007-2008 
15. Support fund for key export 
enterprises  Financial 
appropriations  Xiamen  2006-2007;  
2008-2009 
16. Subsidy for household electric 
appliances trade -in Financial 
appropriations  Xiamen  01.06.2010  
- 
31.12.2012  
17. Subsidy for the sales of 
household electric appliances in 
rural areas  Financial 
appropriations  Xiamen  01.02.2009  
- 
31.01.2013  
Gansu  18. Incentive fund for famous -brand 
products  Financial -
appropriations   2007;  
2009-2012 
Guangdong  19. Fund for the development of 
outward -oriented private enterprises  Financial 
appropriations   2004-2012 
20. Special fund for the training of 
migration and employment of rural 
labour force  Financial 
appropriations   2008-
present  
21. Incentive for enterprise 
innovation and R&D  Financial 
appropriations  Nanhai District, Foshan  2007-2008;  
2009-2011 
22. Incentive fund for famous -brand 
products  Financial 
appropriations  Nanhai District, Foshan  2007-2008; 
2009-2011 
23. Incentive for establishment of 
enterprise standards  Financial 
appropriations  Nanhai District, Foshan  2007-2008; 
2009-2011 
24. Incentive for establishment of 
headquarters and listing of 
enterprises;  
Incentive for establishment of 
headquarters and being listed  Financial 
appropriations
; 
Financial 
appropriations  Nanhai District, Foshan  2009-2010;  
2011-2013 
25. Incentive fund for measurement 
and testing systems of enterprises  Financial 
appropriations  Nanhai District, Foshan  2007-2008; 
2009-2011 WT/TPR/S/ 375/Rev.1  • China  
 
- 191 - 
 
  Provincial -level 
administrative 
division  Programme  Forms of 
subsidy  Authority for the 
subsidy  Period/  
Validity  
26. Incentive fund for the 
establishment of trading companies 
overseas  Financial 
appropriations  Shunde District, Foshan  2012-2013 
27. Governmental subsidy for 
participation in trade exhibitions by 
enterprises  Financial 
appropriations  Shunde District, Foshan  2011-2013 
28. Special fund for technical 
development  Financial 
appropriations  Shunde District, F oshan, 
Guangdong  2002-2007 
29. Support fund for the 
development and application of new 
products and new technologies  Financial 
appropriations  Shunde District, Foshan  2002-2009 
30. Support fund for the 
development and application of new 
products and new technologies  Financial 
appropriations  Shunde District, Foshan  2002-2009 
31. Support fund for high and new 
technology projects  Financial 
appropriations  Huadu District, 
Guangzhou  2002-2007 
32. Incentive fund for famous -brand 
projects  Financial 
appropriations  Shenzhen  2008 
33. Incentive fund for mechanical, 
electronic, high and new technology 
products  Financial 
appropriations  Shenzhen  2008 
34. Incentive fund for famous -brand 
products  Financial 
appropriations  Futian District, Shenzhen  2007-2008 
35. Incentive fund for technological 
centres of enterprises  Financial 
appropriations  Futian District, Shenzhen  2007-2008 
Guangxi  36. Incentive fund for famous -brand 
products  Financial 
appropriations   2007-2008 
Hainan  37. Incentive fund for famous -brand 
products  Financial 
appropriations   2007-2009 
38. Incentive fund for famous -brand 
products  Financial 
appropriations   2007-2008 
Henan  39. Fund for using whole village's 
resources to develop financial 
support to the poor Financial 
appropriations   2014-
present  
40. Subsidy for the sale of 
household electric appliances in 
rural areas  
40.1 Special fund for the 
development of foreign trade and 
economic co -operation;  
40.2 Special fund for the 
development of foreign trade and 
economic co -operation  Financial 
appropriations  
 
Financial 
appropriations  
 
Financial 
appropriations   01.12.2008  
- 
30.11.2011;  
2007-2008;  
 
 
2009 
41. Special fund for the training of 
rural migrant labour force  Financial 
appropriations  Zhengzhou  2004-
present  
Heilongjiang  42. Incentive fund for famous -brand 
products  Financial 
appropriations   2008 
Hunan  43. Special fund for renewable 
energy resources  Financial 
appropriations   2007-2012 
44. Special fiscal fund to alleviate 
poverty  Financial 
appropriations   2012-
present  
45. Subsidy for household electric 
appliances trade -in Financial 
appropriations   01.06.2009  
- 
31.05.2010  
Jiangsu  46. Incentive fund for famous -brand 
products  Financial 
appropriations  Nanjing  2005-2008 
47. Incentive fund for famous -brand 
products  Financial 
appropriations  Suzhou  2003-2004; 
2005; 2006  
48. Incentive encouraging 
innovations  Financial 
appropriations  Suzhou  2006-
30.04.2009  
49. Incentive fund for famous -brand 
products  Financial 
appropriations  Yandu District, Yancheng  2007-2008 
50. Incentive fund for famous -brand 
products  Financial 
appropriations  Yangzhou  2007 
51. Incentive fund for famous -brand 
products  Financial 
appropriations  Zhenjiang  2007 
Jiangxi  52. Support fund for the 
development of foreign trade  Financial 
appropriations   2007 
53. Support fund for the 
development of foreign trade  Financial 
appropriations  Nanchang  2007-2008 
54. Incentive fund for famous -brand 
products  Financial 
appropriations  Xinyu  2002-2008 WT/TPR/S/ 375/Rev.1  • China  
 
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  Provincial -level 
administrative 
division  Programme  Forms of 
subsidy  Authority for the 
subsidy  Period/  
Validity  
Liaoning  55. Fund for interest discount of 
loans for the export of high and new 
technology products and products of 
the equipment manufacturing 
industry  Financial 
appropriations   2005-2007 
56. Fund for interest discount of 
loans for the "five points and one 
line" coastal economic belt  park Financial 
appropriations   2007-2013 
57. Special fund for energy 
conservation  Financial 
appropriations   2010-2014 
58. Development fund for SMEs  Financial 
appropriations   2005-2014 
59. Northeast old industrial base 
foreign trade development fund in 
Liaoning province  Financial 
appropriations   2004-2008 
Shandong  60. Support fund for the 
development of foreign trade  Financial 
appropriations   2003; 2004; 
2005; 2006; 
2007 
61. Special fund for technology R&D 
of the environmental protection 
industry  Financial 
appropriations   2007-2012 
62. Special fiscal fund supporting 
the development of high and new 
technology industries  Financial 
appropriations   2011-2013 
63. Subsidy for the sale of 
household electric appliances trade -
in rural areas  Financial 
appropriations   December 
2007 
- 
November 
2011 
64. Subsidy for household electric 
appliances trade -in Financial 
appropriations   June 2009  
- 
December 
2011 
65. Incentive fund for foreign trade 
enterprises  Financial 
appropriations  Shouguang  2010-2012 
Shanxi  66. Subsidy for the sale of 
household electric appliances in 
rural areas  Financial 
appropriations   01.02.2009  
- 
31.01.2013  
67. Subsidy for household electric 
appliances trade -in Financial 
appropriations   30.07.2010  
- 
30.07.2011  
Shanghai  68. Fund  for promoting the trade of 
light industry and textile products  Financial 
appropriations   2009-2012 
69. Special fund for the 
development of software and 
integrated circuit industries  Financial 
appropriations   2008-2012 
70. Supporting fund for enterprises  Financial 
appropriations  Pudong Town, Minhang 
District  2010-2014 
Sichuan  71. Incentive fund for famous -brand 
products  Financial 
appropriations   2008 
Tianjin  72. Incentive fund for famous -brand 
products  Financial 
appropriations   2008 
Zhejiang  73. Special fund for technological 
innovation  Financial 
appropriations   2004-2012 
74. Incentive fund for famous -brand 
products  Financial 
appropriations   2005; 2006 -
2008; 2012  
75. Support fund for foreign -
invested enterprises  Financial 
appropriations  Hangzhou  2001-2007 
76. Incentive fund for famous -brand 
products  Financial 
appropriations  Hangzhou  2005; 2006;  
2007; 2008;  
2009; 2012 -
2013 
77. Incentive fund for Jinlong award  Financial 
appropriations  Hangzhou  2007-2008 
78. Incentive  fund for the export of 
textile products with self -owned 
brands  Financial 
appropriations  Hangzhou  2004-2005 
79. Incentive fund for products with 
trademark or patent   Changxing Country, 
Huzhou  2005 
80. Incentive fund for famous -brand 
products  Financial  
appropriations  Wuxing District, Huzhou  2006 WT/TPR/S/ 375/Rev.1  • China  
 
- 193 - 
 
  Provincial -level 
administrative 
division  Programme  Forms of 
subsidy  Authority for the 
subsidy  Period/  
Validity  
81. Incentive fund for famous -brand 
products  Financial 
appropriations  Deqing Country, Huzhou  2008 
82. Incentive fund for enterprise 
innovation  Financial 
appropriations  Jiaxing  2005-2011 
83. Incentive fund  for famous -brand 
products  Financial 
appropriations  Jinhua  2006-2007 
84. Incentive fund for famous -brand 
products  Financial 
appropriations  Jindong District, Jinhua  2006 
85. Incentive fund for famous -brand 
products  Financial 
appropriations  Wuyi Country, Jinhua  2004 
86. Incentive fund for famous -brand 
products  Financial 
appropriations  Ningbo  2006 
87. Incentive fund for famous -brand 
products  Financial 
appropriations  Cixi, Ningbo  2007 
88. Incentive fund for exporting 
enterprises  Financial 
appropriations  Xiangshan, Ningbo  2007 
89. Incentive fund for famous -brand 
products  Financial 
appropriations  Yinzhou District, Ningbo  2006-2007 
90. Special fund for energy 
conservation  Financial 
appropriations  Yinzhou District, Ningbo  2008 
91. Incentive fund for famous -brand 
products  Financial 
appropriations  Quzhou  2007-2008 
92. Incentive for enterprise 
technology centres and fund for 
export brands  Financial 
appropriations  Quzhou  2007-2009 
93. Incentive fund for famous -brand 
products  Financial 
appropriations  Shaoxing  2007 
94. Incentive for the use of foreign 
investment  Financial 
appropriations  Shaoxing  2007-2008 
95. Incentive for science and 
technology funds  Financial 
appropriations  Wenzhou  2006-2010 
96. Support fund for high and new 
technology industries  Financial 
appropriations  Wenzhou  2006-2010 
97. Incentive for inventions and 
innovations  Financial 
appropriations  Wenzhou  2007 
98. Incentive for high and new 
technology incubators  Financial 
appropriations  Wenzhou  2006-2008 
99. Incentive fund for famous -brand 
products  Financial 
appropriations  Wenzhou  2006-2008 
Chongqing  100. Incentive fund for famous -
brand products  Financial 
appropriations   2008 
Source:  WTO document G/SCM/N/95/CHN/Suppl.1, G/SCM/N/123/CHN/Suppl.1, SCM/N/155/CHN/Suppl.1, 
G/SCM/N/186/CHN/Suppl.1, G/SCM/N/220/CHN/Suppl.1, G/SCM/N/253/CHN/Suppl.1, and 
G/SCM/N/284/CHN/Suppl.1, 29 July 2016 . 
__________