RESTRICTED  
  
WT/TPR/S/300  
 
27 May 2014  
(14-3140)  Page: 1/200  
Trade Policy Review Body   
 
 TRADE POLICY REVIEW 
REPORT BY THE SECRETARIAT 
CHINA 
This report, prepared for the fifth Trade Policy Re view of China, has been drawn up by the WTO 
Secretariat on its own responsibility. The Secr etariat has, as required by the Agreement 
establishing the Trade Policy Review Mech anism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from China on its trade policies 
and practices.  Any technical questions arising from this report may be addressed to Mr. Angelo Silvy (022 739 
5249); Mrs. Eugenia Lizano  (022 739 6578); Mr. Pierre  Latrille (Servi ces section) (022 739 5266), 
and Mr. Nelnan Koumtingue (022 739 6252).  
Document WT/TPR/G/300 contains the policy statement submitted by China. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on China. This report was drafted in 
English. WT/TPR/S/300 • China 
 
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  CONTENTS 
SUMMARY ....................................................................................................................... . 9 
1   ECONOMIC ENVIRONMENT ........................................................................................ 14  
1.1   Recent Econ omic Developments.................................................................................. 14 
1.1.1   Real  economy ....................................................................................................... 14 
1.1.2   Fiscal policy an d structural  reform ............................................................................ 17 
1.1.2.1   Fiscal policy and related issues .............................................................................. 17 
1.1.2.2   Structural  reform me asures .................................................................................. 19 
1.1.3   Monetary and exchange ra te policy .......................................................................... 22 
1.1.3.1   Monetary policy .................................................................................................. 22 
1.1.3.2   Exchange  rate po licy ........................................................................................... 24 
1.1.4   Balance of payments .............................................................................................. 25 
1.2   Developments in Trade and Foreign Direct Investment ................................................... 28 
1.2.1   Mercha ndise trade ................................................................................................. 28 
1.2.2   Trade in services ................................................................................................... 30 
1.2.3   Foreign di rect inve stment........................................................................................ 31 
1.2.4   Outlook ............................................................................................................... . 33 
2   TRADE AND INVE STMENT RE GIME ............................................................................ 35  
2.1   Institutional and legal framework ................................................................................ 35 
2.2   Trade policy fram ework and ob jectives ........................................................................ 37 
2.2.1   Institut ional framework .......................................................................................... 37 
2.2.2   Trade policy objectives ........................................................................................... 38 
2.3   Participation in th e World Trade Organization................................................................ 39 
2.4   Regional  arrang ements.............................................................................................. 40 
2.4.1   Reciproc al agreements ........................................................................................... 40 
2.4.2   Unilateral preferences ............................................................................................ 41 
2.5   Foreign inve stment regime ........................................................................................ 42 
2.5.1   Regulatory framew ork and market  access ................................................................. 42 
2.5.2   Examination and approval procedures ....................................................................... 45 
2.5.2.1   Inward  investment .............................................................................................. 45 
2.5.2.2   Outwar d investment ............................................................................................ 47 
2.5.3   Incentives to  foreign in vestment .............................................................................. 48 
2.5.4   China (Shanghai) Pilo t Free Trade Zone  (CSPFTZ) ...................................................... 51 
2.5.5   Bilateral in vestment tr eaties .................................................................................... 54 
3   TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 55  
3.1   Measures Direct ly Affectin g Imports ............................................................................ 55 
3.1.1   Customs procedur es and requirements ..................................................................... 55 
3.1.2   Custom s valuation ................................................................................................. 58 
3.1.3   Rules of origin .......................................................................................................  58 
3.1.4   Tariffs ............................................................................................................... ... 58 WT/TPR/S/300 • China 
 
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  3.1.4.1   Applied tariffs  and tariff struct ure .......................................................................... 58 
3.1.4.2   Bound tariff ........................................................................................................ 60 
3.1.4.3   Bilateral and regional preferences .......................................................................... 60 
3.1.4.4   Tariff concessions ................................................................................................ 62 
3.1.5   Other charge s affecting imports ............................................................................... 62 
3.1.6   Import prohibitions, restrictions, an d licensing ........................................................... 64 
3.1.7   Anti-dumping, countervai ling, and safegu ard measures ............................................... 66 
3.1.7.1   Anti-dum ping measures ....................................................................................... 66 
3.1.7.2   Counterv ailing measures ...................................................................................... 71 
3.1.7.3   Safeguards ........................................................................................................ 72 
3.1.8   Standards and othe r technical requirements .............................................................. 73 
3.1.8.1   Standards and technical regulations ....................................................................... 73 
3.1.8.2   Product certification ............................................................................................. 74 
3.1.9   Sanitary and phyt osanitary requ irements .................................................................. 76 
3.2   Measures Directly Affecting Exports ............................................................................. 78 
3.2.1   Export procedur es and requirements ........................................................................ 78 
3.2.2   Export taxes, charges, an d levies ............................................................................. 79 
3.2.3   Export prohibitions, restrictions, and licensing ............................................................ 81 
3.2.4   Export suppo rt and pr omotion ................................................................................. 83 
3.2.5   Export promotion and marketing assistance ............................................................... 84 
3.2.6   Export finance, in surance, and guarantees ................................................................ 84 
3.3   Measures Affectin g Production and Trade ..................................................................... 87 
3.3.1   In centives ............................................................................................................  87 
3.3.2   Competition policy and price controls ........................................................................ 92 
3.3.2.1   Overview ........................................................................................................... 92 
3.3.2.2   Legislative and institutional framework ................................................................... 92 
3.3.2.3   Monopoly agreements and dominant mark et positions .............................................. 95 
3.3.2.4   Administrative monopolies .................................................................................... 97 
3.3.2.5   Mergers and acquisitions ...................................................................................... 97 
3.3.2.5.1   Anti-trust re views of conc entrations .................................................................... 97 
3.3.2.5.2   National security review of concentrations ............................................................ 99 
3.3.2.6   Pric e contro ls ..................................................................................................... 99 
3.3.3   State trading, state-owned enterprises, and privatization ........................................... 102  
3.3.4   Government  procurement ..................................................................................... 105  
3.3.5   Intellectual property rights .................................................................................... 109  
3.3.5.1   Overview and inst itutional deve lopments .............................................................. 109  
3.3.5.2   Industri al property ............................................................................................ 111  
3.3.5.2.1   Patents ......................................................................................................... 1 11 
3.3.5.2.2   Trademarks ................................................................................................... 114  
3.3.5.2.3   Geographical indications .................................................................................. 115  WT/TPR/S/300 • China 
 
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  3.3.5.3   Copyright an d related rights ............................................................................... 116  
3.3.5.4   Ot her IPRs ....................................................................................................... 11 7 
3.3.5.4.1   Layout-designs of integrated circuits ................................................................. 117  
3.3.5.4.2   New plant varieties ......................................................................................... 118  
3.3.5.4.3   Undisclosed info rmation and trad e secrets ......................................................... 118  
3.3.5.5   Enforcement ..................................................................................................... 118  
3.3.5.5.1   Overview ...................................................................................................... 118  
3.3.5.5.2   Administra tive enforcement ............................................................................. 120  
3.3.5.5.2.1   Patent admi nistrative enforcement ................................................................. 120  
3.3.5.5.2.2   Copyright admini strative law en forcement ....................................................... 120  
3.3.5.5.2.3   Trademark admini strative law en forcement ..................................................... 121  
3.3.5.5.3   Judici al enforcement ....................................................................................... 121  
3.3.5.5.3.1   Custom s law enforcement ............................................................................. 121  
3.3.5.5.3.2   International cooperation .............................................................................. 122  
4   TRADE POLICIES BY SECTOR ................................................................................... 123  
4.1   Agriculture ............................................................................................................ 123 
4.1.1   Features and ma rket developments ........................................................................ 123  
4.1.2   Policy objectives  and administ ration ....................................................................... 124  
4.1.2.1   Policy formulation, inst itutional and legal framework .............................................. 124  
4.1.3   Policy instruments ............................................................................................... 126  
4.1.3.1   Bord er measures............................................................................................... 126  
4.1.3.1.1   Measures affecting im ports .............................................................................. 126  
4.1.3.1.2   Measures affecting exports .............................................................................. 128  
4.1.3.2   Intern al measures ............................................................................................. 129  
4.1.3.2.1   Support measures .......................................................................................... 129  
4.1.3.2.2   Price cont rols and marketing ............................................................................ 131  
4.1.3.2.2.1   Ot her measures .......................................................................................... 132  
4.2   Services ................................................................................................................  133 
4.2.1   Telecommunica tion services .................................................................................. 133  
4.2.1.1   Market overview ............................................................................................... 133  
4.2.1.2   Regulatory regime ............................................................................................. 133  
4.2.1.2.1   Fixed inte rconnection regime ........................................................................... 133  
4.2.1.2.2   Number portability ......................................................................................... 134  
4.2.1.2.3   Spectrum management ................................................................................... 134  
4.2.1.2.4   Licensing ....................................................................................................... 134  
4.2.1.2.5   Univ ersal serv ice ............................................................................................ 134  
4.2.1.2.6   Preferential policies ........................................................................................ 134  
4.2.1.2.7   Experimental liberalization in the China (Shanghai) Pilot Free Trade Zone ............... 135  
4.2.2   Financial services ................................................................................................. 135  
4.2.2.1   Market overview ............................................................................................... 135  WT/TPR/S/300 • China 
 
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  4.2.2.2   Regulatory regime ............................................................................................. 137  
4.2.2.2.1   Recent regulatory changes in the banking sector ................................................. 137  
4.2.2.2.1.1   Prudential regulations and measures taken to tackle systemic risks ..................... 137  
4.2.2.2.1.2   Bank deposits insurance scheme .................................................................... 140  
4.2.2.2.1.3   Allocation of credit and liberalization of interest rates ........................................ 140  
4.2.2.2.1.4   Support and promotion policies ...................................................................... 141  
4.2.2.2.2   Recent regulatory ch anges in the insu rance sector .............................................. 141  
4.2.2.2.3   Recent regulatory changes in th e securities and stock exchange se ctors ................. 141  
4.2.2.2.4   Experimental liberalization in the China (Shanghai) Pilot Free Trade Zone ............... 144  
4.2.3   Architecture and construction services .................................................................... 144  
4.2.3.1   Architectural services......................................................................................... 144  
4.2.3.2   Construction ..................................................................................................... 146  
4.2.3.2.1   Regula tory regime .......................................................................................... 148  
4.2.4   Ed ucation ........................................................................................................... 1 51 
4.2.4.1   Regulatory regime ............................................................................................. 151  
4.2.4.1.1   Applied regimes ............................................................................................. 151  
4.2.4.1.2   Provisions in the GATS and FTAs ....................................................................... 154  
4.2.4.1.3   Experimental liberalization in the context of the China (Shanghai) Pilot Free 
Trade Zone ................................................................................................................... 155 
4.2.5   Transpor t services ............................................................................................... 155  
4.2.5.1   Mariti me transp ort ............................................................................................ 155  
4.2.5.2   Air transport ..................................................................................................... 156  
4.2.5.3   Rail transport ................................................................................................... 15 8 
4.2.6   Movements of  natural pe rsons ............................................................................... 158  
REFERENC ES ................................................................................................................ 162  
5   APPENDIX TABLES .................................................................................................. 163  
 
CHARTS 
 Chart 1.1 Product composition of merchandise trad e, 2011 an d 2012 ...................................... 29
 
Chart 1.2 Direction of merchandise trade, 2011 and 2013 ...................................................... 30 
Chart 3.1 Distribution of MFN applied tariff rates, 2009, 2011 and 2013 ................................... 60 
Chart 3.2 Import licensing  by HS sect ion, 2013 .................................................................... 65 
Chart 3.3 Export licensing by  HS section,  2010 and 2013 ...................................................... 83 
Chart 3.4 Eximbank operations , 2008-12  ............................................................................ 86 
 
TABLES 
 
Table 1.1 Selected macroeco nomic indicato rs, 2009- 13 ......................................................... 14 
Table 1.2 GDP by sector, 2009-1 3 ...................................................................................... 16 
Table 1.3 Balance of payments, 2009-13 ............................................................................. 25 WT/TPR/S/300 • China 
 
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  Table 1.4 Composition of tr ade in servic es, 2009- 13 ............................................................. 31 
Table 1.5 Inward foreign direct investment by sector, 2011-13 ............................................... 32 
Table 1.6 Inward foreign direct investment by origin, 2011-13  ............................................... 32 
Table 1.7 Outward foreign direct inve stment to main countries, 2012 ...................................... 33 
Table 2.1 Overview of the new FTAs, 1 January 2012 - 31 December 2013 .............................. 41 
Table 2.2 Summary of the major changes in the Investment Catalogue,  2011 .......................... 43 
Table 2.3 Verification and approval  process for outw ard invest ments ....................................... 48 
Table 2.4 Incentives in the form of preferential tax treatment under the Enterprise Income 
Tax Law ....................................................................................................................... .. 49 
Table 3.1 China's tariff stru cture, 2009, 2011 and 2 013 ........................................................ 59 
Table 3.2 Summary analysis of the Chinese preferenti al tariff,  2013 ........................................ 61 
Table 3.3 Excise (or co nsumption) tax, 2013 ....................................................................... 63 
Table 3.4 Anti-dumping measures by product and by country (in force as at 
31 December  2013)  ......................................................................................................... 70 
Table 3.5 Countervailing investigations  and measures, 31 December 2013 ............................... 72 
Table 3.6 China's standards,  2010- 13 ................................................................................. 74 
Table 3.7 Laws and regulations re lated to China' s SPS regime ................................................ 76 
Table 3.8 Institutions in charge of the SPS system ................................................................ 77 
Table 3.9 Exports duty type s by HS Chapter, 2013 ............................................................... 80 
Table 3.10 Products subject to ex port quotas and licensin g, 2013 ........................................... 82 
Table 3.11 Selected Catalogues ......................................................................................... 89 
Table 3.12 Various su pport meas ures ................................................................................. 91 
Table 3.13 Competition policy legislation and competent enforcement authorities in China .......... 94 
Table 3.14 NDRC Government or government-guided prices, 2013 ........................................ 100  
Table 3.15 Price announcem ents by ND RC, 2013  ................................................................ 101  
Table 3.16 Imports under state tradin g, 2011- 13 ............................................................... 102  
Table 3.17 Export products subject to  state-trading arra ngements, 2011-13 .......................... 104  
Table 3.18 Government procurement by procur ement of goods, construction projects, and 
services, 2009-12 .......................................................................................................... 10 6 
Table 3.19 Government procurement by procurement me thod, 2010- 12 ................................ 108  
Table 3.20 China's membership of international intellectual property rights conventions, 
2013  ......................................................................................................................... . 111 
Table 3.21 Intellectual property rights  applications and grants, 2011-12 ................................ 113  
Table 3.22 Intellectual proper ty enforcemen t, 2010-13  ....................................................... 119  
Table 4.1 Principal indicators for agricu lture, forestry an d fishing,  2008-13 ............................ 123  
Table 4.2 Institutions in charge of  agricultural po licies, 2013- 14 ........................................... 125  
Table 4.3 Tariff rate quotas and their utiliza tion, 2011- 12 .................................................... 127  
Table 4.4 Agricultural products subject to export quotas and licensing in 2013 ........................ 128  
Table 4.5 Support to agri culture and fo restry ..................................................................... 129  
Table 4.6 Number of legal entities and assets held by various types of banks operating in 
China, 2012 .................................................................................................................. 136 
Table 4.7 Non-performi ng loans, 2007-11 ......................................................................... 138  WT/TPR/S/300 • China 
 
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  Table 4.8 Chinese construction companies within the top 300 international contractors, 
2012 and 20 13 .............................................................................................................. 14 6 
Table 4.9 Roles of the various authorities in  the approval of Sino-foreign cooperative 
education institutions  and programmes ............................................................................. 154  
Table 4.10 Liberalization of air transport services under China's bilateral air service 
agreements, 2011 .......................................................................................................... 157  
Table 4.11 Comparative table of the two regimes applicable to foreign persons ....................... 160  
 
BOXES 
 Box 3.1 Goods exempted from import duties ....................................................................... 62
 
Box 3.2 Exemptions from the use of the CCC Certification ...................................................... 76 
Box 3.3 Goods exempted from export duties ........................................................................ 80 
Box 3.4 Main regulations dealing with competition policy issues .............................................. 93 
Box 4.1 Agricultural legislation ......................................................................................... 126  
Box 4.2 Telecom services sector main economic indicators ................................................... 133  
Box 4.3 Financial services: statistical overview ................................................................... 135  
Box 4.4 Insurance, pension funds and securities: statisti cal overview .................................... 137  
Box 4.5 Main economic indicators and regulatory framework of architectural services in 
China  ........................................................................................................................ .. 144 
Box 4.6 Main economic indicators of the construction se ctor in China .................................... 147  
Box 4.7 GATS commitments and applied market  access and national treatment regime ........... 148  
Box 4.8 Free Trade Agreem ents commitm ents ................................................................... 149  
Box 4.9 Licensing, registration an d qualification requirements .............................................. 149  
Box 4.10 Experimental liberalization in the context of the China (Shanghai) Pilot Free 
Trade Zone ................................................................................................................... 150 
Box 4.11 Education services sector main statistical indicators ............................................... 151  
 
APPENDIX TABLES 
 Table A1.1 China's merchandise export s by group of pr oducts, 2009- 13 ................................ 163
 
Table A1.2 China's merchandise import s by group of pr oducts, 2009- 13 ................................ 164  
Table A1.3 China's merchandise exports by destination, 2009-13 .......................................... 165  
Table A1.4 China's merchandise imports by orig in, 2009-1 3 ................................................. 166  
 
 Table A2. 1 Principal notifications under WTO Agreements (as at 30 April 2014) ...................... 167
 
Table A2. 2 WTO dispute settlement cases,  1 January 2012 - 31 December 2013 .................... 170  
Table A2. 3 Special Administrative Measures (Negative List) on Foreign Investment Access 
to the China (Shanghai) Pilo t Free Trade Zo ne (2013 ) ......................................................... 172 
 
 
Table A3. 1 Areas under specia l customs superv ision, 2013.................................................. 180 
Table A3. 2 China's MFN app lied tariff su mmary, 2013 ........................................................ 182  
Table A3. 3 Tax preferences at the central level ................................................................. 184  WT/TPR/S/300 • China 
 
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  Table A3. 4 Support programme s notified to  the WTO ......................................................... 186  
Table A3. 5 Selected foreign investment in centives ............................................................. 189  
Table A3. 6 Support to fisheries ....................................................................................... 191  
 
 
Table A4. 1 Type of insurance .......................................................................................... 199  
 WT/TPR/S/300 • China 
 
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  SUMMARY 
1. During the period under review (2012-14), China's economy has experienced stable growth, 
with real GDP expanding by 7.7% annually, in  both 2012 and 2013, and forecast at 7.5% for 
2014. The driving force behind growth was strong domestic demand, mainly private consumption, 
triggered by a policy of fiscal expansion, by rising  incomes, and by credit availability. The Chinese 
Government continues to promote consumption expansion through specific measures, including a structural tax reduction policy. China's strong domestic demand, including for imports, has 
continued to contribute to global economic growth. Consumer price inflation, which had reached 
5.4% in 2011, slowed down in 2012 and 2013, due to lower commodity prices, wage increase moderation and more contained domestic food and energy prices hikes. 
2. China's traditional external current account surplus reflects the excess of national savings 
over investment. The faster growth of consumption has reduced China's savings-investment gap 
somewhat during the past few years, and this has translated into a lower current account surplus (2% of GDP in 2013, down from 4% in 2010). However, the levels of both savings and investment 
continue to be very high, representing some 50% and 47% of GDP, respectively.  
3. During the period under review, China continued to implement an active fiscal policy, with 
expenditure increasing faster than revenue. The fiscal deficit reached 1.7% of GDP in 2012 and an 
estimated 1.9% of GDP in 2013. Although the level of Central Government debt remains moderate 
at 14.9% of GDP in 2012, total government debt is considerably higher, reaching 39.4% of GDP by the end of 2012. China continues to promote priv ate participation in the economy and the number 
of private enterprises and individual industrial and commercial households has been increasing. 
However, state participation in the economy remains relatively high, as the public sector controls 
some 40% of fixed-asset investment and accounts for some two-thirds of total exports. 
4. During most of the period reviewed, China's monetary policy has consisted mostly of fine–
tuning measures applied to either pre-empt inflat ionary pressure from building up or to keep 
economic momentum, as required. In 2013, a number of policy changes were introduced, including further steps towards interest rate liberalization, with financial institutions now allowed to 
freely determine their lending rates.  
5. The People's Bank of China (PBC) continues to maintain a "managed floating" exchange rate 
regime, taking a basket of currencies as reference.  During the period under review, the fluctuation 
band range of the RMB/US$ exchange rate in the interbank spot foreign exchange market was 
enlarged twice, from 0.5% to 1% in 2012, and from 1% to 2% in March 2014. A more flexible 
exchange rate, reflecting more closely the evol ution of the economy's fundamentals, may play a 
role in promoting import consumption growth. In fact, since the launching of the exchange rate 
reform in 2005 to end-2013, the RMB has experience d a substantial appreciation, both in nominal 
and in real terms. Enhanced exchange rate flexibility has been accompanied by measures to facilitate foreign exchange transactions. Current account cross-border RMB business procedures 
have been simplified, and a policy of gradually making the RMB convertible for certain capital 
account transactions has been put forth. Also, the restrictions placed on the opening of foreign exchange accounts have been removed.  
6. China has become the world's largest trader (e xcluding intra-EU trade). During the period 
under review, both exports and imports of goods expanded rapidly, with exports totalling 
US$2.21 trillion and imports amounting to US$1.95 tr illion in 2013. The share of both merchandise 
exports and imports on GDP has, however, declined to 24% and 21.3%, respectively, in 2013 
(down from 26.7% and 23.7% in 2010). In 2013, manufactured products remained the dominant 
component of China's exports, accounting for 94% of the total. Among manufactured products, office machines and telecommunication equipment and textiles and clothing continued to be 
China's main exports. Intra-industry trade is of growing importance to China, as manufactures 
accounted for 58% of China's imports in 2013. China's main manufacturing imports include office machines and telecommunications equipment, and chemicals. Fuels and other mining products accounted for almost 30% of China's imports in 2013, while imports of agricultural products 
accounted for some 8% of the total.  
7. In 2013, the main destinations for China's merchandise exports remained the EU; the United 
States; Hong Kong, China; Japan and the Republic of Korea, as well as ASEAN countries. The main WT/TPR/S/300 • China 
 
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  sources of its imports were the EU; the Republic of Korea; Japan; Chinese Taipei; the United 
States and Australia, as well as ASEAN countries. In 2013, services represented 8.7% of China's total exports and 14.4% of its imports. 
8. China remains a large recipient of foreign direct investment (FDI). FDI inflows reached 
US$117.6 billion in 2013. The main sectors attracting FDI are manufacturing, real estate, and 
wholesale and retail trade. The sources of FDI in flows continue to be highly concentrated: Hong 
Kong, China remains, by far, the main source of FDI to China, accounting for 62.4% of total FDI in 
2013. It is followed by Singapore, Japan, the EU, th e British Virgin Islands, the Republic of Korea, 
the United States, and Chinese Taipei. In 2012, outward FDI totalled US$70.1 billion, with the 
main destination being Hong Kong, China, with two-thirds of the total. 
9. The Ministry of Commerce (MOFCOM) continues to have main responsibility for policy 
coordination and implementation of all trade-rela ted issues within the overall national economic 
and social development policy devised by the National Development and Reform Commission (NDRC). Other Ministries involved in trade policy formulation and implementation, include: 
Agriculture; Environmental Protection; Finance; Industry and Information Technology; 
Land and Resources; and Transportation. During  the period under review, a National Leading 
Group for Comprehensive Deepening Reform was established, tasked with setting a roadmap to 
deepen economic reform including by allowing the market to play a more decisive role in allocating 
resources, reforming State-owned enterprises, and encouraging private ownership. With respect to 
trade and investment policy reform, measures envisaged include: the reform of the investment regime to make it more open and predictable; the acceleration of the implementation of free-trade 
agreements and of the development of the China (Shanghai) Pilot Free Trade Zone (CSPFTZ); and 
the opening-up of border areas. 
10. China became a WTO Member on 11 December 2001. China is an observer to the Plurilateral 
Agreement on Government Procurement (GPA) and is in the process of negotiating its accession 
thereto. China is an observer to the Pluril ateral Agreement on Trade in Civil Aircraft, 
and a participant in the Information Technology Ag reement (ITA). China's notifications to the WTO 
cover a wide range of agreements; however update d notifications appear to be necessary in the 
area of subsidies. Between 2012 and 2013, China was involved in 4 dispute settlement cases as a complainant, 8 cases as a respondent, and 15 cases as a third party. 
11. China has concluded 12 FTAs with over 20 States  and regions. China has FTAs in force with 
Chile, Costa Rica, New Zealand, Pakistan, Peru and Singapore. Since its last Trade Policy Review, 
China has signed free trade agreements with Swit zerland and Iceland, but they are yet to enter 
into force. It is currently negotiating FTAs with the Gulf Cooperation Council (GCC) countries, 
Australia; Norway; the Republic of Korea; and Japan. Supplementary agreements were added to 
the initial Closer Economic Partnership Arrangements (CEPA) with Hong Kong, China and Macao, China. Unilateral preferences are granted by Ch ina to LDCs. These preferential margins have 
improved substantially since the previous Review. 
12. China's trade and investment policy is managed and fine-tuned through a number of legal 
instruments, including Central Government Five-Year Plans, sectorial and provincial Five-Year Plans and different Catalogues that guide in the im plementation of the overall policies and list the 
industries that can receive preferential trea tment and the sectors in which investment is 
encouraged, just permitted or prohibited. It is not always clear how the different Catalogues should be read, as they sometimes overlap and even conflict, reflecting the different agendas at 
the different levels. The different layers of regulation add an additional level of difficulty when 
trying to unravel specific policy measures in China. 
13. China encourages direct inward FDI as well as  joint ventures between Chinese and foreign 
companies, particularly with regard to R&D activities. FDI is directed towards the areas in which 
China has a strategic interest. FDI has been encour aged in areas such as high-end manufacturing, 
high-tech industries, service industries, new ener gy and energy-saving environmental protection 
industries. China actively guides foreign investment in the central and western regions, where 
projects may benefit from less restrictive policies. Foreign investment projects are classified in four 
categories: encouraged, permitted, restricted, and prohibited.
 Projects in the encouraged category 
are eligible for preferential treatment as specified in the relevant laws and regulations, while 
projects in the restricted category must under go a more thorough examination and approval 
process. WT/TPR/S/300 • China 
 
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  14. In its quest to attract FDI, China took measures aimed at simplifying rules and easing 
restrictions on the use of capital for direct investments. For example, foreign invested enterprises (FIEs) are now allowed to extend loans to offshore shareholders, and to own some shares in State-controlled enterprises in certain sectors. There are no restrictions on lending by domestic banks to 
FIEs. In December 2013 China introduced changes to the examination and approval procedures for 
foreign-invested fixed asset investment projects to facilitate establishment. There are now two categories of investment projects depending on th eir required modality of registration: (a) projects 
subject to verification (examination of the pr oject); and (b) projects subject to filing. The 
Catalogue of Investment Projects Subject to Government Verification  lists the fixed-asset 
investment projects subject to verification; for projects not listed in the Catalogue, only filing is required.  
15. In August 2013, the State Council officially  approved the establishment of the China 
(Shanghai) Pilot Free Trade Zone (CSPFTZ), a pilot pr oject to test the further liberalization of trade 
in services and capital account transactions. The CSPFTZ is also meant to facilitate trade by 
simplifying customs procedure and allowing goods to  be cleared at the port, simplify investment 
procedures, and to grant on a trial basis, pre-establishment MFN treatment for FIEs. A Negative-List approach is used for investment projects; those included in the List require verification.  
Regarding the trial measures to liberalize services introduced, in telecommunications, ownership 
conditions have been relaxed at varying degrees for eight value added services, while in financial 
services, foreign investors registered in the Zone have been allowed to participate in domestic futures trading, to make investments in foreign and domestic securities and futures markets, and 
to issue RMB-denominated bonds in domestic markets. The provision of insurance and insurance 
intermediation services has also been liberalized within the Zone. 
16. In order to increase its competitiveness, China has also adopted measures to gradually 
liberalize the provision of services outside the CSPFTZ. For instance, in telecommunications China 
has adopted measures to extend the geographical sco pe of universal services. In financial services, 
measures were adopted to open up to foreign providers the market for third party compulsory 
automobile insurance. In air transport the only major development is the long-awaited regulation 
on computer reservation services which does not entail any new liberalization but clarifies the legal responsibilities of the various actors involved. China also adopted prudential measures regarding financial services, to tackle systemic risks such as non-performing loans and real estate assets 
bubbles, and reinforced prudential regulations notably regarding compliance with the Basel 
Committee recommendations and anti-money laundering.  
17. In the area of trade in goods, China has continued its efforts to facilitate trade, which date 
back to 2006, by launching a series of reforms,  including the introduction of paperless customs 
clearance procedures. However, despite these efforts, customs procedures across the country still require harmonization. In addition, none of the trade facilitation measures implemented so far 
apply to goods subject to licensing or other restrictions. 
18. The tariff regime has not changed substantially since the last review. China's applied MFN 
tariff in 2013 consisted mainly of ad valorem rates (99.5% of the total number of lines). The non-
ad valorem  rates comprise specific and alternate rates, and formula duties. China's average 
applied MFN rate in 2013 was 9.4%, almost unchanged since 2011 and 2009 when the average 
stood at 9.5%. The applied tariff continues to be higher for agricultural products (WTO definition), at 14.8%, showing a slight decline from the aver ages for 2009 and 2011. The average tariff on 
non-agricultural products has remained unchanged since 2009, at 8.6%. 
19. Import licensing, restrictions and prohibitions are maintained on grounds of state security; 
public morality; human, animal and plant health ; environmental protection; balance of payment 
reasons; and to comply with international commitments. China uses both automatic and non-
automatic licensing. Goods subject to any of these restrictions are listed in Catalogues issued by the relevant agencies. However, these lists can be adjusted as necessary, and imports of goods 
that are not included in the Catalogue can be restricted or prohibited on a temporary basis by the 
relevant authorities. 
20. China's main legislation with respect to trade remedies was not modified during the period 
under review. The legal framework to conduct anti-dumping (AD) investigations and apply 
measures is provided by the Foreign Trade Law, as amended, by the relevant regulations, and by a 
number of published Rules, some of them provisio nal. During the period under review, the number WT/TPR/S/300 • China 
 
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  of AD duty orders in place declined slightly, from 117 reported for December 2010 to 113 as at 31 
December 2013. Chemical products account for 62.8% of these orders, while 22.1% involve resins, plastics, and rubbers. Imports from 16 countries or territories were affected. The number of final AD orders issued fell from 15 in 2010 to 6 in 2011, 5 in 2012 and 8 in 2013. However, the 
average length of the application of measures increased to slightly over six years, as all sunset 
reviews conducted during the period led to the duties remaining in force. Initiations of AD investigations increased from 5 in 2011 to 9 in 2012 and 11 in 2013. Of the 22 investigations 
initiated between 2011 and mid-2013, around 60% resulted in provisional measures.  
21. China initiated three countervailing (CV) inve stigations in 2012, involving saloon and cross-
country cars (new shipper review), originating in the United States, and solar-grade polysilicon, originating in the EU and the United States. No investigations were initiated in 2011 or in 2013. As 
at 31 December 2013, there were three CV measures in place affecting imports from the EU and 
the United States. China has not initiated any safeguard investigations pursuant to the WTO Agreement on Safeguards since its previous Review. 
22. The procedures to set standards, technical regulations and SPS measures have not been 
subject to changes since the last Review. No information was available regarding measures at the provincial level and their impact on trade. 
23. Export restraints are an important feature of China's trade regime. China imposes export 
taxes on certain products, and quotas or even bans on others. The list of goods subject to "statutory" and interim export taxes is issued every year. Exports that are subject to interim taxes may also be subject to special export duties, which are applied seasonally and may be 
substantially higher than interim duty rates. In 2013 the special export duty rate was 75%, while 
interim duty rates varied from 5% to 35%. Export taxes were applied to some 4.2% of all tariff 
lines at the HS 8-digit level in 2013; as China is the leading world exporter of certain products 
subject to export taxes, their application may have an impact on the world price of these products. 
24. As in the case of imports, MOFCOM in collaboration with other relevant departments, issues 
a catalogue of goods restricted or forbidden for export. Export licences may be required for goods 
subject to export restrictions. These measures are in place mainly to protect the environment and 
to preserve natural resources. However, it wo uld appear that, in practice, these and other 
measures affecting exports have been used as policy instruments to encourage or discourage exports as necessary to meet industrial development goals. 
25. The extent to which China supports exports and the different sectors of the economy is not 
clear; specific information regarding this was not provided to the Secretariat in the context of this Review. In addition, China's most recent notification (2011) to the WTO SCM Committee covered 
the period of 2005-2008 and the latest (2014) notifi cation to the Agricultural Committee, in which 
China states that it did not maintain export subsidies, covered the year 2012. 
26. China maintains a large number of support programmes at the sectorial, regional and 
enterprise level to attain different economic and social goals. The different support programmes 
range from those designed to attain major policy goals (i.e. economic growth) to those aimed at boosting specific industries, but they are intertwined. The application of these programmes is not always transparent. A full identification of these programmes was not possible for the Secretariat 
in the context of the current Review, as specific support measures are often the result of internal 
administrative measures that are not always easy to identify and generally only available in Chinese. In addition, the budget is not a public document hence it is not possible to identify 
outlays. Support is also provided through different financial mechanisms. 
27. China also provides industry-specific subsidies for inputs, land and technology to firms that 
the central and provincial governments perceive as strategically important or to revitalize them as 
the NDRC calls for in its National Old Industrial Base Adjustment and Renovation Plan (2013 -
2022). Under this plan, State-Owned Enterprises (SOEs) and favoured companies can purchase inputs below cost and directly from each other, affecting competitiveness.  
28. Credit policy continues to be of major importance in China. Efforts continue to be made to 
enhance the coordination between credit policy an d industrial policies, by speeding up rural 
financial products and service innovation, improving the provision of financial services for small- WT/TPR/S/300 • China 
 
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  and medium- sized enterprises, and by adopting measures to prevent and alleviate local debt-
related risks. The People's Bank of China (PBC) has guided financial institutions to intensify financial support to areas such as scientific and technological innovation, emerging industries of strategic importance, and service industries. Financial institutions were also guided to extend 
credit support for railways, shi pping, thermal power and steel, and were encouraged to use credit 
products flexibly to support profitable export-oriented enterprises. Credit policy was also made to play a guiding role in promoting the implemen tation of regional development strategies. 
29. Agriculture continues to receive support to guarantee farmers' income, develop rural areas, 
and ensure food security and price stability of agricultural products in the domestic market. The four main subsidies in place to support the sector  are: the subsidy to promote the use of superior 
strains and seeds, the subsidy to purchase agricultural machinery and tools, the comprehensive 
subsidy for agricultural inputs, and the direct subsidy to farmers.  
30. During the period under review, China began implementing the provisions regarding 
competition policy adopted in the course of the previous Review and that aim at reinforcing 
observance and combating monopolistic practices as the economy liberalizes. Measures adopted 
include provisions on the implementation of revi ews of concentrations of undertakings (anti-trust 
reviews), and reviews of foreign companies' mergers and acquisitions of domestic companies 
relating to "national security" (national security reviews), with a view to increasing transparency. 
Provisions were also adopted with respect to measures related to price abuse of dominant positions, price-related administrative monopoly, and price fixing. China's competition law covers all types of enterprises; however, immunity against the provisions of the law is granted to State-
owned enterprises (SOEs) that are considered vital to the Chinese economy and to safeguard 
national security, or that have been granted legally-exclusive production and sales rights. Concentrations above certain thresholds must be notified and are subject to a prior anti-trust 
review.  
31. China applies price controls to commodities and services deemed to have a direct impact on 
the national economy and people's livelihoods. Th ey are set both at the central and provincial 
levels. Price controls may take the form of "government prices", fixed prices set by the authorities, 
or "government-guided prices", for which a range within which prices can fluctuate, is determined. The determination of government prices or govern ment-guided prices varies in accordance with 
the type of product or service, based on criteria su ch as market situation, average social costs, the 
effect on the standard of living of the population , as well as on economic, regional and seasonal 
factors. Although the methodology for setting prices is the same across provinces, prices may be set at different levels depending on the particular province. 
32. Under the Government Procurement Law, the Government is required to procure domestic 
goods, construction projects and services, subject to certain exceptions including: unavailability in 
China, lack of availability on reasonable commercial terms, procurement for use abroad, or when it 
is otherwise provided for by other laws and administrative regulations. Government procurement 
can be centralized or decentralized. The threshold for procurement under the central budget in 2013 was RMB 500,000 for goods and services, and RMB 600,000 for construction projects. Centralized procurement accounted for 87.6% of government procurement in 2012. Decentralized 
procurement of items not listed in the Centralized Procurement Catalogue, but with a value above 
a certain threshold, which is specified by governments at various levels, is carried out by the procuring agency itself. China uses five methods for the procurement of goods, services and 
works: public tendering, selective tendering, competitive negotiations, request for quotation, and 
single-source procurement.  
33. During the period under review, China has continued to implement measures aimed at 
improving its Intellectual Property Rights (IPRs) protection regulatory environment, including 
amendments to legislation and regulations, as well as departmental rules. One of the main 
changes during the period under review was the enactment of the third amendment to the 
Trademarks Law in August 2013, effective 1 May 2014. China also promulgated the Administrative 
Measures on Prioritized Examination of Invention Patent Applications in 2012. Despite efforts 
undertaken by the authorities to combat infringement, enforcement of IPRs continues to be a major challenge in China. 
 WT/TPR/S/300 • China 
 
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  1  ECONOMIC ENVIRONMENT 
1.1  Recent Economic Developments 1.1.1  Real economy 1.1.  During the period under review (2012-2014), China's economy experienced stable growth 
with real GDP expanding by 7.7% annually, bo th in 2012 and in 2013, exceeding expectations. 
This growth rate was, however, lower than those registered in 2010 and 2011 (10.4% and 9.3%, respectively). The driving force behind growth wa s strong domestic demand, triggered by a policy 
of fiscal expansion, by rising incomes, and credit availability (Table 1.1). Consumer price inflation, 
which had reached 5.4% in 2011, proceeded at a much more contained pace in both 2012 and 2013, as world prices of primary commodities declined; additionally there was moderation in wage increases and domestic food and energy price hikes. At the People's National Congress in 
March 2014, China lowered its prospects for annual growth to 7.5% for 2014. China's nominal GDP 
per capita (in U.S. dollar terms) increased from around US$6,093 in 2012 to US$6,767 in 2013.  
Table 1.1 Selected macroeconomic indicators, 2009-13 
  2009  2010  2011 2012 2013a 
Nominal GDP (RMB billion) 34,090.3 40,151.3 47,310.4 51,947.0 56,884.5 
Nominal GDP (US$ billion) 4,990.5 5,931.2 7,325.0 8,229.2 9,185.0 
Real GDP (RMB billion, 2010 prices) 36,353.4 40,151.3 43,885.3 47,243.6 50,867.8 
Real GDP (US$ billion, 2010 prices) 5,321.5 5,930.5 6,794.4 7,484.3 8,213.8 
GDP per capita (RMB) 25,607.5 30,015.0 35,197.8 38,459.5 41,907.6 
GDP per capita (US$) 3,748.7 4,433.9 5,449.6 6,092.6 6,766.7 
National accounts (percentage change)  
Real GDP 9.2 10.4 9.3 7.7 7.7 
 Consumptionb 4.6 4.5 5.3 4.2 .. 
 Investmentb 8.1 5.5 4.4 3.6 .. 
 Net exportsb -3.5 0.4 -0.4 -0.1 .. 
Unemployment rate (%) 4.3 4.1 4.1 4.1 4.1 
Prices and interest rates  
Inflation (CPI, percentage change) -0.7 3.3 5.4 2.6 2.6 
Lending rate (%, period average) 5.31 5.81 6.56 6.00 6.00 
Deposit rate (%, period average) 2.25 2.75 3.50 3.00 3.00 
Exchange rate  
RMB per US$ (period average) 6.831 6.770 6.459 6.312 6.193 
Real effective exchange rate index (percentage 
change)d 3.4 -0.4 2.7 5.7 6.1 
Nominal effective exchange rate index  
(percentage change) 5.0 -1.9 0.1 5.1 5.1 
Fiscal policye (% of GDP)      
Government balance -2.3 -1.7 -1.1 -1.7 -1.9 
Total revenue 20.1 20.7 22.0 22.6 22.7 
Tax revenue 17.5 18.2 19.0 19.4 19.4 
Total expenditure 22.4 22.4 23.1 24.2 24.6 
Central government total debt 17.7 16.8 15.2 14.9  ..  
 Domestic debt 17.5 16.7 15.1 14.8  ..  
Saving and investment  
GDP by expenditure approach (RMB billio n) 34,877.5 40,281.7 47,261.9 52,923.8  ..  
 Final consumption expenditure (RMB billion) 16,927.5 19,411.5 23,211.2 26,183.3  ..  
 Gross capital formation RMB billion) 16,446.3 19,360.4 22,834.4 25,277.3  ..  
 Net export of goods and services (RMB billion) 1,503.7 1,509.8 1,216.3 1,463.2  ..  
 Savings (RMB billion) 17,950. 0 20,870.2 24,050.7 26,740.5  ..  
 Savings to expenditure approach GDP (%) 51.5 51.8 50.9 50.5   ..  
 Investment to expenditure approach GDP (%) 47.2 48.1 48.3 47.8  ..  
 Savings-investment gap (% of GDP) 4.3 3.7 2.6 2.8  ..  
External sector (% of GDP, unless otherwise indicated)  
Current account balance 4.9 4.0 1.9 2.6 2.0 
Net merchandise trade 5.0 4.3 3.3 3.9 3.9 
 Value of exports 24.1 26.7 26.0 25.0 24.2 WT/TPR/S/300 • China 
 
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    2009  2010  2011 2012 2013a 
 Value of imports 19.1 22.4 22.7 21.1  20.2 
Services balance -0.6 -0.5 -0.8 -1.1  -1.4 
Capital account 0.1 0.1  0.1  0.1  0.0 
Financial account 3.9 4.8  3.5  -0.4  3.5 
 Direct investment 1.7 3.1  3.2  2.1  2.0 
Balance of payments 8.0  8.0  5.3  1.2  4.7 
Merchandise exportsf (percentage change) -16.1 31.4 20.4 8.0 7.9 
Merchandise importsf (percentage change) -11.2 39.1 25.1 4.5 7.1 
Service exportsf (percentage change) -12.0 25.2 14.7 2.9 7.6 
Service importsf (percentage change) -0.0 21.7 28.1 13.5 17.6 
Gross official reservesg (US$ billion; end period) 2,416.0 2,866.1 3,202.8 3,331.1 3,839.5 
 Foreign exchangeh (US$ billion; end period) 2,399.2 2,847.3 3,181.1 3,311.6 3,821.3 
Total external debt (US$ billion; end period) 428.6 548.9 695.0 737.0 .. 
Debt service ratioi 2.9 1.6 1.7 1.6  .. 
.. Not available. 
a Estimates. 
b Contribution to annual growth in percentage terms. Figures are taken from the National Bureau 
of Statistics of China, Statistical Yearbook 2013, Table 2-20. 
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 curre ncies in the index. 
e Including central and local governments.  f Growth rates in merchandise and service trade are based on US$. g Excluding gold, including SDRs an d Reserve Position in the Fund. 
h Excluding gold, SDRs and Rese rve Position in the Fund.  
i Debt service ratio refers to the ratio of the pa yment of principal and interest of foreign debts 
to the foreign exchange receipts from foreign trad e and non-trade services  of the current year. 
Source: National Bureau of Statistics of China, Statistical Yearbook (various issues),  and press release. 
Viewed at : http://www.stats.gov.cn/english/PressRelease/201402/t20140224_515103.html ; 
State Administration of Foreign Exchan ge online information. Viewed at: 
http://www.safe.gov.cn/wps/portal/english/Data/Payments  [29/01/2014]; 
IMF, International Financial Statistics database; and data provided by the Chinese authorities. 
1.2.  During the period under review, China continued to implement an active fiscal policy and a 
prudent monetary policy, attached more importance  to "stable growth" by paying more attention 
to the relationship between growth, structure of the economy and inflation, and actively promoted 
economic reform.1 
1.3.  Growth in 2012 exceeded the expected targ et of 7.5% set at the beginning of the year, 
triggered by strong domestic demand aided by the implementation of active fiscal policies. As was the case in 2011, the main contribution to growth came from consumption (4.2 percentage points), while investment contributed by 3.6 percentage points. From the beginning of 2012, 
investment growth slowed down. However, as the "stable growth" policies started to take effect, 
investment growth rebounded gradually after August.
2 For the whole of 2012, gross capital 
formation increased by 10.6% with respect to the previous year. In 2012, retail sales expanded 
at an annual rate of more than 14% during the ye ar (12% in real terms). The contribution to GDP 
growth of net exports was negative, reflecting the strong consumption pattern that led to a substantial increase in imports despite strong export growth.  
1.4.  In 2013, real GDP expanded also by 7.7% ov er the previous year. Growth continued to be led 
by strong domestic demand, although, as at March 2014, there were no detailed figures yet with respect to the contribution to growth of the different GDP components. 
1.5.  In the context of the current Review, the authorities noted that, to narrow 
the investment-consumption imbalance, the Chinese Government has continued to promote 
consumption expansion through specific programmes, such as sales of home appliances, vehicles 
                                               
1 People's Bank of China (2013), Annual Report, 2012, pp. 16-17. Viewed at: 
http://www.pbc.gov.cn/publish/english/957/index.html . 
2 People's Bank of China (2013), Annual Report, 2012, pp. 16-17. Viewed at: 
http://www.pbc.gov.cn/publish/english/957/index.html . WT/TPR/S/300 • China 
 
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  and motorcycles in the countryside. These pr ogrammes, in place since 2009, and which 
the authorities consider to be important measures to improve people's livelihood and stimulate consumption, were scheduled to be terminated by 31 January 2013, but were rolled over for another year, until 31 January 2014, when they  were concluded. Other programmes applied 
include the subsidy for purchasing agricultural machines, and programmes for the promotion of 
energy-saving products and autos using new ener gy. The authorities indicated that they also 
promoted consumption through development-oriented poverty-reduction programmes, active 
employment policies, investment in social security, and a structural tax-reduction policy, including 
lower tariffs (see below). The authorities also mentioned efforts to develop new forms of consumption such as online shopping to promote co nsumption in service sectors such as tourism, 
culture and information, and to impr ove the rural distribution system. 
1.6.  Reflecting the faster growth of consumption, China's savings-investment gap has continued 
to decline somewhat during the past few years, falling from 3.7% of GDP in 2010, to 2.6% in 2011 and 2.8% in 2012. Savings continue to represent an equivalent to more than 50% of expenditure, 
while investment exceeds 47% of GDP. The IMF considers that domestic imbalances remain large 
and that, although they are not worsening, a decisive shift towards a more consumer-based economy has yet to occur.
3 
1.7.  Consumer price inflation declined considerably during the period under review. In 2012, 
the consumer price index (CPI) increased by 2.6% year-on-year, 2.8 percentage points down compared with the previous year. In 2013, the CPI also increased by 2.6%. 
1.8.  At a sectoral level, construction has been the fastest growing sector in both 2012 and 2013, 
with growth rates exceeding 9% in both years. It was followed by services (8%) and industry 
(which includes manufacturing, mining and elec tricity) exceeding 7.5% annually (Table 1.2). 
The primary sector (agriculture, forestry and fisheries) has been growing more modestly, 
at 4 to 4.5% per year. The value added of the primary sector accounted for 10% of GDP in 2013, 
industry accounted for 37%, construction for 6.9%  and services for 46.1%. The share of the value 
added of the tertiary sector surpassed that of the secondary sector (industry and construction) for 
the first time in 2013.  
Table 1.2 GDP by sector, 2009-13 
  2009  2010  2011  2012 2013a 
GDP by industry at 1978 indices (annual percentage  change)   
Agriculture, fore stry and fishing 4.2 4.3 4.3 4.5 4.0 
Industryb 8.7 12.1 10.4 7.7 7.6 
Construction 18.6 13.5 9.7 9.3 9.5 
Services 9.6 9.8 9.4 8.1 8.3 
Transport, storage and communication 4.2 9.8 9.9 6.8 7.2 
Wholesale and retail trade 12.1 14.3 12.6 10.4 10.3 
Restaurants and hotels 5.5 10.0 6.6 8.0 5.3 
Financial intermediation 18.2 10.0 7.2 10.0 10.1 
Real estate 11.3 7.0 6.7 4.1 6.6 
Other 7.8 7.9 9.5 7.9 7.7 
Share of main sectors in GDP (%)  
Agriculture, forestry and fishing 10.3 10.1 10.0 10.1 10.0 
Industryb 39.7 40.0 39.8 38.4 37.0 
Construction 6.6 6.6 6.8 6.8 6.9 
Services 43.4 43.2 43.4 44.6 46.1 
                                               
3 The IMF has noted that, while the use of invest ment, since 2009, to support domestic activity 
and offset the impact of external sh ocks, has had positive spillovers to global demand by increasing China's 
imports, it has exacerbated the dome stic imbalance between investment and consumption. See: IMF Country 
Report No. 13/211, People's Republic of China, 2013 Article IV Consultation, July 2013. Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . WT/TPR/S/300 • China 
 
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    2009  2010  2011  2012 2013a 
Transport, storage and communication 4.9 4.8 4.7 4.7 4.8 
Wholesale and retail trade 8.5 8.9 9.2 9.5 9.8 
Restaurants and hotels 2.1 2.0 1.9 2.0 2.0 
Financial intermediation 5.2 5.2 5.3 5.5 5.9 
Real estate 5.5 5.7 5.7 5.7 5.9 
Other 17.2 16.7 16.6 17.2 17.7 
a Estimates. 
b Including mining and quarrying, manufacturi ng, production and supply of electricity. 
Source: National Bureau of Statisti cs of China, Statistical Yearbook (2013); and Press Release viewed at: 
 http://www.stats.gov.cn/english/PressRelease/201402/t20140224_515103.html . 
1.9.  At the end of 2013, the number of employed  people in China was 769.77 million, and that 
in urban areas was 382.40 million. The urban unemployment rate registered was 4.05% at year 
end, slightly lower than the previous year's ra te of 4.09%. The total number of migrant workers 
in 2013 was 268.94 million, up by 2.4% from 2012.4 
1.1.2  Fiscal policy and structural reform 1.1.2.1  Fiscal policy and related issues 
1.10.  During the period under review, fiscal policy continued to be accommodative. In particular, 
China has used infrastructure spending as a countercyclical tool in times of global economic slowdown. The fiscal deficit reached 1.7% of GDP in 2012 and an estimated 1.9% of GDP in 2013. 
In the last few years, expenditure has been  increasing faster than revenue. The level 
of Central Government debt declined to 14.9%  of GDP in 2012 from 15.2% the previous year. 
1.11.  The authorities consider that the implemen tation of active fiscal policies has achieved 
apparent results and thoroughly promoted th e sustainable development of China's economy 
and the adjustment of the economic structure. 
1.12.  Although Central Government debt is relatively low and has been declining slightly, 
overall government debt is considerably higher, mainly on account of the debt of local 
governments. In the context of this Review, the authorities have noted that China's total 
government debt accounted for 39.4% of GDP by the end of 2012. The IMF has attempted to construct an estimate of government debt including off-budget infrastructure spending, which is 
considered to be significant, particularly at the local government level, and has found that the 
augmented fiscal debt has risen to above 45% of GDP and that this augmented fiscal deficit has 
been more countercyclical than the headline government deficit.
5 The IMF concludes that China 
has less fiscal space than indicated by conventional general government data and that additional 
sources of vulnerability include possible contingent liabilities related to the financial sector, state-owned enterprises (SOEs), and actuarial shortfalls in the pension system. 
1.13.  During the period under review, the author ities launched a number of reforms on the fiscal 
front, including the exemption from the vehicle purchase tax for some vehicles
6 and the increase 
in the standard deduction amount to calculate individual income tax; they also lowered import duties on certain goods, and cancelled some administrative charges.
7 The purpose of these 
changes was to promote consumption.  
                                               
4 National Bureau of Statistics of China (2014), Statistical Communiqué of the People's Republic of China 
on 2013, National Economic and Social Development, 24 February 2014. Viewed at: http://www.stats.gov.cn/english/PressRelease/201402/t20140224_515103.html . 
5 IMF (2013), IMF Country Report No. 13/211, People's  Republic of China, 2013 Article IV Consultation, 
July 2013. Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . 
6 Between 1 January 2012 and 31 December 2015, city public transportation enterprises are exempted 
from the vehicle purchase tax when acquiring public tran sportation vehicles. This policy is applicable also 
to other public service vehicles. 
7 The annual adjustment to import custom duties for 2014 is contained in the 2014 Tariff 
Implementation Plan of the Customs Tariff Commission of the State Council Circular dated 11 December 2013 (Shuiweihui [2013] No.36). In accordance with the circular, most MFN rates remained unchanged in 2014; WT/TPR/S/300 • China 
 
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  1.14.  The reform of the deduction standards for, and the rate structure of, individual income tax 
was carried out in 2011. The standard deduction for individual income tax on wages and salaries was raised to RMB 3,500/month from RMB 2,000/month; the standard deduction for owners of individual commercial and industrial households an d investors of sole proprietary enterprises and 
partnerships was correspondingly adjusted to RMB 42,000/year (RMB 3,500/month).
8 The number 
of taxable tiers was decreased from nine to seven and the lowest tax rate was reduced to 3% from 5%. 
1.15.  The Vehicle and Vessel Tax Law was adopted in February 2011; it adjusted the scope 
and basis of taxation on vehicles and vessels  and the tax amounts, regulated preferential 
tax policies and enhanced control measures. The State Council promulgated revised Interim Regulations on the Resource Tax on 30 September 2011; the purpose was to improve the tax 
system, while promoting a more efficient explorat ion and use of resources, and protecting the 
environment. The reform entered into force on 1 November 2011; it established a new method for levying resource taxes on crude oil and natural gas based on value rather than on quantity and 
eliminated the taxation differences based on the or igin of the capital of the mining venture. As a 
result of the reform, the tax treatment of Chinese and foreign oil and gas enterprises has been standardized. The Implementation Rules Concerning  the Interim Regulations on the Resource Tax, 
promulgated on 28 October 2011, set the tax rate applicable to crude oil and natural gas at 5% 
and revised the tax rates applicable to certain resource categories. The Interim Regulations on Vessel Tonnage Dues were implemented on 1 Janua ry 2012, repealing the Provisional Procedures 
of the Customs of the People's Republic of Ch ina Governing the Levying of Vessel Tonnage Dues 
issued in September 1952. The new rules adjusted tax rates and modified rules on tax deductions 
and exemptions. The scope of taxation was broadene d to all vessels entering the domestic ports of 
the People's Republic of China from overseas ports, including all Chinese-registered vessels 
engaged in international voyages. 
1.16.  In 2011 the authorities also introduced a Pilot Reform Programme for levying housing 
property tax on personal residential premises, limited to Shanghai and Chongqing, where taxes 
are levied only on the area exceeding a stip ulated surface for each qualifying property. 
This programme is intended to serve as a foundat ion for a national housing property tax reform. 
With the aim of eliminating double taxation an d improving the taxation system, the Shanghai 
authorities launched on 1 January 2012 a pilot programme to replace the business tax with 
the VAT in the transportation sector and other services. The VAT pilot programme was expanded 
to Beijing and Jiangsu on 1 September 2012 and extended nationwide as from 1 August 2013. 
In December 2013, the State Council decided to continue to expand gradually the scope of the VAT 
pilot programme. Since 1 January 2014, the railway sector and postal services have been included 
in the VAT pilot programme across China. 
1.17.  There have been some changes to the cent ral-local government income allocation system. 
For example, it has been decided that the funds used for VAT export rebates should be paid from 
the central treasury uniformly, the local income af fected by such exemptions and offsets should 
be transferred to the local treasury from the centra l treasury in full, and the portions to be shared 
                                                                                                                                               
a 1% rate was applied on imports of urea, fertilizers,  and diammonium hydrogen phosphate. Import quotas 
at the same rates continued to be applied on 47 HS lin es corresponding to commod ities. The Circular also 
specifies the products subject to sp ecific or compound rates. The gene ral tariff rate remained unchanged, 
while preferences were granted, on: 1,888 tariff headings from Korea, the Republic of, India, Sri Lanka, Bangladesh and Laos (Asia-Pacific Trade Agreement); 7,340 headings for imports originating in Chile (China - Chile Free Trade Agreement); 6,539 tariff lines for goods from Pakistan (China - Pakistan Free Trade Agreement); 7,351 tariff headings for items originatin g in New Zealand (China - New Zealand Free Trade 
Agreement); 2,793 tariff lines for imports from Singapore (China - Singapore Free Trade Agreement); 7,117 tariff headings for imports originating in Peru (China - Peru Free Trade Agreement); 7,313 tariff headings for imports originating in Costa Rica (China - Costa Rica Free Trade Agreement); duty-free access for 
imports of 1,791 tariff headings from Hong Kong, China,  1,312 from Macao, China; and preferential access for 
imports from 40 least developed countries, including two that graduated from the United Nations list in 
February 2013 (Vanuatu and Equatorial Guinea). Note : the 2014 full tariff was not available for the current 
Review. For more information, see: http://www.gov.cn/zwgk/2013-12/16/content_2548712.htm  (in Chinese only). 
8 The Individual Income Tax Law has been revised th ree times with respect to the standard deduction 
for individual income tax on wages and salaries: the first time to increase it from RMB 800 per month 
to RMB 1,600 per month, effective 1 January 2006; the second time to increase it from RMB 1,600 per month 
to RMB 2,000 per month, effective 1 March 2008; and the third time to increase it from RMB 2,000 to RMB 3,500 per month, effective 1 September 2011. WT/TPR/S/300 • China 
 
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  by the local governments should be settled and handed over to the Central Government at the end 
of each year. However, it was also decided that during the periods of application of the above-mentioned pilot programme the income allo cation system would remain the same and the 
income from VAT in lieu of business taxes would still belong to the local governments. There were 
also changes to the system of income distribution between central and local railway transportation 
enterprises. Since 2012 the business tax, urban maintenance and construction tax, and education surcharges payable by railway transportation enterprises are allocated to the local authorities, 
while income tax payable by railway transportation enterprises and by China Railway Express Co. 
Ltd. is shared by central and local governments in a proportion of 60 to 40. It was also decided that local governments should share 40% of the business tax and enterprise income tax paid by cross-provincial railway joint ventures (including Dalian-Qinhuangdao Railway), which should be 
distributed among relevant regions based on such factors as mileage and turnovers. As mentioned 
above, since 1 January 2014, the railway transpor tation service has been subject to the VAT, in 
lieu of the business tax.  
1.18.  In 2012, the Ministry of Finance, the State Administration of Taxation and the People's Bank 
of China jointly amended the Measures for the Allocation of the Income Tax Paid by Enterprises with Headquarters and Subsidiaries (Branches) in Different Provinces and Municipalities. 
According to the authorities, the purpose is  to ensure correspondence between benefits 
and responsibilities on the part of local governments and to minimize the intervention of governments in corporate acts. 
1.1.2.2  Structural reform measures 
1.19.  As part of the process of structural reform, China continues to promote private participation 
in the economy. The authorities have noted in the context of the present Review that in the past 
three years, the number of private enterprises and individual industrial and commercial households 
has been steadily growing; the amount of their re gistered capital has been rapidly rising; and the 
average registered capital per enterprise or hous ehold has been increasing. By the end of 2011, 
9,676,800 private enterprises were registered in China, a 14.4% increase from the previous year; 
there were also 37,564,700 individual industrial and commercial households, 8.8% up from the 
previous year. The registered capital of priv ate enterprises reached RMB 25.79 trillion, or 
RMB 2,67 million per enterprise on average, 34.3% above the level of the previous year; the registered capital of individual industrial and commercial households reached RMB 1.62 trillion, or 
RMB 43,000 per household on average, 20.8% higher  than the previous year on a year-on-year 
basis. There were 1,215 private companies list ed on the Shanghai Stock Exchange at end 
April 2012; in 2011, these private listed enterprises realized a total operating income of 
RMB 2.47 trillion. 
1.20.  At the end of 2011, the domestic private sect or had invested RMB 7.6 trillion in fixed assets, 
and accounted for 58.2% of total national fixed asset investment, 7 percentage points more than 
that at the end of 2010. Total exports realized  nationwide by private enterprises reached 
RMB 635.29 billion, accounting for 33.5% of total exports. By end 2011, there were 183 million persons working in individual households and private enterprises around China, 11.5% more than at the end of 2010, among which 10 3.5 million persons were working in private 
enterprises and 79.5 million were working in individual industrial and commercial households. 
The authorities consider that private enterprise s are currently the main source of employment 
opportunities and have contributed to rising sala ries and income and improved living standards. 
1.21.  China has continued to apply policies to promote employment during the period under 
review. China's policy on employment is mainly contained in the Employment Promotion Law adopted in 2008. The authorities have noted that the Government adopts various legal, economic 
and necessary administrative measures to control unemployment from the source, prevent 
excessively rapid growth in the numbers of the unemployed, and limit unemployment duration and 
geographical concentration. In accordance wi th the Law, the people's governments above 
the county level shall uniformly coordinate industrial and employment policies and increase 
employment opportunities by encouraging the de velopment of labour-intensive industries and 
service industries, supporting small and medium-siz ed enterprises and encouraging and supporting 
and guiding the economic development of the private sector. The Law confirms China's policy of 
encouraging self-employment and the start-up of businesses through tax and administrative 
charge rebates and exemptions, and the provisio n of special employment funds to serve as a 
guarantee for small-amount loans and of interest subsidies for small-amount secured loans for less WT/TPR/S/300 • China 
 
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  profitable projects.9 The State also encourages enterprises to increase employment opportunities 
and assist the unemployed and the disabled to obtain employment by granting benefits such as preferential taxes, social subsidies and small-amou nt guaranteed loans to qualified enterprises and 
personnel.
10 The Law also calls for improving the employment assistance system; strengthening 
public employment services, including by directing the transfer of the surplus workforce in rural 
areas; strengthening occupational training; and gradually promoting flexible employment systems 
as part-time employment.  
1.22.  In line with the decisions of the CPC Central Committee and the State Council, that finance 
should serve the real economy, efforts were made to enhance the coordination between credit policy and industrial policies, by speeding up rural financial product and service innovation
11, 
improving the provision of financial services for small and medium-sized enterprises, by continuing 
to implement a differentiated housing credit policy12, and by adopting measures to prevent and 
alleviate local debt-related risks.13 To achieve the first goal, the PBC guided financial institutions to 
intensify financial support to areas such as scientific and technological innovation, emerging 
industries of strategic importance and the service industry. Financial institutions were guided to 
extend credit support to key industries and sectors, such as railways, shipping, thermal power and steel, in keeping with credit risk management pr inciples and supporting primarily enterprises that 
are profitable, comply with requirements on environmental protection and safe production and 
satisfy prudential credit conditions.
14 Financial institutions were encouraged to use credit products 
flexibly to enhance support for export-oriented ente rprises that were able to attract orders, were 
profitable and met prudential credit conditions; they were also guided to increase credit and 
financing support to sectors that promoted energy conservation and emissions reduction. To this 
end, the CBRC promulgated the Green Credit Gu ide, urging and guiding banking and financial 
institutions to enhance their support to the green economy (e.g. recycling and low carbon emission 
activities) and promote sustainable development ba sed on the principles of controllable risks and 
                                               
9 Small-amount guaranteed  loans are policy loans provided to  qualified personnel who encounter 
financial difficulties in the course of seeking employment, self-employment or establishing a partnership. They are guaranteed by designated guarantee organizations and disbursed by banks at subsidized interest 
rates through the Small-Amount Guaranteed Loans F unds set up at the various levels of government. 
10 Enterprises engaging above-average age, long-t erm unemployed or disabled persons are entitled 
to social insurance subsidies. Small-amount secu red loans are granted to small enterprises based 
on the number of unemployed or disa bled persons recruited with contract s longer than one year; the amount 
cannot exceed RMB 2 million, and the term of the loan  shall not be longer than two years. The Ministry 
of Finance grants corresponding interest rate subsidies.  As per Ministry of Finance and State Administration 
of Taxation Circular on Preferential Tax Policies for Fa cilitating the Employment of Disabled Persons (Cai Shui 
[2007] No. 92, 15 June 2007), enterprises that employ disabled persons are granted partial VAT refund and a reduced business tax. The Circular on Relevant  Tax Policies to Support and Promote Employment 
(Cai Shui [2010] No. 84), grants commercial, processing and service enterprises (with some exceptions) 
which recruit registered unemployed people for at  least a year, business tax, urban maintenance and 
construction tax, education surtax an d enterprise income tax deductions ca lculated on the basis of the number 
of people actually recruited in a three-year period. Circular of the Ministry of Finance and the State 
Administration of Taxation on the Inclusion of the Rail way Transport Industry and Postal Service Industry in 
the Pilot Collection of Value-added Tax in Lieu of Business Tax  (Cai Shui [2013] No.106) allows for VAT 
and other tax deductions with a cap of RMB 8,000 per year , for enterprises in the sector recruiting unemployed 
persons. The Circular on Policies Concerning Urban Land  Use Tax on Entities Employing the Disabled (Caishui 
[2010] No. 121), allows for urban land use tax reduction or exemption, under certain conditions.  
11 The authorities have noted that innovation is mainly aimed at exploring low-cost rural financial 
products and service modes. Actions to this end includ e promoting credit loan products, expanding the scope 
of collaterals, launching business cooperation betwee n banks and guarantee and insurance institutions, 
simplifying business procedures, boos ting the transparency of the loan  examination and approval process 
and facilitating obtaining loans. They noted that these activities are not subject to government subsidies. 
12 The authorities have noted that this implies th at easier conditions shall be applied for loans 
for self-occupied first homes than fo r the purchase of secondary homes. 
13 In this respect, the authorities have noted that, as stipulated by the China Banking Regulatory 
Commission (CBRC), all banking financial institutions must promote risk management and exercise control on loans to local governments. Banks have been instruct ed to keep constant track of the maturity of these 
loans, the sources of debt repayment, and the actual  repayment and adopt appropriate measures as soon 
as possible. Banks have also been inst ructed to control the volume of loans,  optimize the structure of existing 
loans, and reduce risk by implementing stricter standa rds for new loans. At the sa me time, they have been 
guided to attend to financing demands such as qual ifying government-subsidize d housing and national key 
projects, and decrease exposure to loans with low cash  flow coverage or a high asset-liability ratio.  
14 People's Bank of China (2013), Annual Report 2012. Viewed at: 
http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948
_html . WT/TPR/S/300 • China 
 
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  sustainable business. Together with the National Development and Reform Commission (NDRC), 
the China National Tourism Administration (CNT A) and the CBRC, in 2012 the PBC formulated and 
promulgated the Opinions on Stepping up Financial Support to Facilitate the Rapid Development of the Tourism Industry, requiring financial institutions to support the development of the tourism 
industry by improving credit management, and developing innovative credit products. 
1.23.  Under the Opinions of the State Council on Further Supporting the Healthy Development 
of Small and Micro Enterprises, the PBC must guide financial institutions to enhance support 
for the development of SMEs, especially small and micro enterprises, and to improve the financial 
services available to them. A variety of monetary policy instruments, such as differentiated reserve 
ratio requirements, are used for credit policy  implementation. In September 2012, the PBC 
and CBRC promulgated the Notice on Implementing  the Spirit of the CPC Central Committee with 
Regard to Improving Financial Services and Related Issues, requiring financial institutions 
to improve the provision of financial services to agriculture, farmers and rural areas, and small and micro enterprises, so as to effectively meet the financing needs of the real economy. 
As at end 2012, outstanding loans extended to small and micro enterprises by financial institutions 
(including discounted bills) stood at RMB 11.58 trillion, up 16.6% year-on-year.
15 
1.24.  One of the goals of the 12th Five-Year Plan is to establish a low-cost and sustainable 
payment service system in rural areas to facilitat e access to credit for farmers. To this end, 
in 2012, the PBC expanded the coverage of the payment and clearing network in rural areas 
by providing that over 70,000 outlets of financial institutions in rural areas should be connected 
to the PBC's payment and clearing systems, openin g the channels for transfer of funds in rural 
areas. The payment and clearing systems of rura l credit cooperatives, rural cooperative banks 
and rural commercial banks connected nearly 80,000 ou tlets of rural financial institutions, further 
expanding the coverage of payment services in rural areas. In 2012, the clearing centres for rural 
credit cooperatives, rural cooperative banks and rural commercial banks processed 87 million 
payment and clearing transactions for a total amount of RMB 2 trillion. The PBC also encouraged the use of bank cards in rural areas; at the en d of 2012, this service was available in 78% of 
villages, which had been equipped with the required  terminals. The authorities estimate that the 
use of bank cards could produce savings of as mu ch as RMB 725 million and 290 million hours of 
work.
16 
1.25.  The extension of bank services to farmers has also facilitated the delivery of some direct 
subsidies related to production and the livelihood of farmers. Starting in 2012, China has offered 
farmers a number of grants via bank accounts and bank card agents, such as the new rural social pension insurance, the new rural cooperative medical system and various fiscal subsidies related 
to agriculture, farmers and rural areas for a total of RMB 551.5 billion. 
1.26.  The authorities have also promoted a more regionally-balanced development strategy. 
Credit policy was made to play a guiding role in promoting the implementation of the Western 
Development, Revitalization of Old Industrial Bases in Northeast China, and Rise of Central China 
strategies. Attention was focused on financial support and services for the development of key areas, so as to promote structural adjustment and make the economies of eastern, central and western areas more complementary. Efforts were also made to promote rational distribution, 
optimization and upgrading of industries. 
1.27.  Measures to improve income distribution and expand social security coverage have been 
put in place. These have included strengthening the implementation of government-subsidized 
housing projects, setting up a new type of social-endowment insurance for rural residents 
and non-working urban residents, and increasing government subsidies for the new type of rural 
cooperative medical system and for the basic medical insurance scheme for urban residents 
to RMB 240 per person per year in 2012.  
1.28.  In 2009, China launched a new type of rural old-age insurance pilot programme. In 2011, 
the urban resident social pension insurance pilot programme was initiated. By July 2012, all country-level municipalities ha d implemented both new types of pension insurance. In general, 
                                               
15 People's Bank of China (2013), Annual Report 2012. Viewed at: 
http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948
_html . 
16 On the assumption that each transaction costs a farmer RMB 10 and four hours of work lost.  WT/TPR/S/300 • China 
 
- 22 - 
 
  the main policy aspects of these two systems, such as the basic principle, system model, 
ways of raising funds, financial subsidy, an d payment structure, are the same. By the end 
of 2013, 498 million urban and rural residents participated in the new type of insurance schemes; 138 million urban and rural residents over 60 years old were receiving a pension. The Central 
Government allocated subsidies for RMB 324.5 billion between 2009 and 2013, 
of which RMB 284.1 billion were allocated to basic pension payments. In February 2014, the Central Government decided to merge these two systems, and to establish a unified urban 
and rural resident basic old-age system. 
1.1.3  Monetary and exchange rate policy 1.1.3.1  Monetary policy 1.29.  During the global financial crisis of 2008-2009, the PBC employed moderately loose 
monetary policy to help stimulate domestic demand through cuts in interest rates and reserve 
requirements, reduction in foreign exchange sterilization operations, and "window guidance".
17 
In 2010, as economic growth recovered and domest ic price inflation began to accelerate, the PBC 
launched a pre-emptive fine-tuning of policies with a forward-looking approach, and in 2011 
switched to a more prudent monetary stance. In th e first three quarters of 2011, in order to deal 
with the increasing inflationary pressure an d the large foreign exchange inflows, the PBC 
conducted open market operations, raised deposit reserve ratios six times by 0.5 percentage 
points each time, and the benchmark interest rates for deposits and loans three times, strengthened liquidity management and guided money and credit to grow more moderately. After September 2011, as global economic recovery became more uncertain, economic growth 
witnessed a slowdown, and inflationary pressures declined, the PBC took pre-emptive fine-tuning 
measures such as suspending the issuing of thr ee-year central bank notes, injecting liquidity 
through reverse repo and central bank notes purc hases, reducing the statutory deposit reserve 
ratio by 0.5 percentage points, making the differential reserve dynamic adjustment mechanism 
play a countercyclical role, and increasing credit.  
1.30.  In the first months of 2012, as a result  of a slowdown in domestic economic growth 
and a decline in price increases, the PBC fined-tune d its policy stance accordingly. To this end, 
it: conducted two-way open market operations; lowered the deposit reserve ratio twice by 0.5 percentage points each time; lowered the benchmark interest rates on deposits and loans twice (the one-year benchmark interest rate for deposits was reduced by 0.5 percentage points 
in total and the one-year benchmark interest rate for loans was reduced by 0.56 percentage points 
in total); enlarged the fluctuation range of interest rates on deposits and loans (the upper limit of the fluctuation range of deposit interest rates of financial institutions was adjusted to 1.1 times 
the benchmark interest rate, and the lower limit of the fluctuation range of loan rates was adjusted 
to 0.7 times the benchmark interest rate); and made use of the dynamic adjustment mechanism of differing reserves to promote money and cred it growth. In the second half of 2012, the PBC 
conducted reverse repos successively so as to maintain a "reasonable" liquidity level and stable 
market interest rates.  
1.31.  During 2013, a number of monetary policy changes were introduced, including further steps 
on interest rate liberalization, which now allow financial institutions to freely determine their 
lending rates, and the establishment of Short-Term Liquidity Operations (SLO) and a Standing 
Lending Facility (SLF); some of these changes may have an impact on trade due to their effect on exchange rate markets and on the availability , and cost of credit. The main ones are: 
  in January 2013, the PBC announced the launch of SLO as a supplement to regular open 
market operations; 
  also in January, the PBC launched the SLF as an instrument to provide liquidity support 
to financial institutions; 
                                               
17 Through its "window guidance" policy, the PBC guides financial institutions to enhance financial 
support to key sectors such as agriculture, rural areas, farmers and small and micro businesses. The authorities have noted that this policy aims at strengthening its communications with financial institutions, 
by providing them with information regarding macro- economic and industry de velopments, and reminding 
them of the financial risks in key sectors rather than in tervening in the specific credit allocation of financial 
institutions. In recent years, the PBC has strengthened its "window guidance".  WT/TPR/S/300 • China 
 
- 23 - 
 
    on 22 January 2013, the PBC issued the Noti ce on Strengthening Liquidity Management 
of Local Financial Institutions With Legal Person Status and Enabling Central Bank Short-term Lending to Play a Greater Role in Supplying Liquidity  (PBC Document [2013] 
No. 22). PBC branch offices are to promote the recourse of local financial institutions 
to central bank short-term lending to finance short-term liquidity shortages; 
  clearing agreements with financial institutions in Chinese Taipei and Singapore were 
reached to settle cross-border RMB transactions; 
  in February,  the PBC issued the Opinions on Strengthening Credit Operations for 2013 
(PBC General Administration Department Document [2013] No. 26), urging PBC branch offices and banking financial institutions to enhance financial services to the agricultural sector, rural areas farmers, SMEs and social and employment projects; 
  on 1 March 2013, the China Securities Regulatory Commission (CSRC), the PBC, 
and the SAFE jointly issued the Trial Measures on Securities Investment by RMB Qualified Foreign Institutional Investors on the Domestic Market; 
  on 13 March 2013, the PBC issued the Notice on Issues Related to Investments 
in the Interbank Bond Market by Qualified Foreign Institutional Investors (QFIIs) (PBC Document [2013] No. 69), allowing QFIIs to apply to the PBC for access 
to the interbank bond market; 
  on 25 April 2013, the PBC issued the Notice on Issues Concerning Pilot Securities 
Investment Programme by RMB Qualified Foreign Institutional Investors on the Domestic Market (PBC Document [2013] No. 105); 
  on 5 May 2013, the SAFE issued the Notice  of the State Administration of Foreign 
Exchange on Strengthening Administration of Foreign Capital Inflows (SAFE Document [2013] No. 20) in order to strengthen the position of banking institutions in terms 
of the purchase and surrender of fore ign exchange, and payments of import 
and export firms; 
  on 28 June 2013, to implement the decision of the State Council on stepping up financial 
support for structural adjustment and upgrading and to guide credit funds to further 
support the real economy, the PBC decided to increase the quota of central bank discount funds by RMB 12 billion, to provide liquidity to financial institutions and to support institutions in increasing their credit lines to small and micro enterprises 
and to the agricultural sector, rural areas, and farmers; 
  on 9 July 2013, the PBC issued the Notice on Simplifying the Procedures for Cross-Border 
RMB Business and Improving Relevant Policies  (PBC Document [2013] No. 168), 
which simplified cross-border RMB business procedures under the current account, 
and standardized overseas RMB loan and guarantee procedures by domestic non-financial institutions; 
  on 20 July 2013, the PBC decided to remove controls over interest rates on loans offered 
by financial institutions. The lending-rate floor, which was 70% of the benchmark lending rate, was removed and financial institutions are now free to determine their lending rates based on commercial principles. Controls over the interest rates charged to discount bills 
were removed, eliminating the system of addi ng basis points to the central bank discount 
rate. The lending-rate ceiling for rural credit cooperatives was removed; 
  on 25 July 2013, commercial banks began to issue Basel-III tier-two capital bonds on the 
interbank market to satisfy the supplementary capital demands of commercial banks; 
  on 27 August 2013, the PBC issued Public Announcement No. 12 to strengthen the clearing 
requirements for Delivery Versus Payment (DVP ) on the interbank bond market, so as to 
prevent market risk and enhance efficiency; 
  on 23 September 2013, the PBC issued the Notice on Issues Concerning the RMB 
Settlement Business of Investments in Domestic Financial Institutions by Overseas Investors (PBC Document [2013] No. 225) to standardize the use of the RMB settlement 
business by overseas investors for their investments in the establishment, 
merger and acquisition, and holdings of equity in financial institutions in China; 
  on 24 September 2013, the Guidelines for the Self-Regulatory Pricing Mechanism 
of Market-Based Interest Rates
18 and the Rules for the Loan Prime Rate (LPR) Centralized 
Quotation and Release Mechanism, were approved; 
  on 25 October 2013, the LPR centralized quote and release mechanism formally entered 
into operation. The LPR is the preferential lending rate offered by a commercial bank 
                                               
18 The self-regulatory pricing mechanism for market interest rates among financial institutions, aims 
to apply self-regulatory management of interest ra tes that are independently determined by financial 
institutions on the money, credit, and other financial markets, under the precondition that they comply with the relevant interest-rate regulations. WT/TPR/S/300 • China 
 
- 24 - 
 
  to its prime clients, and provides a reference to financial institutions for the pricing of their 
credit products; 
  on 30 October 2013, the CSRC and the CBRC  jointly issued the Guide on Issuance 
of Corporate Bonds by Commercial Banks, which explored diversified channels for 
commercial banks to raise capital funds; 
  on 1 November 2013, the PBC issued the Notice on Issues Related to the Expansion 
of the Pilot Reform Programme of the Rural Financial Business Division of the Agricultural 
Bank of China (PBC Document [2013] No. 263), which added 538 county-level 
sub-branches of the ABC in Jiangsu, Zhejiang, Hunan, Yunnan, Jiangxi, Shanxi, and Guangdong provinces to the pilot schem e and renewed the preferential measures 
applied under it, such as the differentiated reserve ratio requirement, the supervisory 
fee reduction or exemption, and the business tax reduction or exemption; 
  on 8 December 2013, the PBC issued the Provisional Rules on the Management 
of Interbank Certificates of Deposit  (PBC Public Announcement [2013] No. 20) to regulate 
the business of interbank certificates of  deposit, broaden the financing channel 
for deposit-taking banking and financial institutions, and promote the development 
of the money market; 
  on 27 December 2013, financial bonds were allowed to be issued across different markets;  
  on 1 March 2014, the PBC removed the upper interest rate limit for small-amount foreign 
currency deposits within the China (Shanghai) Free Trade Pilot Zone. 
 
1.32.  Money supply M2 grew by 13.6% in 2011, 6. 1 percentage points less than in the previous 
year. The balance of loans in RMB grew by 15.8% and stood at RMB 7.47 trillion, down RMB 390.1 billion from the previous year-on-year. Total social financing stood 
at RMB 12.83 trillion, down RMB 1.11 trillion fr om 2010. At the end of 2012, the growth of M2 
reached 13.8% year-on-year and RMB loans expanded by 15% to RMB 8.2 trillion, while total social financing stood at RMB 15.76 trillion, slightly over 30% of GDP. At end-2013, broad 
money (M2) stood at RMB 110.65 trillion (194.5% of GDP), increasing by 13.6% year-on-year. 
Outstanding RMB and foreign currency loans totalled RMB 76.63 trillion (135% of GDP), up 13.9% year-on-year. Outstanding RMB loans rose by 14.1% year-on-year to RMB 71.90 trillion (126.4% of GDP). Outstanding foreign currency loans registered US$776.9 billion, up 13.7% year-on-year. 
Also at end-2013, the outstanding amount of RMB and foreign currency deposits 
reached RMB 107.06 trillion, up 13.5% year-on-year, and represented a staggering 188% of GDP. RMB deposits were RMB 104.38 trillion (up 13.8%), with a strong increase of household 
deposits and deposits of non-financial enterprises.  At end-2013, the outstanding amount of foreign 
currency deposits was US$438.6 billion, up 7.9% year-on-year.
19 
1.33.  The monthly weighted average interbank lending rate for December 2013 stood at 4.16%, 
up 1.55 percentage points from the same period a year earlier and the monthly weighted average 
interest rate on bond-pledged repos was 4.28%, 1.66 percentage points above the rate in the same period a year earlier. Lending, spot trading and bond repo transactions in the interbank RMB market totalled RMB 235.29 trillion in 2012. Official foreign exchange 
reserves stood at US$3.82 trillion. The average RMB exchange rate was RMB 6.1932 
per U.S. dollar in 2013. 
1.34.  The IMF has recommended that the Chinese authorities take further steps towards a more 
commercially oriented financial system and market -based monetary policy framework. Recognizing 
that notable progress has already been made with interest rate liberalization, they encourage China to take further measures, such as increasing the upward float with respect to maximum 
deposit rates. The IMF also recommended stepping  up supervision and regulation as financial 
reform progresses and interest rates are liberalized, using interest rates as the primary instrument of monetary policy and introducing deposit insurance.
20 
1.1.3.2  Exchange rate policy 
1.35.  The PBC maintains a "managed floating" exchange rate regime, taking a basket 
of currencies as reference. In June 2010, China began a reform of the RMB exchange rate 
                                               
19 People's Bank of China (2014), Highlights of China's Monetary Policy in 2013. Viewed at: 
http://www.pbc.gov.cn/image_public/UserFiles/english/upload/File/2013 年货币政策大事记 .pdf. 
20 IMF (2013), IMF Country Report No. 13/211, People's Republic of China, 2013 Article IV Consultation, 
July 2013. Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . WT/TPR/S/300 • China 
 
- 25 - 
 
  mechanism with a view to gaining more flexibility. The authorities state that since 2011 the PBC 
has taken further steps to enhance the flexibility of the RMB exchange rate, while preventing large fluctuations and maintaining the exchange rate  around its equilibrium level. In April 2012, 
the fluctuation band range of the RMB/US$ exchange  rate in the interbank spot foreign exchange 
market was enlarged from 0.5% to 1%. In March 2014, the band was again enlarged, 
from 1% to 2%. 
1.36.  Since the launching of the exchange ra te reform in 2005 and up to end-2013, the RMB 
has experienced a substantial appreciation, both in  nominal and in real terms. The central parity 
of the RMB/US$ exchange rate was up 35.8% during this period, while the central parity of the RMB/€ exchange rate was up 19%, and th e central parity of the RMB/JPY was up 26.5%. 
According to information provided by the authorities, based on calculations by the Bank 
for International Settlements, the nominal effective RMB exchange rate was up 32.1% 
and the actual effective RMB exchange rate was up 43.2% between the launching of the exchange 
rate reform in 2005 and end-2013. 
1.37.  In the course of the present Review, the au thorities noted that the reform of the exchange 
rate formation mechanism has had a positive impact on the real economy. They consider that exchange rate fluctuations provide a driving fo rce for pushing forward industrial upgrading and 
enhancing the opening up of China. More exchange  rate flexibility has contributed to the rapid 
development of the foreign exchange market. More flexibility has also contributed to increase the 
awareness and ability of enterprises to cope with exchange rate risks as well as to correct foreign imbalances. A more flexible exchange rate, reflecting more closely the economy's fundamentals 
has promoted import consumption and the current account of the balance of payments surplus has 
been shrinking over the years, to some 2% of GDP in 2013 (see below). Total trading on the inter-
bank foreign exchange reached US$7.51 trillion in 2013, up 72% from 2010.
21 
1.38.  In a most recent public evaluation of Ch ina's exchange rate, IMF Directors considered that 
a more market-based exchange rate system would facilitate further internal and external rebalancing. They expressed their support of the authorities' policy of restraining foreign exchange 
intervention, thereby allowing market forces to play a greater role in exchange rate 
determination.
22  
1.1.4  Balance of payments 1.39.  China's traditional surplus in the curren t account of the balance of payments reflects 
the surplus of national savings over domestic investment. Economic growth became more 
domestic-demand driven during the period under review, and this has translated into a lower surplus in the current account of the balance of payments. The surplus shrank considerably 
between 2010 and 2011 mainly on account of a shar p increase in imports of services, but also 
of merchandise, and due to a deterioration of the income balances (Table 1.3). In 2012, the trade balance surplus recovered due to a strong increase in merchandise exports, which exceeded that 
of imports. This trend was reinforced in 2013, with the merchandise trade surplus reaching 
US$359.9 billion. Although this was a record surplus, its share of GDP - 3.9% - was lower than the 4.3% recorded in 2010. The ratio of the current account surplus to GDP also dropped from 4% in 2010 to 1.9% in 2011, 2.3% in 2012, and 2% in 2013. 
Table 1.3 Balance of payments, 2009-13 
(US$ million) 
  2009  2010  2011  2012 2013  
 Current account 243,257 237,810 136,097 215,392 182,807 
 Goods and services balance 220,130 223,024 181,904 231,845 235,380 
Trade balance 249,511 254,180 243,549 321,595 359,890 
Exports 1,203,798 1,581,417 1,903,821 2,056,887 2,218,977 
Imports 954,287 1,327,238 1,660,272 1,735,292 1,859,087 
Service balance -29,380 -31,156 -61,645 -89,750 -124,510 
                                               
21 Spot trading closed at US$4.07 trillion in 2013, up 33.8% from 2010; forward trading reached 
US$32.4 billion, down 0.9% from 2010; swap trading reached US$3.4 trillion, up 165% from 2010. 
22 IMF (2013), IMF Country Report No. 13/211, People's Republic of China, 2013 Article IV Consultation, 
July 2013. Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . WT/TPR/S/300 • China 
 
- 26 - 
 
    2009  2010  2011  2012 2013  
Exports 129,476 162,165 186,009 191,430 206,018 
 Transportation 23,569 34,211 35,570 38,912 37,646 
 Travel 39,675 45,814 48,464 50,028 51,664 
Imports 158,856 193,321 247,654 281,180 330,528 
 Transportation 46,574 63,257 80,445 85,862 94,324 
 Travel 43,702 54,880 72,585 101,977 128,576 
 Income -8,533 -25,899 -70,318 -19,887 -43,839 
 Credit 108,251 142,424 144,268 167,037 185,505 
 Compensation of employees 9,209 13,636 16,568 17,066 17,790 
 Investment income 99,041 128,788 127,699 149,971 167,715 
 Debit 116,783 168,324 214,585 186,924 229,344 
 Compensation of employees 2,052 1,455 1,618 1,788 1,714 
 Investment income 114,732 166,868 212,967 185,136 227,630 
 Current transfers 31,659 40,686 24,511 3,434 -8,733 
 Credit 42,645 49,521 55,570 51,167 53,162 
 General government 906 1,187 16 863 1,124 
 Other sectors 41,740 48,334 55,554 50,304 52,037 
 Debit 10,986 8,835 31,060 47,733 61,895 
 General government 2,663 2,665 3,353 3,961 4,237 
 Other sectors 8,324 6,170 27,706 43,772 57,658 
 Capital and financial account 198,470 286,865 265,470 -31,766 326,203 
 Capital account 3,939 4,630 5,446 4,272 3,052 
 Financial account 194,531 282,234 260,024 -36,038 323,151 
 Direct investment 87,167 185,750 231,652 176,250 184,972 
 China's direct investment abroad -43,890 -57,954 -48,421 -64,963 -73,244 
 Direct investment in China 131,057 243,703 280,072 241,214 258,216 
 Portfolio investment 27,087 24,038 19,639 47,779 60,547 
Assets -2,526 -7,643 6,248 -6,391 -5,353 
 Equity securities -40,647 -8,429 1,104 2,029 -2,531 
 Debt securities 38,121 787 5,144 -8,420 -2,822 
Liabilities 29,613 31,681 13,391 54,170 65,900 
 Equity securities 29,117 31,357 5,308 29,903 32,595 
 Debt securities 496 324 8,083 24,267 33,305 
 Other investment 80,276 72,446 8,733 -260,068 77,633 
Assets 18,414 -116,262 -183,604 -231,680 -136,529 
 Trade credits -34,271 -61,635 -70,958 -61,812 -60,266 
 Loans 3,095 -21,041 -45,275 -65,332 -31,947 
 Currency and deposits 2,035 -58,013 -115,531 -104,789 -2,014 
 Other assets 47,555 24,428 48,160 253 -42,302 
Liabilities 61,862 188,708 192,338 -28,388 214,162 
 Trade credits 32,082 49,515 38,027 42,326 44,937 
 Loans 7,066 79,105 105,061 -16,784 93,443 
 Currency and deposits 11,575 60,347 48,283 -59,376 75,762 
 Other liabilities 11,138 -259 966 5,447 21 
 Net errors & omissions -41,383 -52,936 -13,766 -87,074 -77,631 
 Balance of payments 400,344 471,739 387,801 96,552 431,379 
Source: State Administration of Foreign Ex change online information. Viewed at: http://www.safe.gov.cn . 
1.40.  The total amount of balance of paym ents transactions in 2012 was US$7.5 trillion, 
6% higher year-on-year, and equivalent to 91% of GDP. Trade in goods and services increased 
by 7%, while international direct investment  (including FDI and ODI) decreased by 2%.23 
At the end of 2012, China's balance of foreign exchange reserves reached US$3,311.6 billion, while the level of reserves reached US$3,821.3 billion at the end of 2013. 
1.41.  Currently, the RMB is fully convertible for current account transactions, and partly 
convertible for some capital account transactions. Since 2011 all residents and non-residents can 
use RMB for FDI. In the 12
th Five-Year Plan, the Chinese Government put forth a policy 
                                               
23 People's Bank of China (2014), Highlights of China's Monetary Policy in 2013. Viewed at: 
http://www.pbc.gov.cn/image_public/UserFiles/english/upload/File/2013 年货币政策大事记 .pdf. WT/TPR/S/300 • China 
 
- 27 - 
 
  of "gradually making the RMB convertible for capital account transactions". The Plan does not 
establish a sequence for capital account liberalization. The authorities indicated that they expect that the gradual liberalization of the capital account and of interest rate determination will reinforce each other and lead to a market-determined exchange. 
1.42.  In the course of the current review, the auth orities have stressed that China will continue to 
proactively and steadily push forward the RMB convertibility for capital account transactions. This is intended to further facilitate the operations of  enterprises' "going global" and to "advance the 
internationalization of China's capital market. The authorities indicated that China will enhance the 
degree of RMB convertibility for some short-term capital account transactions, establish a foreign debt and capital flow management system, improv e its risk control system, improve cross-border 
capital flow monitoring, and im plement an early-warning system
. 
1.43.  During the period under review, the authorities took a number of steps to liberalize 
the capital account. In 2011, China launched the RMB Qualified Foreign Institutional Investors 
(RQFIIs) system and raised the total RQFII quota several times. The current (2014) RQFII (total) 
quota is RMB 500 billion. Before March 2013, only Hong Kong, China subsidiaries of eligible fund 
management and securities companies were allowed to participate in the RQFII scheme. 
Since then, the scope has been broadened to in clude fund management companies, securities 
companies, commercial banks, insurance companies, and all institutions registered in and operated from Hong Kong, China. By end 2013, 61 RQFIIs had been approved with a cumulative approved 
investment quota of RMB 157.5 billion. Changes were introduced to the QFII, lifting the restrictions 
on the number of capital accounts QFII clients could hold. By end 2013, 228 QFIIs with a domestic securities investment quota of US$49.7 billion and 115 Qualified Domestic Institutional Investors 
(QDIIs) with an offshore securities investment quota of US$84.3 billion had been approved.
24 
In 2012, China removed the restrictions it placed on the opening of foreign exchange accounts and the use of capital. It has also applied a policy of supplying foreign exchange according to demand 
for offshore direct investments. Other measures include: as of 2011, granting RMB loans to 
Chinese-invested enterprises with their foreign exchange earnings as guarantee; enlarging the pilot areas where offshore guarantees are accepted for Chinese-invested enterprises' offshore loans; issuing foreign exchange regulations in 2012 to facilitate the participation of Chinese 
companies and individuals in the purchase of stock of offshore-listed companies; removing, in 
2013, the approval formalities for holding foreign debt accounts, for the withdrawal and payment of the principal and interest on foreign debts, and for the foreign debt exchange settlement of 
foreign-invested enterprises. 
1.44.  Pilot capital liberalization measures (under  the precondition that the risk is controllable) 
are currently being tried in the China (Shanghai) Pilot Free Trade Zone (CSPFTZ), which started 
operations in August 2013 (see section 2.3.4). In accordance with the Policies and Measures on 
the Capital Market for Supporting and Promoting the China (Shanghai) Pilot Free Trade Zone, issued on 29 September 2013, foreign investors may participate in domestic futures trading, qualified entities and individuals in the CSPFTZ may make investments in foreign and domestic 
securities and futures markets, and foreign pa rents of enterprises in the CSPFTZ may issue 
RMB bonds in domestic markets, among others. 
1.45.  In the course of the present Review, the authorities noted that they expect liberalization 
will allow markets to play their basic role in allocating resources and promote the adjustment 
of China's economic structure, eliminating balance of payments restrictions. They also noted that as the scale and fluctuation of cross-border capital flows will grow with liberalization, China must 
constantly strengthen its prudential regulatory framework, and improve monitoring and 
early-warning mechanisms. 
1.46.  In a recent assessment of China's capital account liberalization, the IMF noted that China 
has gradually widened the scope for capital flows, but the non-FDI capital account remains subject 
to considerable restrictions. Portfolio investment is controlled by quotas, as mentioned previously, 
and can only be done through QFIIs; foreign borrowing is subject to a ceiling (for short-term borrowing) or approval requirements (for long -term borrowing), but lending abroad by banks 
and affiliated companies is largely unrestricted. The holding of cross-border accounts 
                                               
24 Portfolio inward investment is ch annelled through QFIIs and subject to at least a three-month lock-in 
period for most shares and an overall ceiling of US$80 billion. Outward portfolio investment is channelled through QDIIs, subject to a ceiling of US$90 billion. Cross-border issuance of securities requires approval. WT/TPR/S/300 • China 
 
- 28 - 
 
  requires SAFE approval.25 The IMF also notes that despite the controls, capital flows have been 
considerable, with inflows and outflows of shor t-term borrowing on the order of 10% of GDP. 
1.2  Developments in Trade and Foreign Direct Investment 1.2.1  Merchandise trade 
1.47.  China has become the world's largest trader (excluding intra-EU trade). During the period 
under review, both exports and imports of goods expanded rapidly, with exports totalling US$2.21 trillion in 2013, 40% higher than in 2010. The share of merchandise exports of GDP, 
has, however, declined during the period under review, from 26.7% of GDP in 2010 to 24% 
in 2013. Imports of merchandise totalled US$1.95 trillion in 2013, up 39.69% from 2011. Imports represented 21.3% of GDP in 2013, down from 23.7% in 2010. China's net trade surplus stood at 2.8% of GDP in 2013, down from 3.1% in 2010, due mainly to the relative lower weight of GDP 
represented by both exports and imports, as dome stic demand has become the main force behind 
growth. In the context of the review, the auth orities emphasized that China is promoting 
the balanced development of foreign trade through consumption-friendly policies to expand 
domestic demand and hence imports, while stabilizing exports. The real appreciation of the RMB 
is also expected to support these developments. 
1.48.  In 2013, manufactured products remained the dominant component of China's exports, 
accounting for 94% of the total (Table A1.1). Am ong manufactured products, office machines and 
telecommunication equipment and textiles and clothing continued to be China's main exports (Chart 1.1). Agricultural exports account for only slightly more than 3% of the total. Exports under "processing trade" (under which enterprises import  inputs, assemble them in bonded areas, and 
export the assembled products) accounted for 39.6% of total trade in 2010, down from 44% in 
2011. Manufactures accounted for 58% of China's imports in 2013. China's main manufacturing imports include office machines and telecommunication equipment, and chemicals (Table A1.2). 
Fuels and other mining products accounted for almost 30% of China's imports in 2013, 
while imports of agricultural products accounted for some 8% of the total. In 2013, imports under 
processing trade accounted for 25.5% of China's total merchandise imports, down from 26.9% 
in 2011. 
1.49.  In 2013, the main destinations for China's merchandise exports remained the EU, 
the United States, Hong Kong, China, Japan, and Korea, the Republic of (Chart 1.2), as well as ASEAN countries (Table A1.3). The main sources of  its imports were the EU, Korea, the Republic 
of, Japan, Chinese Taipei, the United States, and Australia, as well as ASEAN countries 
(Table A1.4).  
 
                                               
25 IMF Country Report No. 13/211, People's Republic  of China, 2013 Article IV Consultation, July 2013. 
Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . WT/TPR/S/300 • China 
 
- 29 - 
 
  Chart 1.1 Product composition of merchandise trade, 2011 and 2012 
2011 2012
(a)    Exports (f.o.b.)
Other consumer goods
16.0%
Manufactures
93.3%
Total:   US$1,898.4 billion Total:  US$2,048.8 billion
[US$2,210. 0 billion]
(b)    Imports (c.i.f.)
Chemicals
10.4%Transport 
equipment
5.6%
Manufactures
59.2%Office machines &
telecom. equip.
17.5%Other electrical machines  
5.1%
Non-electrical 
machinery
7.9%Other
3.8%Other electrical machines
4.7%Office machines & 
telecommunication equipment
26.3%
Other semi-manuf.  
3.9% [3.9%]
Chemicals
9.8% [9.8%]Manufactures
58.2%Office machines &
telecommunication
equipment
19.1%
Total:   US$1,743.4 billion Total:  US$1,818.2 billion
[US$1,950.3 billion]Manufactures
94.0%Other electrical
machines
7.5%Mining  2.7% 
[2.7%]
Other electrical 
machines
7.7%
Other 
consumer 
goods
8.6%
Other
2.8%Office machines & 
telecommunication equipment
26.2%Textiles
5.0%Clothing
7.8% [8.0%]
Other semi-
manuf.  
10.6% 
[10.5%]
Non-electrical 
machinery
7.5%Transport 
equipment
5.8%Mining
3.1%
Other
consumer
goods
8.4%Other consumer goods
18.3%
Textiles
4.7% [4.8%]
Other semi-manuf.
10.6%
Non-electrical 
machinery
7.5%
Other semi-manuf.
4.3%Transport
equipment
6.2%
Agriculture
8.6% [8.4%]Agriculture
8.3%Transport 
equipment
5.6%Chemicals
6.0%Chemicals
5.5% [5.4%]Agriculture
3.4% Agriculture  3.2% 
[3.2%]Clothing
8.1%
Fuels
17.2%
[16.1%]Fuels
15.8%
Other mining
12.1% [11.8%]Other mining  
13.8%Non-electrical 
machinery
6.5%
 
Note: Data in square brackets  correspond to 2013 figures. 
Source: UNSD, Comtrade database (SITC, Rev.3) and General Administration of Customs [2013], 
China's Customs Monthly Exports and Imports, 12, Series No. 292. WT/TPR/S/300 • China 
 
- 30 - 
 
  Chart 1.2 Direction of merchandise trade, 2011 and 2013 
2011 2013
(a)    Exports (f.o.b.)
Asia
43.5%
Total:   US$1,898.4 billion Total:  US$2,210.0 billion
(b)    Imports (c.i.f.)
Other 
0.3%
EU28
12.1%Middle East
7.7%
CIS
3.8%United States
7.1%Australia
4.7%
EU28
11.3%Australia
5.1%
CIS
3.6%United States
7.8%
Total:   US $1,743.4 billion Total:   US $1,950.3 billionJapan
7.8%
Middle East
8.0%Korea, Rep. of
9.4%Korea, Rep. of  
9.3%United States
17.1%Other Asia
17.2%
United States
16.7%Middle East
4.3%
Japan
8.3%Chinaa
7.0%CIS
3.8%
EU28
15.3%CIS
3.5%Africa
3.8%
Japan
11.2% Other
0.2%Other Asia
13.0%Hong Kong, China
17.4%
EU28
18.8%Middle East
4.2%
Other Europe
1.3%
Other America
7.7%Hong Kong, China
14.1%
Japan
6.8%
Chinese Taipei
8.0%Other Asia
18.8%
Africa
5.3%Other Asia   
14.2%Korea, Rep. of
4.4%
Other Europe
1.1%Africa
4.2%
Chinese Taipei
7.2%
Asia
55.8%Asia
57.7%Asia
47.1%
Other America
7.8%Other America
8.1%Other America
7.4%
Africa
6.0%
Other 
Europe
2.0%Other 
Europe
3.3%Korea, Rep. of
4.1%
Chinaa
8.1%
 
a Includes goods that have been  exported from China and therea fter reimported into China. 
Source: UNSD, Comtrade database and General Ad ministration of Customs (2013), China's Customs 
Statistics: Monthly Exports & Imports, 12, Series No. 292. 
1.2.2  Trade in services 
1.50.  In 2013, services represented 8.7% of China's total exports (merchandise and services 
trade) and 14.4% of its imports. During the pe riod under review, imports of services became 
more important as a component of total imports.  China's exports of insurance and other business WT/TPR/S/300 • China 
 
- 31 - 
 
  services advanced their share of the total, while transportation, travel, computer and information 
services lost share in 2013. Among imports, travel gained considerable market share, accounting for 39.1% of total imports. Transportation is another important item among services imports, accounting for 28.7% of the total (Table 1.4). 
Table 1.4 Composition of trade in services, 2009-13 
(US$ million and %) 
 2009  2010  2011 2012 2013  
 Total credit (US$ million) 129,476 162,165 186,009 191,430 206,018  
 % of total credit 
 Transportation 18.2 21.1 19.1 20.3 18.3 
 Travel 30.6 28.3 26.1 26.1 25.1 
 Communication 0.9 0.8 0.9 0.9 0.8 
 Construction 7.3 8.9 7.9 6.4 5.2 
 Insurance 1.2 1.1 1.6 1.7 1.9 
 Financial services 0.3 0.8 0.5 1.0 1.5 
 Computer & information 5.0 5.7 6.5 7.6 7.5 
 Royalties & licence fees 0.3 0.5 0.4 0.5 0.4 
 Consulting services 14.4 14.0 15.3 17.5 19.7 
 Advertising & public opinion polls 1.8 1.8 2.2 2.5 2.4 
 Audio-visual and related services 0.1 0.1 0.1 0.1 0.1 
 Other business services 19.1 16.4 19.1 14.8 16.5 
 Government services 0.7 0.6 0.4 0.5 0.6 
 Total debit (US$ million) 158,856 193,321 247,654 281,180 330,528 
 % of total debit 
 Transportation 29.3 32.7 32.5 30.5 28.5 
 Travel 27.5 28.4 29.3 36.3 38.9 
 Communication 0.8 0.6 0.5 0.6 0.5 
 Construction 3.7 2.6 1.5 1.3 1.2 
 Insurance 7.1 8.1 8.0 7.3 6.7 
 Financial services 0.4 0.7 0.3 0.7 1.1 
 Computer & information 2.0 1.5 1.6 1.4 1.8 
 Royalties & licence fees 7.0 6.7 5.9 6.3 6.4 
 Consulting services 8.4 7.8 7.5 7.1 7.1 
 Advertising & public opinion polls 1.2 1.1 1.1 1.0 0.9 
 Audio-visual and related services 0.2 0.2 0.2 0.2 0.2 
 Other business services 11.8 8.9 11.2 7.0 6.2 
 Government services 0.5 0.6 0.4 0.4 0.4 
Source: MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/article/ae/ai/201402/20140200485297.shtml , and 
http://tradeinservices.mofcom.gov.cn/a/2014-02-19/233341.shtml . 
1.2.3  Foreign direct investment 
1.51.  As mentioned above, the Government is tryi ng to facilitate FDI inflows through the removal 
of restrictions, such as the revision of its Investment Catalogue and by simplifying procedures, including by eliminating verification requirements  in a number of cases (sections 2.5.1 and 2.5.2) 
It also seeks to attract further FDI through a number of incentive schemes (section 2.5.3) 
and through the more liberal rules applied to the CSPFTZ (section 2.5.4). 
1.52.  Reflecting the large size of its market, and its increasing openness, China remained one 
of the largest recipients of FDI in the world during the period under review. However, in 2012, 
FDI inflows slowed down somewhat, although th ey recovered in 2013, when China attracted 
US$117.6 billion of FDI, up 1.4% from 2011. The main sectors attracting FDI are manufacturing 
(38.7%) of the total in 2013, real estate (24.5%), wholesale and retail trade (9.8%) and leasing 
and business services (8.8%) (Table 1.5). WT/TPR/S/300 • China 
 
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  Table 1.5 Inward foreign direct investment by sector, 2011-13 
 2011 2012 2013 
  Number 
of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) Number  
of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) Number 
of 
projects Amount of 
foreign 
capital 
actually 
used  
(US$ 
million) % of  
total 
FDI 
Total 27,712 116,011.0 24,925 111,716.1 22,773 117,586.2 100.0 
Agriculture, 
forestry 
and fisheries 865 2,008.9 882 2,062.2 757 1,800.0 1.5 
Mining 87 612.8 53 770.5 47 365.0 0.3 
Manufacturing 11,114 52,100.5 8,970 48,866.5 6,504 45,555.0 38.7 
Production and 
distribution 
of electricity, gas 
and water 214 2,118.4 187 1,639.0 200 2,429.1 2.1 
Construction 215 916.9 209 1,181.8 180 1,219.8 1.0 
Transport, storage 
and post 413 3,190.8 397 3,473.8 401 4,217.4 3.6 
Information 
transmission, 
computer and 
software 993 2,699.2 926 3,358.1 796 2,880.6 2.4 
Wholesale and 
retail trade 7,259 8,424.6 7,029 9,461.9 7,349 11,511.0 9.8 
Hotels and 
catering service 513 842.9 505 701.6 436 771.8 0.7 
Financial 
intermediation 156 1,909.7 282 2,119.5 509 2,330.5 2.0 
Real estate 466 26,881.5 472 24,124.9 530 28,798.1 24.5 
Leasing and 
business service 3,518 8,382.5 3,229 8,211.1 3,359 10,361.6 8.8 
Scientific research, 
technical services and geological prospecting 1,357 2,457.8 1,287 3,095.5 1,241 2,750.3 2.3 
Water 
conservancy, 
environment and 
public facilities  151 864.3 122 850.3 107 1,035.9 0.9 
Other 391 2,600.2 375 1,799.8 357 1,560.3 1.3 
Source: Data provided by the Chinese authorities. 
1.53.  Hong Kong, China continues to be, by far,  the main source of FDI to China, accounting 
for 62.4% of total FDI in 2013. It is followed by Singapore, Japan, the EU, the British Virgin 
Islands, Korea, the Republic of, the United States, and Chinese Taipei (Table 1.6). 
Table 1.6 Inward foreign direct investment by origin, 2011-13 
 2011 2012 2013 
  Number of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) Number of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) Number of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) % of total 
FDI 
Total 27,712 116,011.0 24,925 111,716.0 22,773 117,586.2 100.0 
Hong Kong, 
China 13,889 70,500.2 12,604 65,561.2 12,014 73,396.7 62.4 
Singapore 740 6,096.8 698 6,305.1 731 7,228.7 6.1 
Japan 1,859 6,329.6 1,579 7,351.6 943 7,058.2 6.0 
EU (27) 1,665 5,267.0 1,607 5,348.3 1,446 6,517.9 5.5 WT/TPR/S/300 • China 
 
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   2011 2012 2013 
  Number of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) Number of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) Number of 
projects Amount 
of foreign 
capital 
actually 
used  
(US$ 
million) % of total 
FDI 
British Virgin 
Islands 758 9,725.0 572 7,830.9 501 6,158.6 5.2 
Korea, the 
Republic of 1,375 2,551.1 1,306 3,038.0 1,371 3,054.2 2.6 
United States 1,426 2,369.3 1,301 2,598.1 1,061 2,819.9 2.4 
Chinese 
Taipei 2,639 2,183.4 2,229 2,847.1 2,017 2,087.7 1.8 
Samoa 476 2,076.2 418 1,743.7 393 1,858.1 1.6 
Cayman 
Islands 135 2,242.0 110 1,975.4 87 1,668.3 1.4 
Mauritius  89 1,139.2 48 958.7 27 910.3 0.8 
Other 2,661 5,531.0 2,453 6,158.0 2,182 4,827.6 4.1 
Source: Data provided by the Chinese authorities. 
1.54.  During the period under review, China has re inforced its role to become an important source 
of FDI. In 2012, outward FDI tota lled US$70.1 billion, with the main destination being Hong Kong, 
China, with two-thirds of the total, followed by the Cayman Islands, the British Virgin Islands, Australia, the United States and the United Kingdom (Table 1.7). Most FDI in the areas of energy, mining, manufacturing, services, and infrastructure. 
Table 1.7 Outward foreign direct investment to main countries, 2012 
  Value (US$ million) 
Total 70,140 
  
Hong Kong, China 46,510 
Cayman Islands 6,700 
British Virgin Islands 2,970 
Australia  2,160 
United States 1,880 
United Kingdom (Britain) 1,420 
Singapore  1,350 
Iran  750 
Canada 720 
Cambodia  720 
Russian Federation 660 
Germany 650 
Laos 650 
Indonesia  600 
Algeria 460 
Source: Data provided by the Chinese authorities. 
1.2.4  Outlook 
1.55.  The authorities consider that economic growth will continue to hinge on strong domestic 
demand, given a stable external environment. They expect changes in income distribution to bring 
rapid income growth for rural and urban households and enhance consumption, which will play a more important role in driving economic growth. This effect is likely to be reinforced by trends 
that are beginning to be observed, such as the process of urbanization, computerization, further 
industrialization, and modernization of the agricultural sector. The authorities consider that these trends will boost investment demand in areas such as infrastructure, industrial upgrading 
and technology innovation. WT/TPR/S/300 • China 
 
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  1.56.  The authorities noted that despite this gene rally positive assessment, some risks to future 
growth and development persist. First, they point to: the fact that the basis of global economic 
recovery is not yet solid; considerable excess capacity in some industries; the tension between economic development, resources constraint an d environmental protection; and potential risks 
in the financial sector.
26 They also noted the need to remain watchful with respect to inflationary 
pressure, particularly due to the rising costs of la bour and land and to price increase expectations. 
As a consequence, macroeconomic management needs to handle skilfully the trade-off between 
stable growth and economic reform so as to improve people's livelihoods. To this end, China will 
continue to implement a prudent monetary policy and an active fiscal policy, while deepening and 
accelerating reform. 
1.57.  The IMF forecasts growth of 7.5% in 2014 and 7.3% in 2015.27 It expects inflation 
to remain moderate at around 3% as inflationary pressures are likely to stay subdued, 
and as persistently high investment has led to excess capacity in many sectors that tends to put downward pressure on prices. External and domest ic (savings-investment) imbalances are likely 
to persist, and the IMF calls for rebalancing. In  its assessment of the possible risks the Chinese 
economy faces, the IMF notes that the heavy reliance on credit and investment to sustain activity is raising vulnerabilities. This is reflected in the steady build-up of leverage, with the stock 
of total social financing rising by 60% of GDP since 2009. This risks eroding the strength 
of the enterprises, the financial sector, and local governments. Although it is considered that China still has policy space, the IMF cautions that maintaining rapid and unbalanced growth would further strain the financial sector, government, and corporate balance sheets.
28 
 
                                               
26 People's Bank of China (2013), Annual Report, 2012, pp. 16-17. Viewed online at: 
http://www.pbc.gov.cn/publish/english/957/index.html . 
27 IMF online information, viewed at: http://www.imf.org/external/country/CHN/index.htm . 
28 IMF Country Report No. 13/211, People's Republic  of China, 2013 Article IV Consultation, July 2013. 
Viewed at: http://www.imf.org/external/pubs/ft/scr/2013/cr13211.pdf . WT/TPR/S/300 • China 
 
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  2  TRADE AND INVESTMENT REGIME 
2.1  Institutional and legal framework 2.1.  The National People's Congress of the People 's Republic of China (NPC) is the supreme organ 
of state power. The NPC exercises legislative power;  it has a term of five years, meets in session 
once a year and is convened by its Standi ng Committee, which is its permanent body. 
The 12
th NPC was elected in 2013. The State Council (the Central People's Government) is the 
executive body and the highest organ of st ate administration. Chaired by a Premier, 
the State Council is composed of Vice-Premiers,  State Councillors, Ministries and Commissions, 
the Auditor-General and the Secretary-General. A new cabinet took office in 2013.  
2.2.  Local people's congresses and local people's governments respectively exercise 
and implement state power at the local level. The Constitution of China provides that all levels 
of administration are subordinated to the State Council. Where the division of responsibilities 
between the central and local governments is not clear, delegation from the central executive 
is the most common manner of policy implementation.  
2.3.  The President and Vice-President of Chin a are elected by the NPC and may serve no more 
than two consecutive five-year terms. The Pres ident appoints and has the power to remove 
the Premier, Vice-Premiers, State Councillors, and Ministers. The President promulgates legislation 
adopted by the NPC or its Standing Committee, but does not have the power to veto it. 
He is responsible for ratifying or abrogating bilateral, regional or international treaties and agreements.  
2.4.  China's judicial system consists of the Su preme People's Court, the local people's courts 
at different levels, and special courts such  as military, railway, and maritime courts. 
2.5.  The WTO Agreements and China's Protocol  of Accession are implemented domestically 
through enabling legislation. Both the Civil Procedure Law and the relevant judicial interpretations 
accept the principle that, when an international treaty concluded or acceded to by China contains 
provisions that differ from the provisions of the Civil Procedure Law, the provisions of the international treaty will apply, except in cases where China has made reservations. 
2.6.  In the hierarchy of Chinese domestic legi slation the Constitution prevails over any other 
statute; it is followed by laws, administrative regulations (issued by the State Council), local regulations,
1 ministerial administrative rules (enacted by ministries or departments exclusively 
at the Central Government level), and local rules (enacted by the People's Government at the 
provincial, autonomous region and municipal levels directly under the Central Government).2 
2.7.  Laws are passed, amended and enacted by the NPC and its Standing Committee. The NPC 
itself enacts and amends criminal, civil, state organization laws and other fundamental laws. 
The Standing Committee of the NPC passes and amends legislation other than the laws that must 
be enacted by the NPC; this generally includes most trade or customs-related legislation. The State Council promulgates administrative nation al regulations. They ar e signed by the Premier 
and published through an Order or Decree of the State Council.  
2.8.  For the implementation of laws, regulation s, and national policies, the People's Congress 
and its Standing Committee at the provincial, autonomous region, municipal directly under 
the Central Government and large city levels may enact local regulations with effect within their 
local administrative territories. These local regulations may vary across regions, reflecting 
                                               
1 Enacted by: (a) the People's Congress and its Stan ding Committee at the follo wing levels: provincial, 
autonomous region, municipal directly under the central government, comparatively la rger city, or municipal, 
in that order, or (b) the People's Congress and its St anding Committee in the corresponding large city, and 
approved by the Standing Co mmittee of the People's Congress at its pr ovincial, or autonomous region level. 
2 Some large cities have a special status, that of "C omparatively larger cities",  granted under Article 63 
of the Legislation Law. This refers to a city where a provincial or auto nomous regional people's government 
is located or where a special economic zone is located, or a larger city approved as  such by the State Council. 
These cities may legislate; they have a Congress. WT/TPR/S/300 • China 
 
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  the different local features and interests.3 Special Economic Zones may also develop regulations 
that can be applied in their jurisdiction. Local rules are published through Announcements of the local Congress. The Constitution and other relevant statutes clarify that local regulations must yield to regulations of higher status.
4 The Legal Affairs Office of the State Council reviews local 
regulations and rules to ensure policy coherence. 
2.9.  Administrative regulations are developed by ministries, commissions, the People's Bank 
of China, the Audit Commission and its affiliated institutions with administrative functions, 
or directly by the State Council. They must be in accordance with laws, administrative regulations, 
decisions and orders of the State Council. Opinions  and directives are published by way of notices 
or circulars. Implementation and enforcement of  national policies and measures are carried out 
mostly by counterpart agencies of local governme nts, except for those ministerial agencies that 
have local branches.  
2.10.  Administrative regulations and departmental rules usually come into effect 30 days after 
their publication; regulations or rules related to national security, foreign exchange and monetary 
policy may take effect on the day of their publication.5 
2.11.  The Provisions on the Disclosure of Government Information  mandate governments 
at central and local levels to: establish the processes for information disclosure; formulate guides 
and catalogues on the information to be disclosed; and improve the publication of information 
and systems concerning performance review, public comments, annual reporting, and accountability. The Provisions define government information and a mechanism of related administrative remedies. The Government has iden tified problems of administrative disclosure 
including implementation, comprehensiveness of di sclosure, procedural problems, and the balance 
between information disclosure and confidential information.
6 On judicial procedures regarding 
information disclosure, the Regulations on Trials in Administrative Litigation Cases Concerning 
Government Information Disclosure  state that the People's Courts must register litigation claiming 
that the Government did not provide appropriate information in time, in response to the applicant's request. The authorities have noted that since the last Review in 2012, steps have been 
taken to enhance government information disclosure, and public consultation on the drafting 
of regulations and rules. The General Office of the State Council has been working towards further 
implementation of the Provisions on the Disclosure of Government Information  by promoting 
information disclosure on key areas such as administration approval and financial budgeting 
and accounts. The Legislative Affairs Office of the State Council has issued draft administrative 
rules to improve the procedures for soliciting public comments on draft laws, regulations and rules, including online. 
2.12.  The website of the China Legislative Information Network System
7 publishes mainly 
the Central Government's trade-related laws and regulations as well as some trade-related departmental rules by the Central Government agencies, in Chinese. In addition, it provides 
on-line or off-line links to other agencies and ministries that are responsible for drafts 
of administrative regulations and departmental ru les proposed for public comments; it also has 
links to local government legislative affairs office s. The authorities have indicated to WTO Members 
that all draft administrative regulations have been published on the website of the 
China Legislative Information Network System for public comments since 2008.
8 A 30-day period 
for public comments is provided in accordance with the Legislation Law  and its relevant 
                                               
3 Local regulations are issued by local people's cong resses and their standing committees, provided they 
do not contradict the Constitution, laws, and administrative regulations.  Local regulations of comparatively 
larger cities must be submitted to and approved by the standing committ ees of the provinces or autonomous 
regions. Autonomous regulations and separate regulati ons are issued by people's congresses in national 
autonomous areas. Local rules are formulated by lo cal governments in provinces, autonomous regions, 
municipalities, and comparatively larger cities, in acco rdance with relevant laws, administrative regulations 
or local regulations. 
4 WTO (2006), Trade Policy Review – China, Geneva, pp 34-37. 
5 The Legislative Affairs Office of the State Council issued a circular (Guo Fa Han 2002/134) to the 
legislative affairs agencies of ministries (at the central level) and local governments (at the provincial level) to urge strict adherence to the 30-day notice for all departmental  rules/provincial regulations. 
6 Circular of Opinions on Deepening Administrative Disclosure and Strengthenin g Administrative Service, 
issued by the General Office of the State Council on 2 August 2011. 
7 China Legislative Information Network System, viewed at: http://www.chinalaw.gov.cn . 
8 WTO document S/C/M/92, 12 December 2008, paragraph 24. WT/TPR/S/300 • China 
 
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  regulations. They have also indicated that draft laws are published online for public opinion, except 
in the case of laws that are re quired to be kept confidential. 
2.13.  The China Foreign Trade and Economic Gazette, edited by MOFCOM, publishes China's 
trade-related laws, regulations and rules. Currently, laws, regulations, rules and draft rules 
soliciting public opinion, are published in the Gazette with the text in Chinese but the title in both 
English and Chinese. 
2.14.  In accordance with the Legislation Law  and its relevant regulations9, the opinions of relevant 
authorities, other organizations, and citizens must be solicited when administrative regulations, 
rules of the State Council ministries and local governments are drafted.10 In 2010, 
the State Council issued some Opinions with a view to clarifying obligations of ministries and agencies to solicit public comments on draft administrative regulations and departmental rules.
11 
Under the above-mentioned Opinions, administrative agencies at the central and provincial levels 
must solicit public comments when developing administrative regulations and departmental rules except in cases where they are required to be kept  confidential in accordance with the law; they 
are also required to broaden the scope of inform ation disclosure and to enhance administrative 
reconsideration and litigation. For trade-related re gulations and rules that are published for public 
comment, the agency must provide a comment period of not less than 30 days, subject to 
exceptions. In accordance with the Regulations on Procedures for Enacting Administrative 
Regulations , and the Regulations on Procedures for Enacting Rules,  public opinion may be 
gathered in various forms such as panel discussions, feasibility study meetings, hearings, etc. The authorities have noted that, besides soliciting public opinions, the Chinese Government has 
continued organizing experts' discussions on draft laws and administrative regulations, including 
with the participation of foreign experts, and the representatives of foreign enterprises and 
international organizations. 
2.15.  In accordance with the Law on Administrative
12, any citizens, organs, or other organizations 
may file appeals with a view to preventing and correcting specific administrative acts that are deemed illegal or improper, within 60 days of the occurrence of the administration action that they 
believe has damaged their legitimate rights. A pilot programme to establish administrative 
reconsideration commissions, which are independent from other government agencies, was launched in 2008 in Beijing, Heilongjiang, Jiangsu, Shandong, Henan, Guangdong, Hainan, and Guizhou.
13 The authorities have noted that this pilot programme continues to be implemented and, 
that as at March 2014, it was applied in different degrees by 21 provinces, autonomous regions, 
and municipalities directly under the Central Government. 
2.16.  Complaints from foreign-invested enterp rises are handled by the Complaint Coordination 
Office for Foreign-invested Enterprises and the National Complaint Centre for Foreign-invested 
Enterprises, both under MOFCOM.14 Data on actual complaints is not available. 
2.2  Trade policy framework and objectives  
2.2.1  Institutional framework 
2.17.  The National Development and Reform Co mmission (NDRC) is in charge of devising 
the overall national economic and social development policy. The NDRC is also responsible for: conducting research and setting objectives and policies on economic reform and liberalization; 
and the planning of inbound and outbound investment. The Ministry of Commerce (MOFCOM) 
has main responsibility for policy coordination and implementation of all trade-related issues. 
                                               
9 Relevant regulations include the Regulations on  Procedures for Formulation of Administrative 
Regulations (State Council Decree 321), and the Regulation on Procedures for Formulation of Departmental Rules (State Council Decree 322), effective 1 January 2002. 
10 For a more detailed explanation of China's legal structure and legislative process, see WTO (2006), 
Trade Policy Review – China, Geneva, p. 36.  
11 Certain Opinions on Streng thening the Building of a Government Ruling by Law. 
12 National People's Congress online information. Viewed at: 
http://www.npc.gov.cn/englishnpc/Law/2007-12/11/content_1383562.htm . 
13 Online information, viewed at:  
http://news.xinhuanet.com/le gal/2008-12/12/cont ent_10494653.htm . 
14 MOFCOM Decree 2006/2, effective 1 October 2006 (in Chinese). Viewed at: 
http://www.gov.cn/gongbao/content/2007/content_494436.htm . WT/TPR/S/300 • China 
 
- 38 - 
 
  MOFCOM is in charge of, inter alia : formulating strategies, guidelines and policies related to foreign 
trade and international economic cooperation; drafting laws and regulations governing foreign trade and investment; studying and putting forward proposals on harmonizing domestic legislation on trade and economic affairs; and bringing domestic laws into conformity with multilateral 
and bilateral treaties and agreements. 
2.18.  Other Ministries involved in trade po licy formulation and implementation include: 
Agriculture; Environmental Protection; Finance; Industry and Information Technology; Land and 
Resources; and Transportation.  
2.19.  An institutional change adopted by th e NPC in 2013 concerned some agencies involved 
in trade policy implementation.
15 The change essentially consisted in merging agencies 
and/or reassigning regulatory functions. It includes the establishment of the China Food and Drug 
Administration16; the re-establishment of the State Oceanic Administration17; the separation of the 
business functions from the administrative function in the railway sector18; and the re-organization 
of the National Energy Administration to include the duties of the State Electricity Regulatory 
Commission (which was abolished).  
2.2.2  Trade policy objectives 2.20.  China's overall main trade policy objective is to accelerate its opening up to the outside 
world. The Third Plenary Session of the 18
th National Congress of the Communist Party 
of China (CPC) held in November 2013 approved a Decision on Major Issues Concerning Comprehensively Deepening Reforms. The Decision calls for the construction of a united and open market system with orderly competition that will play a decisive role in allocating resources; this is 
the main highlight of the new agenda. The Decision also calls for the reform of state-owned 
enterprises and sets new rules and targets to encourage private ownership; the goal is to modernize the entrepreneurial environment and diversify ownership. In addition, during the 
session it was decided to set up a monitoring system to promote ecological progress and fight 
environmental pollution and improve the use of na tural resources. The Decision also seeks to 
promote the acceleration of reforms in the social  sector including education, employment, income 
distribution, social security and public health , and for deepening the judicial system reform.  
The Decision calls for the establishment of fair, op en and transparent market rules, the elimination 
of rules which hamper market unification and fair competition, and the punishment of all kinds of illegal anti-competitive behaviour and actions. 
2.21.  A National Leading Group for Comprehensive Deepening Reform was established as a result 
of the Plenary Session's decision; it is tasked with the responsibility of setting a reform roadmap, and with the coordination, promotion, and supervis ion of the decision's implementation. To this 
end, under the Leading Group, six subgroups were established: (a) economic reform 
and environmental protection; (b) democracy and rule of law; (c) cultural issues; (d) social issues; (e) reform of the Party's building system; and (f) disciplinary inspection (anti-corruption). 
The authorities indicated that the subgroups are developing implementation plans in accordance 
with their responsibilities and cooperate with each other. MOFCOM is involved in the first 
subgroup. The Plenary drew the roadmap and se t a timetable for the concrete realization 
of the reform targets; it stated that it would push reform past the barriers of vested interests 
and avoid the country falling into the "middle-income trap".
19 
                                               
15 Institutional Reform and Function Tran sformation Scheme of the State Council , passed by the 
1st Session of the 12th National People's Congress in March 2013. 
16 The China Food and Drug Administration was esta blished to unify the supervision and management 
of food and drug safety, from production to consumptio n. The new body merges some of the duties of the 
following agencies: Office of Food Safety Commission  (abolished); State Food and Drug Administration 
(abolished); General Administrati on of Quality Supervision, In spection and Quarantine; and, 
State Administration of Industry and Commerce. The General Admi nistration of Quality Su pervision, Inspection 
and Quarantine retains its responsibility with regard to  the safety and quality of imported and exported food. 
17 The State Oceanic Administration is under the respon sibility of the Ministry of Lands and Resources. 
It merges the duties of the China Ocean Guard, China Coast, Chin a Fishery Patrol, and the Coast 
Anti-Smuggling Guard. 
18 The Ministry of Railways was abolished, and its functions were assigned to two new entities: 
the State Railways Administration and China Railways Corporation.  
19 Viewed at: http://news.xinhuanet.com/english/china/2013-11/15/c_132891756.htm . WT/TPR/S/300 • China 
 
- 39 - 
 
  2.22.  The different departments of MOFCOM are in charge of aspects of trade and commercial 
policy reform. The changes envisaged include: (a) promoting a reform of the domestic trading and 
circulation system through a reform of trading regulations and the strengthening of the legal 
environment for business; (b) a reform of the investment regime (inward and outward) to make it 
more open, transparent and predictable; (c) an ac celeration of the implementation of free-trade 
agreements; (d) the acceleration of the development of the China (Shanghai) Pilot Free Trade Zone (CSPFTZ); and (e) the acceleration of reform geared to opening up inland and border areas. 
2.23.  With respect to the opening up of border ar eas, the authorities noted in the context of this 
review, that this is an attempt to shift the excl usive focus of development, which has concentrated 
in the eastern and coastal regions in the past three decades, to the inland and border areas, which will be considered the new frontier. The authorities consider that this implies both 
the development and the opening up of these areas.  They deem that this can be partly achieved 
by strengthening economic and trade relations with the 14 neighbouring countries with which China has borders. 
2.24.  Regarding the CSPFTZ the goal is to have a showcase for trade investment and financial 
services reform. Foreign investment is subject to simplified procedures: only filing is required for projects in sectors not included in a Negative List (see below) and approval procedures only 
apply to the sectors included in the Negative List. 
2.25.  Regarding the CSPFTZ, the goal is to unleas h the benefits of reform and opening up through 
innovation in the governmental administration system. The aim of launching the pilot programme on changing the functions of government, reforming investment areas, facilitating trade 
and reforming finance sectors is to provide replicable and expandable experience for the new 
round of reform. CSPFTZ issues a Negative List for foreign investment; foreign investment in the 
sectors outside the Negative List will be subj ect to filing procedures instead of approving 
procedures, which significantly simplifies the process. 
2.26.  With respect to the reform of the domestic trading and circulation system the goal 
is to build up a law-based business environment, to remove market access barriers, to improve 
resource allocation, and to foster and facilitate domestic trade. The authorities have noted that 
the Chinese circulation system is still in a development stage and is mired in problems such as low efficiency, high costs, and unbalanced deve lopment between rural and urban areas. To this 
end, the reform will seek to streamline the logistics process so as to raise general efficiency 
and build a domestic trade system based on the rule of law, and where information technology use 
is promoted. 
2.27.  The Third Plenary Session of the 18
th CPC National Congress work ed out a detailed roadmap 
and a time-frame for the implementation of the re forms. To this end, 330 major reform measures 
covering 15 areas have been set. Economic restructuring is expected to lead the overall reform effort.
 The authorities noted that, after more than th ree decades of fast expansion, the elemental 
factors supporting China's development are undergoing profound changes, and deep-seated 
contradictions are becoming more acute. China is undergoing a period of restructuring and reform, and of adjustment of its growth pace. The authorit ies stated that the reform process is entering a 
stage where crucial problems need to be addressed and that, to this end, China is making efforts 
to deepen reforms and restructuring. 
2.3  Participation in the World Trade Organization 2.28.  China became a WTO Member on 11 December 2001. China is an observer 
to the Plurilateral Agreement on Government Procurement (GPA) and is in the process 
of negotiating its accession thereto. At the Ninth WTO Ministerial Conference (MC9) in Bali, the authorities indicated that an inter-agency mechanism has been established, which could 
expedite the GPA accession process.
20 China submitted a revised offer in December 2013.  
2.29.  China is an observer to the Plurilateral Agreement on Trade in Civil Aircraft, 
and a participant in the Information Technology Agreement (ITA). 
                                               
20 WTO document GPA/M/54: Committe e on Government Procurement - Minutes of the Ministerial-Level 
meeting of 3 December 2013. WT/TPR/S/300 • China 
 
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  2.30.  China considers its participation in the multilateral trading system and regional trade 
arrangements as an important part of its opening up policy. At the MC9, the authorities expressed China's support of the multilateral trading system, its openness towards further multilateral and plurilateral negotiations, and its  commitment to achieving development objectives through 
trade.
21 China considers that an early harvest should "serve as the base for kick-starting 
negotiations of remaining issues on the Doha Development Agenda (DDA) and eventually achieving the development objectives". 
2.31.  China contributes regularly to the DDA Global Trust Fund. In 2011, China sponsored 
the China's LDCs and Accession Programme,  a programme established within the Aid for Trade 
framework to help LDCs participate more effectively in the WTO meetings, and assist non-members to negotiate their accession.
22 
2.32.  China's notifications to the WTO cover a wide range of agreements (see Table A2.1). 
Between 2012 and 2013, China made 115 new or updated notifications under the SPS Agreement (SPS, Article 7, Annex B), and 171 under the TBT Agreement. Other notifications covered subsidies 
for the period 2005-2008; regional integration processes (Article XXIV:7 of the GATT 1994); 
and regular reports on anti-dumping and count ervailing duty actions (Article 16.4 of the 
AD Agreement and Article 25.11 of the SCM Agreem ent). It appears that some changes or updates 
to laws or procedures would require updated or amended WTO notifications. In particular, updated 
notifications are likely to be necessary in the area of agriculture and subsidies.   
2.33.  In the negotiations at the WTO, China is a member of the following groups: developing 
Members, recently acceded Members (RAMs), G-20; G-33, and "W52" sponsors. 
2.34.  Between 2012 and 2013, China was involved in four dispute settlement cases 
as a complainant; eight cases as a respondent; and 15 cases as a third party (Table A2.2).  
2.4  Regional arrangements 
2.35.  As stated in its twelfth Five-Year Plan, China intends to accelerate the implementation 
of its Free Trade Area Strategy; strengthen economic linkages with major trading partners; and deepen cooperation with emerging markets and developing countries. 
2.4.1  Reciprocal agreements 
2.36.  China has concluded 12 FTAs with over 20 States and regions. China has been a member 
of the Asia-Pacific Economic Cooperation (APEC) forum since 1991; and a member of the Asia-Europe Meeting (ASEM) since its inception, in 1996. China acceded to the Asia-Pacific Trade 
Agreement in 2001. China's free trade agreement with the Association of Southeast Asian Nations 
(ASEAN) came into effect in 2005.
23 The cooperation with ASEAN countries was extended 
to standards, technical regulations, conformity  assessment, and intellectual property through 
complementary agreements. 
2.37.  In 2003, China signed Closer Economic Partnership Arrangements (CEPA) with  Hong Kong, 
China and Macao, China. Several supplementary ag reements were added to the initial agreement. 
The latest was signed in August 2013 and entered into force in January 2014.  
2.38.  China has FTAs in force with Pakistan, Chil e, New Zealand, Singapore, Peru, and Costa Rica 
(see WTO, 2012). Since its last Trade Policy Re view, China has signed free trade agreements 
with Switzerland and Iceland, but they are yet to enter into force (Table 2.1).  
2.39.  China is currently negotiating FTAs with the Gulf Cooperation Council (GCC) countries, 
Australia; Norway; Korea, the Republic of and Ja pan. Negotiations for a Regional Comprehensive 
                                               
21 WTO document WT/MIN(13)/ST/99, 24 January 2014,  Statement by China's Minister of Commerce 
at the WTO Ministerial Conference, Nint h Session, Bali, 3-6 December 2013. 
22 China's LDCs and Accession Programme  (also known as China's Programme). Viewed at: 
http://www.wto.org/english/news_e/pres11_e/pr632_e.htm . 
23 By 2010, China and the original ASEAN members (B runei, Indonesia, Malaysia, the Philippines, 
Singapore, and Thailand) had substa ntially reduced their ta riff and non-tariff barriers. Cambodia, Lao PDR; 
Myanmar, and Viet Nam were provided flexibility up to 2015. WT/TPR/S/300 • China 
 
- 41 - 
 
  Economic Partnership (RCEP) between ASEAN members, Australia, China, India, Korea, the 
Republic of, Japan, and New Zealand were launched at the 21st ASEAN Summit in November 2012.  
Table 2.1 Overview of the new FTAs , 1 January 2012 - 31 December 2013 
China-Switzerland Free Trade Agreement 
Parties  China and Switzerland 
Date of signature/entry 
into force 6 July 2013/Not yet in force 
Transition for full 
implementation Category % of tariff lines Transition period  
(upon entry into force) China Switzerland 
A 22.8 88.9 Immediately 
B 38.7 N/A 5 years B1, B3, C N/A 8.0 Immediately (f ixed duty or reduced MFN) 
C1 30.3 N/A 10 years 
C2 2.1 N/A 10 years (to be reduced by 60%) 
D 5.8 3.2 Exempted Other 0.3 N/A 12 or 15 years 
 
Main products excluded 
from liberalization China: Exceptions related to such products as grain, oil, cotton and sugar 
Merchandise trade (2012)  Imports from Swit zerland: US$228.2 million (1.26% of total) 
Exports to Switzerland: US$34.9 million (0.17% of total) 
of which preferential Not applicable 
Related WTO documents Not yet notified 
Relevant websites http://fta.mofcom.gov.cn   
http://www.seco.admin.ch/themen/ 00513/00515/01330/index.html?lang=en   
China-Iceland Free Trade Agreement  
Parties  China and Iceland 
Date of signature/entry 
into force  14 April 2013/Not yet in force 
Transition for full 
implementation  Category % of tariff lines Transition period 
(upon entry into force)  China Iceland 
A 95.6 96.0 Immediately B 0.3 N/A 5 years C 0.0 N/A 10 years 
D 4.1 3.9 Exempted 
Tariff not to 
exceed 65% N/A 0.1 Immediately 
Other N/A 0.04 Immediately (compound tariffs) 
 
Main products excluded 
from liberalization  China: grain, oil, cotton, sugar, and certain products made of paper 
Iceland: dairy and meat products  
Merchandise trade (2011)  Imports from Ic eland: US$75.6 million (0.42% of total) 
Exports to Iceland: US$76.6 million (0.37% of total) 
of which preferential Not applicable 
Related WTO documents  Not yet notified 
Relevant websites  http://fta.mofcom.gov.cn  
http://www.mfa.is/foreign-policy/trade/ free-trade-agreement-between-iceland-
and-china   
Source: Information provided by the Chinese authorities supplemented by online information. 
2.4.2  Unilateral preferences 
2.40.  As of 1 January 2014, unilateral preferential tariffs were offered to 40 least developed 
countries, including two that graduated from the United Nations list in February 2013 (Vanuatu and Equatorial Guinea). Some 90% of tariffs (in terms of national tariff lines) on imports 
from the Lao People's Democratic Republic, Cambodia and Myanmar were eliminated unilaterally 
by China as of 1 January 2010 under the China-ASEAN FTA framework.
24 In accordance with 
                                               
24 An FTA between China and "old members" of ASEAN, i.e. Brunei, Indonesia, Malaysia, the Philippines, 
Singapore, and Thailand was fully implemented on 1 January 2010, whereas the FTA between China 
and "newer members", i.e. Cambodia, Lao PDR, Myan mar, and Viet Nam is to be fully implemented 
on 1 January 2015 (WTO document WT/COMTD/51, 21 December 2004). WT/TPR/S/300 • China 
 
- 42 - 
 
  the Notice of the Tariff Commission of the State Council No. 15 of 21 June 2013 
(Shuiweihui [2013] No.15), since 1 July 2013 duties on 95% of tariff lines have been lowered to zero for imports from LDCs that have diplomatic ties and have completed an exchange of notes with China.  
2.5  Foreign investment regime 
2.41.  In 2012, China was the world's second largest recipient of FDI inflows (after 
the United States).
25 FDI in China mostly takes the form of wholly foreign-owned enterprises, 
which represented 52.5% of foreign-invested enterprises as of 2012. FDI is concentrated in the 
eastern region, which accounted for 81.2% of realized FDI value in 2012.26 Also, FDI is still largely 
concentrated in the manufacturing sector, which represented 38.7% of the total in 2013, although FDI in real estate and services  has been growing fast in recent years.
27 
2.42.  China's policy towards foreign investment ha s been to encourage direct inward FDI as well 
as joint ventures between Chinese and foreign companies, particularly with regard to R&D activities. FDI has been encouraged in areas such as high-end manufacturing, high-tech industries, 
service industries, new energy and energy-s aving environmental protection industries. 
The authorities have noted that China actively guides foreign investment in the central and western regions.  
2.5.1  Regulatory framework and market access 
2.43.  The main laws specifically related to foreign-invested enterprises (FIEs) in China include 
the following: the Law on Sino-Foreign Equity Joint Ventures; the Law on Sino-Foreign Cooperative Joint Ventures; the Law on Wholly Foreign-Owned En terprises; the Law on Partnership Enterprises; 
and their related administrative regulations and rules. During the period under review, 
the regulatory framework underwent significant changes, as broadly reflected in the State Council's Circular No. 47 of 13 December 2013 (GuoFa [2013] No. 47), or State Council Circular 
on releasing the Catalogue of Investment Projects Subject to Government Verification, 2013 
version . Other changes include the revision of the Company Law (Order of the President of the 
People's Republic of China No.8, issued on 28 December, 2013). 
2.44.  Foreign investment in China can take several forms, including joint ventures 
(equity, contractual or cooperative), wholly foreign-owned enterprises, participation in partnership enterprises, or mergers and acquisitions of Chin ese domestic enterprises. Wholly foreign-owned 
enterprises and equity joint ventures remain the most common forms of FIEs, and attracted 
respectively 58.2% and 27.2% of realized FDI in 2012.
28 
2.45.  Foreign investment projects are classified in four categories: encouraged, permitted, 
restricted, and prohibited.29 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 projects are thos e deemed to employ outdated technologies, 
over-exploit scarce natural resources, or harm the environment. The prohibited category includes 
projects that are considered as polluting the environment, destroying natural resources 
or damaging social and public interests. Projects that do not fall into these three groups are "permitted". 
2.46.  The Catalogue for the Guidance of Foreign Investment Industries  (Investment Catalogue) 
is the main reference for the classification of proj ects. It lists the industries that are encouraged, 
restricted or prohibited. The Catalogue was revised in 2011 to reflect the goals adopted 
                                               
25 UNCTAD (2013), World investment Report 2013 – Global value chains: investment and trade for 
development.  United Nations, New York and Geneva, 2013. Viewed at: 
http://unctad.org/en/publicationslibrary/wir2013_en.pdf . 
26 The Eastern Region comprises: Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, 
Shandong, Guangdong, and Hainan. 
27 Statistics on FDI in China, 2013. Accessed online at: 
http://img.project.fdi.gov.cn//21/1800000121/File/201310/201310141023341793163.pdf . 
28 Statistics on FDI in China, 2013. Accessed online at: 
http://img.project.fdi.gov.cn//21/1800000121/File/201310/201310141023341793163.pdf . 
29 Provisions on Guiding Foreign Investment Direction. Viewed at: http://english.mofcom.gov.cn/ 
aarticle/topic/chinainvest/foreigntradelaw/200707/20070704928472.html  [13 February 2014]. WT/TPR/S/300 • China 
 
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  in the twelfth Five-Year Plan (2011-2015). The revised Catalogue is considered a step towards 
further opening up the economy as it included more projects in the encouraged category, removed some from the restricted and prohibited categori es, and relaxed some restrictions on the form 
of investment in certain industries (Table 2.2).  
2.47.  Projects in the "encouraged" category are eligible for preferential treatment as specified 
in the relevant laws and regulations. They ma y enjoy customs duty and VAT exemption on the 
importation of capital goods. Projects in the restricted category must undergo a more thorough 
examination and approval process. 
Table 2.2 Summary of the major change s in the Investment Catalogue, 2011 
2011 
Catalogue 2007 
Catalogue Industry/Activity 
Encouraged Encouraged Mining:  form of investment extended to equity joint ventures, in addition to 
cooperative joint ventures. 
Food processing:  no restriction on the form of investment in the production of 
natural food additives and ingredients.  
Permitted Health:  production of new vaccines for selected diseases. 
Mining: exploration and development of shale gas.  
Textile:  new products and technologies in textile; green/environmental protective 
and special clothing production. 
Manufacturing:  key spare parts for vehicles using new energy. 
Energy:  manufacturing of gear transmission used for wind power; nuclear power 
and high-speed trains; variable paddle gear transmission systems used for vessels; 
and large-scale and heavy load gear cases. 
Services:  Electric vehicle charging stations; venture capital businesses, intellectual 
property services; household services; marine oil pollution clean-up services; 
vocational training services; water plant construction and operation. 
Other:  next-generation Internet system equipment; use of environmentally friendly 
resources in the production of bi o fibre; venture capital firms. 
Permitted Encouraged Manufacturing:  whole cars, certain components and parts; ethylene; 
polycrystalline silicon. 
Chemicals: large-scale chemical products using coal as raw material.  
Restricted Health:  public health; social security and social welfare industry; medical 
institutions; pharmaceutical distribution; production of non-self-destructible 
injections; transfusion sets; blood transfusion sets and blood bags. 
Construction:  natural gas, heating, and public sewage systems. 
Manufacturing:  carbonated beverages. 
Services:  financial leasing firms; distribution of automobiles; commercial products 
auctions; franchises; agencies; business management services. 
Others:  import of audio-visual products ; books; newspapers; periodicals 
and digitally published contents. 
Prohibited Internet culture business: music only. 
Restricted Restricted Mining:  list of restricted non-metal ores extended to high alumina refractory 
cement, wollastonite and graphite; extraction and refining of lithium and sulphur 
iron; refining of brine resources from salt lakes.  
Food processing:  extension of the scope of edible oils and grains. 
Wholesale and retail trade:  large-scale agricultural markets. 
Education: ordinary senior high schools (CJV only). 
Prohibited Permitted Post and telecommunications:  domestic express letter delivery services. 
 Restricted Real estate:  villa projects. 
Source: Catalogue for the Guidance of Foreign Investment Industries  (2007 and 2011 versions). 
2.48.  Projects in the Central and Western Regions may enjoy less restrictive policies. 
Foreign-invested projects in sectors listed in the Catalogue of Priority Industries for Foreign 
Investment in the Central-Western Regions of China  are entitled to the same preferential 
treatment as those classified as "encouraged" in the Investment Catalogue . The Central 
and Western Regions Catalogue was revised in 2013, to enlarge its sectoral and geographical 
scope30: it has now 500 items, 173 more than the previous Catalogue, and covers Hainan 
province. Newly included sectors are related to emerging industries and services (solar power 
                                               
30 An English version of the revised catalogue was no t available at the time of writing this report. 
The Chinese version is available at: http://www.ndrc.gov.cn/zcfb/zcfbl/2013ling/W020130516388520815145.pdf . WT/TPR/S/300 • China 
 
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  generation and its equipment, spare parts manufacturing, cloud computing, the "Internet of 
Things", and mobile Internet). The Catalogue relists some industries such as manufacturing of whole automobiles or of special purpose vehicles , even though these industries were removed 
from the Investment Catalogue. 
2.49.  Foreign investment in China can be made in foreign currency or in renminbi (RMB). Except 
for investments valued at US$300 million or more or in industries that require approval from MOFCOM, procedures may be completed by the authorities at the provincial level. Foreign 
investment with RMB is not allowed "directly or indirectly" in equities and financial derivatives, 
except if used for strategic investment in listed companies.  
2.50.  Between 2012 and 2013, the State Administration of Foreign Exchange (SAFE) took 
measures aiming at simplifying rules governing FDI in China and easing restrictions on the use 
of capital for direct investments.
31 The SAFE abolished 24 regulations containing requirements 
on foreign exchange registration and the opening and use of accounts; and introduced new rules focusing on simplified procedures and regulations for foreign currency registration, the opening 
and use of accounts, as well as the receipt and disbursement of capital and settlements. 
The restrictions on reinvestment in RMB for fo reign companies were abolished. FIEs are now 
allowed to extend loans to offshore shareholders, although restrictions are still in place 
on the amount of such loans. 
2.51.  Foreign investors may also be allowed to own some shares in State-controlled enterprises 
in certain sectors.
32 There are no restrictions on lending by domestic banks to FIEs. 
2.52.  In accordance with the Anti-Monopoly Law, FDI in the form of mergers and acquisitions 
(M&As) of enterprises is subject to anti-trust reviews.33 The reviews are intended to assess 
the impact of such M&As on market competition. In addition to anti-trust reviews, FDI involving 
M&As with Chinese domestic enterprises is subject to  national security reviews, if the FDI is related 
to defence, or is deemed to have an influence on national security, for example through control 
of firms engaged in activities involving key co mmodities (e.g. agriculture, energy, and natural 
resources), key infrastructure, key transport, and key equipment manufacturing with essential 
technologies. In 2011, the authorities took some st eps to clarify the procedures and scope of these 
reviews34, and issued guidelines for impact assessment of anti-trust reviews.35 
From 1 January 2012 to 1 May 2013, MOFCOM unconditionally approved 215 anti-monopoly review decisions and conditionally approved eight. Anti-monopoly reviews have also been conducted 
at the provincial level. The authorities noted that the State Administration for Industry 
and Commerce (SAIC) authorized the industrial and commercial bureaux in some provinces, such as Jiangsu, Jiangxi and Zhejiang, to regist er and investigate 21 anti-monopoly cases during 
the period. 
2.53.  In 2013, the authorities issued some Guiding Opinions
36 encouraging companies operating 
in some key industries to increase their merger and reorganization activities in order to improve 
their efficiency and global competitiveness. The targeted industries are: automobiles, steel, 
cement, shipbuilding, electrolytic aluminium, rare earth, electronic information, pharmaceuticals, and agricultural industrialization. For some of these industries, the Guiding Opinions set targets in terms of the degree of concentration to be reached by 2015. The legislation also encourages 
                                               
31 Circular on Further Improving an d Adjusting Foreign Exchange Admi nistration Policies on Direct 
Investment (Hui Fa [2012] No. 59).  
32 State-controlled enterprises are enterprises in which the State, or  another state-owned enterprise 
(SOE), holds more than 50% of equity; or, if the eq uity share is less than 50% , the State or another SOE 
has controlling influence on its management and operation. 
33 Administrative regulations with regard to FDI involving M&As include: the Provision on Mergers 
and Acquisition of Domestic Enterprises by Foreign Investors; Measures on the Examination of Concentration of Undertakings; Measures on the Notification of Conc entration of Undertakings (which entered into force 
in January 2010); and Provisions on National Security Review of Acquisitions of Domestic Enterprises by Foreign Investors (which entered into force on 1 September 2011). 
34 MOFCOM Provisions on National Security Review of  Acquisitions of Domestic  Enterprises by Foreign 
Investors, 1 September 2011. 
35 The Interim Provisions on the Assessment of the Impact of Concentration of Undertakings 
on Competition, 5 September 2011. 
36 Guiding Opinions on Accelerating the Merger and Reorganization of Enterprises in Key Industries  
(MIIT Lian Chan Ye [2013] No. 16). WT/TPR/S/300 • China 
 
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  foreign investors to participate in domestic enterprises through share participation, mergers 
and acquisitions. 
2.54.  The Government encourages the development of foreign-invested high-tech enterprises, 
as well as R&D cooperation between domestic and foreign enterprises for the purpose of enjoying 
EIT (enterprise income tax) preferential treatment.37 The authorities support eligible FIEs, 
jointly with domestic enterprises and research institutes, to apply for government funded/sponsored R&D projects, innovation capacity-building projects, and authentication 
of national technology centres. Eligible foreign- invested R&D centres were exempted from customs 
duties, value-added tax, and consumption tax on  imported inputs needed for R&D consumables 
until 31 December 2015.
38 The authorities maintain that there are no mandatory requirements 
of technology transfer associated with FDI approval; these were removed from all laws 
and regulations upon China's accession to the WTO. In response to concerns raised 
by other WTO Members about de facto technology transfer requirements on foreign investment projects, e.g. in the new-energy automotive sector
39, the authorities stated that such concerns are 
not consistent with the facts, as China encourages the development of new-energy automobiles 
through independent innovation and applies the same certification requirements to national companies or joint ventures. 
2.5.2  Examination and approval procedures 
2.5.2.1  Inward investment 2.55.  Important changes to the examination and approval procedures for foreign-invested fixed 
asset investment projects were introduced in De cember 2013 to accelerate the foreign investment 
establishment process and facilitate investment. State Council Circular No. 47 
of 13 December 2013 (GuoFa [2013] No. 47) contains the Catalogue of Investment Projects 
Subject to Government Verification . The Catalogue applies to fixed asset investment projects 
of both foreign and domestic investors. In accordance with the Circular, as of 13 December 2013, 
there are two categories of investment proj ects depending on their required modality 
of registration: (a) projects subject to verification ; (b) projects subject to filing. The Catalogue lists 
the fixed-asset investment projects subject to verification; projects not listed in the Catalogue may 
be classified under the filing option. In genera l, FDI in "important or restricted" projects
40 requires 
verification by the authorities, as stipulated in the State Council  Decision on Reforming 
the Investment System and the Catalogue of Investment Projects Subject to Government 
Verification , which includes government-funded, important or restricted fixed-asset investment 
projects, in several industries or sectors.41  
2.56.  Verification consists in the examination of the investment project. It is carried out by the 
NDRC for projects at the national level, or by th e corresponding provincial DRCs for projects at the 
provincial level or under a certain threshold (see below). A number of conditions need to be met, including those related to the environmental effect of the project, and land use. 
Filing is a simplified process handled by the competent local authorities; in general 
foreign-invested projects are subject to the same  requirements as domestic investment projects. 
                                               
37 Any enterprise registered in China for longer  than one year may apply for authentication 
as a high-tech enterprise. Six conditions must be met to be "authenticated", including: that the products 
(or services) supplied by the enterprise s must be on the list of High-Tech Fields with Essential Support by the 
State; and the authenticated high-tech enterprises must possess "self-owned" intellectual property rights over the "core technology" acquired through in-house R&D, tr ansfer or gift, M&A operation, or exclusive licence 
for more than five years. The status  of high-tech enterprise is valid fo r three years, and may be renewed. 
Authenticated high-tech enterprises ma y be granted preferential tax treatment, such as income tax exemption 
or reduction, within the period of validit y of their high-tech enterprise status.  
38 Foreign-invested R&D centres were initiall y exempted from import customs duties, VAT 
and consumption tax on scientific development products between 1 July 2009 and 31 December 2010. Circular on Further Implementation of Tax Policies for Research and Development Institutions' Purchase 
of Equipment  (Cai Shui [2011] No. 88), extended the tax preferential treatment until 31 December 2015. 
39 WTO documents G/L/977, 16 November 2011; and IP/C/60, 17 November 2011.  
40 The authorities note that these restricted sector s are listed in the restricted category in the Catalogue 
for Guiding Industry Structure Adjustment  and the Catalogue for the Guidance of Foreign 
Investment Industries . 
41 These include: agriculture an d forestry; energy; transporta tion; information technology; 
raw materials; manufacturing; light industry and toba cco; high and new technology; urban infrastructure; 
social projects (including to urism), and financial services. WT/TPR/S/300 • China 
 
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  The formalities to be met regardless of the need for verification include: approval of the 
establishment of the enterprise; obtaining the required FIE approval certificates; application for a business licence; and registration with th e relevant authorities (taxation, customs, 
foreign exchange, regulatory body). The proces s for FDI approval in the services sectors 
is governed by sector-specific laws and regula tions (for example, subject to minimum capital 
requirements in banking). 
2.57.  At the time of drafting this report (March 2014), the NDRC had already drafted 
administrative measures for the verification and filing of foreign-invested projects and had 
completed the process of public consultation online, including the one-month period for comments.
42 The authorities noted that the NDRC would publish the administrative measures 
after introducing the pertinent modifications. The corresponding measures 
for domestically-invested projects had not yet been drafted. Since administrative rules were 
not yet in place, and hence the procedures of the Catalogue of Investment Projects Subject 
to Government Verification  could not yet be implemented,  the authorities indicated that 
enterprises in industries classified in the Catalogue of Investment Projects Subject to Government 
Verification as requiring only filing had the choice, du ring this transition period, of applying 
for verification immediately or waiting to file wh en the administrative measures come into effect. 
They indicated that most fixed-asset foreign-invested projects seemed to favour the second route. 
They also indicated that implementation of the Catalogue measures will take place on the same 
day the administrative rules are issued. 
2.58.  The main regulations for FDI in "important or restricted" projects, the Interim Measures 
for the Administration of Examination and Verification of Foreign Investment Projects , 
based on the Decision and on the Administrative Permission Law, stipulate examination and approval procedures for fixed-asset FDI in China.
43 
2.59.  Verification is carried out, depending on  the size or location of the project, by the 
State Council, the central NDRC or one of its loca l branches. Projects in encouraged industries 
in the Catalogue for the Guidance of Foreign Investment Industries valued at over US$300 million 
(US$50 million for restricted industries), and where the Chinese party has the controlling stake, 
must be examined by the NDRC, while projects below these thresholds can be filed, verified 
and approved by local branches.44 Projects valued at US$500 million or more (US$100 million 
for restricted industries) are submitted for verification to the State Council. The NDRC (or its local 
branches) examines and verifies FDI applications against, inter alia,  the following provisions: 
relevant laws and regulations; the Catalogue for the Guidance of Foreign Investment Industries ; 
the Catalogue of Priority Industries for Foreign Investment in the Central-Western Regions 
of China ; the medium and long-term development plan for the national economy and society 
(the five-year plans); policies related to industry planning and restructuring; public interests and competition provisions; land-use planning, city planning, and environmental protection 
policies; national standards; and rules on capital account management and foreign debt 
management.
45 They may also seek opinions from the industry regulator or a "qualified 
consultation institution". 
2.60.  Upon completion of the verification or fili ng process, which can be regarded as the market 
access procedure, the FIE must next submit an application to MOFCOM, at the competent level, 
for an FIE Approval Certificate (establishment procedure) in the case of new fixed-asset investment projects, or when expanding the scale of  production. In the case of projects not falling 
into either of these two categories, the FIE may directly submit an application for establishment 
to MOFCOM at the competent level. Investment projects valued at US$300 million or more in the encouraged or permitted sectors (and US$50 million for restricted industries) require approval 
from MOFCOM at the central level, while projects below these thresholds can be approved 
by MOFCOM's provincial or local offices. Once  MOFCOM's approval has been obtained at the 
                                               
42 Consultations were held online (in Chinese only) through NDRC's website: www.ndrc.gov.cn . 
43 These measures apply to Chinese-foreign contract ual joint ventures, Chines e-foreign equity joint 
ventures, wholly foreign-owned enterpri ses, mergers between enterprises, ac quisitions of domestic enterprises 
by foreign investors, and increases in capital of foreign-owned enterprises. 
44 The power to verify restricted in dustries may not be delegated to a department belo w provincial DRC 
level. For projects of more than US$30 million involving FDI, local governments must submit a copy of the 
examination and verification document to the NDRC within 20 working days. 
45 Provisions on the Interim Measures for the Administra tion of Verification and Authorization of Foreign 
Investment Projects  (NDRC Decree No. 2004/22), entered into force on 9 October 2004. WT/TPR/S/300 • China 
 
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  competent level, the FIE must apply for business registration and obtain a business licence. 
Any subsequent change regarding the FIE (such as capital increase, share transfers, merger operations), must obtain MOFCOM's approval at the competent level, followed by filing for a change in registration.  
2.61.  FIEs must also register with the State Administration for Indust ry and Commerce (SAIC) 
or a provincial commercial department, and with the SAFE. Registration requirements are the same as for domestic enterprises, but may vary slightly depending on the sector of activity. 
Corporations are registered in accordance with the Corporations Law, while partnerships 
are registered in accordance with the Partnership Law. 
2.62.  In 2013, the State Council adopted measures aimed at easing the industrial and commercial 
registration system.
46 With the exception of projects involving national security, 
human or property safety, prior approval by the competent authorities is no longer a prerequisite 
for registration with industrial and commercial authorities. The State Council issued on 18 February 2014 a Notice on Implementation of Reform of the Registration of Enterprises, 
as part of the State Council's Decision on the Abolishment and Revision of several Administration 
Regulations  (State Council Order No. 648, of 19 February 2014). The reform, with effect 
from 1 March 2014, covers both foreign and domestic enterprises, including state-owned 
enterprises. It has four components, linked to registration and post-establishment requirements: 
(a) changes with respect to capital requirements , from paid-up capital in the previous system, 
to subscribed capital; also the (prior to registration) capital verification requirement has been removed, and it is now up to the shareholders to decide when to put up the capital; (b) relaxation 
of domicile requirements for the enterprise: prev iously a domicile had to be provided for each 
enterprise registered; currently a single domicile can be provided for one or several enterprises, 
and one enterprise may provide more than one domicile at registration (previously this was not 
allowed); (c) elimination of the annual inspection requirement: previously an annual inspection 
of the enterprise's operating status was mandatory, now it has become voluntary; (d) establishment of a credit information disclosure system for enterprises: enterprises may 
submit their basic information (domicile, structure, capital, members of the Board of Directors, 
articles of association) to a public system; this is intended to let the general public know whether a company is legally established and solvent.
47 
2.63.  The Corporations Law was amended in January 2014 to adapt the provisions regarding 
capital requirements, and replace the paid-up capita l registration system with a subscribed capital 
registration system. The amendment entered into  effect on 1 March 2014. Partnerships have 
no capital requirements, so they were  not affected by the changes in the Notice 
on Implementation of Reform of the Registration of Enterprises.  
2.64.  Some provinces, autonomous regions and municipalities directly under the 
Central Government have established one-stop services to help foreign investors with the approval 
and registration process. 
2.5.2.2  Outward investment 2.65.  Since 2005, China's outward FDI flows have been rapidly increasing, reflecting 
stronger policy support to the country's Going Global  strategy.
48 In 2012, China overtook 
the United Kingdom and Hong Kong, China to become the third largest investor economy, 
behind the United States and Japan.49 
2.66.  The Decision on Reforming the Investment System  (GuoFa [2004] No. 20) is the main 
guiding framework for China's outward investment. The Administrative Measures on Outbound 
                                               
46 The Institutional Reform and Function Transf ormation Scheme of the State Council,  adopted 
at the 1st Session of the 12th NPC. 
47 Previously, this type of information was not available to the public; it was only deposited with 
Government institutions. The new system does not serve the purpose of easing the grant of credit; 
the People's Bank of China (PBC) has its own clas sification and rating system for these purposes. 
48 China's "go global" policy was initiated in 1999, to encourage Chinese enterprises, mainly SOEs, 
to invest overseas.  
49 UNCTAD (2013), World investment Report 2013 – Global value chains: investment and trade for 
development. United Nations, New York and Geneva, 2013. Viewed at: http://unctad.org/en/publicationslibrary/wir2013_en.pdf . WT/TPR/S/300 • China 
 
- 48 - 
 
  Investment  stipulate the approval process. The Outbound Foreign Investment Catalogue  indicates 
the sectors and countries where outward investments are encouraged. Basically, Chinese investors must seek approval and verifications from th ree key regulatory bodies: the NDRC, MOFCOM 
and SAFE. The nature of the procedure (approval or simple filing) and the relevant administrative 
level (central or local) depend on factors such as the type of investor (SOE or private), the place, 
the sector and the size of the investment. Outward investments in "sensitive" sectors, countries or regions require approval and verification at central levels. For all other investment projects, 
the size of the investment and the nature of the investing entity are the main criteria 
for determining the appropriate approval authority (Table 2.3).
50  
Table 2.3 Verification and approval  process for outward investmentsa 
 Centrally-administered SOEs Other entities 
2004 Catalogue 2013 Catalogue 2004 Catalogue 2013 Catalogue 
NDRC Approval 
Local filing Not allowed No longer applicable Not allowed ≤ US$300 million 
Central filing ≤ US$100 million No longer applicable Not allowed US$300 million to 
1 billion 
Local approval  Not applicable ≤ US$100 millionb No longer applicable 
Central approval > US$100 million > US$1 billion > US$100 milliona > US$1 billion 
MOFCOM verification 
Filing, central or local Not allowed All projects  All projects 
Summary process Not allowed No longer applicable ≤ US$10 million No longer applicable 
Central verification > US$100 million No longer applicable > US$10 million No longer applicable 
a This does not apply to proj ects in sectors or countries designated as "sensitive". 
b The threshold is raised to US$300 million for natural resources-related projects. 
Source: Information provided by the authorities.  For more detailed information, refer to the Decision 
on Reforming the Investment System  (GuoFa [2004] No. 20) , the Catalogue of Investment Projects 
Requiring Government Verification (issued by the State Council, 2013 version). Viewed at: 
http://www.gov.cn/zwgk/2005-08/12/content_21939.htm ; and to Administrative Measures 
on Outbound Investment (MOFCOM Order [2009] No. 5). Viewed at: 
http://www.mofcom.gov.cn/article/b/c/200903/20090306103210.shtml . 
2.67.  In December 2013, the State Council issued the Circular Concerning the Catalogue 
of Investment Projects Requiring Government Verification , Guo-Fa [2013] No. 47. The Circular 
extends the Catalogue  to all (onshore and offshore) investment projects that require governmental 
approval. Investments in "sensitive" countries, regions or sectors remain subject to approval by the NDRC and verification by MOFCOM. The 2013 Catalogue provides some details regarding 
filing procedures. Currently, the NDRC and MOFCOM are revising the relevant administrative rules. 
2.68.  After the approval and verification processe s, the investor must register with SAFE in order 
to be allowed to remit out of China the funds required for the investment. SOEs also need 
to obtain the approval of the state-owned Assets Supervision and Administration Commission. 
The approval of industry-specific regulators may be required for investment in certain industries. 
2.5.3  Incentives to foreign investment 2.69.  Incentive measures applicable to foreign investments take mainly one of the 
following forms: 
a. encouraged items in the Catalogue for the Guidance of Foreign Investment Industries
51 
(see Table 2.2), and projects in the Catalogue of Priority Industries for Foreign 
Investment in the Central-Western Regions of China (latest amendment in 2013);  
                                               
50 The authorities have noted that, according to the current relevant rules, sensitive countries 
and regions include those with which China has not established diplomatic relations, or those subject to international sanctions, or those facing a wa r or civil strife. Sensitive sectors include basic 
telecommunications operations, the exploration of water resources, large-scale land exploration, electricity 
transmission lines an d power grids, news media, among others. 
51 The investment project must be in  the encouraged category in the Catalogue for the Guidance 
of Foreign Investment Industries and in the Catalogue of Priority Indust ries for Foreign In vestment in the WT/TPR/S/300 • China 
 
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  b. duty-free treatment for equipment imported within the total investment amount 
for self-use; and, 
c. Preferential tax treatment provided under the Enterprise Income Tax Law  (Table 2.4). 
2.70.  The Enterprise Income Tax Law  allows the application of an accelerated depreciation method 
or the shortening of the depreciation period when the depreciation of a fixed asset is accelerated. 
Autonomous local authorities may also opt for tax reduction or exemption for their portion of the enterprise income tax (EIT). 
Table 2.4 Incentives in the form of prefer ential tax treatment under the Enterprise 
Income Tax Law  
Type of enterprise Conditions of eligibility Form of the incentive 
Small enterprises 
with low profits Industrial enterprises with an annual taxable 
income of no more than RMB 300,000, a payroll 
size of at most 100 persons, and a total amount of 
assets not exceeding RMB 30 million.  
Other enterprises, with an annual taxable income 
of no more than RMB 300,000, a payroll size of at most 80 persons,  and a total amount 
of assets not exceeding RMB 10 million. Reduced rate of 20% 
High and new 
technology 
enterprises State-encouraged. Recognized high-tech 
enterprises must engage in a business involving 
products (services) that falls within the scope 
specified in the Advanced and New Technology 
Areas Eligible for the Key Support of the State . 
To be recognized as high-tech enterprises, 
companies must meet some parameters regarding 
R&D expenses, income from high-end new 
technological products and number 
of R&D personnel. Reduced rate of 15% 
Venture capital 
enterprise Venture capital investments supported 
and encouraged by the State Partial deduction of the 
invested amount from taxable 
income 
All enterprises Income derived from one of the following: 
 Projects in agriculture, forestry, 
animal husbandry and fisheries; 
 Public infrastructure investment projects 
supported by the State 
 Qualified projects related to environmental 
protection, energy and water conservation 
 Qualified transfer of technology Deduction/exemption from 
income tax 
All enterprises R&D expenses incurred for the development 
of new technology, new products or techniques Deduction for 50% of the 
incurred expenses 
All enterprises Income from the production of goods in conformity 
with the industrial policies of the State and by way 
of comprehensive utilization of resources Deduction of such income from 
taxable income 
All enterprises Investment made in specialized equipment 
for environmental protec tion, energy and water 
conservation, production safety… Partial deduction of the 
invested amount from income 
tax 
Source: Enterprise Income Tax Law of  the People's Repu blic of China. 
2.71.  Preferential tax treatment previously granted to firms located in special economic 
and high-tech development zones was grandfathered under the Enterprise Income Tax Law 
of 2008, and a transition period was granted. After the transition period, there will 
be no preferential tax treatment for enterprises in these zones.52  
                                                                                                                                               
Central-Western Regions of China , and goods to be imported must not be listed in the Catalogue of Imported 
Products not subject to Tax Exemption in Foreign Investment Projects.  
52 Article 57 of the Enterprise Income Tax Law  and provisions stipulated in the Notice of the 
State Council on the Implementation of the Grandfatheri ng Preferential Policies for Enterprise Income Tax  
(Guo Fa 39/2007). WT/TPR/S/300 • China 
 
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  2.72.  Foreign-invested projects listed in the encouraged category in the Catalogue 
for the Guidance of Foreign Investment Industries  may also benefit from customs tariff exemption 
for the equipment purchased to be used in the project, excluding goods listed in the Catalogue of 
Imported Products not subject to Tax Exemption in Foreign Investment Projects . 
2.73.  Both domestically-funded and foreign-invested enterprises in China are currently subject 
to the same taxation regime, and there is no longer a preferential tax treatment uniquely for FIEs. Before 2008, the actual tax burden of FIEs was apparently lower than the burden for domestic 
enterprises in virtue of the support granted th rough preferential tax treatment. This changed 
in 2008 when, with the purpose of creating a fair taxation environment for all kinds of enterprises 
and fully implementing the non-discrimination principle, China implemented a new Enterprise Income Tax (EIT) Law and its regulations as from 1 January 2008. The new law terminated the 
situation under which domestic and foreign-invest ed enterprises were subject to different EIT 
treatment by providing that the EIT be levied at the same rate on FIEs and domestic enterprises. 
China subsequently went on to standardize the urban maintenance and construction tax 
and educational surcharge on enterprises, for FIEs and domestic enterprises (and individuals) 
as from 1 December 2010. 
2.74.  Tax incentives are in place for FDIs investing in the central-western region.
53 
Processing trade in the central-western region is also encouraged by establishing special customs 
supervision zones or bonded supervision areas.54  
2.75.  Small and medium-sized enterprises (SMEs) may benefit from lower enterprise income tax 
and lower VAT. Small-scale, low-profit enterprise s meeting certain requirements pay enterprise 
income tax at 20%.55 Since 1 January 2012 and until 31 December 2015, small-scale 
and low-profit enterprises with an annual taxabl e income not higher than RMB 60,000 are subject 
to an enterprise income tax at a rate of 20% calculated on 50% of their taxable income.56 
From 1 August 2013, micro and sm all enterprises with monthly sales of less than RMB 20,000 
are exempted from VAT. 
2.76.  In order to attract investment, especially foreign investment, and promote economic 
development China operates a preferential tax regime in specific regions. Such specific regions 
include Special Economic Zones57, Coastal Open Cities58; Economic and Technological Development 
Zones, Binhai New Area of Tianjin, Pudong New District of Shanghai and the Three Gorges of the Yangtze River Economic Zone.
59 The enterprises established in these regions, which satisfy certain 
                                               
53 Certain Opinions on Further Improving the Use of Foreign Capital (State Council Circular 2010/9), 
Section 2, Point 8 and Point 9.  
54 See the State Council's Guiding Opinions on the Central and Western Regions' Receipt of Industrial 
Transfers (State Council Circular 2010/28, 31 August 2010).  
55 Small-scale, low-profit enterprises are: industrial enterprises whose total assets are less 
than RMB 30 million, with annual taxable income be low RMB 300,000, and with fe wer than 100 employees; or 
other enterprises whose assets are less than RMB 10 million, with annual taxable income lower than RMB 300,000, and with fewer than 80 employees. 
56 Opinion of the State Council on Further Suppor ting the Sound Development of Small and Micro 
Enterprises (Guo Fa [2012] No. 14). 
57 The Special Economic Zones entitled to preferential policies are Shenzhen; Zhuhai; Shantou; Xiamen; 
and Hainan Province. 
58 The coastal open economic areas originally referred to the 14 coastal open cities designated in 1984, 
including Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao,  Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, 
Fuzhou, Guangzhou, Zhanjiang, and Beihai. They were th e second set of regions opened to the outside world, 
following the special economic zones. In 1985 the Yangtze River Delta, the Pearl River Delta, and the triangle area of Xiamen, Zhangzhou, and Quanzhou cities in Fujian Province were included in the coastal open 
economic areas. In 1988 the areas were further expanded to the Liaodong Peninsula, the Shandong Peninsula, 
etc. to include 153 cities and counties in Tianjin Mu nicipality, Hebei Province, Liaoning Province, Jiangsu 
Province, Zhejiang Province, Fujian Province; Shando ng Province, and Guangxi Zhuang Autonomous Region. 
In 1990, the city of Jinan was also included. In 1992, fi ve cities along the Yangtze River, namely Chongqing, 
Yueyang, Wuhan, Jiujiang, Wuhu, 6 provincial capital ci ties in border and coastal provinces and autonomous 
regions, namely Harbin, Changchun;  Hohhot, Shijiazhuang, Nanning and Kunming, and 11 provincial capital 
cities of inland provinces and auto nomous regions, namely Taiyuan, Hefei, Nanchang, Zhengzhou, Changsha, 
Chengdu, Guiyang, Xi'an, Lanzhou, Xining, and Yinchuan  began to implement the policies of the coastal open 
economic areas. In 1993, the city of Huangshi on the Yangtze River also began to implement the policies of the 
coastal open economic areas. 
59 The Three Gorges of the Yangtze River Economic Zone include Yichang County, Zigui County, and 
Xingshan County under the jurisdiction of Yichang City in Hubei Province, Badong Co unty of the Enshi Tujia, WT/TPR/S/300 • China 
 
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  conditions (e.g. foreign-invested enterprises or en terprises recognized as high and new technology 
enterprises) may benefit from a lower Enterprise Income Tax.60 Tax exemptions are also granted 
to high-tech enterprises that require support from the State and have been registered since 1 January 2008 in any special economic zone (i.e. Shezhen, Zhuhai, Shantou, Xiamen, and 
Hainan) and in the Pudong New Area of Shanghai. Income earned in any such zone is exempted 
from EIT for the first two years following the initial year in which income derived from production or operations is earned, and subject to EIT at ha lf of the 25% statutory tax rate between the third 
and fifth years. 
2.5.4  China (Shanghai) Pilot Free Trade Zone (CSPFTZ)  2.77.  On 17 August 2013, the State Council offici ally approved the establishment of the China 
(Shanghai) Pilot Free Trade Zone (CSPFTZ). The CSPFTZ covers the four specially supervised 
Customs zones: the Waigaoquiao Free Trade Zone, the Waigaoquiao Bonded Logistics Park, 
Yangshan Free Trade Port Area, and the Pudong Ai rport Free Trade Zone, in accordance with the 
Circular of the State Council on Printing and Distributing the Overall Plan for China (Shanghai) 
Pilot Free Trade Zone  (GuoFa [2013] No.38). 
2.78.  The authorities indicated that the launching of the CSPFTZ is a national strategy to deepen 
reforms. Since it is a Pilot Zone, policies will be tested in the Zone and this will serve 
as a showcase for further trade and investment liberalization nationwide. The authorities also 
indicated that Shanghai was chosen because it had traditionally been at the forefront of China's reform policies. The CSPFTZ is meant to expand and open up the service sectors and to reform 
the investment administration mechanism, push forward trade transformation, deepen the opening 
up of financial services, and create a new mode of supervision and service.  
2.79.  The CSPFTZ is really the deepening of a pr ocess that started in 1990 with the establishment 
of bonded areas. The Waigaoquiao Free Trade Zone , the first bonded area in China, was approved 
by the State Council in June 1990. The second step was taken in December 2003, when the 
State Council approved the establishment of  the Waigaoquiao Bonded Logistics Park. 
The Yangshan Free Trade Port Area, the first in China, was approved in June 2005, and finally 
in July 2009, the State Council approved the creation of the Pudong Airport Free Trade Zone, 
which was expanded in 2012. The purpose of these measures was to facilitate trade. A further step in this direction was the establishment in November 2009 of the Shanghai Free Trade Zones Administration, to oversee the functioning of the first three areas mentioned above (except 
Pudong Airport). 
2.80.  In 2013, it was decided to integrate all th e special Customs supervision areas and establish 
a single Free Trade Zone, in which policies would be tested. In August, the CSPFTZ 
was established encompassing the four bonded areas, with a total surface of 28 km
2. The CSPFTZ 
was inaugurated on 29 September 2013. In the cont ext of this Review, the authorities indicated 
that the zone has managed to attract a considerable amount of foreign investment during its first 
months of existence. Between the date of inau guration and mid-February 2014, 434 FIEs were 
established in the Zone, with a total investment of US$1.8 billion. The authorities also noted that the Zone has attracted investors from 40 countries and that investment has been strong in services: e.g., 89 financial companies were established during the period mentioned above, 
and 34 financial leasing companies. They noted further that trade from the Zone accounted 
for 27% of Shanghai's total trade (exports and imports). 
2.81.  One of the CSPFTZ's most important features is that it grants pre-establishment 
MFN treatment for FIEs
 on a trial basis . For the first time, with the exception of some bilateral 
agreements negotiated by China, a Negative-List approach is used for investors (see below) (Table A2.3). Projects outside the List need only to  file; no verification of the project is necessary. 
Filing can be done online, and this is the procedure used in 90% of cases, according to the 
                                                                                                                                               
and Miao Autonomous Prefecture in Hubei Province, Wushan County, Wuxi County, Fengjie County, Yunyang 
County, Kai County, and Zhong County under the jurisd iction of Wanxian City in Sichuan Province, Shizhu 
County under the jurisdiction of Qianjiang Prefecture, and Fengdu County, Wulong County under the 
jurisdiction of Fuling Prefecture of Sichuan Province, and Changshou Co unty, Jiangbei County, Ba County, and 
Jiangjin City under the jurisdiction of Chongqing City. 
60 Programmes 11-14 and 16 contained in WTO document G/SCM/N/186/CHN, 21 October 2011 
and programmes 6 and 10-13 contained in WTO document G/SCM/N/123/CHN, 13 April 2006. WT/TPR/S/300 • China 
 
- 52 - 
 
  authorities.61 There is a single window for filing FIE pr ojects and for establishment (and changes) 
of enterprises, which was opened at the Yangshan Free Trade Port Area in February 2014; documents go to all the institutions involved through this single window. In accordance with the Procedures on the Filing Administration of Foreign Investment Projects Within the China 
(Shanghai) Pilot Free Trade Zone (2013), t he project filing agency has up to ten working days 
after receiving the application materials to issue a decision on filing of the foreign investment project. According to the CSPFTZ's authorities, it takes four days to get the filing certificate and 
complete the registration (compared to an averag e of 29 days prior to the establishment of the 
Zone). Investments of Chinese enterprises registered in the Zone also require only filing. 
2.82.  In March 2014, a simplified reporting procedure was adopted, by which companies in the 
Zone need only to produce an annual report, instead of going through an annual inspection of their 
books, which was previously the case. The reports will be filed through an electronic platform 
in which the companies input their data. The authorities indicated that the platform would be operational by 1 March 2014. The exceptions to this are companies listed in the 
Abnormal Enterprise Directory.  
2.83.  Trade facilitation measures have also been introduced, including the simplification 
of customs procedures and improvement of regulati ons. A first-tier opening is currently applied, 
meaning that imported goods can be cleared at the port, before they reach the CSPFTZ. 
Enterprises are allowed to bring goods into the CSPFTZ with import manifests and an entry record list of goods before going through declaration formalities with the competent Customs authorities. A second-tier opening (between the Zone and the Chinese Customs territory) is envisaged, 
as information management is improved and upgraded. Other trade facilitation measures include 
the shortening of the quarantine period for animals, from 28 days to seven, and exemption from preshipment inspection requirements for used mechanical and electronic products. 
2.84.  The "Special Administrative Measures (Neg ative List) on Foreign Investment Access to the 
China (Shanghai) Pilot Free Trade Zone (2013)" (the "Negative List"), is mainly based on the "Framework Plan for the China (Shanghai) Pilot Fr ee Trade Zone," and the "Catalogue of Industries 
for Guiding Foreign Investment (2011 Amended Version)", and sets out administrative measures 
applicable to foreign investment projects and establishment of FIEs in the CSPFTZ where "national treatment" is not granted. The Ne gative List is compiled according to the "Classification and Codes 
of National Economic Industries (2011)" and includes 18 sectors or industries.
62 Two sectors: 
public management, social security and social organizations; and international organizations, 
are not subject to the Negative List. The Negative List will be adjusted when deemed appropriate. 
2.85.  For areas falling outside the Negative List (except those domestic investment projects 
requiring verification as stipulated by the State Council), prior approval is no longer required 
for foreign investment projects. It is sufficient to file the investment contract and the articles of association of the FIE. The Negative List also applies to investments in the CSPFTZ by investors 
from Hong Kong, China; Macao, China; and Chinese Taipei. If more favourable treatment 
is available for qualified investors according to the "Mainland and Hong Kong/Macao Closer 
Economic Partnership Agreements"  and their supplements, the "Cross-Straits Economic 
Cooperation Framework Agreement"  and the follow-up "Cross-Straits Agreement on Trade 
                                               
61 The applicant for a foreign investme nt project that is under filing administration within the CSPFTZ 
must fill in the required form and su bmit the relevant information thereon, as well as the following materials 
to the project filing agency: (a) the enterprise registration certificate (business licence), and certificate of commercial registration (the person al identity card in the case of an individual investor) of the Chinese 
and foreign parties of the investment project, respectively; (b) the letter of intent to invest signed by the 
investors, and a resolution of the board of director s of the company with respect to capital increase 
or acquisition and merger or any relevant resolutions on capital contribution; (c) the certificate of real estate 
ownership, or land bid-winning notice (or letter of confirmation of land tr ansaction, or contract of granting 
of state-owned construction land use right), or le asing agreement; and (d) any other related materials 
provided for by the relevant laws and regulations.  Procedures on the Filing Administration of Foreign 
Investment Projects Within the China (Shanghai) Pilot Free Trade Zone (2013).  
62 The 18 service sectors open to further foreign and private capital range from finance, shipping, 
commerce to culture. Foreign compan ies are also allowed to  provide specific types of telecommunications 
value-added services, including call centers, Internet information and related software technology services. 
Foreign travel agencies registered in the CSPFTZ can operate for overseas trips, except to Chinese Taipei. 
Entertainment agencies are allowe d to solely provide performance brokerage business in Shanghai. 
Foreign companies must enter into a partnership with Ch inese counterparts to open educational and vocational 
training, provide healthcare insurance services, and establish independent medical institutions. WT/TPR/S/300 • China 
 
- 53 - 
 
  in Services" , and other free trade agreements signed by  China, such treatment prevails over 
the Negative List. 
2.86.  The administrative rules are contained in the Procedures for the Administration of China 
(Shanghai) Pilot Free Trade Zone , promulgated by Decree No. 7 of the Shanghai Municipal People's 
Government on 29 September 2013. The Procedures established the China (Shanghai) Pilot Free 
Trade Zone Administrative Committee to specifically carry out reforms in the CSPFTZ, and undertake overall management and coordination of the relevant administrative affairs in the 
zone. The Administrative Committee, more specifically, has responsibility for: (a) promoting 
the implementation of various pilot reforms in the CSPFTZ, putting forward the policy-related 
measures and administrative management systems required; (b) taking charge of the administrative work in the areas of investment , trade, financial services, planning and land, 
construction, greening and city appearance, environmental protection, labour and human 
resources, food and drug supervision, intellec tual property rights, culture, public health, 
and statistics within the CSPFTZ; (c) directing the administrative work of the departments 
of industry and commerce, quality supervision, taxation, and pubic security within the CSPFTZ; 
(d) coordinating the administrative work of the departments of customs, inspection and quarantine, marine affairs, and finance within the CSPFTZ; (e) undertaking the work related 
to anti-monopoly investigations; (f) taking charge of the provision of services and of law 
enforcement within the CSPFTZ. The Procedures are effective as of 1 October 2013. 
2.87.  The administrative rules call for the open ing up and expansion of service sectors such 
as financial services, shipping, commerce and trade services, professional services, cultural 
services, and social services in the CSPFTZ and fo r exploring fields of possible service expansion.  
2.88.  Capital requirements have also been rela xed, replacing the requirement of paid-up capital 
with that of subscribed capital. It is up to the shareholders to determine the pledged capital 
contribution, as well as its mode and time-limit. 
2.89.  In accordance with the Circular of the China Banking Regulatory Commission on Issues 
Concerning Banking Supervision in China (Shanghai) Free Trade Zone , Yin Jian Fa [2013] No. 40, 
of 28 September 2013, Chinese-funded banks may carry out business in the CSPFTZ 
by establishing new branches or special institutio ns. The then existing Chinese-funded bank outlets 
in the four bonded areas of the CSPFTZ were a llowed to upgrade to branches or sub-branches. 
Newly established or upgraded sub-branches within the CSPFTZ are free from restrictions. 
Qualified foreign-invested banks are allowed to set up subsidiaries, branches, special institutions 
and Sino-foreign equity joint-venture banks in the CSPFTZ. Sub-branches of foreign-invested banks are allowed to upgrade to branches. The Circular states that studies will be conducted with 
the aim of shortening the statutory period for a CSPFTZ representative office of a foreign bank 
to be allowed to upgrade to a branch, and the statutory period for a CSPFTZ branch of a foreign bank to be allowed to carry out RMB business. 
2.90.  Qualified large enterprise groups in th e CSPFTZ are allowed to establish group finance 
companies, auto finance companies and consumer finance companies in the Zones; trust companies established in Shanghai are perm itted to relocate into the CSPFTZ; national 
financial asset management companies may establish branches in the Zone, and finance leasing 
companies may establish specialized subsidiaries. Qualified private investors may set up banks, 
finance leasing companies, consumer finance companies and other finance institutions in the CSPFTZ. Institutions licensed to operate in the Zone may carry out cross-border investment 
and financing operations, including commodity trade finance, whole supply chain finance, offshore 
vessel finance, onshore loans against offshore guarantees, commercial instruments, etc. Banks and financial institutions in the CSPFTZ may promote financial services for cross-border 
investments, including cross-border M&A loans and project loans, guarantees for offshore loans, 
cross-border assets management and wealth management, etc. Qualified Chinese banks are allowed to engage in offshore banking business in the CSPFTZ. WT/TPR/S/300 • China 
 
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  2.91.  Market access procedures for financial institutions were simplified, by eliminating the prior 
approval requirements for banks' sub-branches, and replacing it with a reporting requirement, 
and by setting up a "green channel" to grant market access for banks in the Zone.63  
2.92.  In accordance with the Policies and Measures on the Capital Market for Supporting 
and Promoting the China (Shanghai) Pilot Free Trade Zone , published by the China Securities 
Regulatory Commission on 29 September 2013, the China Securities Regulatory Commission (CSRC) will deepen capital market reform, and further promote its opening-up through a number 
of specific measures, including: (a) consenting to the establishment of the Shanghai International 
Energy Trading Center Co., Ltd. in the CS PFTZ by the Shanghai Futures Exchange, 
to be responsible for establishing a trading platform for international crude oil futures. Foreign investors may participate in domestic futures trading using the platform; (b) qualified entities 
and individuals in the CSPFTZ may make investments in foreign and domestic securities 
and futures markets; (c) foreign parents of enterprises in the CSPFTZ may issue RMB bonds in domestic markets; (d) securities and futures institutions may register and set up specialized 
subsidiaries in the CSPFTZ, and securities and futures institutions in the CSPFTZ may carry 
out over-the-counter (transactions of commodities and financial derivatives for domestic clients).  
2.93.  In accordance with the Opinion by the China Insurance Regulatory Commission to Support 
the China (Shanghai) Pilot Free Trade Zone , the CIRC decided to: (a) allow the establishment 
of foreign-invested specialized health insurance institutions in the CSPFTZ; (b) allow the establishment of CSPFTZ branches of insurance companies, and the development 
of cross-border RMB-denominated reinsurance business in the CSPFTZ; (c) allow pilot outbound 
investments by CSPFTZ insurance institutions, relaxing the relevant outbound investment 
restrictions for CSPFTZ insurance institutions; (d) allow world-known specialized insurance intermediaries as well as social organizations or individuals engaged in the reinsurance business 
to provide support for the development of insurance industry in the Zone; (e) permit 
the development of shipping insurance business es in Shanghai, including shipping insurance 
institutions and brokers.  
2.5.5  Bilateral investment treaties  
2.94.  By mid-May 2013, China had concluded 131 bilateral investment protection and promotion 
agreements. Between 2012 and 2013, China signed a tripartite agreement with Japan and Korea, the Republic of; and bilateral agreements with Ca nada, Chile and Tanzania. With the exception of 
the bilateral agreement with Canada, none of these agreements has yet taken effect. 
2.95.  Since 2011, China has signed agreements on  avoidance of double taxation with Botswana, 
Ecuador and Uganda and revised its agreements with Denmark, France, the Netherlands, 
Switzerland and the United Kingdom. In the meantime, agreements with the following countries 
came into force: Belgium, Czech Republic, Denmark, Ethiopia, Malta, Syria and Zambia.  
2.96.  China revised its double taxation ag reement with Switzerland in September 2013. 
                                               
63 The authorities have noted that "Green Channel" means streamlining the ma rket access procedures 
for financial institutions by optimizing the supervision mechanism, so as to promote opening and competition among banks and financial institutions within the CSPFTZ. WT/TPR/S/300 • China 
 
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  3  TRADE POLICIES AND PRACTICES BY MEASURE 
3.1  Measures Directly Affecting Imports 3.1.1  Customs procedures and requirements 3.1.  Customs procedures continue to be mainly regulated by: the Customs Law of the 
People's Republic of China (issued in 1987, and amended in 2000 and 2013); the Provisions of the 
People's Republic of China on the Customs Administration of Declarations for the Import and Export of Goods (GACC Decree No. 103 of 2003); an d the Customs Rules on Administration of the 
Levying of Duties on Imports and Exports (GACC Decree No. 124 of 2005).
1 
The General Administration of Customs of  the People's Republic of China (GACC)2, the national 
authority responsible for customs administration in China, issues administrative customs ordinances and announcements as required to introduce and enforce changes in customs 
procedures. Between January 2012 and October 2013, the GACC issued a total of 138 GACC 
Announcements and nine GACC Decrees, which have focused, inter alia , on issues such as: 
paperless procedures, the harmonization of customs procedures throughout the country, the 
imposition of anti-dumping duti es, and tariff classification.
3 The decrees issued since January 2012 
are related to issues such as: procedures to manage imports from LDCs which are subject to special preferential tariff treatment
4; the implementation of free trade agreements5; and the 
implementation of new supervision procedures in special customs controlled areas6 and 
of comprehensive experimental customs zones.7 
3.2.  Importers (and exporters) must register as foreign trade operators with the 
Ministry of Commerce of the People's Republic of China (MOFCOM) or its authorized bodies before 
filing customs declarations.8 Foreign-invested enterprises (FIEs) may also register as foreign trade 
operators; FIEs require a copy of the certificat e of "approval of foreign-invested enterprises" 
to register.9 Import (and export) declarations must be made in paper and electronic format or 
totally paperless (see below)10, and can be made either by a natural person or by a customs 
declaration enterprise.11  
                                               
1 For a full list of the laws and regulations conc erning customs procedures, please refer to the GACC 
website. Viewed at: http://www.customs.gov.cn/Default.aspx?tabid=399  (in Chinese only). 
2 The Customs Law of the People's Republic of China. Viewed at: 
http://www.customs.gov.cn/Default.aspx?TabID=433&InfoID=3420  (in Chinese only). 
3 The full list of announcements and decrees may be viewed at: 
http://www.customs.gov.cn/tabid/49659/Default.aspx.  
4 China Customs management approach  to special preferential tariff treatment of imported goods from 
LDCs (GACC Decree No. 210 of 1 July 2013). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info623255.htm  (in Chinese only). 
5 Amendment to the implementation of the "Mai nland and Macao Closer Economic Partnership 
Arrangement" (GAC Decree No. 207 of 31 March 2012). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49660/info551065.htm ; and Amendment of the "Mainland and 
Hong Kong Closer Economic Partnership Arrangement" (GACC Decree No. 206 of 31 April 2012). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab49660/info551066.htm  (in Chinese only). 
6 Customs Supervision Measures for Hengqin New Area (GACC Decree No. 209 of 27 June 2013). 
Viewed at: http://www.china-briefing.com/news/2013/07/12/china-releases-customs-supervision-measures-
for-hengqin-new-area.html#sthash.466Y44oD.dpuf  or 
http://www.customs.gov.cn/publish/portal0/tab49660/info623256.htm  (in Chinese only). 
7 China Customs regulatory approach to Pingtan comp rehensive experimental zone (Trial) (GACC Decree 
No. 208 of 27 June 2013). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49660/info623257.htm  
(in Chinese only). 
8 The documents required for registration do not seem to have changed since the previous Review. 
See the Rules for the Registration of Foreign Trade Operators, viewed at: 
http://www.mofcom.gov.cn/aarticle/b/e/200406/20040600239262.html  (in Chinese only). The registration 
form for a foreign trade operator can be downloaded from: http://iecms.ec.com.cn/iecms/index.jspm  
(in Chinese only). 
9 The Rules for the Registration of Foreign Trade Operators, viewed at: 
http://www.mofcom.gov.cn/aarticle/b/e/200406/20040600239262.html  (in Chinese only). 
10 In August 2012 China introduced a paperless customs clearance procedure, which is still a pilot 
project. 
11 The requirements that the customs declaration enterprises need to fulfil are stipulated in: 
"The Provisions of the Customs of the People's Republ ic of China for the Administration of Registration 
of Declaration Entities of 2007". Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info4475.htm . WT/TPR/S/300 • China 
 
- 56 - 
 
  3.3.  Importers (and exporters) need 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 in the Catalo gue of Import and Export Commodities Subject to 
Compulsory Inspection. The Catalogue is amended every year to add or subtract commodities as 
required for the protection of human, animal or plant health and the environment, and to prevent 
fraud and to safeguard national security.
12 The amendment implemented on 1 August 2013 added 
two tariff lines (lignite (whether or not pu lverized, but not agglomerated) (HS 2702100000) and 
agglomerated lignite (HS 2702200000)) to the list of  imports subject to inspection and quarantine 
requirements.13 
3.4.  Efforts to facilitate trade in China date ba ck to 2006 with the reform of China's regional and 
customs transit system14, under which Customs authorization could be given, at the port of entry, 
for goods to be transported to the final destination, where customs clearance would take place. 
Prior to the reform, goods had to obtain clearance at the port of entry and at the inland Customs.
15. In 2006, China's E-Port, an electronic platform that operates as a "single window", 
was also launched.16 China's E-Port connects 13 major port authorities. Through the "single 
window", traders can, inter alia , file on-line customs declarations and make payments in foreign 
exchange of duties.17 
3.5.  In order to facilitate trade China has launched a series of reforms to make customs 
procedures more efficient both for imports and exports. In 2009, China launched a pilot programme on the Reform of Classified Customs Clearance, which applies only in certain ports for imports but nationwide for exports. The Classified Customs Clearance refers to the classification of 
imports (and exports) according to risk level of enterprises based, inter alia , on credit rating, and 
compliance with the law. The Classified Customs Clearance applies to all imports (and exports) that are declared through China's Customs Clearance operating system (H2000 version); in the 
case of imports only for those that enter through the eligible ports.
18 In addition, under the 
Classified Enterprise Administration Reform19, enterprises are classified in five different categories: 
AA, A, B, C, and D according to different criteria, including risk and credit ratings.20 The customs 
clearance treatment applied will depend upon the enterprise classification. Enterprises with a 
higher ranking (AA and A) will benefit from more relaxed customs clearance procedures and can make customs declarations and have goods released at destination; category B enterprises are subject to intermediate customs clearance procedures, and C and D would be subject to stricter 
                                                                                                                                               
The documents that need to accompany a customs de claration do not seem to have changed since 2006. 
For more details please refer to: WTO (2006) Trade Policy Review - China; and The Provisions of the People's Republic of China on the Customs Administration  of Declarations for the Import and Export of Goods 
(GACC Decree No. 103 of 2003). Viewed at: http://www.asianlii.org/cn/legis/cen/laws/potprocotcaodftiaeog1158 . 
12 Implementing Regulations for the Law of the People's  Republic of China on Inspection of Import and 
Export Commodities, Order of the State Council of the People's Republic of China, No. 447. Viewed at: http://www.asianlii.org/cn/legis/cen/laws/irftlotprocoioiaec1072 . 
13 GACC and AQSIQ Announcement No. 109 of 2013. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/lhgg/201308/t20130801_370419.htm  (in Chinese only). 
14 Announcement No. 43 of GACC of 2006 . Viewed at: 
http://www.gov.cn/gzdt/200608/10/content_359439.htm  (in Chinese only). 
15 Goods that require import licensing are excluded  from "the system of regional co-operation in 
customs clearance". 
16 Announcement of the State Council  No. 36 of 2006 . Viewed at: 
http://www.gov.cn/gongbao/content/2006/content_327798.htm  (in Chinese only). 
17 For the main services offered by Ch ina's E-Port Project please refer to: The Details of Applications 
of China's E-Port by the End of 2010 , viewed at: http://www.chinaport.gov.cn/xxmtg/index.htm  
(in Chinese only); and APEC, Introduction of China e-Port , submitted by China at the Single Window Working 
Group Capacity Building Workshop 4, Singapore 6-8 April 2009. Viewed at: http://aimp.apec.org/Doc uments/2009/SCCP/SWWG-WKS P4/09_sccp_swwg_wksp4_010.pdf . 
18 GACC Announcement No.33 of 2009. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab1/info174780.htm  (in Chinese only); and Announcement 
No. 56 of GACC of 2010 . Viewed at : 
http://www.e-to-china.com/tariff_changes/china_customs_practice/2010/0903/85925.html . 
19 Administrative Measures on Customs Administ ration of the Classification of Enterprises 
(Order No. 170 of 2008) revised in 2010 by GACC Order No. 197 of 2010. Viewed at: http://www.customs.gov.cn/publish/portal0/tab521/info247588.htm . 
20 For a full list of the enterprise classification criteria please refer to: The Provisions on Administration 
of the Classification of Enterprises  (GACC Decree No. 197 of 2010). Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab521/info247588.htm  (in Chinese only). WT/TPR/S/300 • China 
 
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  control measures.21 Enterprises may change category according to their performance. None of the 
trade facilitation measures implemented by China apply to goods subject to licensing or other restrictions. 
3.6.  In 2012, with the aim of further facilita ting trade, China started implementation of the 
"Reform of Paperless Customs Clearance " to cover imports (exports) via air, sea and land.
22 
Under this Reform the approved pilot enterprises graded B or higher could choose to clear customs 
either through a paper or paperless customs declaration via the China E-port System. "AA"-rated 
enterprises and "A"-rated manufacturing enterprises,  which are approved by customs, do not need 
to submit electronic supporting documents when making a customs declaration. These electronic 
documents must be submitted within 10 days of customs clearance or upon request by China Customs. The supporting documents need to be kept by the enterprises. "A"-rated 
non-manufacturing enterprises and "B"-rated enterp rises, which are selected by customs, must 
submit the supporting electronic documents al ong with the declaration form when making 
a customs declaration. Imports (exports) subj ect to licensing cannot be cleared using the 
paperless method.
23 
3.7.  In addition to the ordinary importation regime, China has six additional import regimes 
including: the importation of goods at no cost to replace damaged products24; the importation 
of leased goods; temporary entry of goods, entry of goods for maintenance and repair; the 
importation of returned goods; and imports into special customs supervision areas.25 Goods 
entering (and exiting) bonded zones, expo rt-processing zones and other special customs 
supervision areas, as well as border trade import s (and exports) are subject to different customs 
procedures formulated by GACC, and other inspection and quarantine requirements, which are 
formulated by the AQSIQ with the GACC (Table A3.1).26 
3.8.  Although China is making efforts to harmonize customs procedures across the country, it is 
also promoting and creating "new special customs supervision areas" that are governed by special 
regulations. China also applies different customs procedures to specific customs areas, in some 
instances on a trial basis.27 These pilot programmes are designed to assess whether policies would 
work and also to promote the development of certain areas and regions. However, according to 
guiding opinions issued by the State Council in 2012 the rules applied to such special customs supervision areas will be unified.
28 
                                               
21 GACC Announcement No. 56 of 2010 on Further Promotion of Classified Customs Clearance expanded 
the scope of classified customs clearance reform. Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info237228.htm  (in Chinese only). 
22 At present the pilot programme is being implemented at all sites of 12 customs offices: Beijing, 
Fuzhou, Gongbei, Guangzhou, Hangzhou, Huangpu, Na njing, Ningbo, Qingdao, Shanghai, Shenzhen and 
Tianjin. The remaining 30 customs offices are implemen ting a few of the pilot programmes for paperless 
custom clearance at only one or two sites.  
23 "State Council Opinions on Promoting the Growth of Foreign Trade, 16 September 2012 ". Viewed at: 
http://www.gov.cn/zwgk/2012-09/18/content_2227657.htm ; and GACC Announcement No. 45, 2012 on 
Foreign-Trade Promotion Measures. Viewed at:  
http://www.e-to-china.com/tariff_changes/Policy_Focus/2012/1011/104566.html ; and 
GACC Announcement No. 19 of 2013. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info426260.htm  (in Chinese only). 
24 Decree No.124 of the General Administration of Customs, of 4 January 2005. 
25 General Administration of Customs Decree No. 124 of 2005. 
26 Article 44 of Implementing Regulations for the Law of the People's Republic of China on Inspection 
of Import and Export Commodities, Order of the State Council of the People's Republic of China, No. 447. Viewed at: http://www.asianlii.org/cn/legis/cen/laws/irftlotprocoioiaec1072 . 
27 Customs Supervision Measures for Hengqin New Area (GACC Decree No. 209 of 27 June 2013). 
Viewed at: http://www.china-briefing.com/news/2013/07/12/china-releases-customs-supervision-measures-
for-hengqin-new-area.html#sthash.466Y44oD.dpuf  or 
http://www.customs.gov.cn/publish/portal0/tab49660/info623256.htm  (in Chinese only), and China Customs 
regulatory approach to Pingtan comprehensive experimental zone (Trial) (GACC Decree No. 208 
of 27 June 2013). Viewed at: http://www.customs.gov.cn/publish/portal0/tab49660/info623257.htm  (in 
Chinese only). 
28 Guiding Opinions of the State Council on Promoting the Scientific Development in Special Customs 
Supervision Areas (Guo Fa Number 58 of 2012). Viewed at:  
http://www.gov.cn/zwgk/2012-11/02/content_2256060.htm ; and New Guidelines on Promoting the 
Development of Special Customs. Viewed at: Supervision Areas 
http://www.pwccustoms.com/en_W1/w1/recentdevelopments/assets/cn_customs_news_dec2012.pdf . WT/TPR/S/300 • China 
 
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  3.1.2  Customs valuation 
3.9.  According to the authorities, there have  been no changes in China's customs valuation 
procedures. The legislation regulating customs valuation has not been amended since 2006.29 
Customs value continues to be determined on the basis of the transaction value, including the cost 
of transport and other charges associated therewith,  and the cost of insurance. If the transaction 
value method cannot be used the customs authorities, after obtaining relevant information and consulting over price with the importer, determ ine the customs value by applying the following 
methods in sequential order: (a) transaction value of identical goods; (b) transaction value of 
similar goods; (c) deductive value; (d) computed value; and (e) reasonable means. At the request of the importer, the order of application of meth ods (c) and (d) could be reversed. According to 
the authorities, in 2012 and 2013 some 99% of all imports were valued according to transaction 
value. 
3.1.3  Rules of origin 3.10.  China continues to apply preferential and non-preferential rules of origin. 
3.11.  China last notified its non-preferential rules of origin to the WTO in 2002.
30 Non-preferential 
rules of origin continue to be defined in China according to the Regulations on the Origin of Imported and Exported Goods of 2005.
31 Non-preferential rules of origin are used to: apply the 
MFN tariff rate; ensure origin of goods subject to anti-dumping, countervailing and safeguarding 
measures; ensure that import quotas and tariff quota limits are imposed on specific countries; and determine the origin of imported goods purchased by the Government. According to the Regulations, for goods to originate in a country they have to be wholly-obtained in one country. 
If goods are produced in more than two countries, the country where the final substantive 
transformation is made determines the origin of the product. The basic criteria to determine substantive transformation is a change of tariff classification. If there is no change in tariff 
classification, value added can be used as a supplementary criterion; the value added should not 
be less than 30% of the total value of the product. 
3.12.  Preferential rules of origin apply in accord ance with various preferential agreements signed 
by China or to grant preferential treatment to imports from LDCs.
32 
3.1.4  Tariffs 3.1.4.1  Applied tariffs and tariff structure 3.13.  In China, duty rates on imports continue  to comprise: MFN rates, agreement tariff rates, 
special preferential tariff rates, general tariff rates, and tariff quota rates; in addition, interim tariff 
rates, which are usually lower than MFN rates, are applied for a specific period of time - usually one year - and are actually the applied rate for that year. 
3.14.  Agreement rates apply to imports from countries and customs territories with which China 
has preferential trade agreements; there are two regional and nine b ilateral agreements in force at 
present.
33 Special preference duty rates are unilateral preferences applied to imports originating in 
least developed countries.34 General rates apply to: products whose origin cannot be determined; 
                                               
29 Regulations of the People’s Republic of China on Import and Export Duties of 1 January 2004. 
Viewed at: http://english.customs.gov.cn/publish/portal191/tab47813/info391174.htm ; and WTO document 
G/VAL/N/1/CHN/5 of 11 April 2008. 
30 WTO documents G/RO/N/37, 3 June 2002 and G/RO/N/37/Rev.1, 2 August 2002. 
31 Decree of the State Council of the People's Republic of China No. 416, Regulations on the Origin 
of Imported - Exported Goods of PRC, 1 January 2005. 
32 For a complete list of China's rules of origin under arrangements signed prior to 2012, please refer to 
WTO (2012), " Trade Policy Review – China ", Geneva or WTO document WT/TPR/S/264/Rev.1. 
33 APTA; ASEAN; Chile; Chinese Taipei; Costa Rica; Hong Kong, China; Macao, China; New Zealand; 
Pakistan; Peru and Singapore. 
34 Afghanistan; Angola; Bangladesh; Benin; Bur undi; Central African Republic; Chad; Comoros; 
Democratic Republic of the Congo; Djibouti; East Ti mor; Equatorial Guinea; Eritrea; Ethiopia; Guinea; 
Guinea-Bissau; Lesotho; Liberia; Madagascar; Malawi; Mali; Mauritania; Mozambique; Nepal; Niger; Rwanda; 
Samoa; Sierra Leone; Senegal; Somalia; Sudan; Tanzania; Togo; Uganda; Vanuatu; Yemen and Zambia WT/TPR/S/300 • China 
 
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  countries that do not have a reciprocal trade agreement with China; non-WTO Members; 
WTO Members to which China does not afford MFN treatment; and some territories of EU Member States. According to the authorities, if a country ap pears in several lists, the most favourable rate 
applies. Interim duties are fixed annually by the Tariff Commission under the Regulations on 
Import and Export Tariffs, and usually apply from 1 January to 31 December of each year; interim 
duties are applied on an MFN basis and effectively replace the MFN duty for the lines that are affected. Interim duty rates are lower than the M FN rates and in certain instances the interim duty 
rate applies to just part of a tariff line. 
3.15.  China's applied MFN tariff  in 2013 consists of 8,238 lines at the eight-digit level in the 
Harmonized System 2012; some 99.5% (7,385 lines) of the lines are ad valorem  and 43 tariff 
lines are subject to non- ad valorem  rates (35 lines have specific rates, 3 have alternate rates and 
5 lines carry 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).
35 The tariff lines subject to specific rates are mainly in 
Chapters 37 (photographic or cinematographic goods, 28 tariff lines), 02 (meat and edible offal 
of poultry, 6 tariff lines), and 01 (products of animal origin, 1 tariff line). In addition, 47 tariff lines 
are subject to tariff rate quotas (section 4.1), including in HS Chapters 10 (wheat and meslin, 
maize, rice), 11 (cereal flours other than of wheat and meslin, cereal groats), 17 (cane or beet 
sugar), 31 (mineral or chemical fertilizers), 51 (wool, carded or combed), and 52 (cotton). 
3.16.  The tariff analysis presented here is based on the MFN rate, including the interim duty rates 
for 2013, which apply to 8.7% of the tariff lines, the out-of-quota rates, and the ad valorem  
equivalents provided by the authorities, which for each tariff line are at the same level as the 
bound rate. In those instances in which the interim duty rate applies only to part of the tariff line, 
the MFN rate has been used in the tariff analysis. Hence the averages presented in this report are 
an approximation of the levels of protection. An analysis of the tariff at the HS-10 digit level would 
be required to assess the exact levels of pr otection. However, the tariff at that level 
of disaggregation is not available. 
3.17.  The average applied MFN rate in 2013 was 9.4%, almost unchanged since 2011 and 2009 
when the average stood at 9.5%. The tariff cont inues to be higher for agricultural products 
(WTO definition), at 14.8%, showing a slight decline from the averages calculated for 2009 and 2011 (Table 3.1). The average tariff on non-agricultural products has remained unchanged since 2009, at 8.6%. The percentage of tariffs that exceeded 15% (international tariff peaks) has 
declined slightly, to 14.4%, down from 14.9% and 14.8% in 2009 and 2011, respectively. 
Table 3.1 China's tariff st ructure, 2009, 2011 and 2013 
  MFN applied Final bounda 
2009 2011 2013 
Bound tariff lines (% of all tariff lines) 100 100 100 100 
Simple average rate 9.5 9.5 9.4 9.9 
Agricultural products (HS01-24) 14.5 14.5 13.9 14.6 
Industrial products (HS25-97) 8.6 8.6 8.6 9.0 
WTO agricultural products 15.2 15.1 14.8 15.3 
WTO non-agricultural products 8.6 8.6 8.6 9.0 
Duty free tariff lines (% of a ll tariff lines) 9.4 9.4 9.8 7.5 
Simple average rate of dutiable lines only 10.5 10.5 10.5 10.7 
Tariff quotas (% of all tariff lines) 0.6 0.6 0.6 0.6 
Non-ad valorem  tariffs (% of all tariff lines) 0.7 0.7 0.5 0.0 
Domestic tariff "peaks" (% of all tariff lines)b 2.1 2.2 2.1 2.4 
International tariff "peaks" (% of all tariff lines)c 14.9 14.8 14.4 15.7 
Overall standard deviation of tariff rates 7.5 7.5 7.5 7.5 
Coefficient of variation of tariff rates 0.8 0.8 0.8 0.8 
Nuisance applied rates (% of all tariff lines)d 2.7 2.7 2.9 2.6 
Number of lines 7,867 7,977 8,238 8,238 
Ad valorem 7,072 7,177 7,385 7,609 
Duty-free 743 748 810 629 
Specific rates 44 44 35 0 
Alternate rates 3 3 3 0 
                                                                                                                                               
(Ministry of Finance P.R.C. (2013), Customs Tariffs on Im ports and Exports of the People's Republic of China, 
2013. Beijing, China). 
35 These five lines correspond to HS 8521.10.11, HS 8521.10.19, HS 8521.10.20 (video recording or 
reproducing apparatus); HS 8525.80.12; and HS 8525.80.13 (certain television cameras). WT/TPR/S/300 • China 
 
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    MFN applied Final bounda 
2009 2011 2013 
Othere 5 5 5 0 
a Final bound rates are based on the 2013 tariff schedule in HS12 nomenclature. 
b Domestic tariff peaks are defined as those exc eeding three times the overall average applied rate. 
c International tariff peaks are defined as those exceeding 15%. d Nuisance rates are those greater than zero, but less than or equal to 2%. 
e 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: 2009 and 2011 tariff schedules are based on the HS 07 nomenclature; 2013 tariff schedule is based 
on the HS 12 nomenclature. Calculations are based on  national tariff line levels (8-digit); including 
only out-of-quota rates and including AVEs for non- ad valorem  rates provided by the authorities, 
as available. Interim duty rates are used for the ca lculations when fully appl ied at the 8-digit level. 
Source: WTO Secretariat calculations, based on data provided by the authorities of China. 
3.18.  The distribution of China's applied MFN tariff has not changed substantially since the last 
Review. In 2013, China's applied MFN tariff contained 55 different ad valorem  tariff rates, ranging 
from 0% to 65%; in addition, there were 43 non- ad valorem  rates. Some 40% of all tariffs ranged 
from 5% to 10%, also unchanged since 2009 and 2011 (Chart 3.1). The percentages of duty-free 
lines and of lines with rates higher than 30% have not changed. 
Chart 3.1 Distribution of MFN appl ied tariff rates, 2009, 2011 and 2013 
(9.4) (17.5) (43.0)
(15.1)
(8.8) 
(3.9)   
(2.1) (9.4)(17.6)(43.3)
(14.9)
(8.7)
(3.9)
(2.2)(9.8)(17.6) 43.0)
(15.1) 
(8.4)
(3.8) 
(2.2)
05001,0001,5002,0002,5003,0003,5004,000
Duty free >0-5 >5-10 >10-15 >15-20 >20-25 >25-30Number of tariff lines
Tariff rates (%)MFN 2009
MFN 2013MFN 2011
 
Note: Figures in parentheses denote the share of total lines. 
Source: WTO Secretariat calculations, based on data provided by the authorities of China. 
3.1.4.2  Bound tariff 
3.19.  Since China joined the WTO, its average applied MFN rates have closely followed its bound 
rates. China bound 100% of its tariffs, at ad valorem  rates ranging from 0% to 65% for agriculture 
(WTO definition) and from 0 to 50% for non-agricultural products (Table A3.2). There are considerable variations within the bound tariff rates by sector, with the higher bindings applying to 
cereals and preparations, and beverages and spirits (Table A3.2). However, while the applied tariff 
has been bound at ad valorem  rates, applied tariffs on 43 tariff lines are non- ad valorem . 
The authorities state that the ad valorem  equivalents of the non- ad valorem  rates are always equal 
to the bound tariff rate. 
3.1.4.3  Bilateral and regional preferences 3.20.  China offers preferential treatment under its different bilateral and regional trade 
agreements. The ASEAN countries, Chile and New Zealand face the lowest tariff rates, while the WT/TPR/S/300 • China 
 
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  concessions offered  to the Special Administrative Regions (SARs) of Hong Kong and Macao and to 
Chinese Taipei do not result in significant tariff reductions (Table 3.2). The average preferential 
tariff applied to 37 LDCs was 5% at the beginning of 2013; these rates were substantially higher than those offered by China to the ASEAN countries. However, the authorities noted that as 
of 1 July 2013, 30 out of 37 LDCs enjoy duty-f ree treatment on 95% of all tariff lines. 
Table 3.2 Summary analysis of th e Chinese preferential tariff, 2013 
(%) 
 Total WTO agriculture WTO non-
agriculture 
  Average 
(%) Duty 
free 
ratesa 
(%) Average 
(%) Duty 
free 
ratesa 
(%) Average 
(%) Duty 
free 
ratesa 
(%) 
MFN 9.4 9.8 14.8 8.1 8.6 10.1 
Agreement tariff rates  
APTAb 8.9 10.0 14.0 8.9 8.0 10.2 
ASEAN       
Brunei Darussalam 0.7 94.8 1.8 93.5 0.6 95.0 
Cambodia 0.8 93.9 1.9 92.9 0.7 94.0 
Indonesia 0.7 94.8 1.8 93.5 0.6 95.0 
Laos 0.8 93.9 1.9 93.3 0.7 94.0 
Malaysia 0.7 94.8 1.8 93.5 0.6 95.0 
Myanmar 0.7 94.8 1.8 93.6 0.6 95.0 
Philippines 0.7 94.8 1.8 93.5 0.6 95.0 
Singapore 0.7 94.8 1.8 93.5 0.6 95.0 
Thailand 0.7 94.8 1.8 93.5 0.6 95.0 
Viet Nam 0.7 94.8 1.8 93.5 0.6 95.0 
Hong Kong, China CEPAc 7.1 30.8 12.6 21.3 3.2 32.4 
Macao, China CEPAc 7.5 25.2 10.4 33.3 7.0 23.9 
Chinese Taipei ECFAd 8.8 17.1 14.6 9.3 7.8 18.4 
Pakistan FTA 5.9 35.7 11.5 23.2 5.0 37.8 
Chile FTA 0.9 74.5 2.9 67.6 0.6 75.6 
New Zealand FTA 0.5 96.7 2.2 91.3 0.2 97.6 
Singapore FTA 4.6 43.5 8.8 41.5 3.9 43.8 
Peru FTA 3.5 61.0 8.2 31.4 2.7 65.8 
Costa Rica FTA 2.8 65.7 7.0 35.7 2.1 70.6 
Least developed preferential rates  
Special preferential tariff agreement for:  
Bangladesh and Laos under APTA 9.2 11.0 14.7 8.1 8.3 11.5 
Cambodia 8.7 15.8 12.0 29.4 8.2 13.6 
Laos 9.0 13.7 12.8 23.1 8.3 12.2 
Myanmar 9.0 13.6 13.7 14.9 8.2 13.4 
37 LDC countries 5.0 61.5 9.1 56.6 4.3 62.3 
Memorandum item:  
Bangladeshe 4.8 61.5 8.8 56.6 4.1 62.3 
Cambodiaf 0.8 94.1 1.8 94.0 0.7 94.1 
Laosg 0.8 94.0 1.7 94.1 0.6 94.0 
Myanmarh 0.7 94.8 1.8 93.6 0.6 95.0 
Singaporei 0.7 94.8 1.8 93.5 0.6 95.0 
a Duty-free lines as a percentage of total tariff lines. 
b Preferential rates under APTA are applicable to Bangladesh, India, Laos, the Republic of Korea and 
Sri Lanka. 
c Closer Economic Partnership Agreement. d Cross-straits Economic Co-operation Framework Agreement. e Based on lowest rates taken among 37 LDC countries, Bangladesh and Laos under APTA, and APTA 
preferential rates. 
f Based on lowest rates taken among ASEAN-Cambod ia, and special preferential rates for Cambodia. WT/TPR/S/300 • China 
 
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  g Based on lowest rates taken among ASEAN-Laos, sp ecial preferential rates for Laos, Bangladesh and 
Laos under APTA, and APTA preferential rates. 
h Based on lowest rates taken among ASEAN-Myanma r and special preferential rates for Myanmar. 
i Based on lowest rates taken among ASEAN-Singapore and Singapore FTA. 
Note: Calculations are based on the 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. 
3.1.4.4  Tariff concessions 
3.21.  Certain items continue to be exempt from import duties (Box 3.1). In addition, duty 
exemptions and reductions may apply in accordance with the provisions set out in the relevant 
regulations by the State Council and on goods imported into designated areas, for designated 
enterprises or for designated uses.36 For instance, imported commodities are exempt from import 
duties and other taxes when entering areas under  special customs regulations, and imports are 
devoted to specific purposes. Under processing trade, imported goods 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. 
Box 3.1 Goods exempted from import duties
 
Goods in a single consignment on which the duties are estimated to be less than RMB 50. 
Advertising material and samples of no commercial value. 
Goods and materials donated by internationa l organizations or fo reign governments. 
Fuels, stores, beverages an d provisions to be used en route by vessels which are in transit in China. 
Source: Regulations on Import and Export Tariffs. 
3.1.5  Other charges affecting imports 
3.22.  Imports are subject to Value Added Tax (VAT), which is collected by Customs on behalf 
of the State Administration of Taxation. VAT on im ports is charged based on the c.i.f. price plus 
the import duty. If goods are also subject to th e consumption (excise) tax, VAT is calculated 
including the consumption tax. VAT has two rates: 13% and 17%. Both the products subject to the 
13% rate and those that are exempt have not changed since the previous Review.37 Agricultural 
products sold directly by the producer continue to be exempted from VAT, while imported goods 
are not.38 
3.23.  A number of imported and domestically-produced goods are also subject to the consumption 
(excise) tax. Consumption tax in China is levied on different categories of products: products that 
could be harmful to health, social order and the environment (such as tobacco, alcohol, and 
fireworks); luxury goods (jewellery and cosmetics); and high-energy consumption and high-end products (passenger cars and motorcycles), and non-renewable and non-replaceable petroleum products (such as gasoline and diesel oil). Tax rates vary considerably depending upon the 
product; they can be ad valorem , specific or compound (Table 3.3). Modifications to the tax rates 
and the products subject to the tax can be introduced as required. However, rates have not changed since 2009.
39 The consumption tax is part of the base upon which VAT is levied.40 
                                               
36 Article 46 of the Regulations of the People' Re public of China on Import and Export Duties, 
1 January 2004. Viewed at: http://english.customs.gov.cn/publish/portal191/tab47813/info391174.htm . 
37 Products subject to a 13% VAT rate are: agricultur al products; processed grai ns; edible vegetable oil 
and edible salt; drinking water, heating, air-conditioni ng, and hot water; gas, lique fied petroleum gas, natural 
gas, biogas and dimeth yl ester; coal; books, newspapers and magazi nes; and feedstuffs, fertilizers, pesticides, 
agricultural machinery and plastic film for agricultural use (VAT, 28 September 2011). Viewed at: http://www.chinatax.gov.cn/n8136506/n8136608/n8138877/n8139027/8357269.html  (in Chinese only). 
38 "The Interpretation of VAT by the State Administration of Taxation" , VAT, 28 September 2011. 
Viewed at: http://www.chinatax.gov.cn/n8136506/n8136608/n8138877/n8139027/8357269.html  (in Chinese 
only). 
39 The People's Republic of China Interim Regulati ons on Consumption Tax, The People's Republic 
of China State Council Order No. 539 of 10 October 2008 (in Chinese only). Viewed at: WT/TPR/S/300 • China 
 
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  Table 3.3 Excise (or consumption) tax, 2013  
Product 2013 
Tobacco  
 Cigars 36% 
Cigarettes:  
Production procedure  
Cigarettes, if the price is higher than RMB 70 per carton 56% plus RMB 0.003 per cigarette 
Cigarettes, if the pr ice is lower than RMB 70 per carton 36% plus RMB 0.003 per cigarette  
Wholesaling procedure 5% 
Cut tobacco 30% 
Alcoholic drinks and alcohol  
White spirit distilled from gr ain, potatoes, or grapes 20% plus RMB 1 per kg  
Yellow rice wine RMB 240 per tonne 
Beer made from malt and of a value above or equal to US$370 
per tonne RMB 250 per tonne  
Beer made from malt and of a value less than US$370 per tonne RMB 220 per tonne  
Other alcoholic beverages 10% 
Ethyl alcohol 5% 
Cosmetics (apart from skin-care products) 30% 
Precious jewellery, pearls, jade and precious stones  
Gold, silver, platinum je wellery, and diamonds 5% 
Pearls, jade, and precious stones 10% 
Firecrackers and fireworks 15% 
Gasoline  
Motor gasoline and aviation gasoline  
(containing more than 0.013 g of lead per litre) RMB 1.4 per litre 
Motor gasoline and aviation gasoline  
(containing less than 0.013 g of lead per litre) RMB 1.0 per litre 
Diesel oil RMB 0.8 per litre 
Aviation kerosene RMB 0.8 per litre 
Naphtha RMB 1.0 per litre 
Solvent RMB 1.0 per litre 
Lubricants RMB 1.0 per litre 
Fuel oil RMB 0.8 per litre 
Motor vehicle tyres 3% 
Motorcycles   
With a cylinder capacity less than or equal to 250 ml 3% 
With a cylinder capacity over 250 ml 10%  
Motor vehicles  
Passenger vehicles with  fewer than 9 seats  
- with a cylinder capacity of less than 1,000 ml 1% 
- with a cylinder capacity of more than 1,000 ml but less than 
1,500 ml 3% 
- with a cylinder capacity of more than 1,500 ml, but less than 
2,000 ml 5% 
- with a cylinder capacity of more than 2,000 ml, but less than 
2,500 ml 9% 
- with a cylinder capacity of more than 2,500 ml, but less than 
3,000 ml 12% 
- with a cylinder capacity of more than 3,000 ml, but less than 
4,000 ml 25% 
- with a cylinder capacity of 4,000 ml or more 40% 
Middle-size or light passenger vehicles for commercial purposes 5% 
Yachts 10% 
Luxury watches with a unit price higher than RMB 10,000 20%  
                                                                                                                                               
http://www.chinatax.gov.cn/n8136506/n8136593/n8137537/n8138502/8527133.html ; Ministry of Finance, 
State Administration of Taxation on the adjustment of re fined oil import consumption tax, notice Cai Guan Shui 
[16 December 2008] No. 103 (in Chinese only). Viewed at: http://www.mof.gov.cn/preview/guanshuisi/zhengwuxinxi/zhengcefabu/200812/t20081230_104399.html ; and 
Ministry of Finance, State Administration of Taxati on on tobacco product consumption tax policy notice 
(Cai Guan Shui [16 September 2009] No. 84) (in Chinese only). Viewed at: http://www.chinaacc.com/new/63_67_/2009_6_4_wa522377441469002441.shtml . 
40 For more details on the method used to classify the products subject to the tax and the procedure for 
levying the tax please refer to: Mini stry of Finance, State Administration of Taxation, Annotations to the 
Collection "Scope of Consumption Tax" (Guo Shui Fa [1993] No. 153). Viewed at: 
http://www.chinatax.gov.cn/n6669073/n6669088/8992908.html ; and Ministry of Finance, State Administration 
of Taxation, Provisions on Some Specific Issues Concerning Consumption Tax (Guo Shui Fa [1993] No. 156). 
Viewed at: http://www.chinatax.gov.cn/n6669073/n6669088/8992445.html . WT/TPR/S/300 • China 
 
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  Product 2013 
Golf equipment 10% 
Solid wood flooring 5% 
Disposable chopsticks 5% 
Source : Information provided by the Chinese authorities. 
3.1.6  Import prohibitions, restrictions, and licensing 
3.24.  China has three categories of imports: not restricted, restricted and prohibited. 
Most imported goods fall under the category of permitted; however, even these imports may be 
subject to automatic licences to monitor their volume for statistical purposes. MOFCOM 
and the GACC jointly issue an annual Catalogue of Goods subject to Automatic Licensing . In 2013, 
there were 442 tariff lines at the HS 8-digit level included in this Catalogue (Chart 3.2). There is 
an additional Catalogue of Automatic Licensing for Solid Waste  that can be used as raw materials 
in China; the last Catalogue was issued in 2009.41 Certain goods, including: goods imported for 
processing trade and then re-exported, goods imported by FIEs for their own use, samples or advertising material of a value of less than RMB 5,000, which are not subject to automatic import 
licensing. 
3.25.  Importers must apply for automatic licences. There do not seem to have been major 
changes regarding the process to obtain an auto matic import licence nor on the terms of the 
licence since the previous Review.
42 Automatic import licences are valid for six months and usually 
only for one shipment. However, multiple licences can be obtained under one import contract, and for certain goods one licence can be used for as many as six shipments. 
3.26.  Restricted goods are administered through non-automatic licences and/or quotas. Import 
restrictions are maintained because of public se curity and welfare, and to protect exhaustible 
natural resources. MOFCOM together with the GACC and the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), on an annual basis, issue a " Catalogue of Import 
Goods Subject to Licensing" . In 2013 there were 86 lines at the HS 8-digit level subject to non-
automatic import licensing (Chart 3.2). There are a few products (i.e. machinery and electrical equipment) that are subject to both non-automatic and automatic import licensing.
43 There is an 
additional " Catalogue of Restricted Imports for Solid Waste" that can be used as raw materials in 
China; the last Catalogue was issued in 2009.44 For 2013, imports subject to non-automatic 
licences fall under two categories: used mechanical and electronic products and substances that 
deplete the ozone layer. As in the case of au tomatic licences, it appears that the terms and 
procedures to obtain a non-automatic import licence remain substantially unchanged since the previous Review in 2012.
45 
3.27.  During the period under review, China has apparently not applied any import quotas.46 
                                               
41 Annex 3 of the Announcement on Amending Catalogues of Imported Wastes Management, No. 36 
of 2009. Viewed at: http://english.mep.gov.cn/Policies_Regulations/policies/Solidwastes/200909/P020090911322248259263.pdf . 
42 For details regarding the procedure to obtain automa tic import licences please refer to China's last 
notification under Article 7.3 of the Agreement on Import Licensing Procedures (WTO document 
G/LIC/N/3/CHN/9, 11 November 2010). 
43 According to the Chinese authorities, this conclusion is incorrect. They indicated that it might appear 
that machines require both licences because at the HS 8-digit level there is no differentiation between used and new machinery; used machinery is subject to non- automatic licensing while new machinery is subject to 
automatic licences. However, the differe nce for "old" and "used" machinery is clearly made in the Catalogue for 
Automatic Licensing but not in the Catalogue on Import Licensing.  
44 Annex 2 of the Announcement on Amending Catalogues of Imported Wastes Management, No. 36 
of 2009. Viewed at: http://english.mep.gov.cn/Policies_Regulations/policies/Solidwastes/200909/P020090911322248259263.pdf . 
45 For details regarding the procedure to obtain automa tic import licences please refer to China's last 
notification under Article 7.3 of the Agreement on Import Licensing Procedures (WTO document 
G/LIC/3/CHN/9, 11 November 2010). 
46 Import quotas were last notified to the WTO in 2009.  WT/TPR/S/300 • China 
 
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  Chart 3.2 Import licensing by HS section, 2013 
% of HS section 
0510 15 20 25 30 35 40 45 
01 02 03 04 05  06 10 11 15  16 17 18 20  Automatic import licensin g
Automatic + non-automatic import licensing HS section
01  Live animals and products
02  Ve getable products
03  Animal/vegetable fats and oils
04  Prepared food products
05  Mineral products06  Chemicals and products thereo
f 
10  Pulp, paper and paperboard  
11  Textiles and clothin g
15  Base metals  
16  Machinery and electrical equipment  
17  Transport equipmen t
18  Precision instruments and apparatus
20  Miscellaneous manufacturesNon-automatic import licensing
 
Note: Calculations include adjustments announced up  to August 2013. Calculations are based on HS12 
nomenclature at 8-digit level. Th ere are 418 tariff lines subject to automatic import licensing only, 
63 subject to non-automatic import licensing only and 24 subject to both automatic and non-automatic import licensing. 
Source: WTO calculations, based on da ta provided by the authorities. 
3.28.  Under the Foreign Trade Law47, China maintains import prohibitions on the following 
grounds: state security; public morality; human, animal and plant health; environmental 
protection; balance-of-payments reasons; and to comply with international commitments 
(Article 16 of the Foreign Trade Law). Prohibited products are listed in the " Catalogue 
of Commodities Subject to Import Prohibitions ", issued by MOFCOM and other relevant ministries 
and bodies, such as the GACC and AQSIQ.48 The last notification regarding import prohibitions 
dates from 2009, when imports of products classified under 543 tariff lines at the HS 2007 8-digit level were prohibited; no further information has been provided to the Secretariat since then. 
In addition to the general Catalogue, the Mini stry of Environmental Protection issued the 
"Catalogue of Imported Wastes Management" , also of 2009, which lists, inter alia , the solid wastes 
that cannot be imported into China.
49  
3.29.  The list of imports subject to restriction or prohibition can be adjusted as necessary, and 
imports of goods that are not included in the Catalogue can be restricted or prohibited on 
a temporary basis by the relevant authorities. According to information provided by the authorities, in 2013 there were some 30 temporary prohibitions in place on sanitary grounds, 
which affected mainly animal products imported from European countries. In addition, since 
1 October 2012, in order to improve energy effi ciency and to protect the environment China has 
banned imports of incandescent lighting.
50 
3.30.  China's legislation also allows the authorities to restrict imports to allow for the 
establishment of a particular domestic industry or to accelerate its development. Imports of agricultural, animal and fish products may also be restricted if the circumstances so require (Article 16 of the Foreign Trade Law). According to the authorities, this provision has never been 
used. 
3.31.  In addition to the general import prohibitions included in the " Catalogue of Commodities 
Subject to Import Prohibitions ", other prohibitions apply to imports under processing trade. 
According to the authorities, the latest " Catalogue of Commodities Prohibited under Processing 
                                               
47 The Foreign Trade Law of the People's Republic of China. Viewed at:  
http://www.gov.cn/flfg/2005-06/27/content_9851.htm  (in Chinese only). 
48 China last notified its quantitative restrictions to the WTO in 2010. 
49 Given the manner in which the items are listed in th e Catalogue, the number of tariff lines affected by 
this restriction cannot be estimated (" The Catalogue of Imported Wastes Management ", Annex 1 
of Announcement No. 36 of 2009). Viewed at: 
http://english.mep.gov.cn/Policies_Regulations/policies/Solidwastes/200909/P020090911322248259263.pdf . 
50 National Development and Reform Commission (NDRC) [2011], Announcement No. 28. Viewed at: 
http://www.gov.cn/zwgk/2011-11/14/content_1992476.htm  (in Chinese only). WT/TPR/S/300 • China 
 
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  Trade"  and its amendment dates from 2009 and 2010.51 These Catalogues include 394 tariff lines 
(in HS 2007 at the 8-digit level) that are subject to import prohibition under processing trade. These products include: mineral products; organic chemicals (e.g. anthracite, bituminous coking coal and lignite); fertilizers (e.g. urea, animal and vegetable fertilizers other than guano); 
new hides and skins; iron and steel; machines and electric equipment; waste and used 
scrap metal; and used mechanical and electrical products. According to the authorities, imports of these products are prohibited under processing trade for reasons of national security, 
environmental protection, or human, animal and plant health and safety concerns.
52 
3.1.7  Anti-dumping, counterva iling, and safeguard measures 
3.1.7.1  Anti-dumping measures 3.32.  During the period under review, the number of anti-dumping measures in place has declined 
slightly compared to the number reported in the previous Review. However, the average length 
of the application of measures increased to slightly over six years, as all sunset reviews conducted in 2011 and the first half of 2012 have led to the duties remaining in force and half of the 
measures due to expire over the same period have also remained in force. In this respect, 
the authorities have noted that anti-dumping measures imposed by China will normally be 
terminated after 10 years. 
3.33.  China's main legislation with respect to anti-dumping was not modified during the period 
under review. The legal framework to conduct anti-dumping investigations and apply measures is provided by the Foreign Trade Law, as amen ded, which entered into force on 1 July 2004
53, by the 
relevant Regulations (the anti-dumping regulations)54, and by a number of published Rules, some 
of them provisional.55  
3.34.  MOFCOM is the agency responsible fo r initiating and conducting anti-dumping 
investigations, and determining the existence of dumping, of injury, and their causal link. 
Two different bureaux within MOFCOM participate in anti-dumping investigations. The Bureau 
of Foreign Trade for Imports and Exports (BOFT) has responsibility for the investigation and determination of the existence of dumping, as well as for calculating the margin of dumping. 
The Investigation Bureau of Industry Injury (IBII) is charged with conducting investigations to 
determine the existence of injury caused to the domestic industry and the causal link between 
dumped imports and injury. However, in cases where an anti-dumping investigation involves agricultural products, the injury investigation is conducted jointly by IBII and the 
Ministry of Agriculture.  
3.35.  The Chinese authorities consider that the pu rpose of conducting anti-dumping investigations 
is to maintain a fair competitive environment and a normal trade order, and not to blindly protect 
domestic industries.
56 
3.36.  The implementing rules regarding the initiation of anti-dumping investigations are contained 
in the " Provisional Rules of the Ministry of Foreign Tr ade and Economic Co-operation on Initiation 
of Anti-dumping Investigations" .57 Investigations may be initiated at the request of an interested 
party or may be self-initiated by MOFCOM.  
3.37.  In the case of initiations on behalf of the domestic industry, petitions may be lodged with 
MOFCOM in writing, by natural or legal persons, or by any relevant organization, representing the 
domestic industry. Articles 13-15 of the anti-dumpi ng regulations specify that the petition shall 
                                               
51 General Administration of Customs Announcement [2009] No. 37 of 2009. Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/e/200906/20090606300331.html  (in Chinese only); and Ministry 
of Commerce and General Administration of Customs, Joint Announcement [2010] No. 63 of 2010. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab519/info242951.htm  (in Chinese only). 
52 The Central People's Government of  China online information, at:  
http://www.gov.cn/jrzg/2007-04/10/content_577619.htm (in Chinese). 
53 Notified to the WTO in WTO document G/ADP/N/1/CHN/2/Suppl.4, 1 December 2004. 
54 WTO document G/ADP/N/1/CHN/2/Suppl.3, 20 October 2004. 
55 Notified to the WTO in WTO documents G/ADP/N/1/CHN2/Suppl.1, 2, 4, 5, and 6, 
of 18 February 2003, 14 April 2003, 1 December 2004, 11 January 2007, and 19 October 2007. 
56 Viewed at: http://gpj.mofcom.gov.cn/article/d/ci/201211/20121108441455.shtml . 
57 Notified to the WTO in WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. WT/TPR/S/300 • China 
 
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  have supporting evidence of the existence of dumpin g, of injury caused to the domestic industry, 
and of the causal link between dumping and injury . MOFCOM has 60 days from the date of receipt 
of a petition to decide whether to initiate an investigation. To self-initiate an anti-dumping investigation, MOFCOM must have sufficient eviden ce of the existence of dumping, of injury, and 
of a causal link. MOFCOM is responsible for determining the existence of dumping, injury, and 
causation, and the State Council Tariff Commissi on (SCTC), the coordination body of the 
State Council, makes the final decision as to whether to impose anti-dumping duties based upon 
a proposal by MOFCOM. This proposal is not a public document; a determination is published by 
MOFCOM after the SCTC has made its decision.
58 
3.38.  MOFCOM, through the BOFT, may require th e applicant to make amendments or provide 
supplementary information regarding the application for an anti-dumping investigation within the 
period specified above, failing which it may reject the application. If the application is rejected by 
MOFCOM, it is not published; a Public Notice is issued only if MOFCOM decides to initiate an anti-dumping investigation, before which it shall notify the governments of exporting countries 
(regions). Non-confidential information regarding an investigation is available to the public.
59 
Interested parties may also apply for a public hearing regarding dumping or injury; the hearing may be open unless the BOFT or IBII consider that keeping information confidential warrants 
a different type of meeting.  
3.39.  On the basis of its findings, MOFCOM must make and publish a preliminary determination on 
dumping and injury, as well as on whether there exists a causal link between dumping and injury. 
If a preliminary determination is affirmative, provisional anti-dumping measures may be applied, 
after at least 60 days from the date of publication of the decision to initiate the investigation. 
Provisional measures may take the form of provisional anti-dumping duties, or a request to provide deposits, bonds, or other forms of guarantees. In the latter case, the decision is made by 
MOFCOM. The decision to apply provisional anti -dumping duties is made by the SCTC on 
the recommendation of MOFCOM. Provisional measures may not generally be applied for more than four months, but may be extended to nine months in "special circumstances", this being 
understood to refer to those cases where the authorities are examining whether a duty lower than 
the margin of dumping would be sufficient to remove the injury to the domestic industry.
60 
3.40.  Whether or not provisional measures ar e applied, in the case of an affirmative 
determination MOFCOM must continue the investigation and, on the basis of its findings, make 
a final determination which must be published. Before the final determination is made, MOFCOM 
must inform all known interested parties of the essential facts on which the final determination is based. The investigation must be completed within 12 months of the date on which the decision to 
initiate is announced, or within 18 months under special circumstances. In accordance with the 
anti-dumping regulations, the imposition of anti-d umping duties must be in the public interest. 
However, there are no rules specifying how to do this and, with the exception of price 
undertakings, the issue has not been explicitly included as a factor for considering whether to 
impose a measure or not. 
3.41.  The margin of dumping is determined on the basis of a comparison of a weighted average 
normal value with a weighted average of prices of all comparable export transactions, or by 
a comparison of the normal value and export price on a transaction-to-transaction basis. However, 
if export prices differ significantly among purcha sers, regions or time periods, a comparison may 
be made between a weighted average normal value and prices of individual export transactions. 
This method has not, however, been used so far. Anti-dumping duties may not exceed the margin 
of dumping established in a final determination. The anti-dumping regulations do not preclude the 
i m p o s i t i o n  o f  a  d u t y  l e s s  t h a n  t h e  m a r g i n  o f  dumping. In this respect, the authorities have 
indicated that China does not currently examine if a duty less than the margin of dumping 
is sufficient to eliminate the injury caused by dumped imports in final determinations. 
                                               
58 The SCTC has its offices in the Ministry of Fina nce, and the Tariffs Depart ment of this Ministry 
is responsible for its daily work. 
59 Under Article 22 of the Foreign Trade Law, inte rested parties may reques t MOFCOM to treat the 
information they provide as confidential if they consider that disclosure would create significantly adverse 
effects. If MOFCOM decides to trea t the information as confidential, interested parties are requested to 
provide non-confidential summaries. 
60 WTO document G/ADP/Q1/CHN/54/Suppl.1, 2 May 2005. WT/TPR/S/300 • China 
 
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  3.42.  Chinese regulations allow for price undertakings which can be offered by the exporter or 
suggested to the exporter by MOFCOM. Price und ertakings may be made only after MOFCOM has 
made a preliminary affirmative determination of dumping injury and causation. MOFCOM shall take into account whether accepting an undertaking would result in the elimination of the injury 
determined, as well as considerations of public interest, effective monitoring and possibility 
of circumvention. If the price undertaking is accepted, MOFCOM may suspend or terminate the anti-dumping investigation. However, a suspended/terminated investigation may be resumed if the 
exporter violates the price undertaking, or if MOFCOM considers it necessary for other reasons. 
3.43.  China's anti-dumping legal framework contains specific rules on sampling. Although 
MOFCOM shall normally, on the basis of a full-scale investigation, determine a separate margin of dumping for each individual responding exporter  or producer, it may carry out its investigation 
by using a sampling method when the number of exporters, producers, types of products or 
transactions is so large that it would be undul y burdensome and prevent the timely completion 
of the investigation. MOFCOM is responsible fo r deciding on the selection of exporters and 
producers for the sample and for the reserve list
61, after which it must notify each interested 
party, giving seven days for comments. Only the selected exporters or producers will receive the questionnaire to be used for the investigation.
62 However, the exporters and producers on the 
reserve list may provide information to MOFCOM on a voluntary basis. MOFCOM determines 
a separate margin of dumping for each individual  exporter and producer selected in the sample. 
The margin of dumping for responding exporters and producers who are not subject to individual 
examination is determined on the basis of the weighted average margin of dumping determined 
for the sampled exporters and producers, calculated excluding zero or de minimis  (less than 2%) 
margins of dumping.  
3.44.  MOFCOM can also decide on the sampling of products to determine dumping and the margin 
of dumping if it finds that 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/producer sampling. Chinese regulations also allow for sampling of transactions to 
determine the normal value and export price for the product concerned. In this case, however, 
MOFCOM must obtain the agreement of the re sponding exporters and producers concerned. 
The normal value or the export price of the product under investigation is determined on the basis of the corresponding weighted averages. 
3.45.  Parties not satisfied with a MOFCOM decisi on may request an administrative reconsideration 
by the Department of Treaties and Law or may bring the case directly to court. The result 
of an administrative reconsideration may be appealed in court; procedures are specified under the  
"Rules of the Supreme People's Court on Certain Issues Related to Application of Law in Hearings 
of Antidumping Administrative Cases ".
63 The authorities indicated that there had been 
no administrative or judicial appeals with respect to anti-dumping measures in 2012 and 2013; 
however, there have been appeals in years prio r to the review period. Importers may apply for 
a duty refund if they can provide evidence that the anti-dumping duty paid is higher than the 
margin of dumping. Applications are examined and verified by MOFCOM, which makes a proposal 
for decision to the SCTC. The application for refund must be made within three months of payment 
of the duty, under the " Provisional Rules of the Ministry of Foreign Trade and Economic 
Cooperation on Refund of Anti-Dumping Duty ".64 MOFCOM calculates an updated margin 
of dumping for the product for the six-month period prior to the application and refunds the 
difference with respect to the duty determined in the original investigation. No interest is paid on 
the refund. There have been no requests fo r refund during the period under review. 
3.46.  Article 56 of the anti-dumping regulation s allows the authorities to take corresponding 
measures when a trading partner ''discriminatorily'' imposes anti-dumping measures on exports 
from China. However, the authorities reiterated during the current review that China has not applied Article 56, and that before taking corresponding measures in respect of a WTO Member China would resort to the relevant WTO dispute settlement provisions. 
                                               
61 The reserve list is prepared in case the sa mpled exporters and producers fail to cooperate. 
62 For selected exporters and producers that do not respond to the questionnaire, the margin 
of dumping is established on th e basis of the facts available. 
63 WTO document G/ADP/N/1/CHN/2/Suppl.5, 11 January 2007. 
64 Notified to the WTO in WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. WT/TPR/S/300 • China 
 
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  3.47.  The " Provisional Rules Governing New Shipper Reviews" , notified to the WTO in 2002, which 
came into effect on 15 April 2002, mandate that MOFCOM conduct a new shipper review and determine a separate margin of dumping for a new exporter that can show it is not related to any of the exporters subject to the anti-dumping duty.
65 Under the Rules, an interested party may 
apply for a review after the final determination in the original investigation has come into force 
and within three months of an actual export. Th e applicant for new shipper review must be the 
party which has actually exported to China the product under investigation after the original period 
of investigation in sufficient quantities as to constitute the basis for the determination of the 
ordinary export price, and whose exports are subj ect to anti-dumping duties as a result of the 
investigation. Within seven working days of receipt of the application for a new shipper review, MOFCOM must notify the applicant of the original anti-dumping investigation; the applicant may 
make comments within 14 days. 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 is six months prior to the submission of the 
application. 
3.48.  Final anti-dumping measures are imposed for five years, but may be extended following 
review. The anti-dumping regulations contain provisions regarding "expiry" (sunset) and "interim" 
reviews. With respect to sunset reviews, in practice MOFCOM publishes a notice six months before 
the measure is scheduled to expire, and initiates a review only if the domestic industry submits an application including sufficient evidence that expiry would likely lead to a continuation or recurrence of dumping and injury. MOFCOM may also initiate an interim review, ex officio  or upon 
request of an interested party, provided that a reasonable period of time has elapsed. Reviews 
conducted by MOFCOM must be concluded within 12 months of the date of the decision to initiate the review. Preliminary determinations need not be made in interim reviews; sampling methods 
may be used. If there is no petition to conduct a sunset review, the anti-dumping measure is 
automatically terminated. A separate public notice indicating that the measure was terminated is issued. 
3.49.  Since 2011, there has been only one anti-dumping case in which the result 
of an investigation has been challenged, a requ est for administrative reconsideration has been 
submitted and litigation through the competent authority and court initiated. The product concerned was grain oriented flat-rolled electrical steel and the applicants were two Russian 
companies. This administrative litigation case is currently being adjudicated. 
3.50.  Initiations of anti-dumping investigations  by China fell from 8 in 2010 to 5 in 2011, but 
increased to 9 in 2012 and 11 in 2013. Of the 22 investigations initiated between 2011 and mid-
2013, around 60% resulted in provisional measures . The number of final anti-dumping duty orders 
issued fell from 15 in 2010 to 6 in 2011, 5 in 2012 and 8 in 2013. Initiations during the period mostly affected imports from the European Union; the United States; Japan; Republic of Korea, 
Brazil; India; and Canada. Most investigations in the period led to the application of duties: 10 out 
of 13 investigations started in 2010-11 resulted in final anti-dumping duty orders; all 4 investigations initiated in the first half of 2012 an d terminated in the first half of 2013 resulted in 
the application of anti-dumping duties; of the 5 cases started in the second half of 2012, 2 had 
been subject to definitive anti-dumping duties by end 2013, in 2 cases provisional measures had 
been applied, and in one case the investigation was still ongoing. All 11 cases initiated in 2013 were still under investigation as at December 2013; provisional measures had been applied in 
6 cases.
66 
3.51.  China had 113 AD duty orders in effect as  at 31 December 2013, slightly down from the 
117 measures reported for December 2010 in the previous Review.67 Imports from 16 countries or 
territories were affected. Imports from Japan are subject to the largest number of China's 
anti-dumping duty orders (22), followed by th e United States (20), and accounting for 37.2% 
of the total; followed by the Republic of Ko rea (14.2%), the EU (13.3%) and Chinese Taipei 
(9.7%). Chemical products account for 62.8% of these orders, while 22.1% involve resins, 
plastics, and rubbers. Other categories subject to anti-dumping duty orders are machinery and 
equipment, paper, and base metal products, which account for a combined total of 14.2% of all 
                                               
65 WTO document G/ADP/N/1/CHN/2/Suppl.1, 18 February 2003. 
66 WTO document G/ADP/N/252/CHN, 5 February 2014. 
67 WTO document G/ADP/N/252/CHN, 5 February 2014. WT/TPR/S/300 • China 
 
- 70 - 
 
  orders (Table 3.4); 60.2% of anti-dumping duty orders had been in place for more than five years, 
up from 43% reported in the previous Review.  
Table 3.4 Anti-dumping measures by pr oduct and by country (in force as at 
31 December 2013) 
Country (a) (b) (c) (d) (e) (f) (g)  
Japan 14 3 1 3 1   22 
United States 12 4 1 1 1 1  20 
Korea, Rep. of 12 2  1 1   16 
European Union 7 2 2 1 2  1 15 
Chinese Taipei 6 5      11 
Russian Federation 2 3 1     6 
Singapore 3 2      5 
India 4       4 
Indonesia 2 1      3 
Malaysia 2 1      3 
T h a i l a n d  3        3  
United Kingdom 1       1 
France 1 1      2 
Italy  1      1 
N e w  Z e a l a n d  1        1  
Saudi Arabia, Kingdom of 1       1 
Total 71 25 5 6 5 1 1 114 
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) Machinery and electrical equipment.  (f) Live animals and animal products.  (g) Prepared foodstuffs. 
Source:  WTO document G/ADP/N/252/CHN, 5 February 2014, China's Semi-annual Report under Article 16.4 
of the Anti-Dumping Agreement. 
3.52.  Between 2011 and end-2013, 30 sunset reviews and 6 interim reviews were initiated. 
The number of investigations subject to a sunset review represents some 62.5% of the anti-dumping measures expiring during the period  (30 out of 48). In addition, 17 orders expired 
without review between 2011 and 2013 and 5 were  terminated because the application was 
rejected as the applicant did not provide sufficient evidence.
68 None of the 21 reviews initiated 
in 2011 and 2012 concluded with a revocation of  measures; in all cases the application 
of anti-dumping duties was extended. The 2 interim reviews concluded by 30 June 2013 led to the 
application of anti-dumping duties. A new shipper review regarding saloon and cross-country cars 
of a cylinder capacity larger than 2500cc from  the United States was initiated in October 2012.69 
As a result of the review, definitive duties were terminated as of 15 December 2013.70 
3.53.  In the WTO Committee on Anti-Dumping Practices, in the context of the review of China's 
anti-dumping investigation practices and measures, some Members have posed questions and made observations regarding China's anti-dumping procedures, including issues regarding transparency, injury determinations by MOFCOM and the standards used for this, including margin 
calculations, the communication between MOFCOM and Chinese customs authorities, and the 
disclosure of determinations and expiry review regulations.
71 In response to some of these 
comments, China noted that it had made continued and persistent efforts to fulfil the 
commitments made upon its accession to the WTO; China's anti-dumping regulations were clear 
                                               
68 WTO documents G/ADP/N/216/CHN, 12 October 2011; G/ADP/N/223/CHN, 17 April 2012; 
G/ADP/N/230/CHN, 26 September 2012; G/ADP/N/237/CHN, 10 April 2013; G/ADP/N/244/CHN, 17 October 2013; and G/ADP/N/252/CHN, 5 February 2014. 
69 The new shipper review referred to products classified under HS codes 87032361, 87032362, 
87032369, 87032411, 87032412, 87032419, 87032421, 87032422, 87032429, 87033311, 87033312, 87033319, 87033321, 87033322, 87033329, 87033361, 87033362, 87033369, and 87039000. WTO document 
G/ADP/N/244/CHN, 17 October 2013. 
70 WTO document G/ADP/N/252/CHN, 5 February 2014. 
71 WTO documents G/ADP/M/41, 22 December 2011; and G/ADP/Q2/CHN/6, 10 December 2010. WT/TPR/S/300 • China 
 
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  and comprehensive and had been notified to the WTO, together with the related departmental 
rules.72 
3.1.7.2  Countervailing measures 3.54.  The main legal framework for the application of countervailing measures in China is 
contained in the Foreign Trade Law, the Regulations on Countervailing Measures (CV Regulations), 
promulgated in 2001, and amended on 31 March 2004
73, and a number of provisional published 
rules.74 
3.55.  The procedures for the conduct of countervailing (CV) investigations are in general similar 
to those described for anti-dumping investigations, although there are a few differences. One main difference is the involvement of the Government of the exporting country or territory in the investigations, through a process of consultations or by answering the CV questionnaire. 
These consultations must take place before the investigation is initiated. MOFCOM must invite the 
Government of the exporting country or territory to engage in consultations to clarify the issue and seek a mutually agreeable solution; if a solution is found, MOFCOM may decide not to initiate an 
investigation. The period for consultations must not exceed 60 days. Othe r differences include the 
absence of published rules for the use of sampling, and to conduct interim or judicial reviews. Also, there are no provisions to regulate the use of price undertakings to settle a CV investigation. 
3.56.  In accordance with Chinese regulations, the description of the alleged subsidy shall include 
information regarding the existence, nature and amount of the subsidy in question, as well as an estimated per-unit measure of the alleged subsidy. The applicant shall provide the legal documentation of the exporting country or regi on pursuant to which the alleged subsidy is 
granted, and describe the calculation of the pe r-unit estimated subsidy. Any hearing for the 
determination of a subsidy is to be held publicly unless permitted otherwise by the BOFT, in cases where State secrets, commercial secrets or personal privacy are concerned. 
3.57.  China initiated three CV investigations in 2012, involving saloon and cross-country cars 
(new shipper review), originatin g in the United States, and solar-grade polysilicon (HS 28046190), 
originating in the EU and the United States. No investigations were initiated in 2011 or in 2013.
75 
In the two investigations initiated in 2010, the ex istence of a subsidy, injury and a causal link 
between the subsidy and the injury were found, thus leading to the imposition of CV duties. A case initiated in 2009 also led to the imposition of CV duties. As at 31 December 2013, there were three CV measures in place affecting imports from the EU and the United States (Table 3.5). A fourth 
measure that had been in place throughout most of  the period under review regarding saloon cars 
and cross-country cars from the United States, which had been subject to a final anti-dumping duty of between 0% and 12.9% since 14 Novemb er 2011, was eliminated on 15 December 2013 
as a result of a new shipper review.
76 No new definitive CV measures were applied in 2012 or in 
2013. As at end 2013, the longest existing CV measure had been in place for slightly over three and a half years. 
                                               
72 WTO document G/ADP/M/41, 22 December 2011. 
73 WTO document G/SCM/N/1/CHN/1/Suppl.3, 20 October 2004. 
74 Provisional Rules on Initiation of Countervailing Investigations; Provisional Rules on Questionnaires in 
Countervailing Duty Investigations ; Provisional Rules on the Conduct of Public Hearings in Countervailing Duty 
Investigations  ; and Provisional Rules on On-the-spot Verificati on in Countervailing Duty Investigations . 
75 WTO documents G/SCM/N/259/CHN/, 17 October 2013; and G/SCM/N/267/CHN, 5 February 2014. 
76 WTO document G/SCM/N/267/CHN, 5 February 2014. WT/TPR/S/300 • China 
 
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  Table 3.5 Countervailing investigations  and measures, 31 December 2013 
Country Product Initiation Provisional 
measures Final measures Import volume 
as % of total 
imports 
U.S. Grain oriented 01.06.2009 10.12.2009 10.04.2010 16.80% 
  flat- rolled 
electrical steel  11.7%-12% 11.7%-12%  
    All others 12% All others 44.6%  
  Broiler products 27.09.2009 28.04.2010 29.08.2010 73% 
    3.8%-11.2% 4%-12.5%  
    All others 31.4% All others 30.3%  
EU Potato starch 30.08.2010 19.05.2011 16.09.2011 90.27% 
    7.7%-11.19% 7.5%-12.4% 
All others 12.4%  
     All others 11.19%   
Source: WTO documents G/SCM/N/267/CHN, 5 February 2014; G/SCM/N/259/CHN, 17 October 2013; 
G/SCM/N/250/CHN, 9 April 2013; G/SCM/N/242/CHN, 15 October 2012; and G/SCM/N/235/CHN, 18 April 2012. 
3.58.  Under the RTAs to which China has subscribed with Hong Kong, China and Macao, China the 
right to use CV measures between the parties has been waived. Under the RTAs between China 
and Chile, New Zealand and Pakistan, and ASEAN and Peru, the parties maintain their rights under the Anti-Dumping and Subsidies and Countervailing Measures Agreements. 
3.1.7.3  Safeguards 
3.59.  The Foreign Trade Law and the Regulations on Safeguards (SG Regulations) regulate the 
procedures for safeguard investigations and the adoption of measures. Safeguard actions may be taken under the Foreign Trade Law and the Regulations on Safeguards (SG Regulations).
77 
MOFCOM is the body responsible for investigating and determining an increase in imports and 
injury caused; in cases where an investigation involves agricultural goods, the investigation and determination of injury must be done jointly with the Ministry of Agriculture. To initiate 
an investigation, in accordance with the SG Regulations, the interested party - that is, any natural 
or legal person, or other organization related to a domestic industry - must make a written application to MOFCOM to take safeguard action against imports. MOFCOM may also initiate an investigation ex officio  if it has sufficient evidence of injury. The decision to initiate 
an investigation must be published and notified promptly to the WTO Committee on Safeguards. 
3.60.  Under the SG Regulations, the applicant mu st provide detailed information with respect to 
the increase in quantities of the imported product for a period of at least five years prior to the 
submission of the application, including: the annual import quantity and value of the product in 
question; the absolute export quantity of the imported product from every exporting country 
(region) and its percentage of the total import qu antity of the imported product; market share, 
in quantity and in value, of total domestic cons umption, represented respectively by the imported 
product, the domestic like product and the directly competitive product; and an analysis of reasons for the increase in imports. 
3.61.  MOFCOM must make a decision on whether to initiate an investigation within 60 days 
of receipt of the written application for an investigation; in particularly complicated cases, 
an extension may be given to the time limit for examination. MOFCOM may conduct an investigation by means of questionnaires or on-the-spot verification of the issues raised in the 
written application and supporting materials. 
3.62.  MOFCOM may apply a provisional safeguard measure for no longer than 200 days from the 
effective date of the public notice. Final measures may take the form of tariff increases or 
quantitative restrictions. A decision to take a final measure in the form of tariff increases is made 
by the SCTC on the basis of MOFCOM's proposal; a decision to take a final measure in the form 
of quantitative restrictions is made by MOFCOM. The decision to apply a safeguard measure is published by way of Ministerial Decree on MOFCOM's website. Final safeguard measures may not 
remain in place for more than four years, except under special circumstances. MOFCOM must 
                                               
77 WTO document G/SG/N/1/CHN/2/Suppl.3, 20 October 2004. WT/TPR/S/300 • China 
 
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  conduct a mid-term review of the safeguard me asure when its duration exceeds three years. 
There is no appeal mechanism against decisions taken by the authorities. 
3.63.  RTAs with New Zealand and Singapore prov ide that a party may exclude imports of a good 
originating from another party from a safeguard measure applied pursuant to Article XIX of the 
GATT and the WTO Agreement on Safeguards, prov ided that such imports are non-injurious. 
In contrast, the RTAs with ASEAN, Chile, Pakistan, and Peru provide that the parties maintain their right under Article XIX and the WTO Agreement on Safeguards. All six RTAs preclude the 
simultaneous imposition of a global safeguard an d a bilateral safeguard under the relevant RTA. 
3.64.   China has not initiated any safeguard investigations pursuant to the WTO Agreement on 
Safeguards since its previous Review. As was pointed out in the previous Review, since its accession to the WTO in 2001, China has notified only one initiation of a safeguard investigation on 
certain steel products. The investigation was initiated on 20 May 2002, and definitive safeguard 
measures were imposed between 20 November 2002 and 26 December 2003.  
3.1.8  Standards and other technical requirements  
3.1.8.1  Standards and technical regulations 
3.65.  Standards in China continue to be developed mainly under the Standardization Law 
(of 1988) and the Regulations for the Implementation of the Standardization Law (1990). 
3.66.  There are four kinds of standards in China: national, industry/sectoral, local, and enterprise 
standards. National standards are developed for adoption at the national level. Industry/sectoral standards are developed when there are no national standards, but compliance with specific conditions is required in a professional field at the national level. Local standards may be 
developed where neither national nor industry/secto ral standards exist. However, once equivalent 
national standards are developed, these replace lo cal and industry/sectoral standards. Similarly, 
enterprise standards may be developed for an ente rprise when national, industry/sectoral or local 
standards are not available. 
3.67.  The Standardization Administration of China (SAC), under AQSIQ
78, continues to be the 
agency that centralizes the administration of the standardization system in China.79 The SAC is 
assisted by the National Development and Reform Commission (NDRC), the State Food and Drug 
Administration, the China Association of Standards (CAS), a number of ministries, and local and industry standardization associations. In addition, the AQSIQ ensures that both imports and exports comply with technical regulations and certification requirements.
80 There are other 
organizations such as the China Association of Standards (CAS) and non-governmental 
organizations affiliated to AQSIQ that 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 so that they comply when possible 
with existing international standards. These institutions also disseminate the proper use and application of standards.
81 
3.68.  The authorities noted that there has been  no substantial change in the procedures to 
formulate standards, both voluntary and "mandatory" standards (as technical regulations are referred to in China), since the last Review. Na tional standards are formulated by SAC, through 
                                               
78 AQSIQ is a ministerial administrative organ in charge of national quality, metrology, entry-exit 
inspection, animal and plant quarantine, certification, accreditation, stan dardization, and administrative law 
enforcement.  
79 The SAC is in charge of: the overall coordinati on and unified management of China's national 
standardization; the development of national polici es of standardization; the planning of national 
standardization strategy; and the sanctioning, issuing and revising of  national standards. 
80 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 . 
81 China Association of Standards (CAS). Viewed at: 
http://www.chinacsrmap.org/Org_Show_EN.asp?ID=539 ; and China National Inst itute of Standardization 
(known as the Institute of Standardization of the St ate Science and Technology Commission). Viewed at: 
http://en.cnis.gov.cn/faq/201305/t20130527_14361.shtml . WT/TPR/S/300 • China 
 
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  an eight-step process: feasibility study, research , project design, drafting of proposed standard, 
comments, examination, approval and publication.  National standards are reviewed after five 
years of implementation and might be amended or annulled as required.82 Industry/sectoral 
standards are formulated by the standardization ad ministrations of the competent ministries, with 
the support of the industry institutes of standardization and technical committees. National and 
industry/sectoral standards must be published in th e Standard Press of China, and filed and stored 
at the National Library of Standards. Loca l standards are formulated by departments 
of standardization authorities of provinces, autonomous regions and municipalities directly under 
the Central Government in accordance with the Administrative Measures on Local Standards.83 
3.69.  The procedures to develop and issue a standard and a technical regulation (also referred to 
in China as "mandatory" standard) are similar bu t there are some differences. When a technical 
regulation is to be developed, it must be stipulated that it will be mandatory; the examination 
procedure is different, and the period to receive comments cannot be less than two months. A (voluntary) standard could be quoted in a te chnical regulation and thus it would become 
mandatory. "Mandatory" standards refer usually to: medicines, food, veterinary drugs, and 
pesticides; labour and transportation safety; construction; environmental emissions; and technical terms (Table 3.6). The code of a mandatory national standard starts with the letters "GB".
84 
The code of a mandatory local standard starts with "DB" and the code of the Province 
(e.g. Shanxi Province, mandatory local standard code: DB14/).85 
Table 3.6 China's standards, 2010-13  
 2010 2011 2012 2013 
(January 
to May) 
National standards 2,860 1,969 1,986 97 
Mandatory 493 219 247 8 
Voluntary 2,367 1,750 1,739 89 
Sectoral standards 3,026 3,287 3,593 2,044 
Mandatory 182 228 111 43 
Voluntary 2,844 3,059 3,482 2,001 
Local standards  2,520 2,448 3,293 1,757 
Mandatory 149 149 239 82 
Voluntary 2,371 2,299 3,054 1,675 
Source: Information provided by the Chinese authorities. 
3.70.  China's TBT Enquiry Point continued to be AQSIQ. The Enquiry Point was responsible for 
preparing, checking and submitting China's TBT notifications. During the period under review, 
China submitted 167 TBT notifications, most of them  (some 150) under Article 2.9. The majority of 
the technical regulations notified were applied to regulate the market and to protect human health, 
safety and the environment.86 In the TBT Committee concerns were raised regarding, inter alia , 
the length of time to comment and the ability of foreign companies to comment.87 
3.1.8.2  Product certification 
3.71.  Certification and accreditation continue to be regulated by, inter alia , the Standardization 
Law; the Product Quality Law; the Import and Export Commodity Inspection Law; the Regulations on Certification and Accreditation
88; and the Regulations on Compulsory Product Certification.89 
                                               
82 The procedures to formulate national standards ar e stipulated in the Measures on Administration 
of National Standards, Order No . 10 of 24 August 1990. Viewed at: 
http://www.csms.org.cn/fagui/fagui_03.html . 
83 Viewed at: http://baike.baidu.com/view/1369197.htm . 
84 The code for a voluntary national standard starts with GB/T (Measure s on Administration of National 
Standards Order No. 10 of 1990). Viewed at: http://www.csms.org.cn/fagui/fagui_03.html . 
85 The code for a recommended local standard is "D B../T" (e.g. Shanxi recommended local standard 
code: DB14/T) (Local standard management approach, National Bureau of Technical Supervision Order of 
9 September 1990. Viewed at: http://www.sacmd.org/html//161.html ). 
86 WTO documents G/TBT/N/CHN/ series from 2 January 2012 to 31 December 2013. 
87 WTO documents G/TBT/M/ series from 2 January 2012 to 31 December 2013. 
88 Viewed at: http://www.asianlii.org/cn/legis/cen/laws/rotprococaa658 . 
89 AQSIQ Decree No. 117 of 3 July 2009. Viewed at: http://www.aqsiqccc.com/en/aqsiq/ccc-5.html . WT/TPR/S/300 • China 
 
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  3.72.  China administers two types of certification: a voluntary certification and a compulsory 
certification system. China National Certification and Accreditation Administration (CNCA) under AQSIQ manages both systems.  
3.73.  China's compulsory product certification system was established in 2001 to enforce 
compliance with technical requirements. The system applies to both domestic products and 
imports. The products subject to compulsory product certification are listed in this " Compulsory 
Product Certification Catalogue " (the Catalogue). Products listed in the Catalogue cannot be sold in 
China or imported without China's Compulsory  Certificates (CCC) and the corresponding CCC 
marks.
90 Random conformity sampling tests are conducted on imports that have already acquired 
CCC. The Catalogue is approved and released jointly by the AQSIQ and the CNCA. 
3.74.  In 2012, the Catalogue included some 157 products classified in 22 categories, including, 
electrical wires, circuit switches, low-voltage electrical apparatus, low power motors, electrical 
tools, household electrical appliances, audio and video equipment (excluding audio equipment for broadcasting service), information technology equipment, telecommunication terminal equipment, 
motor vehicles and safety parts, tyres for motor vehicles, safety glass, agricultural machinery, 
latex products, medical devices, fire-fighting equi pment, safety protection products, wireless LAN 
(local area network) products, home décor, and remodelling products and toys.
91 In 2012, there 
were 629 tariff lines at the 10-digit level (431 at the 8-digit level) that were subject to the 
CCC mark. Most of the lines (83.5%) covered items in HS Chapters 84 (machinery and mechanical 
appliances), 85 (electrical machinery and equipment), and 87 (vehicles).92 Some 25% of the 
goods (mainly automobiles) that require the CCC mark  are also subject to au tomatic licensing, and 
non-automatic licensing applies to some 10% of the goods requiring the CCC mark, mainly 
electronic goods. In a ddition, 58% of all goods that requir e the CCC mark are also subject to 
quarantine or compulsory inspection.93 
3.75.  Applications for the CCC must be made 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. There ar e 13 mandatory certification bodies.
94 The procedures to 
apply for compulsory certification have not changed substantially since the previous Review and 
are stipulated in the Mandatory Product Certification Regulations. In general there are five major steps in the CCC certification application process: (i) submission of an application and supporting 
materials; (ii) type-testing (a CNCA-designated test laboratory in China will test product samples); 
(iii) initial factory inspection (a CNCA-designated certification body will send representatives to 
inspect the manufacturing facilities for the product); (iv) evaluation of certification results and approval (or failure or retesting); and (v) supervision after the certificate is granted.
95 However, 
each certification body may have different application procedures, according to the product's 
characteristics.96 CCC certificates are valid for five ye ars from the date of approval of the 
application. Applications to re new the CCC certificate should be submitted 90 days prior to the 
expiry of the certificate. 
                                               
90 "Administrative Measures for Co mpulsory Product Certification"  (Decree No. 5 of AQSIQ), effective on 
1 May 2002. 
91 List of products subject to compulsory certif ication in English (unknown date). Viewed at: 
http://www.cnca.gov.cn/cnca/cncatest/20040420/column/227.htm ; and CNCA Notice No. 36 of 2012 
Mandatory product certification directory of products and corresponding HS2012 codes. Viewed at 
http://www.cnca.gov.cn/cnca/zwxx/ggxx/722154.shtml  (in Chinese only). 
92 Mandatory product certification directory of products and corresponding 2012 HS codes. CNCA Notice 
No. 36 of 2012. Viewed at: http://www.cnca.gov.cn/cnca/zwxx/ggxx/722154.shtml  (in Chinese only); and 
Catalogue of Products Subject to Compulsory Ce rtification. CNCA Notice No. 30. Viewed at: 
http://www.cnca.gov.cn/cnca/zwxx/ggxx/719933.shtml  (in Chinese only). 
93 Secretariat calculation. 
94 Amongst these are: China Quality Certification Centre; China Electromagnetic Compatibility 
Certification Centre; China Security Technology Certification Centre; China Agricultural Product Quality Certification Centre; China Safety Glass Certification Centre; China Committee for Conformity Certification of Tyres; China Certification Co mmittee for Latex Quality; Product Conformity Assessment Centre; 
Ministry of Public Security Fire; Ch ina Automotive Certification Centre (CCC Compulsory prod uct certification 
system FAQ). Viewed at: http://www.aqsiqccc.com/en/aqsiq/ccc-12.html . 
95 Certification bodies re-inspect the manufacturing fa cilities on a regular basi s. The frequency of the 
follow-up inspection depends on the security level and quality stability of the prod uct and the record of the 
manufacturer. 
96 Product-specific technical documentation requ ired for submission can be found in the " Implementation 
Rules for Compulsory Certification ". Viewed at: http://www.aqsiqccc.com/en/aqsiq/ccc-9.html . WT/TPR/S/300 • China 
 
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  3.76.  Exemptions from the use of the CCC cert ification are possible (Box 3.2). To obtain 
an exemption, manufacturers or importers need to apply directly to the local inspection and quarantine bureaux. In addition, under special circumstances (i.e. "special use" or "special reasons"), certain goods, which are used as inputs and for household consumption, can be 
imported exempt from certification if they pass inspection.
97 
Box 3.2 Exemptions from the use of the CCC Certification   
Goods exempt from CCC Certification: 
Goods used by diplomatic agen cies and for personal use. 
Goods used by Hong Kong and Macao SAR agencies, and for personal use. 
Goods brought by tourists in to China for their own use. 
Goods donated to the Government as aid and/or gifts. 
Exemptions granted to addr ess specific situations: 
Goods used in research and testing. 
Goods used to test production lines with  the intention of importing technology. 
Goods used to maintain equipment. 
Equipment or parts used to complement the factory produc tion lines/sets of producti on lines (excluding office 
supplies). 
Goods for exclusive use in commercial exhibition. 
Goods imported temporarily. 
Parts of machines to be processed and then exported as a complete machine. 
Spare parts or materials imported under materials processing trade.  
Source: WTO (2012). 
3.1.9  Sanitary and phytosanitary requirements 
3.77.  There have been no major changes in the le gislation that regulates the SPS regime in China 
since the last Review. A myriad of laws and implementing regulations and rules continue to regulate China's SPS regime; some of these laws ar e outdated and repetitive (Table 3.7). Existing 
legislation stipulates the procedures to establish SPS requirements as well as to regulate imports 
subject to SPS measures, including aspects dealing with their inspection, quarantine and supervision.  
Table 3.7 Laws and regulations related to China's SPS regime 
Law  Promulgated/Amended 
Law on the Entry and Exit Animal and Plant Quarantine 30.10.1991/27.08.2009 
Regulations on Implementation of the Law on the Entry and Exit 
Animal and Plant Quarantine  02.12.1996 
Law on Quality and Safety of Agricultural Products  29.04.2006 
Animal Disease Prevention Law 03.07.1997/30.08.2007 
Regulations on Plant Quarantine  03.01.1983/13.05.1992 
Regulations on Control of Pesticides 08.05.1997/29.11.2001 
Regulations on Control of Veterinary Drugs  21.05.1987/29.11.2001 and 09.04.2004 
Regulations on the Administration of Feed and Feed Additives  29.05.1999/29.11.2001 and 03.11.2011 
Law on Frontier Health and Quarantine .. 
Law on Import and Export Commodity Inspection .. 
Food Safety Law 28.02.2009 
Rules and administrative measures .. 
Measures for the Supervision and Administration of Inspection and 
Quarantine of Import and Export Aquatic Products  AQSIQ Decree No.135 of 2011 
Measures for the Supervision and Administration of Inspection and 
Quarantine of Import and Export Meat Products  AQSIQ Decree No. 136 of 2011 
Measures for the Prevention and Treatment of AIDS at Frontier AQSIQ Decree No. 139 of 2011 
Measures for the Supervision and Administration of Inspection and 
Quarantine of Import and Export Cosmetic Products  AQSIQ Decree No. 143 of 2011 
                                               
97 CNCA Announcement No. 38, 2008. WT/TPR/S/300 • China 
 
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  Law  Promulgated/Amended 
Administrative Measures on the Safety of Import and Export Food  AQSIQ Decree No. 144 of 2011 
Administrative Measures for Registration of Overseas Manufacturers of 
Imported Food AQSIQ Decree No. 145 of 2012 
Measures for the Supervision and Administration of Inspection and 
Quarantine of Import and Export Dairy Products  AQSIQ Decree No. 152 of 2013 
.. Not available. 
Source: Information provided by the Chinese authorities. 
3.78.  Another salient feature of China's SPS system  is the fragmentation of regulatory authorities 
among different Government agencies. Currently th e Ministry of Health (MOH), the Ministry of 
Agriculture (MOA), AQSIQ, the State Administrati on for Industry and Commerce (SAIC), MOFCOM, 
and the State Food and Drug Administration (SFDA) are actively involved in regulating the SPS 
regime (Table 3.8). This fragmentation of the SPS regulatory system presents a challenge 
regarding the enforcement and implementation of policies and specific measures as there could be an overlap of functions and thus an avoidance of responsibility and lack of accountability. 
Table 3.8 Institutions in charge of the SPS system 
Institution  Responsibility 
Ministry of Health (MOH) Responsible for food safe ty risk assessment and the formulation of food 
safety standards 
Ministry of Agriculture (MOA) In charge of implementing entry an d exit animal and plant quarantine 
General Administra tion of Quality 
Supervision, Inspection and Quarantine (AQSIQ) In charge of national quality, entry-exit commodity inspection, 
entry-exit health quarantine, entry- exit animal and plant quarantine, 
import-export food safety, certification and accreditation 
State Administration for Industry 
and Commerce (SAIC) In charge of regulating product quality and food safety in the market 
State Food and Drug Administration (SFDA) In charge of draft laws, regulations and rules to supervise food safety 
(including food additives), drug s (including traditional Chinese 
medicines), medical devices and cosmetics 
Source: Information provided by the Chinese authorities. 
3.79.  According to the authorities, there have been no changes in any of the procedures to 
establish SPS requirements in China since 2010. China can prohibit imports of any animals and 
plants that originate in countries or regions with  prevalent epidemics or plant diseases, based on a 
risk analysis, through a joint order issued by the Ministry of Agriculture and AQSIQ.98 The 
prohibition can be lifted on the basis of scientific assessment. However, to lift a prohibition the 
country needs to submit an application to the relevant Chinese authorities once the epidemic has 
been controlled. The MOA and AQSIQ will jointly as sess the application, and an on-site survey will 
be carried out to assess whether the steps taken to control the disease are in accordance with a risk analysis based on the principles stipulated by national and international organizations. 
Thereafter the MOA and AQSIQ will jointly solicit comments on the risk analysis report from the 
relevant national bodies. China will also submit the report to the countries affected by the prohibition to obtain their comments and feedback. If there are disagreements on 
China's assessment of the country's sanitary conditions, China might request more evidence to 
re-assess the risk based on the new evidence. 
3.80.  Inspection procedures for imports and exports subject to SPS measures have not undergone 
any changes since 2010.
99 All imports and exports listed under the Catalogue must be presented 
to the entry and exit inspection and quarantine authorities.100 If the goods subject to statutory 
inspection have not been inspected, they ar e not allowed to be sold or used in the 
Chinese territory. Regarding imports, the Catalogue contained 2,032 tariff lines at the HS 8-digit 
level in 2013.101 The last amendment, which took place on 1 August 2013, added two tariff lines 
(lignite (whether or not pulverized, but no t agglomerated) (HS 27021000) and agglomerated 
                                               
98 Law on the Entry and Exit Animal and Plant Quarantine. 
99 Information provided by the authorities. 
100 AQSIQ has set up 35 Entry-Exit Inspection and Qu arantine Bureaux (CIQ) in China's 31 provinces, 
with 300 branches and more than 200 lo cal offices across the country to enforce the entry-exit inspection and 
quarantine requirements (information provided by the authorities). 
101 The exportable goods included in the 2013 Catalogue accounted for 2,051 tariff lines at the 
HS 8-digit level. WT/TPR/S/300 • China 
 
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  lignite (HS 27022000)) to the list of imports that  are subject to inspection and quarantine 
requirements.102 Some 80% of the goods subject to automatic import licensing are also subject to 
inspection and quarantine and some 35% of goods subject to non-automatic licensing were also subject to inspection and quarantine.
103  
3.81.  There is an additional catalogue, the Catalogue of Import Commodities Subject to Safety 
and Quality Permits,  that stipulates the general standards for goods that are highly sensitive in 
terms of safety, sanitation and environmental protection.104 In addition, imports of waste, which 
can be used as raw materials, must be inspected before loading to prevent harmful waste from 
entering Chinese territory.  
3.82.  Foreign enterprises that manufacture, import , process and store food need to be registered 
with the Certification and Accreditation Administration of China before their related food products 
are imported into China.105 Prior to 2012 firms were registered under the " Provisions for the 
Administration of the Registration of Foreign Manufacturers of Imported Food of 2002 ".106 
3.83.  China's national enquiry point for SPS co ntinues to be the AQSIQ. Between 2011 and 2013, 
China made 286 notifications regarding the adopted SPS measures. Seven of these notifications 
were related to emergency measures: five were ab out the use of food additives and were put in 
place on grounds of food safety and to safeguard human health107, and the other two were aimed 
at preserving plant health through the prohibition of imports of contaminated seeds, and of logs 
and timbers from certain territories.108 
3.84.  Also between 2011 and 2013, Members raised several concerns regarding measures 
imposed by China on grounds of sanitary conditions that have not been reported to the WTO. 
These measures include: quarantine and testing procedures for salmon109; testing methods for 
food additives; import conditions related to phthalates110; import restrictions on beef due to 
BSE111; and registration requirements for foreign companies importing food into China112, and 
have been reiterated on several occasions. The authorities again indicated that these measures are 
based on WTO rules. 
3.2  Measures Directly Affecting Exports 
3.2.1  Export procedures and requirements 
3.85.  Exporters, like importers, must register with Customs before making customs declarations. 
Exporters must declare to Customs directly or entrust "a customs declaration enterprise" to make the declaration once goods arrive at the customs surveillance zone and 24 hours before loading, 
unless otherwise approved by Customs.
113 
3.86.  Exporters must comply with the requiremen ts of Customs AQSIQ which are stipulated in the 
"Catalogue of Import and Export Commodities Subject to Compulsory Inspection "114, which is 
                                               
102 GACC and AQSIQ Announcement No. 109 of 2013. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/lhgg/201308/t20130801_370419.htm  (in Chinese only). 
103 WTO calculation. 
104 Entry and Exit Quarantine Inspection. Viewed at: 
http://english.dg.gov.cn/Entry%20&%20Exit%20Q uarantine%20Inspection%20Administration.htm . 
105 AQSIQ Decree No. 145 of 22 March 2012 (Provisions for the Administration of the Registration 
of Overseas Manufacturers of Imported Food). 
106 The latest Catalogue of Registration of Foreig n Manufacturers of Imported Foods . Viewed at: 
https://cdn.chemlinked.com/file/OtherNews/The_Implementation_Catalogue.pdf . 
107 WTO documents G/SPS/N/CHN/360-576, May 2011 to February 2013. 
108 WTO documents G/SPS/N/CHN/601, 27 March 2013 and G/SPS/N/CHN/632, 29 November 2013. 
109 WTO documents G/SPS/R/63, G/SPS/R/64, G/SPS/ R/66; G/SPS/R/67, G/SP S/R/69, G/SPS/R/70 and 
G/SPS/R/71, from 12 September 2011 to 28 August 2013. 
110 WTO documents G/SPS/R/70, 8 May 2013 and G/SPS/R/71, 28 August 2013. 
111 WTO documents G/SPS/R/63-71, from 12 September 2011 to 28 August 2013. 
112 WTO documents G/SPS/R/64, 17 January 2012; and G/SPS/R/66, 23 May 2012. 
113 The Provisions of the People's Republic of China on the Customs Administrati on of Declarations for 
the Import and Export of Goods  (GACC Decree No. 103). Viewed at: 
http://www.gov.cn/gongbao/content/2004/content_62701.htm  (in Chinese) [12 June 2013]. 
114 According to the authorities, this Catalogue is now called  Catalogue of Entry-Exit Commodities 
Inspected and Quarantined by Entry-Ex it Inspection and Quarantine Organ . WT/TPR/S/300 • China 
 
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  amended every year to add or subtract commodities as required for the protection of health, the 
environment, and national security, and to promot e steady export growth and adjust the export 
structure.115 The last amendment, which took place on 1 August 2013, deleted some 1,507 tariff 
lines at the HS 10-digit level from the list of ex port items subject to inspection and quarantine 
requirements.116 However, some items, such as dangerous chemicals, fireworks, lighters, toys and 
strollers, food products, automotive and other industrial products, and rare earths continue to require export commodity inspection.
117 Exports must be inspected where they are produced. 
In addition, the packaging for export of dang erous chemicals and other dangerous goods must 
undergo tests.118  
3.87.  The Reform of Classified Customs Clearance initiated in 2009 has been adopted by all 
Customs offices to facilitate export procedures.119 Enterprises that export (like those that import) 
are classified into different groups based on risk analysis. Customs inspection and supervision 
depend on the enterprise's rating. Goods export ed by high-risk enterprises are inspected while 
other exports can be released automatically.120 The Reform of Paperless Customs Clearance 
initiated in 2012 is also expected to simplify export procedures.121 Under this reform, Customs will 
base the clearance of goods on classified enterprise management and risk analysis and the classification of exports according to their risk levels. The customs declarations will be transmitted 
electronically by the enterprises at any time without presenting paper documents. Once the 
customs declaration is cleared, customs will send an electronic message to the enterprise and to the premises where the goods are stored indicating  that the merchandise should be released for 
clearance.  
3.2.2  Export taxes, charges, and levies 
3.88.  China continues to apply export taxes in accordance with the Regulations on Import and 
Export Tariffs.
122 The list of goods subject to "statutory" and interim export dutiesis issued every 
year.123 Exports subject to statutory duties might also  be subject to an interim duty, usually at 
a lower rate.124 Interim duties varied from 5% to 35% in 2013. Exports that are subject to interim 
duties may also be subject to a special export duty which is applied according to the season and 
may be substantially higher than interim duty rate s. For instance, the special export duty rate was 
75% in 2013. Export duties are ad valorem , specific or they may take other forms as prescribed by 
the State; however, in practice, most of them are ad valorem . 
3.89.  Export duties are payable on the date wh en Customs accepts the export declaration, based 
on the transaction value of exports, and transp ort and insurance cost. Certain items are exempt 
from export duties (Box 3.3). Duty reductions or exemptions may also be granted for: exports into 
the special economic zones and other specially-designated areas; exports made by specific 
enterprises such as Chinese-foreign equity jo int ventures, Chinese-foreign contractual joint 
ventures and enterprises with exclusive foreign investment; exports devoted to specific purposes 
                                               
115 Viewed at: http://www.gov.cn/jrzg/2013-08/01/content_2459772.htm . 
116 GACC and AQSIQ Announcement No. 109 of 2013. Viewed at: 
http://www.aqsiq.gov.cn/xxgk_13386/jlgg_12538/lhgg/201308/t20130801_370419.htm  (in Chinese only). 
117 Viewed at: http://www.gov.cn/jrzg/2013-08/01/content_2459772.htm . 
118 Viewed at: http://www.gov.cn/jrzg/2013-08/01/content_2459772.htm . 
119 GACC Announcement No. 56 of 2010. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info237228.htm  (in Chinese only). 
120 GACC Announcement No. 33 of 2009. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab1/info174780.htm  (in Chinese only); and more information 
concerning classified customs clearance can be found at: http://www.gov.cn/gzdt/2012-07/04/content 
_2176701.htm  (in Chinese only). 
121 At present the pilot programme is being implemented at all sites of 12 customs offices: Beijing, 
Fuzhou, Gongbei, Guangzhou, Hangzhou, Huangpu, Na njing, Ningbo, Qingdao, Shanghai, Shenzhen, and 
Tianjin. The other 30 customs offices are implementing a few of the pilot programm es for paperless custom 
clearance at only one or two sites. 
122 The Regulations on Import and Export Tariffs ca me into effect on 1 January 2004. Viewed at: 
http://english.customs.gov.cn/publish/portal191/tab47813/info391174.htm  (in English). 
123 Regulations on import and export duties. Viewed at: 
http://english.customs.gov.cn/publish/portal191/tab47813/info391174.htm ; The Tariff Implementation Plan 
of 2012 at http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201112/t20111215_615749.html  and The Tariff 
Implementation Plan of 2013. Viewed at: http://www.gov.cn/zwgk/2012-12/17/content_2291986.htm  
(in Chinese) and http://www.tianyuky.com/en/NewsViews.asp?id=1745  (in English but not exact). 
124 Where exports are subject to both a statutory and an interim export duty, the interim duty applies. WT/TPR/S/300 • China 
 
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  and materials donated for public welfare use; and low-volume border transactions. According to 
the authorities, no such duty reductions have taken place. 
Box 3.3 Goods exempted from export duties 
Imported goods that are exported from the Customs territory within one year of the date of importation into 
the same State 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. 
Goods and materials donated by internationa l organizations or fo reign governments. 
Fuels, stores, beverages an d provisions to be used en route by vessels which are in transit in China. 
Source: Regulations on Import and Export Tariffs. 
3.90.  Between 2011 and 2013, some 4.2% of all tariff lines at the HS 8-digit level were subject to 
export duties (including both statutory and interim) (Table 3.9).125 Neither the goods subject to 
the statutory export duty nor the duty rates ha ve changed since 2011. Goods subject to statutory 
export duty included, inter alia , phosphorus; ores, and concentrates of lead, zinc, tin, and 
tungsten; and base metals (iron, steel, copper, nickel and aluminium). For goods subject to statutory export duties and interim export duties, the rates of the latter are usually lower than 
those of the former, with the exception of th ose applied on three tariff lines (pig iron 
HS 7201.10.00, HS 7201.20.00, and HS 7201.50.00), which bear a statutory rate of 20% and an interim rate of 25%. 
Table 3.9 Exports duty types by HS Chapter, 2013 
 Export duties Interim duties Special duties 
HS Chapters No. of 
lines Range 
% No. of 
lines Range 
% No. of 
lines Range 
% 
Total 102 20-50 320 0-35 13 75 
03 Fish and crustaceans 1 20 0 n.a. 0 n.a. 
05 Products of animal origin, nes. 4 (1) 40 1 0 0 n.a. 
25 Earths and stone; plastering 
materials 0 n.a. 21 5-35 0 n.a. 
26 Ores, slag and ash 7 (2) 20-50 32 0-20 0 n.a. 
27 Mineral fuels, oils and waxes 0 n.a. 11 5-10 0 n.a. 
28 Inorganic chemicals 3 (1) 20-30 79 (1) 5-25 1 75 
29 Organic chemicals 1 (1) 40 1 0 0 n.a. 
31 Fertilizers 0 n.a. 22 (12) 2-30 12 75 
38 Miscellaneous chemical products 0 n.a. 1 10 0 n.a. 
41 Raw hides and skins 2 20 0 n.a. 0 n.a. 
44 Wood and articles of wood 0 n.a. 6 10-15 0 n.a. 
47 Pulp of wood, paper or 
paperboard 0 n.a. 16 10 0 n.a. 
72 Iron and steel 17 (5) 20-40 48 10-25 0 n.a. 
74 Copper and articles thereof 32 (32) 30 34 0-15 0 n.a. 
75 Nickel and articles thereof 4 (4) 40 5 5-15 0 n.a. 
76 Aluminium and articles thereof 24 (24) 20-30 24 0-15 0 n.a. 
78 Lead and articles thereof 0 n.a. 2 10 0 n.a. 
79 Zinc and articles thereof 4 (4) 20 4 0-15 0 n.a. 
80 Tin and articles thereof 0 n.a. 2 10 0 n.a. 
81 Other base metals 3 (1) 20 11 5-15 0 n.a. 
n.a. Not applicable. 
Note: Figures in brackets under the column "export duties" refer to the number of tariff lines subject to 
both an export and an interim duty  rate. Figures in brackets under the column "inter im duties" refer 
to the number of tariff lines subject to both an interim and a special duty rate. 
Source: Information provided by the authorities of China. 
                                               
125 In 2011, 99 tariff lines (HS 8-digit level) were subject to the statutory export tax; while in 2013 the 
splitting of lines at the HS 8-digit level increased the number to 102. WT/TPR/S/300 • China 
 
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  3.91.  Interim export duty rates were levied on  310 tariff lines at the HS 8-digit level in 2011 and 
ranged from 0% to 75%, with the highest ra tes applying to fertilizers (HS Chapter 31). 
The number of products subject to interim export taxes increased in 2013 (320 tariff lines at the HS 8-digit level) as a result of an increase in the number of inorganic chemicals (HS Chapter 28) 
subject to duties. The duty rate levied on inor ganic chemicals also increased from a maximum of 
60% to 75% (including the special duty). In 2013, five products were subject to specific interim export duties.
126 The number of export products subject to  special export duty rates increased in 
2013 to 13 lines at the HS 8-digit level from 8 lines in 2011.127  
3.92.  China is the leading world exporter of cert ain products subject to export taxes, thus the 
application of export taxes could have an impact on world prices of these products.128 
3.93.  VAT on exports is 0% with the except ion of VAT on exports of restricted goods.129 However, 
according to the authorities, in principle, VAT on exports is refundable.  
3.2.3  Export prohibitions, restrictions, and licensing 3.94.  The State may restrict or forbid the ex portation of any product to: maintain national 
security and public morality; protect human, animal and plant health; protect the environment; 
protect exhaustible natural resources that are in short supply or require "effective protection"; and organize "export business management"; or under any other circumstance as provided for in any 
law or administrative regulation. Exports may also be restricted or forbidden in order to comply 
with international treaties or agreements that China has signed. 
3.95.  As in the case of imports, MOFCOM, in collaboration with other relevant departments, 
formulates and issues a catalogue of goods restricted or forbidden for export. Export quotas or 
licences may be applied to any good subject to export restrictions. According to information 
provided to the Secretariat in the context of th is Review, in 2013 the exportation of products 
classified under 65 tariff lines at the HS2012 8-digit level was prohibited. Export prohibitions 
applied, inter alia , to bones, ivory, natural sands (H S Chapter 25) asbestos, halogenated 
derivatives of hydrocarbons, organic chemicals (HS Chapter 29), unprocessed wood and some 
platinum products. The products subject to export  prohibition remain unchanged since 2009, when 
China last notified its export prohibitions to the Secretariat. 
3.96.  China continues to impose global and destination-specific export quotas. In 2013, global 
export quotas applied to 193 tariff lines at HS 8-digit level, up from 180 in 2011.
130 The increase in 
the number of lines was due largely to a change in nomenclature and splitting of lines since, as of 
1 January 2013, China eliminated global export quotas on bauxite, zinc ore/sand, coke, and 
carborundum. However, these products, with the exception of zinc ore/sand, are still subject to export licensing.  
3.97.  The list of products subject to quotas and the total amount of the quotas for the following 
year is published on 31 October of each year. Be tween 1 and 15 November of each year, exporters 
must apply for an export quota for the following year. Export quotas must be allocated before 
15 December of each year, in accordance with Articles 38 and 39 of the " Regulation of the People's 
Republic of China on the Administration  of the Import and Export of Goods ". The allocation 
of quotas must be decided within 30 days of receiving the applications and no later than 15 December of the current year. Export quotas ar e allocated either by NDRC or MOFCOM directly, 
or through a bidding process. Once the exporter obtains a quota, it needs to apply for a licence 
                                               
126 These products were: phosphoric acid (HS 28092019), anhydrous ammonia (HS 28141000), 
ammonia in aqueous solution (HS 28142000), and potassium (HS 31042090 and HS 31043000). 
127 Twelve tariff lines under HS Chapter 31 (mineral or  chemical fertilizers) and the additional line 
(ammonium chloride for use as fertilizer) (HS 28271010) were subject to special export duties in 2013. 
128 In 2012 China's exports of rare-earth metals, scandium and yttrium, whether or not intermixed or 
interalloyed (HS 280530), accounted for 62% of total world exports (United Nations Statistics Division (UNSD), Comtrade database). 
129 The Interpretation of VAT by State Administra tion of Taxation, 28 September 2011. Viewed at: 
http://www.chinatax.gov.cn/n8136506/n8136608/n8138877/n8139027/8357269.html  (in Chinese only). 
130 Information provided by the authorities. WT/TPR/S/300 • China 
 
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  (Table 3.10). Unused quotas must be returned before the end of the year for which they were 
allocated. Exporters need to present the certificate of quotas to clear Customs.131 
3.98.  China applies three types of export licence s: export quota licences, export quota bidding 
licences and export licences (Table 3.10). The di fferent types of licences apply according to the 
restriction that applies to the goods. 
Table 3.10 Products subject to ex port quotas and licensing, 2013 
Products Type of 
licence Comment 
Goods subject to quota and licensing   
Rice, maize, wheat, cotton, coal. Export quota 
licensing The quota is 
allocated by NDRC.  
Live cattle, swine and chicken (for  export to Hong Kong and Macao 
SARs); maize flour; rice flour; wheat flour; sawn timber; coke; crude oil; processed oil;  rare earth; antimony and articles thereof; tungsten 
and articles thereof; zinc ore; tin and articles thereof; silver; indium and articles thereof; molybd enum; and phosphorus ore. Export quota 
licensing The quota is 
allocated by MOFCOM. 
Chinese iris and its products; talc lump (powder); magnesium ore; 
and liquorice and its products.  Export quota 
bidding The quota is 
allocated by 
MOFCOM. 
Goods subject to licensing   
Live cattle, swine and chicken (for markets other than Hong Kong or 
Macao SARs); beef, pork and chicken meat; paraffin wax; platinum 
(through processing trade only); au tomobiles (including completely 
knocked down) and chassis; moto rcycles (including all terrain 
motorcycles) and their engines an d frames; vitamin C; industrial 
salts of penicillin; disodium sulp hate; coke; carborundum; bauxite; 
fluorspar and some other metals and their products (excluding 
ferroalloy). Export licence A licence is granted 
if the exporter has 
the relevant export 
contract. 
Substances depleting the ozone la yer; natural sands (including 
standard sands); molybdenum products; and citric acid. Export licence  An export permit is 
required before applying for a licence. 
Source: Information provided by the Chinese authorities. 
3.99.  MOFCOM issues on a yearly basis a catalogu e of export goods requiring licences (Catalogue 
of Goods Subject to the Administration of Export Licences).132 The Catalogue includes two lists: 
one for export licences that apply to general trade, and one for export licences that apply to 
border trade. For 2013, there were 48 categories  of goods subject to export licensing under 
general trade. The number of lines subject to export licensing increased from 428 tariff lines at the 
HS 8-digit level in 2010 to 450 lines in 2013, due largely to a change in nomenclature and splitting 
of lines. Thus, export licences continue to apply mainly to exports of precious metals (HS section 14), transport equipment (HS section 17) and mineral products (HS section 05) 
(Chart 3.3). 
                                               
131 Articles 40 and 41 of the Regulation of the People's  Republic of China on the Administration of the 
Import and Export of Goods. 
132 Ministry of Commerce, General Administra tion of Customs [2012]. Announcement No. 97 
of 31 December 2013. Viewed at: http://wms.mofcom.gov.cn/article/zcfb/c/201212/20121208503273.shtml  
(in Chinese only). WT/TPR/S/300 • China 
 
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  Chart 3.3 Export licensing by HS section, 2010 and 2013 
% of HS section 
051015202530
01 02 05 06 09 11 14 15 16 17 20HS section
01  Live animals and animal products 
02  Vegetable products  
05  Mineral products  
06  Chemical products  
09  Wood and articles of wood  
11  Textiles and textile articles  
14  Precious metals  
15  Base metals  
16  Machinery and electrical equipmen t
17  Transport equipment  
20  Miscellaneous manufactures  
20132010 
 
Note: 2010 and 2013 calculations are based on HS 07 and HS 12 nomenclature at 8-digit level 
respectively. At the HS 8-digit level 428 and 450 tariff lines have an export licence, for 2010 and 2013 respectively. The difference in number is due to splitting of tariff lines. 
Source: MOFCOM online information. 
3.100.  Non-automatic export licences are issued by MOFCOM's Bureau of Quota Licence Affairs, 
local offices of the MOFCOM commissioners, and certifying bodies under local commerce authorities. Export licences can be used only for one shipment. However, in certain instances the licence can be used for multiple shipments, including for goods exported by FIEs. Export licences 
are valid for a maximum of six months and must be used within the current year from the date of 
issuance. If an export licence is not used during the valid period, the operator can apply for an extension and a new export licence could be issued once the original one is revoked. 
3.2.4  Export support and promotion  
3.101.  In its most recent notification to the WTO regarding export subsidies, China indicated that 
it did not maintain or introduce any export su bsidies on agricultural products during 2011 or 
2012.
133 No information was provided covering the period under review. 
3.102.  Exporters continue to be entitled to VAT rebates. Rebate rates are usually lower than the 
VAT paid. At present, rebate rates are: 17%, 16%, 15%, 13%, 9%, 5% and 0%. Certain goods are not eligible for a rebate.
134 VAT rebate rates as well as the goods that are not eligible for the 
rebate could change as the rebate has been used as a policy instrument to encourage or 
discourage exports, as necessary, to meet industri al development goals. For instance, in 2009 VAT 
rebate rates were increased on exports of certain products including: iron and steel; non-ferrous 
metals; petrochemicals; electronic and information technology products; and also some light 
industries such as textiles and clothing135; while in 2010 the VAT rebate on exports of certain 
products (406 tariff lines at HS 10-digit level), such as steel, non-ferrous metals processing 
materials, silver powder, starch, and ethanol; certain pesticides, pharmaceuticals and chemical 
products; and certain plastic products, rubber products and glass products, was eliminated.136 
According to the authorities, there have been no changes to the VAT refund rates since 2011 and the list of products eligible for VAT export re fund and the refund rates can be viewed in the 
"Inquiry for Export Refund Rates" column on the website of the State Administration of Taxation. 
                                               
133 WTO documents G/AG/N/CHN/24, 17 December 2012; and G/AG/N/CHN/27, 7 March 2014. 
134 Products not subject to VAT rebate include: hi gh-energy-consuming produc ts, high-polluting, and 
those related to the use of resources; and endangered species of fauna and flora (information provided by 
the Chinese authorities). 
135 Trade Monitoring Database "TMDB". 
136 Information provided by the Chinese authorities making reference to the Circular by MOFCOM and 
the Ministry of Finance, Cai Shui No. 57 of  22 June 2010 [in Chinese only]. Viewed at: http://www.china-
briefing.com/news/2010/06/24/china-cancels-export-r ebates-on-406-products.html#sthash.cLX3WmLV.dpuf . WT/TPR/S/300 • China 
 
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  However, as this information is only available in Chinese the Secretariat was not able to confirm 
it.137 
3.103.  The authorities were unable to provide any other information regarding export support. 3.2.5  Export promotion and marketing assistance 
3.104.  China's overall objectives regarding trad e promotion are to promote balanced development 
of imports and exports, improve competitiveness and increase participation of SMEs in trade.
138 
Trade promotion activities are undertaken mainly by the Ministry of Commerce and its subordinate 
organizations, local commerce authorities and chambers of commerce. The two main organizations 
in charge of trade promotion are the Trade De velopment Bureau (TDB) under MOFCOM and the 
China Council for the Promotion of International Trade (CCIPT).139 The CCIPT is a non-
governmental organization which includes representatives from different sectors. Its main role is 
to promote trade through inter alia  participation in trade fairs and exhibitions; sponsor and/or 
participate in domestic and overseas expos, provide enterprises with information on trade issues, and training including in trade law and the protection of intellectual property rights. 
3.105.  China also holds domestic exhibitions and tr ade fairs, such as the China Import and Export 
Fair ("Canton Fair") held twice a year in Guangzhou, which is sponsored by MOFCOM and the Guangdong Provincial People's Government. This is China's most comprehensive trade fair as it 
showcases the widest range of commodities and sellers, and it is an important platform for 
China to introduce new enterprises, especially SMEs, to international markets. China also holds other product-specific exhibitions. The CCIPT has also held a series of cooperation forums which are mainly for SMEs and aim to promote trade development. 
3.106.  China established a public commercial information service system for enterprises or 
individuals engaged in international trade activities. The service includes a hotline and public database. According to the authorities, in 2006 MOFCOM set up a hotline to provide one-stop 
services, accept daily complaints and consultations from enterprises seeking to reduce risks while 
undertaking overseas commercial activities.
140 The database contains economic and trade 
information to assist traders in identifying business opportunities.  
3.2.6  Export finance, insurance, and guarantees 
3.107.  Export finance, insurance, and guarantees continue to be granted in China by at least 
two institutions playing broadly complementary roles. These are: the China Export-Import Bank (China Eximbank), and the China Export and Cred it Insurance Corporation (SINOSURE). The China 
Development Bank (CDB) finances exports but according to the authorities, is not an official export 
finance institution. 
3.108.  The Export-Import Bank of China (China Eximbank), one of China's "policy banks", 
established in 1994 as a wholly state-owned bank, is  the official export credit institution that 
provides export financing services in areas that social and commercial capital are unwilling to enter, such as high-risk export projects. Its mandate has not changed since the last Review in 
2012. It continues to provide support for the import  and export of capital goods (e.g. mechanical 
and electronic products, complete sets of equipment and new and high-tech products) and services. It also assists Chinese companies in undertaking overseas construction and investment projects. It promotes international economic cooper ation as China's official provider of credit to 
developing countries and as China's recipient of foreign aid.  
3.109.  China Eximbank supports exports mainly through export buyer's credit and export seller's 
credit. Export buyer's credit refers to loans ex tended by Eximbank to overseas borrowers and 
export seller's credit are loans granted to domestic enterprises when exporting vessels, 
                                               
137 State Administration of Taxation. Viewed at: http://www.chinatax.gov.cn  [in Chinese only]. 
138 China provides financial support to SMEs to particip ate in trade fairs. For further details please refer 
to Programme 49 listed in WTO document G/SCM/N/186/CHN, 21 October 2011. 
139 MOFCOM's official website can be viewed at: http://tdb.mofcom.gov.cn . [in Chinese only]; and the 
CCIPT's official website can be viewed at: http://www.ccpit.org  [in Chinese only]. 
140 The link to the official website of the Complaints  Service Centre of MOFOCM for Overseas Commercial 
Affairs of Enterprises is: http://shangwutousu.mofcom.gov.cn  [in Chinese only]. WT/TPR/S/300 • China 
 
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  equipment, electromechanical products, agricultural products, cultural products and services. 
The authorities noted that loans are granted at commercial interest rates. 
3.110.  Eximbank also has special lines of credit and different financial instruments to service 
SMEs. For instance, SMEs can benefit from "unifi ed borrowing" and repayment, separate borrowing 
and "unified insurance" and "unified insurance and custody". During the period under review, 
Eximbank "properly" increased the proportion of direct payment to SMEs that took loans with them. Eximbank also set up a "Green Channel" for the submission, examination and approval 
of loan applications submitted by SMEs. 
3.111.  In the context of this Review, China Eximbank was not able to provide the Secretariat with 
any more details on their export credit programmes. The authorities indicated that this information was confidential and could not be disclosed. However,  they reiterated as at the time of the last 
Review in 2012, that even though China is not a member of the Arrangement on Officially 
Supported Export Credits of OECD (the "Gentlemen 's Agreement"), in practice Eximbank followed 
the Gentlemen's Agreement. 
3.112.  Export seller's credit has increased since 2010 to reach in 2012 some RMB 175 billion in 
actual loans concluded by the Eximbank (Chart 3.4). These loans were allocated to the hi-tech products industry (35.30%), general electromechanical products (14.50%), vessel exports 
(10.50%) and equipment (7.01%).
141 Export buyers' credit also increased from 2010 to 2011 but 
showed a decrease in 2012 when the total amount of loans stood at RMB 42.5 billion. The amount 
of credit given by Eximbank to finance imports has also increased since 2010. 
3.113.  As part of its broader development mandate, China Development Bank (CDB), another 
fully state-owned bank, also provides export credit. CDB's mandate is to support the development 
of China's public infrastructure and strategic sectors. CDB aligns its business plan with national economic strategy and allocates resources to break bottlenecks in China's economic and social 
development. 
3.114.  China Export and Credit Insurance Corporation (SINOSURE), a state-owned insurance 
company, is China's official export credit insurance agency. SINOSURE offers inter alia  long- and 
medium-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. 
3.115.  SINOSURE aims at promoting Chinese exports of goods, technologies and service, 
especially high-tech and high value-added capital goods like electromechanical products, and at 
assisting national enterprises to invest overseas, by providing insurance against non-payment risks. SINOSURE offers "policy-oriented insurance" and aims at continuing to serve the State 
strategy and at playing a more important role in supporting China's foreign trade development 
with the strategy of "go-abroad", safeguarding  the security of the national economy, and 
promoting economic growth, employment and th e equilibrium of the balance of payments.
142 
3.116.  In 2009, SINOSURE increased its support to the key industries listed in the National Plan 
for Industrial Vitalization. For instance, since the photovoltaic (PV) industry was regarded as the national sunrise industry supported by the St ate, between January and July 2009, SINOSURE 
underwrote contracts for US$1.25 billion for exports from the PV industry, 6.2 times higher than 
the amount underwritten in 2008. During the first half of 2009, the penetration rate of export 
credit insurance for China's PV industry reached 46.3%. SINOSURE saw it as an example of the 
effect of efficiently applying policy-oriented export credit insurance and protecting Chinese 
enterprises against the risk associated with collecting foreign exchange from exports during 
an international financial crisis.
143 Since 2009, export credit insurance policy has been one of the 
most important means of supporting foreign trade in China. As a result, export credit insurance 
                                               
141 Financial Report of the Export-Import Bank of China (2012). Viewed at: 
http://www.eximbank.gov.cn/tm/report/index_27_13319.html . 
142 Viewed at: http://www.sinosure.com.cn/sinosure/english/news_events/114266.html . 
143 Viewed at: http://www.sinosure.com.cn/sinosure/english/news_events/114266.html . WT/TPR/S/300 • China 
 
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  has increased rapidly in China, to reach US$216.24 billion in 2011, equivalent to 23.6% of total 
exports, and US$327.44 billion in 2013, accounting for 14.8% of the total exports.144 
Chart 3.4 Eximbank operations, 2008-12 
020406080100120140160180200
2008 2009 2010 2011 201205101520253035404550
2008 2009 2010 2011 2012
020406080100120140160180
2008 2009 2010 2011 201205101520253035404550
2008 2009 2010 2011 2012
01020304050607080
2008 2009 2010 2011 201202468101214161820
2008 2009 2010 2011 2012Actual disbursement of export seller's credit
RMB billionActual disbursement of export buyer's credit
RMB billion
Actual disbursement of import credit
RMB billionLetters of guarantee
US$ billion
International settlement transactions
US$ billionTrade financing transactions
US$ billion
 
Source: The Export-Import Bank of Ch ina online information. Viewed at: 
http://english.eximbank.gov.cn/annual/2012fm.shtml . 
                                               
144 Export credit insurance reaches US$216.24 billion in 2011. China Economic Net. Viewed at: 
http://en.ce.cn/Insight/201204/18/t20120418_23252615.shtml ; and information provided by the authorities. WT/TPR/S/300 • China 
 
- 87 - 
 
  3.117.  Export credit insurance has also become more important in supporting China's foreign 
trade and economic cooperation. During the financial crisis, it served as leverage in stabilizing foreign demand and driving export deals. Since its creation in 2001 until the end of 2011, SINOSURE has supported exports, domestic trade and investment by guaranteeing a total value 
of US$1,484.6 billion. Its policies covered thousa nds of exporters and hundreds of medium- and 
long-term projects concerning exports of high technology products, large electro-machinery and complete-set equipment, as well as overseas engineering contracts. 
3.3  Measures Affecting Production and Trade 
3.3.1  Incentives 3.118.  China's "subsidy policy" aims, according to the authorities, at, inter alia : upgrading the 
industrial base through the use of scientific and technological innovation; promoting regional 
development; and encouraging energy conser vation and the reduction of emissions. 
The authorities indicated that support in China is granted through tax preferences and direct 
transfers, and that local preferences should be rela tively limited and in line with those granted at 
the central level (Table A3.3). Most taxes are determined by the Central Government; hence, tax 
preferences at the central and local levels are basi cally similar. In principle, the local governments 
should not create any additional  tax preferences. The authorities also noted that the support 
provided by local governments through direct transfers should be to a large extent similar to the 
support policies at the Central Government level.
145 
3.119.  China's most recent notification to  the Committee on Subsidies and Countervailing 
Measures dates from 2011. The notification contains 93 programmes maintained at the central 
level and covers the period 2005-2008.146 The programmes listed in the notification included 
incentives provided to: Foreign-Invested Enterprises (FIE) (section 2); to Small and Medium Enterprises (SMEs); to less developed regions and "s pecial economic zones" (section 2); to specific 
industries and to agriculture. The authorities also  noted that they are preparing a more up-to-date
 
notification of programmes maintained at the Central Government level, covering the period since 
2008, and that they are also considering incorporating local subsidy programmes in that 
notification. According to the authorities, these programmes have not changed substantially since 
2008; however, several of the programmes notified in 2011 have been eliminated (Table A3.4). The authorities were not able to provide statistical data regarding disbursement for the different support programmes, taxes forgone as result of the support measure; or the amount budgeted for 
these. 
3.120.  As notified by China, capital is guided  through preferential tax treatment to specific 
Regions to promote development in remote areas (e.g. the Central and Western Regions) and to 
narrow economic gaps amongst the different regions. Regional development funds also exist to 
assist these areas. It appears that preferences granted in these Regions have not changed since 
the previous Review in 2012. The Enterprise Income Tax (EIT) on enterprises (domestic and 
foreign-invested) established in these Regions and engaged in industries encouraged in 
the Catalogue of Priority Industries for Foreign Investment in the Central-Western Regions are subject to a preferential EIT rate of 15% and exempted from import duties for the equipment 
imported to be used in the project (with the except ion of those listed in the "Catalogue of imported 
products not subject to tax exemption in foreign-invested projects" or in the "Catalogue of 
imported products not subject to tax exemption in domestic invested projects").
147 However, a 
new Catalogue of Priority Industries for Foreign Investment in the Mid-Western Regions was 
released in 2013. This Catalogue (2013) lists by province the specific industries in which FDI 
should be encouraged.148 The difference between the 2008 and the 2013 Catalogues is that the 
latter increased the number of industries to 500 fr om 327, and it included the Province of Hainan 
in the catalogue. The industries enumerated rang e from raising chickens, pigs, cattle and sheep to 
                                               
145 This paragraph is based on informat ion provided by the authorities. 
146 WTO document G/SCM/N/186/CHN, 21 October 2011. 
147 Programme 15 in WTO document G/SCM/N/186/CH N, 21 October 2011. In accordance with the 
Circular on Several Issues Concerning the Implementati on of Transformation and Reform of Value-Added Tax 
in China (MOF Circular Cai Shui No. 170 of 2008), from 1 January 2009, the VAT on the production equipment purchased by enterprises is deductible. The levy of the import VAT will be restored  to the foreign-invested 
enterprises originally exempted from the impo rt VAT for equipment imported for self-use. 
148 The Secretariat was unable to compare the old Catalogue and the new one (2013) as both of them 
are only available in Chinese. WT/TPR/S/300 • China 
 
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  the production of high-performance radial tyres including tubeless truck tyres, low profile and flat 
(less than 55 series), large high-performance radial passenger tyre rims (15 inches or more), radial aircraft tyres; and the production of auto  parts such as: automatic transmissions of more 
than six speeds, LED headlamps, and auto parts ma de of lightweight materials (e.g. high-strength 
steel, aluminium-magnesium al loy, composite materials).
149 
3.121.  Foreign-invested enterprises established in 12 border cities (counties and towns) benefited 
from a preferential EIT rate of 24% until 2008.150 Additional incentives to attract foreign 
investment seem to be granted at the provincial level (Table A3.5). The central government 
authorities noted that they are not in a position to confirm the existence of these programmes. 
3.122.  Specific industries such as emerging industries, high and new technology industries, 
industries that promote energy conservation and environmental protection151, industries related to 
public welfare and public infrastructure, which would not otherwise attract capital, are supported 
by the State. The objective of these support programmes is to promote innovation, upgrade 
industries, and protect the environment and green development. 
3.123.  Agriculture is also supported to guarantee farmers' income, protect the sector, develop 
rural areas, and ensure food security and price st ability of agricultural products in the domestic 
market.152 According to the authorities, China has gradually increased its fiscal expenditures on 
public services for agriculture and has improved the support system for agriculture. No data were 
provided regarding disbursements on th e different agricultural programmes. 
3.124.  China has set up several funds to support agriculture. Some of these funds date back to 
2001 and they are aimed at, inter alia , promoting innovation in the sector (2001)153; supporting 
the use of technology in the sector (2004)154; and financing interest payments on loans for 
irrigation projects aimed at saving water (2005).155 To modernize the agricultural sector, the 
leading key State enterprises and their subsidiari es are exempted from the EIT when engaged in 
preliminary processing of agricultural, forestry, animal and fisheries products.156 According to the 
authorities, support to the leading key State enterprise was abolished when the 2008 Enterprise I n c o m e  T a x  L a w  ( E I T  l a w )  c a m e  i n t o  f o r c e .  U n d e r  t h e  c u r r e n t  E I T  l a w ,  n o  r e q u i r e m e n t s  a r e  
imposed on enterprises that process agricultural  products for them to obtain preferential 
treatment. 
3.125.  The "four subsidies", i.e. the subsidy to pr omote the use of superior strains and seeds, the 
subsidy to purchase agricultural machinery and tools, the comprehensive subsidy for agricultural 
inputs, and the direct subsidy to farmers, remain in place.
157 In addition, imports of seeds 
(seedlings), breeding stock (fowl), fish fries (breeds), and species of wild animals and plants kept as breeds of certain types and in certain quantities, are exempt from VAT.
158  
3.126.  In addition to the programmes notified by China, there appear to be other support 
programmes and other means to support different in dustries (e.g. fisheries) including through the 
provision of grants, policy lending by state-owned banks and the supply of goods at lower than 
"market price" by state-owned enterprises (SOEs) (Table A3.6). However, in the context of this 
Review, no information was provided to the Secretariat regarding these specific programmes or China's industrial policies that supported different areas of the economy. Moreover, the identification of these programmes has not been possible for the Secretariat, as specific support 
                                               
149 Decree No. 1 of 2013, NDRC and the Ministry of Commerce. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/2013ling/t20130516_541505.htm . 
150 Programme 7 in WTO document G/SCM/N/186/CHN, 21 October 2011. 
151 Programme 20 in WTO document G/SCM/N/186/CHN, 21 October 2011. 
152 Information provided by the Chinese authorities. 
153 See Programme 59 in WTO document G/SCM/N/186/CHN, 21 October 2011. 
154 See Programme 58 in WTO document G/SCM/N/186/CHN, 21 October 2011. 
155 According to the authorities, this progra mme was eliminated in 2012 (Programme 66 in 
WTO document G/SCM/N/186/CHN, 21 October 2011). The auth orities also noted that other programmes listed 
in document G/SCM/N/186/CHN, 21 October 2011 have been  eliminated. For instance, Programmes 56 and 57 
regarding the training of rural migrant workers (2005) and young farmers (2006), as well as Programme 65 to 
encourage processing of agricultural products (2004). 
156 See Programmes 53-54, 68 and 74 in WTO document G/SCM/N/186/CHN, 21 October 2011. 
157 See Programmes 60-64 and 69-70 in WTO document G/SCM/N/186/CHN, 21 October 2011. 
158 See Programmes 78 and 79 in WTO document G/SCM/N/186/CHN, 21 October 2011. WT/TPR/S/300 • China 
 
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  measures seem to be the result of internal administrative measures that are not published in 
English.159 In addition, the Secretariat did not have access to an itemized central budget to be able 
to identify the outlays.160 
3.127.  General policies, as well as industries and activities earmarked as priorities for investment, 
and growth targets for the different sectors, continue to be set by the Central Government 
Five-Year Plans. For instance, the twelfth Five-Y ear Plan (2011-2015) calls for the transformation 
and upgrading of key existing industries to increase the competitiveness of China's industrial core, 
and for the development of strategic emerging sect ors. The key manufacturing industries listed in 
the Plan are: equipment, shipbuilding, automobile s, iron and steel, non-ferrous metals, building 
materials, petrochemicals, light industry and textiles. The strategic emerging sectors mentioned in the Plan are: energy conservation and enviro nmental protection industries; new-generation 
IT industry; biological industry; high-end equipm ent manufacturing industry; new energy industry, 
which focus on the developmen t of new-generation nuclear energy and solar utilization, 
photovoltaic and photo-thermal power generation, and intelligent power grids and biomass energy; 
new material industry; and new-energy automobile industry. The value added contribution of these 
new strategic industries to GDP should reach some 8%.
161 In order to attain this goal, the Plan 
calls for "strengthening policy support and gu idance". This is to be attained through, inter alia , 
setting up special funds for the development of ne w strategic industries and investment, increasing 
the number of public start-ups in rising industries, guiding "social" capital to be invested in innovative start-ups, making use of financial preferential policies, and encouraging financial institutions to strengthen credit support.
162 However, the Plan does not outline specific measures. 
3.128.  In addition to the Central Government Five-Year Plans, there are also five-year plans for 
the sectors, provincial five-year plans, and differe nt catalogues that guide implementation of the 
overall policies (Table 3.11). However, the sector al five-year plans and the provincial ones set 
policy guidelines and establish industrial policies but do not outline the specific measures to be 
applied. The Catalogues enumerate the industries  that can avail themselves of preferential 
treatment and/or "guide" capital as they list the sectors in which investment is encouraged. 
However, it is not clear how the different catalo gues should be read, as they may overlap and 
even conflict, reflecting the different agendas at the different levels. The different layers of regulation add an additional level of difficulty when trying to unravel specific support measures in China. 
Table 3.11 Selected Catalogues  
Catalogue  Remarks 
Catalogue of Public 
Infrastructure Projects Eligible 
for Preferential Enterprise Income Tax Treatment (2008) "Ministry of Finance, State Administ ration of Taxation announced the 
National Development and Reform Commission Catalogue of Public 
Infrastructure Projects Eligible fo r Preferential Corporate Income Tax 
Treatment (2008 edition), Notice" (Cai Shui [2008] No. 116). Viewed at: http://www.chinatax.gov.cn/n8136506/n8136593/n8137537/n8138502/
8315882.html  
Catalogue of Priority Industries 
for Foreign Investment in the 
Central-Western Regions (2013) Decree No. 1 of 2013, NDRC and the Ministry of Commerce. Viewed at: 
http://www.sdpc.gov.cn/zcfb/zcfbl/2013ling/t20130516_541505.htm  
Catalogue of Encouraged 
Technology and Product Imports (2011) Jointly issued by the NDRC, Minist ry of Finance, and Ministry of 
Commerce on 29 April 2011. Viewed at: http://www.mof.gov.cn/zhengwuxinxi/zhengcefabu/201105/t20110517_5
49896.htm  
Catalogue of Comprehensive Use 
of Resources for Preferential 
Enterprise Income Tax Treatment "Ministry of Finance, State Administration of Taxation, the State 
Development and Reform Commission on Comprehensive Utilization 
of Resources announced the Corporate Income Tax Catalogue 
(2008 edition) Notice" (Cai Shui [2008] No. 117) (2008). 
Viewed at: http://www.chinatax.gov.cn/n8136506/n8136593/n8137537/
n8138502/8315839.html  
Catalogue of Imported Products 
not subject to Tax Exemption in Foreign Investment Projects On the Issuance of Chinese High-Tech Products Catalogue 2006 "Notice" 
(Ministry of Science [2006] No. 370). Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info125825.htm  
                                               
159 Haley U.C.V. and Haley G.T. (2013), Subsidies to Chinese Industry , Oxford University Press. 
160 Only a general "Report on China's Central, Local Budgets" seems to be available in English. Viewed 
at: http://english.gov.cn/official/budgetsreports.htm . 
161 Twelfth Five-Year Plan. 
162 Twelfth Five-Year Plan. WT/TPR/S/300 • China 
 
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  Catalogue  Remarks 
Catalogue of Chinese High-Tech 
Products for Export (2006) On the issuance of Chinese High-Tech Products Catalogue 2006 
"Notice" No. 370 of 2006 by the Ministry of Science. Viewed at: 
http://www.most.gov.cn/tztg/200612/t20061220_38987.htm  
Catalogue for the Guidance of 
Foreign Investment Industries "Directory (2011 Amendment) Foreig n Investment Industrial Guidance" 
National Development and Refo rm Commission, Order No. 12, 
24 December 2011. Viewed at: www.sdpc.gov.cn/zcfb/zcfbl/201112/t20111229_453392.html  
Catalogue for the Guidance of 
the Advantageous Industries in 
Central and Western Regions 
for Foreign Investment National Development an d Reform Commission, 
Order No. 1 of 9 May 2013. Viewed at: 
www.sdpc.gov.cn/zcfb/zcfbl/201305/t20130516_541505.html  
Catalogue of Imported Products 
not subject to Tax Exemption under Foreign Investment Projects Customs Notice No. 65 of 2008 (regarding adjustments to Catalogue 
of Non-Duty-Free Products under Foreign Investment Projects and other merchandise tariffs) of 5 September 2008. Viewed at: http://www.customs.gov.cn/publish/portal0/tab399/info125825.htm  
Category of Non-Tax-Exempted 
Imported Items under 
Domestically Funded Projects Ministry of Finance, Notice No. 83 of 2012. Viewed at: 
http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201212/t20121231_72
3618.html  
Catalogue of National High-Tech 
Products Categories Ministry of Science and Technology [2006] No. 370, 21 December 2006. 
Viewed at: http://www.most.gov.cn/tztg/200612/t20061220_38987.htm  
Source: Information provided by the Chinese authorities and information compiled by the Secretariat. 
3.129.  In 2012, the People's Bank of China (PBC) made efforts to enhance coordination between 
credit policy and industrial policies by promot ing the balanced development of the economy, 
speeding up the innovation of rural financial products and services and improving financial services 
for SMEs. In this context, the PBC has guided financial institutions to increase financial support to important areas of the economy and to extend credit to key industries such as thermal power and 
steel, shipping and railways. Financial institutions were encouraged to use flexible credit products 
so as to enhance support for export-oriented enterpri ses. In line with the principle of "differential 
treatment for different industries", financial institutions were guided to increase "green" credit. 
In 2012, credit, financial support, preferential lo ans and the improvement of financial services 
played an important role in the implementation of the national policy of regional economic 
development.
163 
3.130.  The General Rules on Loans of 1996 stipulates that Banks determine the interest rate for 
a loan on the basis of the interest rate "ceiling" and "floor" fixed by the PBC.164 In 2013, however, 
the PBC issued a notice liberalizing lending rates. As a result, financial institutions may set lending rates independently. Nonetheless, according to th e General Rules on Loans: "in accordance with 
the State's policy, relevant departments may subsidize interests on loans, to promote growth of 
certain industries and economic development in some areas (Article 15)".
165 Banks are authorized 
to determine which loans they are to subsidize. The Rules also allow for different types of loans, 
amongst them the: "special-purpose loan" which is a loan made by a fully state-owned commercial 
bank with approval and authorization of the State Council and with necessary remedies having been provided in advance for any possible loan loss (Article 7).
166 Hence it could be argued that, in 
situations like this, loans provided by state-owned commercial banks to an industry could in 
practice be equivalent to a direct transfer of funds from the Government to that industry. In this 
regard, the authorities noted that the General Rules on Loans date from 1996 and no longer reflect the current situation of the financial sector in China, hence reference to these Rules could be 
misleading. The authorities also noted that the Rules are being revised. In 2004 a draft was issued 
for public comments and in that draft there was al ready no mention of the "special-purpose loan". 
                                               
163 People's Bank of China (2013), Annual Report 2012 . Viewed at: 
http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948.
html. 
164 Article 13 of the General Rules on Loans – 1996. Viewed at: http://www.lehmanlaw.com/resource-
centre/laws-and-regulations/bankin g/general-rules-on-loans-1996.html . 
165 The authorities noted that "departments" do not mean banks, hence this statement is not valid. 
The authorities also noted that the General Rules on Lo ans date from 1996 and no longer reflect the current 
situation in the financial sector in China, hence reference to these Rules could be misleading. 
166 General Rules on Loans – 1996. Viewed at: http://www.lehmanlaw.com/r esource-centre/laws-and-
regulations/banking/general-rules-on-loans-1996.html . WT/TPR/S/300 • China 
 
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  3.131.  SOEs seem to be supported by the Government in different ways including through the 
provision of direct transfers to finance wages and operating costs, and cheap inputs and credit. China provides SOEs with preferential access to cr edit at the expense of more profitable projects; 
by lowering the cost of capital, SOEs with low productivity can continue to exist.
167 
3.132.  The Chinese Government also provides industry-specific subsidies for inputs, land and 
technology to firms that the central and provincial  governments perceive as strategically important 
or to revitalize them, as called for by the National Old Industrial Base Adjustment and Renovation 
Plan (2013-2022) of the NDRC. SOEs and favoured companies can purchase inputs such as 
components and raw materials below cost and directly from each other, affecting competitiveness. Technology subsidies provide support for R&D, brand development, and technology acquisition 
(Table 3.12). The different support programmes range from those designed to attain major policy 
goals to those serving to boost specific industries, but they are interconnected. For instance, 
the programme to promote the purchase of design ated types of electrical home appliances by 
farmers, was put in place in order to boost domestic demand.
168 The products included in the 
programme would vary according to the support that different industries required. In 2012, the 
Government planned to include solar products in the home appliance subsidy scheme for rural buyers. The plan was expected to benefit the co untry's solar industry, which had been growing 
rapidly, driven largely by government programmes to promote alternative energy. Exports of solar 
cells grew in volume terms by 61% from 2012 to 2013.
169 However, due to industrial overcapacity 
and slumping foreign demand the authorities believed that the industry required a further boost, as indicated by experts from the Chinese Ac ademy of International Trade and Economic 
Cooperation under MOFCOM, and that energy-saving products, solar products and alternative-
energy cars were also likely to become part of the country's consumption stimulus policies in the 2011-2015 period.
170 
Table 3.12 Various support measures  
Subsidy Type of subsidy Legislation 
Subsidies to green energy and energy conservation  
Building-integrated Photovoltaics 
(BIPV) Programme Upfront subsidy for BIPV systems and 
rooftop systems The Renewable Energy Law 
Golden Sun Programme Solar power projects are subsidized up 
to 50% and 70% in remote areas The Renewable Energy Law 
National Feed-in Tariffs (FITs) Guarantee an above the market rate 
paid by the grid companies to 
companies which gene rate energy from 
wind, biomass, and solar sources The Renewable Energy Law 
Full purchase on electricity 
generated by renewable energy .. The Renewable Energy Law 
Price surcharge of electricity 
generated by renewable energy .. The Renewable Energy Law  
Promotion of high-efficiency 
energy-saving products .. Circular of th e State Council on 
Printing and Distributing the 12
th Five-Year Plan on Energy 
Saving and Emission Reduction (GuoFa [2012] No. 40) 
Ride the Wind Programme 
(development of manufacturing 
of wind turbine components) Programme eliminateda The Renewable Energy Law 
Special Fund for Wind Power Manufacturing Programme eliminated
a The Renewable Energy Law 
Financial funds/allowance to 
develop renewable energy 
relating to, inter alia , projects in 
rural areas .. The Renewable Energy Law 
                                               
167 Haley U.C.V. and Haley G.T. (2013), Subsidies to Chinese Industry , Oxford University Press. 
168 The programme was in force from 2009 to 2013, to stimulate rural consumption and promote 
economic growth amid the global economic downturn . Under the programme, farm ers received a reduction 
of 13% of the price of the home appliances that they bought. 
169 China Customs Statistics (various issues). 
170 China may extend home appliance subsidies to solar products (Xinhua, 19 January 2012). Viewed at: 
http://www.china.org.cn/business/2012-01/19/content_24447186.htm . WT/TPR/S/300 • China 
 
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  Subsidy Type of subsidy Legislation 
Exemption or reduction of 
corporate income tax and VAT refund and exemption for renewable energy production Preferential enterprise income tax. 
VAT on sales of electricity generated with wind power will be subject 
to an immediate 50% refund upon payment Article 27 of the EIT Law and 
Article 87 of Implementation Regulation. Circular of the Ministry of Finance and State Administration of Taxation on the Value-added Tax Policies for Integrated Resour ce Utilization 
Products and Other Products (Caishui [2008] No. 156 
Financial subsidies and tax 
incentives granted to energy 
performance contracting projects Financial subsidies gr anted to projects 
that improve the energy conservation 
technologies  
Industry  
Famous Brand and China World 
Top Brands Programme .. .. 
State Special Fund for Promoting 
Key Industries and Innovation Technologies .. .. 
Subsidies for fuel-efficient 
vehicles .. The Renewable Energy Law 
R&D 
R&D fund for industrial 
technologies Financial subsidy to R&D in key 
universal industrial technologies. .. 
Fund for R&D of integrated circuit 
industry Financial subsidy to R&D in key 
universal technologies in integrated circuit industry .. 
Assistance to R&D, support fo r specific industries, assistan ce for industrial development  
Foreign Trade Development Fund Programme eliminateda  
Promotion of new-energy and 
energy-saving automobiles Subsidies to the end-use/customer 
who purchases new-energy and 
energy-saving automobiles The Renewable Energy Law 
Domestic appliance to farmers .. .. 
.. Not available. 
a Information provided by the Chinese authorities. Source: WTO Secretariat and information provided by the Chinese authorities. 
3.3.2  Competition policy and price controls 
3.3.2.1  Overview 3.133.  During the period under review, China began implementing the provisions regarding 
competition policy adopted in the course of the pr evious Review. These include provisions on the 
implementation of reviews of concentrations of  undertakings (anti-trust reviews), and reviews 
of foreign companies' mergers and acquisitions of domestic companies relating to "national 
security" (national security reviews), with a view to increasing transparency (see below). During 
the period from January 2012 to September 2013, new provisions, the " Procedural Provisions on 
Administrative Punishment in relation to Prices ", were adopted to increase the transparency of 
measures against price-related abuse of dominant positions, price-related administrative monopoly 
and price fixing.  
3.3.2.2  Legislative and institutional framework 3.134.  China's competition policy consists of laws, administrative regulations and ministerial rules. 
The laws concerning competition policy include the Anti-Monopoly Law (AML)
171, the Anti-Unfair 
Competition Law, and the Rules on Acquisition of Domestic Enterprises and the Price Law. The AML does not take precedence over other competition-related legislation. The main administrative 
regulations concerning competition are shown in Box 3.4. They touch mainly upon anti-trust 
reviews, abuse of dominant position, or of admi nistrative monopoly, and price fixing. The above 
regulations are issued by the State Council. 
                                               
171 The text of the AML may be viewed at the MOFCOM website: 
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300045909.shtml.  WT/TPR/S/300 • China 
 
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  Box 3.4 Main regulations dealing with competition policy issues 
Guide of the Anti-Monopoly Committee of the State Counci l for the Definition of Re levant Market, issued on 
24 May 2009  
NDRC 
Rules on Prohibiting Below-Cost Dumping (SDPC Order [1999] No. 2) 
Rules on Prohibiting Price Frauds (SDPC Order [2001] No. 15) 
Provisions on Prohibition of Price Monopoly (NDRC Order [2010] No. 7) 
Provisions on the Administrative Procedures for Law Enforcement against Price Fixing (NDRC Order [2010] 
No. 8) 
Procedural Provisions on Administ rative Punishment in relation to Prices (NDRC Order [2013] No. 22)  
MOFCOM 
Measures on the Notification of Concentration of Undertakings (MOFCOM [2009] No. 1) 
Measures on the Examination of Concentration of Undertakings (MOFCOM [2009] No. 12) 
Measures for Calculating the Turnover for the Declaratio n of Business Concentration in the Financial Industry 
(MOFCOM, PBOC, CBRC, CSRC  and CIRC [2009] No. 10) 
Interim Rules on the Implementation of Divestiture of Assets or Businesses for Concentrations of 
Undertakings (MOFCOM Anno uncement [2010] No. 41) 
Interim Rules on Assessment of the Impact of Concentration of Undertakings on Competition 
(MOFCOM Announcement [2011] No. 55) 
Interim Provisions on Investigations of Unnotified Concentrations of Undertak ings (MOFCOM Order [2011] 
No. 6)  
SAIC 
Certain Provisions on Prohibiting Unfair Competition in Prize-Attached Sales (SAIC Announcement No. 19 
promulgated on 24 December 1993) 
Certain Provisions on Prohibiting Anti-Competitive Prac tices of Public Enterprises (SAIC Announcement No. 20 
promulgated on 24 December 1993)  
Certain Provisions on Prohibition of Unfair Competition Activity concerning Imitation of Specific Names, 
Packaging and Decoration of Well-known Commod ities (SAIC Announcement No. 33 promulgated on 
6 July 1995) 
Certain Provisions on Prohibiting Infringement of  Commercial Secrets (SAIC Announcement No. 41 
promulgated on 23 November 1995, amended by SAIC Announcement No. 86 promulgated on 
3 December 1998) 
Interim Provisions on Banning Commercial Brib ery (SAIC Announcement No. 60 promulgated on 
15 November 1996) 
Interim Provisions on Prohibiting Bid-rigging (SAIC Announcement No. 82 promulgated on 6 January 1998) 
SAIC Procedural Provisions on the Prohibition of the Abuse of Administrative Power to Exclude or Restrain 
Competition (SAIC Announcement No. 41 promulgated on 26 May 2009) 
SAIC Provisions on Investigating and Handling Ca ses Concerning Monopoly Agreements and Abuse 
of Dominant Market Positions (SAIC Announcement No. 42 promulgated on 26 May 2009) 
SAIC Provisions on the Prohibition of Monopoly Ag reements (SAIC Announcemen t No. 53 promulgated on 
31 December 2010) 
SAIC Provisions on the Prohibition of Abuse of Domi nant Market Positions (SAIC Announcement No. 54 
promulgated on 31 December 2010) 
SAIC Provisions on the Suppression of Abuse of Administrative Power to Eliminate and Restrict Competitive 
Conduct (SAIC Announcement No. 55 promulgated on 31 December 2010).  
Source: Information provided by the Chinese authorities. 
3.135.  The AML's main objectives are to safeguard fair market competition, and improve 
economic efficiency, while protecting consumer an d public interest. In particular, the AML focuses 
on preventing, analysing and combating three kinds of monopolistic conduct: the conclusion of monopoly agreements; the abuse of a dominant market position; and concentrations 
of undertakings that have or are likely to have the 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 their business activities (production, processing, sales, transportation, and storage of farm 
products) related to agricultural products. The AM L covers monopolistic operations that have an 
effect on the Chinese market - that is, operations within China as well as activities outside the territory of China that have eliminative or restrictive effects on competition in China's domestic 
market. 
3.136.  Although the AML covers all types of enterp rises, Article 7 of the Law allows the exercise 
of exclusive activities of state-owned enterprises (SOEs) that are considered vital to the 
Chinese economy and to safeguard national security  or that have been granted legally-exclusive WT/TPR/S/300 • China 
 
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  production and sales rights. In accordance with the AML, the State will supervise and regulate 
these firms' operations and the prices of the goods and services they supply. 
3.137.  The Anti-Monopoly Committee of the State Council is responsible for organizing, 
coordinating and guiding anti-monopoly work. The Committee, whose General Office is in 
MOFCOM, also coordinates the work of the three different state agencies responsible for 
competition policy implementation and enforcement (Table 3.13). MOFCOM's Anti-Monopoly Bureau is in charge of conducting anti-trust reviews. The other two agencies 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 NDRC has responsibility for price-related violations of the rules in these areas, while the Anti-Monopoly and 
Anti-Unfair Competition Enforcement Bureau of the SAIC deals with non-price issues. 
Each authority has issued a series of ministerial rules in their own area of responsibility. 
3.138.  The bodies mentioned above may issue administrative penalties, including fines, 
confiscation of illegal gains, and cease-and-desist orders. In addition to these administrative 
measures, parties injured by violations of anti-monopoly provisions may take their case to the 
courts. 
3.139.  China is continuing its international cooperation on competition policy issues with the 
competition authorities of other countries or groups of countries, inter alia , the European Union, 
Japan, the Republic of Korea and the United States. In January 2011, the NDRC signed a Memorandum of Understanding (MOU) on cooper ation with the United Kingdom's Office for 
Fair Trade. In July 2011, the NDRC, MOFCOM and SAIC signed an MOU on Anti-Monopoly/ 
Anti-Trust Cooperation with the U.S. Department of Justice and the Federal Trade Commission. 
In May 2012, the NDRC signed an MOU on Anti-Mon opoly/Anti-Trust Cooperation with the Republic 
of Korea's Fair Trade Committee. In September 2012, the NDRC and SAIC signed an MOU on 
Anti-Monopoly Cooperation with the European Co mmission's Department of Competition. China 
participates in competition policy-related activiti es in the context of APEC, the OECD, and UNCTAD. 
China is not a member of the International Competition Network and, as was reported in the 
previous Review, there is no a clear timeline for China to consider joining the network. 
Table 3.13 Competition policy legislation an d competent enforcement authorities in 
China 
Competent 
authority  Laws, administrative regulations and ministerial 
rules Responsibilities  Enforcement 
delegation 
MOFCOM AM L 
1. Rules of the State Council on Thresholds for  Reporting  Concentration of Undertakings. 2. Measures on the Examination of Concentration of  Undertakings. 
3. Measures on the Notification of Concentration of 
 Undertakings. 4. Interim Rules on Assessment of Impact of  Concentration of Undertakings on Competition 5. Interim Provision on Investigations of Un-notified 
 Concentrations of Undertakings. 
6. Measures for Calculating the Turnover for the  Declaration of Business Concentration in the  Financial Industry. 
7. Interim Provisions on the Implementation of  Divestiture 
 of Assets or Businesses for Concentrations of  Undertakings. Anti-monopoly review of 
concentrations of undertakings. No delegation.
 WT/TPR/S/300 • China 
 
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  Competent 
authority  Laws, administrative regulations and ministerial 
rules Responsibilities  Enforcement 
delegation 
NDRC AML; Price Law  
1. State Council Provisions on the Administrative 
 Punishment of Price-related Violations. 
2. Provisions on Prohibition of Price Monopoly. 
3. Procedural Provisions on Administrative 
 Punishment in relation to Prices. 
4. Provisions on the Administrative Procedures for 
 Law Enforcement against Price Fixing. 1. To investigate and 
 punish price  monopoly 
 acts in 
 accordance with the 
 law, including price-
 related monopoly 
 agreements, abuse  of 
 market dominance and 
 abuse of 
 administrative 
 powers to eliminate 
 and restrict 
 competition. 
2. To investigate and 
punish price-related 
violations in accordance 
with the law. 
3. To investigate and 
 punish arbitrarily 
 charged 
 administrative fees in 
 accordance with the 
 law. Anti-monopoly 
enforcement may 
be delegated to 
the authorities at 
or below the 
provincial level. 
 
Price Law 
enforcement may 
be exercised at 
the local level. 
SAIC AML; Anti-Unfair Competition  
1. SAIC Procedural Provisions on Prohibition of the 
 Abuse of Administrative Power to Exclude or Restrain  Competition. 2. SAIC Provisions on the Prohibition of Monopoly 
 Agreement. 
3. SAIC Provisions on the Prohibition of Abuse of  Dominant Market Positions. 4. SAIC Provisions on the Suppression of Abuse of  Administrative Power to Eliminate and Restrict 
 Competitive Conduct. 
5. SAIC Provisions on Investigating and Handling  Cases Concerning Monopoly Agreements and Abuse of  Dominant Market Positions. 1. Sanctions against 
 non-price-related 
 monopolistic  agreements. 2. Regulation on non-
 price-related market 
 dominant abuses. 3. Sanctions against  administrative  monopolies. Anti-monopoly 
enforcement may 
be delegated to the authorities at the provincial 
level, but not 
further down. Cases must be registered at SAIC before 
delegation. 
Note: MOFCOM: Ministry of Commerce. 
 NDRC: National Development and Reform Commission.  SAIC: State Administration of Industry and Commerce. 
 AML: The Anti-Monopoly Law. 
Source: Information provided by the Chinese authorities. 
3.3.2.3  Monopoly agreements and dominant market positions 
3.140.  The Anti-Monopoly Law and the subsequent set of implementing regulations, most of which 
entered into effect on 1 February 2011, including the NDRC Provisions on Prohibition of Price 
Monopoly (NDRC Decree 2010/7), SAIC Provisions on the Prohibition of Monopoly Agreements 
(SAIC Decree 2010/53), and SAIC Provisions on th e Prohibition of Abuse of Dominant Market 
Positions (SAIC Decree 2010/54), provide definitions of dominant market positions and include 
a list of the types of agreement that are prohibited. 
3.141.  The AML defines horizontal and vertical monopoly agreements, and identifies six types 
of horizontal agreements (those among competitors, Article 13 of the AML) and three types 
of vertical agreements (those among counterparties, Article 14 of the AML) as prohibited practices. This prohibition applies not only to written or verbal monopoly agreements, but also to concerted behaviour among firms, without explicit written or verbal agreement. 
3.142.  The AML defines dominant market position as one that permits a firm to control output, 
set prices, and impose conditions in a relevant market, or allows it to limit the entry of other firms into that market. A firm that has been deemed to have a dominant market position is forbidden to 
engage in certain types of conduct that may lead to abuse of its dominant position. For instance, 
they are prohibited from selling products at unreasonably high prices or purchasing products at unreasonably low prices, and without valid reasons, selling products at a price below cost, or tying 
the purchase or sale of products or imposing unreasonable trading conditions.
 There is no list 
of enterprises considered to have a dominant  market position. The NDRC and SAIC carry out 
investigations to identify whether an enterprise shall be considered to have a dominant market position on a case-by-case basis according to related laws and regulations. Dominant firms are WT/TPR/S/300 • China 
 
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  obliged to grant competitors access to essential facilities they might hold on reasonable conditions. 
In accordance with the NDRC Provisions on Prohibition of Price Monopolies, dominant firms are also prohibited from restricting customers, without proper reasons, from trading with the dominant firm or firms linked by the dominant firms through the means of loyalty programmes such as 
discounts or rebates.
172 
3.143.  Article 46 of the AML outlines the penalties that may be imposed for concluding and 
implementing a monopoly agreemen t. These include: a cease-and-desist order to discontinue the 
violation; the confiscation of any unlawful gains; and, in addition, the imposition of a fine of not 
less than 1% but not more than 10% of the sales ac hieved in the previous year. If such monopoly 
agreement has not yet been implemented, the fine may not exceed RMB 500,000. Voluntary collaboration with the investigating authority on issues related to the monopoly agreement 
reached, as well as providing material evidence, may lead to mitigation or exemption from the 
penalty, at the discretion of the investigating authority. 
3.144.  In accordance with the AML, Article 9 of  the NDRC Provisions on Prohibition of Price 
Monopoly, and Articles 9 and 10 of the SAIC Pr ovisions on the Prohibition of Monopoly 
Agreements, industrial associations are prohibited from organizing or facilitating monopoly agreements among their members. Violations are punishable by fines of up to RMB 500,000 or, 
where the circumstances are serious, by ordering  the de-registration of the association by the 
registration authority. 
3.145.  Both the AML and the Price Law prohibit pric e fixing and quantitative restrictions, such as 
cartels. The surveillance of activities to fix or attempt to fix either prices or quantities 
of commodities is the responsibility of the Pr ice Supervision and Anti-Monopoly Bureau of the 
NDRC. However, in accordance with the NDRC Provisions on Procedures for Administrative 
Enforcement of Prohibition of Price Monopoly (NDRC Decree 2010/8), the relevant provincial-level 
authorities, including the provincial Development and Reform Commissions (DRCs) may be 
delegated by the NDRC to act as the anti-pri ce-monopoly enforcement agency within their 
administrative territories. The provincial DRCs may delegate the investigation to local 
price-supervision departments, hierarchically one level below. 
3.146.  The authorities have noted that since the implementation of the Anti-Monopoly Law 
in 2008, the NDRC and the competent anti-price -monopoly enforcement authorities of various 
provinces have been strengthening their efforts in anti-monopoly law enforcement and have dealt 
with various price fixing acts involving several sectors including pharmacy, liquid crystal displays 
and white liquor and such market players as st ate-owned enterprises, private enterprises and 
foreign-invested enterprises. In 2012 and 2013,  the NDRC and the relevant provincial-level 
authorities dealt with horizontal price-monopoly cases involving Samsung, LG and other liquid 
crystal display manufacturers; vertical price-monopoly cases related to price controls involving: the Kuichou Moutai Group, and the Wu Liangye Grou p, two large SOEs in the white liquor industry; 
a price cartel organized by Shanghai Gold & Jewellery Trade Association; and a price cartel for 
baby formula milk powder among nine milk powder producers on which fines totalling approximately US$110 million were imposed, the largest fines since the implementation of the AML. 
3.147.  The enforcement of all non-price-related violations resulting from monopoly agreements 
and dominant market position is the responsibility of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of the SAIC. The practices that fall under investigation include 
the possible formation of monopoly agreements or ab use of dominant position leading to refusal to 
deal, or the imposition of unreasonable conditions. SAIC may delegate an investigation to the provincial Administration for Industry and Commerc e (AIC) on a case-by-case basis, but provincial 
AICs may not delegate the case to a lower level, as is the case with price-related investigations 
and the DRCs. From 2011 to 2013, the SAIC investigat ed a total of 27 cases involving construction 
materials, telecommunications, insurance, us ed-car transactions, special equipment, and 
packaging materials, 12 of which were concluded by February 2014. The administrative penalties 
applied for the concluded cases are available on SAIC's website. 
                                               
172 In accordance with Article 14 of the NDRC Provisions on Prohibition of Price Monopolies, proper 
reasons for restricting customer access  to trade with the dominant firm in clude: the safeguard of a product's 
quality and safety; to maintain brand image or improve services; to reduce costs significantly, and improve 
efficiency. WT/TPR/S/300 • China 
 
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  3.3.2.4  Administrative monopolies 
3.148.  Article 8 and Chapter 5 of the AML specif ically prohibit "administrative monopolies", 
defined as the use of administrative powers to eliminate or restrict competition by administrative agencies and organizations of public affairs management authorized by laws and regulations.
173 
Under Articles 32 to 37 of the AML, there are six types of prohibited administrative monopoly conduct: 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 issuing rules with content eliminating or restricting competition. SAIC 
Decree 2011/55 further elaborates on the prohibitions defined in the AML.
174 The NDRC Provisions 
on Prohibition of Price Monopoly contain similar provisions with a focus on price-related violations. 
3.149.  According to Article 51 of the AML, if an  administrative authority and an organization 
authorized by laws or regulations to perform public functions abuses its administrative powers by 
engaging in activities which eliminate and restrict competition, its superior authority shall order it to correct the illegal act. A disciplinary penalty is imposed on the supervising official directly 
responsible or other officials directly responsible for the conduct in accordance with the Law. 
The anti-monopoly enforcement authorities may offer suggestions to the relevant superior authority on how to handle the case in accordance with the Law. 
 
3.150.  Business operators are also prohibited from implementing monopolistic agreements and 
abusing their dominant position by means of admi nistrative decisions, delegation, or regulation.175 
Administrative remedies to this end are prescribed in SAIC Decree 2011/53 (SAIC Provisions on the Prohibition of Monopoly Agreements) and SAIC Decree 2011/54 (SAIC Provisions on the 
Prohibition of Abuse of Dominant Market Positions). 
3.151.  Since the implementation of the AML,  the competent authorities have initiated 
investigations into cases suspected to be abuses of administrative power to eliminate and restrict 
competition. However, no case has been registered  in the courts against administrative monopoly. 
3.3.2.5  Mergers and acquisitions 3.3.2.5.1  Anti-trust reviews of concentrations 
3.152.  According to Chapter 4 of the AML, all concentrations above certain thresholds must be 
notified to the Administrative Department of the State Council. They are then subject to a prior anti-trust review conducted by MOFCOM, and require its approval to proceed.
176 The AML defines 
concentration as one of the following cases: (a) merger; (b) acquisition of shares or assets giving 
control over other business operators; (c) control obtained by business operators over other 
operators by way of a contract; or (d) the ability to  exert a decisive influence over other operators. 
3.153.  The thresholds defined by the 2008 State Council Regulations are: (a) worldwide turnover 
of the merged entity of more than RMB 10 billion  in the year preceding the merger, and turnover 
in China of at least two of the merging oper ators exceeding RMB 400 million; (b) combined 
turnover in China of all the operators participating in the concentration exceeding RMB 2 billion in 
the immediately preceding accounting year, and tu rnover in China of at least two operators 
exceeding RMB 400 million in the preceding fiscal year. When calculating the turnover, 
consideration must be given to specific industries , such as banking, insurance, securities, futures.  
Multiple-concentration activities between the same entities within a two-year period are considered 
as a single transaction whose value is the sum of the turnover from the transactions. However, 
even if each individual action is below the thresh old, if the total transaction turnover is above the 
notification threshold, the concentration activities  must be notified and are subject to anti-trust 
reviews.177 
                                               
173 SAIC Decree 2011/55, SAIC Provisions on the Suppression of Abuse of Administrative Power to 
Eliminate and Restrict Competitive Conduct, which entered into force on 1 February 2011. 
174 SAIC Decree 2011/55, Articles 3 and 4. 
175 SAIC Decree 2011/55, Article 5. 
176 Apart from MOFCOM, other agencies involved in  merger reviews include SAIC, and sectoral 
regulators. 
177 MOFCOM Decree 2009/11, Measures on the Notification  of Concentrations of Undertakings Article 7. WT/TPR/S/300 • China 
 
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  3.154.  Apart from the analysis of concentrations of undertakings above the notification thresholds 
which need to be notified by undertakings, MOFC OM can also conduct, within its competence, an 
investigation of concentrations between undertakings which do not reach the notification thresholds, if facts and evidence are found to indicate that the concentrations are likely to have 
the effect of eliminating or restricting competition.
178 
3.155.  During the period under review and in order to facilitate the procedures of anti-trust 
reviews, MOFCOM issued the Interim Rules on Crit eria for Facilitating Review of Concentrations 
of Undertakings (draft) in April 2013, with a view  to improving the efficiency of anti-monopoly 
reviews.179 Other administrative rules dealing with anti-trust reviews include: the Measures on the 
Examination of Concentrations of Undertakings  (MOFCOM Decree 2009/12), the Measures on the 
Notification of Concentrations of Undertakings (MOFCOM Decree 2009/11) (both in effect 
since 1 January 2010), the Interim Rules on the Implementation of Divestiture of Assets or 
Businesses for Concentrations of Undertakings (MOFCOM Announcement 2010/41, entered into force on 5 July 2010), and the Interim Provisions on Assessment of the Impact of Concentrations 
of Undertakings on Competition (MOFCOM Announcement 2011/55) (in effect since 
5 September 2011). 
3.156.  Within 30 days from the date MOFCOM receives the complete documents or materials 
submitted by the undertakings
180, it must make a preliminary review of the concentration notified 
and make a decision on whether to conduct a further review. MOFCOM must notify the parties involved in the concentration of its decision in writing. The act of concentration may not be implemented before MOFCOM makes such a decision . If MOFCOM decides not to conduct a further 
review or fails to make a decision at the expira tion of the specified time-limit, the concentration 
may be implemented. If MOFCOM decides to conduct a further review, it must be completed within 90 days. In cases where a decision on prohibiting the concentration is made, the reasons for such 
decision must be given. Under some circumst ances, MOFCOM may extend the period for the 
review. However, the extension period must not exceed a maximum of 60 days.
181 
3.157.  When conducting an anti-trust review, MOFCOM considers the effect of the merger on 
market competition, not only in terms of controlling the market and influencing prices, but also in 
terms of the effect on other associated markets along the value chain leading to the production of the relevant goods or services. Indices such as the Herfindahl-Hirschman Index (HHI) and Concentration Ratios (CRs) are used in assessing the impact of concentrations on competition. 
The same criteria are applied to all businesses, including SOEs. In anti-trust reviews 
of transnational mergers and acquisitions, MOFCOM is entitled to exchange information with competition authorities of other jurisdictions if it considers that such exchange is necessary for its 
investigations. 
3.158.  As the result of a review, MOFCOM may ap prove, reject, or approve the concentration with 
conditions. The conditions may include: divestment of certain assets or business; the opening 
of infrastructure to the public; the licensing of key technologies; or terminating exclusive 
agreements.
182 Under the Interim Provisions on Investigation of Unnotified Concentrations 
of Undertakings, in effect since 1 February 2012, MOFCOM may initiate investigations on whether unnotified concentration activities should have been notified and made subject to an anti-trust 
review. Parties to the concentration found at faul t may face a fine of up to RMB 500,000 if the 
investigation finds that the unnotified concentration activity would have required clearance through anti-trust review. MOFCOM may also order that the concentration be reversed. 
3.159.  From 1 January 2012 to 1 May 2013, MOFCOM unconditionally approved 215 anti-
monopoly review decisions and conditionally approved 8 anti-monopoly review decisions. 
                                               
178 Article 4 of the State Council Regulation on the Notification Thresholds for Concentrations 
of Undertakings. 
179 The Interim Rules on Criteria for Facilitating Review  on Concentrations of Undertakings (draft) can be 
viewed on MOFCOM's website at: http://fldj.mofcom.gov.cn/article/zcfb/201304/20130400076870.shtml  
(in Chinese), 16 September 2013. 
180 Reference to the materials and documents required to  be submitted is made in Article 23 of the AML. 
181 Article 26 of the AML. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/Businessregulations/201303/20130300045909.shtml . 
182 MOFCOM Decree 2009/12, Measures on the Examination of Concentrations of Undertakings, 
Article 11. WT/TPR/S/300 • China 
 
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  3.3.2.5.2  National security review of concentrations 
3.160.  In accordance with Article 31 of the AML, in addition to anti-trust reviews, acquisitions by 
foreign investors of domestic enterprises considered to be related to national security must undergo a national security review. In these cases,  national security review clearance is required 
as a prerequisite for any other administrative procedures, including anti-trust reviews. 
If a proposed merger case is not granted national  security clearance, MOFCOM must, jointly with 
other relevant authorities, terminate the merger transaction or take action to eliminate the 
negative impact on national security caused by the merger. 
3.161.  
 The scope of the regulated activities is co ntained in the Provisions on Mergers and 
Acquisitions of Domestic Enterprises by Foreign Investors, as last revised in MOFCOM Decree 2009/6. In accordance with China's normative rules, mergers and acquisitions of domestic 
enterprises by foreign investors are defined as: (a ) when a foreign investor's equity investment 
exceeds 25% of a domestic company's registered capital; (b) when foreign investors set up FIEs in order to acquire and operate assets of domestic enterprises; or (c) the acquisition by foreign 
investors of assets of domestic enterprises and se tting up of FIEs based on the acquired assets. 
3.162.  National security reviews are conducted by the Inter-Ministerial Joint Conference on 
National Security Review of Acquisitions of Do mestic Enterprises by Foreign Investors, led by 
NDRC and MOFCOM. The procedures to conduct national security reviews are contained in the 
MOFCOM Rules on Implementing the National Security Review Mechanism for Mergers and  
Acquisitions of Domestic Enterprises by Foreign Investors (MOFCOM Announcement 2011/53), which entered into force on 1 September 2011. 
3.163.  In accordance with the Circular on th e Establishment of a National Security Review 
of Acquisitions of Domestic Enterprises by Foreign Investors (Guo Ban Fa 2011/6), which entered into force on 5 March 2011, the instances where me rgers and acquisitions of domestic enterprises 
by foreign investors must be subject to national security review are: defence-related activities, 
which include the acquisition of defence or defence-affiliated enterprises, as well as the purchase of enterprises located near defence facilities; and the acquisition of, and gaining control over, 
enterprises related to national security engaged in the production of key agricultural products, 
energy and natural resources, as well as key infrastructure, transportation, and machinery manufacturing. If a merger falls within the scope of activities mentioned in the Circular, foreign investors must request that MOFCOM conduct a national security review; the request may also 
come from other ministries or government agencies, industrial associations, or enterprises in the 
same industry or along the value chain.  
3.164.  National security reviews are subject to specified timelines. The first stage of the review, 
known also as general review, must be completed within 30 working days. If MOFCOM is satisfied 
that the national security conditions are met at this stage, the concentration operation may proceed without the need to engage in further revi ew. However, if the application is not successful, 
a second stage of review, known as special review, will be conducted; this special review must be 
completed within 60 working days. 
3.3.2.6  Price controls 3.165.  China applies price controls to commodities and services deemed to have a direct impact 
on the national economy and people's livelihoods.  Article 18 of the Price Law of 1998 provides 
that, when necessary, government-guided prices or government-set prices can be applied to commodities that have significant bearing on national economic development and people's 
livelihood, that are rare or are a natural monopoly, or are considered key public utilities or public 
services.
183 Price controls are set by the government price-management bodies, namely the NDRC 
at the central level, and the Bureau of Commodity Pricing in each province.  
3.166.  Price controls are implemented in acco rdance with NDRC Announcement No. 11 of 2001. 
In their implementation, price controls may take the form of "government prices" or "government-guided prices". Government prices (or government-determined prices) are fixed prices set by the 
                                               
183 In accordance with the Price Law, the determination of prices shall be in line with the law of value, 
prices of most commodities and services shall be mark et-determined and only the prices of an "extremely 
small" number of commodities and services shall be government-guided or government-set prices. WT/TPR/S/300 • China 
 
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  authorities, while in the case of government guided-prices, a certain range within which prices can 
fluctuate, is determined. There is a Central Government Pricing Catalogue, as well as Local Government Pricing Catalogues compiled at the level of provinces, autonomous regions and municipalities, which must be approved by the State Council. 
3.167.  The determination of government prices or government-guided prices varies in accordance 
with the type of product or service. A number of cr iteria are used in their formulation, such as the 
market situation, average social costs, the effect  of the prices of the product or service on the 
standard of living of the population, as well as economic, regional and seasonal factors, 
development and social needs. Although the methodology for setting prices is the same across provinces, prices may be set at different levels depending on the particular province's situation; the above-mentioned factors are taken into account to this end. In accordance with the Price Law, 
government-guided prices and government prices must be released to the consumers and 
operators. 
3.168.  Government prices are applied to items subject to state monopoly, such as tobacco and 
salt, and to public-interest items, such as educational material.
184 Government-guided prices are 
applied to refined oil, fertilizers, and natural gas.  Products classified as the State's key reserve 
materials (grain, cotton, sugar, silkworm cocoons, crude oil, processed oil, and chemical 
fertilizers), are included in the Government Pricing Catalogue released in 2001 and, according to 
the Catalogue, could be subject to government prices (Table 3.14). The authorities have noted that this is not the case in practice, since China does not directly set the prices of reserve materials. Since reserve-materials procurement is generally conducted through auctions, prices 
are the result of competitive bidding.  
Table 3.14 NDRC Government or government-guided prices, 2013
 
Product  Type of control/rationale 
Tobacco, salt and 
explosive materials Government price. State monopoly. Establishment of  purchasing price of tobacco leaves, wholesale 
price of salt. Guided pric e of explosive materials. 
Fertilizers Guided price: benchmark factory prices and fluctuations, port settlement prices. 
Educational material Government price 
The rationale is public interest. 
Refined oil The retail price is government-guided. Managed prices are determined on the basis of the price of 
crude oil on the international market plus the average processing fee, taxes and reasonable 
transportation fees in China. 
The rationale is the lack of adequate market competition. 
Natural gas The factory price of onshore gas is Central Government-guided while the pipeline transportation price 
is Central Government-set. The sales price of gas is controlled by the local government and is generally set by the latter. The rationale for maintaining price controls is that natural gas is considered a crucial public utility and 
the need to complete a full reform of the electricity system before liberalizing prices. 
Military products Factory government price.  
The rationale is defence and national security. 
Electricity The price of electricity is mainly set by  the Government and monitored by the competent price 
authority. The price of electricity generated by power grids across provinces, autonomous regions and 
municipalities directly under the competent authority of the State Council at Central Government 
level and provincial-level power grids is approved  by the competent price authority of the State 
Council, and the price of electricity generated by independent power grids below the provincial level is monitored by the governments of the provinces, autonomous regions and municipalities. The rationale for maintaining price controls is the nature of electricity prices as a crucial public utility 
price, as well as the lack of a fully completed reform of the electricity system. 
Environment 
protection charges Pollutant discharge levies mainly include sewage, waste gas, solid wastes and noise-discharge fees 
and are subject to Central Government-set prices. 
The rationale for maintaining price controls is that pollutant discharge levies are administrative 
charges and hence, must be controlled, as mandated by Article 47 of the Price Law, and stipulated in 
Article 36 of the Regulations on Price Control. The specific rationale for each charge is formulated by 
the State Council separately. 
Urban household 
garbage disposal 
charges Prices are set by local governments.  
The rationale for maintaining price control is that garbage disposal is a main public utility. 
Water Urban water prices are subject to price control by  local governments.  
The rationale for maintaining this price control is that water supply is a natural monopoly. 
Sewage disposal 
charges Set by local governments.  
The rationale for maintaining price control is that sewage disposal is a main public utility. 
                                               
184 NDRC online information. Viewed at: http://www.sdpc.gov.cn/zfdj/djfw/t20050707_130525.htm  
(in Chinese), 20 August 2013. WT/TPR/S/300 • China 
 
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  Product  Type of control/rationale 
Financial settlement 
and trading service 
fees Fees for basic settlements such as bank drafts, ca sh remittances, acceptance of bills of exchange, 
promissory notes and cheques, and foreign exchange are set by the Central Government. Bank card-
swiping service fees are Central Government-guided. 
The rationale for maintaining price controls is lack of full competition. 
Charges of some 
construction projects Land-expropriation administrative charges and house-ownership registration charges are set by the 
Central Government. The rationale is that they are administrative affairs charges. 
Operational service 
charges  Subject to government prices or government-guided prices.  
The rationale is public interest or lack of full competition. 
Real estate prices and charges of related services Benchmark land prices, economic housing prices, low-price house rental and property service charges 
are subject to local government-guided prices. The rationale is public interest. 
Entrance to 
sightseeing sites Local government-guided prices.  
The rationale is public interests. 
Railway transportation fares Railway-passenger and cargo-transportation fares and miscellaneous charges are mainly 
government-set or government-guided prices. The rationale is that railway transport closely relates to national economic and social development and people's livelihoods and is to some extent a monopoly. 
Harbour charges Mainly subject to government-set prices and government-guided prices. Charges of major harbours 
along coastal lines and the Yangtze River and all harbours opened up to the world are administered 
by the Central Government; charges of other domestic trade harbours are administered by local 
governments. 
The rationale is that harbours are important public infrastructure that closely relate to national 
economic and social development and are to some extent a regional monopoly business. 
Air transport prices and airport charges Civil domestic flight prices are mainly government-guided prices; both the benchmark rates and their 
fluctuation range are determined by the Central Government. The rationale is that the civil domestic flight market is still developing and civil aviation does not fully compete with other means of transport. 
Civil airport charges Mainly government-guided, the benchmark rates and fluctuation range of which are determined by 
the Central Government.  
The rationale is that airports closely relate to national economic and social development and people's 
livelihood and are to some extent natural monopolies. 
Basic postal service 
fees Government-set. 
The rationale relates to people's livelihoods. 
Basic 
telecommunication 
service charges Mainly government-set and government-guided. The rationale is inadequate competition and close 
relation to the national economic and social development and people's livelihood. 
Medicines and medical 
services Government-set prices or government-guided prices are applied for medicines listed in the catalogue 
of medicines covered by the basic medical insurance and for medicines outside the said catalogue but in monopoly operation. Government-guided prices apply to basic medical services provided by non-profit medical institutions. The rationale is economic importance and effect on pe ople's livelihoods, public interest and, to some 
extent, lack of market competition. 
Source: Information provided by the Chinese authorities and NDRC online information. 
3.169.  The NDRC is in charge of implementing price controls at the central level for tobacco, 
edible salt, natural gas, electric power, rail and civil aviation transport, and post and telecom services. Price controls on health-related services and passenger transport by road are implemented by provincial governments. Addition ally, minimum procurement prices for rice and 
wheat remain in place for main grain-producing areas (seven provinces for rice, and six provinces 
for wheat). 
3.170.  Although the list of goods and services  subject to government prices and government- 
guided prices has not changed since the previous Review, there have been numerous adjustments 
to rates and fees. In 2013 (up to 10 December),  the NDRC issued a total of 22 announcements 
concerning the pricing of commodities and services , 13 of which related to increases or decreases 
in the price of fuels (Table 3.15). 
Table 3.15 Price announcements by NDRC, 2013  
Areas Announcement Basic changes 
Electrical power Nos. 973 and 1942 of 2013 Adjusting the price categories of electrical power 
  Regulating the price of nuclear electrical power 
Domestic fuels 13 announcements, the latest 
being issued on 28.11.2013 Adjusting the domestic pr ice of processed oil and 
other fuels 
Natural gas No. 1246 of 2013 Adjusting the price ceiling of natural gas 
Some key medicines No. 4134 of 2013 Adjusting the price ceiling of some medicines WT/TPR/S/300 • China 
 
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  Areas Announcement Basic changes 
Water resources No. 29 of 2013 Formulating the minimu m purchase price of 
water resources in different regions 
Key reserve materials 
of the State No. 193 of 2013 Regulating the minimum procurement prices for 
rice 
 No. 947 of 2013 
No. 205 of 2013 Regulating the initial minimum procurement 
prices for wheat 
Source: NDRC online information. Viewed at: http://www.sdpc.gov.cn/ zfdj/jggg/default.htm  (in Chinese), 
10 December 2013. 
3.171.  The Price Law defines a number of unfair price acts: (1) manipulation of market prices in 
collusion; (2) dumping (including predatory dumping); (3) speculation over price increases; 
(4) using falsified or misleading prices; (5) practising price discrimination; (6) procuring, selling commodities or providing services at prices increased or lowered in disguised form by adopting such means as raising or lowering the grade or qu ality of a good; (7) seeking exorbitant profits; 
and (8) other unfair price acts prohibited by laws and administrative regulations. 
3.3.3  State trading, state-owne d enterprises, and privatization 
3.172.  Under the Foreign Trade Law (2004), the State may subject certain goods to state trading. 
The reasons for maintaining state trading for certain products in China seem to have remained 
unchanged since the last Review; these include: ensuring stable supply and prices of the products concerned; safeguarding China's food security; and protecting exhaustible and non-recyclable 
natural resources and the environment. Imports su bject to state trading continue to comprise: 
grain (including wheat, maize, and rice), sugar, co tton, chemical fertilizers, tobacco, crude oil, and 
processed oil (Table 3.16).
185 
3.173.  It appears that the functioning of the st ate-trading system has not changed substantially 
since the last Review in 2012. In principle, g oods subject to state trading can be imported 
(and exported) only by authorized enterprises.186 However, products subject to tariff-rate quotas 
(grain, cotton, sugar, and certain chemical fertilizers) may also be imported by non-state-trading 
enterprises, as may imports of crude oil. Tobacco is the only state-traded product which can be 
traded solely by authorized enterprises. The non-state-trading portion of these goods is allocated either by the NDRC, in the case of grains an d cotton, or by MOFCOM for the other products. 
The NDRC and MOFCOM issue on a yearly basis the criteria for an enterprise to acquire trading 
rights for these products, the volumes they can import and the allocation method. The quantities imported under state trading are not available.
187 
Table 3.16 Imports under state trading, 2011-13  
Product HS code Percentage of TRQ allocated 
to state-trading enterprises in 
  2011 2012 2013 
Wheat 10011000; 10019010; 
10019090; 11010000; 
11031100; 11032100 90 90 90 
Maize 10051000; 10059000 
11022000; 11031300 
11042300 60 60 60 
Rice 10061011; 10061019 
10061091; 10061099 
10062010; 10062090 
10063010; 10063090 
10064010; 10064090 11023010; 11023090 11031921; 11031929 50 50 50 
                                               
185 Imports subject to state trading do not seem to have changed since 2003 when China provided its 
last notification regarding state trading (WTO document G/STR/N/9/CHN/Add.1, 14 July 2003). 
186 Article 11 of the Foreign Trade Law. 
187 Information provided by the authorities of China. WT/TPR/S/300 • China 
 
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  Product HS code Percentage of TRQ allocated 
to state-trading enterprises in 
  2011 2012 2013 
Cotton 52010000; 52030000 33 33 33 
Sugar 17011100; 17011200 
17019100; 17019910 
17019920; 17019990 70 70 70 
Urea 31021000 90 90 90 
NPK 31052000 51 51 51 
Diammonium phosphate 31053000 51 51 51 
Other chemical fertilizer 31022100; 31022900 
31023000; 31024000 
31025000; 31026000 31027000; 31028000 31029000; 31031000 
31032000; 31039000 
31041000; 31042000 31043000; 31049000 
31051000 n.a. n.a. n.a. 
Tobacco 24011010; 24011090 
24012010; 24012090 
24013000; 24021000 
24022000; 24029000 
24029000; 24031000 
24039100; 24039900 
48131000; 48132000 
48139000; 55020010 
56012210; 84781000 
84789000 n.a. n.a. n.a. 
Crude oil 27090000 n.a. n.a. n.a. 
Processed oil 27100011; 27100013 
27100023; 27100024 
27100031; 27100033 
27100039 n.a. n.a. n.a. 
n.a Not applicable. These products, although subject to import under state trading, are not subject to 
tariff-rate quotas. 
Source: National Development and Reform Commission (NDRC) Announc ement No. 35 of 2012 [Grains and 
cotton]. Viewed at: http://www.ndrc.gov.cn/zcfb/zcfbgg/2012gg/t20121008_508641.htm  
(in Chinese only); MOFCOM Announcement No. 59 of 2012 on Detailed Rules for Applying and 
Distributing Import Tariff Quota of Sugar for 2013. Viewed at: http://english.mofcom.gov.cn/aarticle/policyrelease/buwei/201209/20120908366253.html ; 
MOFCOM Announcement No. 61, 2012 on Total Import Amount, Distribution Rules and Relevant 
Procedures for Tariff Quotas of Chemical Fertilizer for 2013. Viewed at: 
http://english.mofcom.gov.cn/article/policyrelease/buwei/201210/20121008384037.shtml ; and 
MOFCOM online information [Fertilizer]. Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/e/201210/2012100837 6628.html  (in Chinese only). 
3.174.  The export products subject to state trading and the enterprises in charge of trading these 
products have not changed substantially since the last Review. In 2013, exports subject to 
state trading were rice, maize, cotton, coal, crude oil, tungsten ore and products, antimony ore 
and products, silver and tobacco (Table 3.17). The volume of export subject to state trading is 
determined taking into account international and domestic supply and demand. The state-trading enterprises themselves determine the pr ice of the goods that they export.
188 According to the 
authorities, exports are allocated amongst state- trading enterprises based on market principles. 
                                               
188 WTO document G/STR/N/9/CHN/Add.1, 14 July 2003. WT/TPR/S/300 • China 
 
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  Table 3.17 Export products subject to  state-trading arrangements, 2011-13  
Product (HS code) Enterprises 
Rice 
10061011; 10061019; 10061091; 10061099; 
10062010; 10062090; 10063010; 10063090; 
10064010; 10064090  China National Cereals, Oil and Foodstuffs Import & 
Export Co. (renamed as COFCO in April 2007); and 
Jilin Grain Group Import & Export Co. Ltd. 
Maize 
10051000; 10059000; 11042300  China National Cereals, Oil and Foodstuffs Import & 
Export Co. (renamed as COFCO in April 2007); and 
Jilin Grain Group Import & Export Co. Ltd. 
Cotton 
52010000; 52030000  Chinatex Cotton Import & Export Corporation; 
Xinjiang Uygur Autonomous Region Cotton and 
Jute Import & Export Co.;  Xinjiang NongKen (Group) 
Import & Export Co. Ltd.; China National Cotton 
Reserve Corporation. 
Coal 
27011100; 27011210; 27011290; 27011900; 
27021000  China National Coal Group Corporation; Shanxi Coal 
Import & Export Group Co. Ltd.; Shenhua Group 
Corporation Ltd.; China Minmetals Corporation. 
Crude oil 
27090000  SINOCHEM Corporation; China International United 
Petroleum & Chemicals Co.;  China National United 
Oil Co. 
Processed oil 
27101110 (start from 2012, change to 27101210);  
27101120 (start from 2012, change to 27101220); 
27101191 (start from 2012, change to 27101291); 
27101199 (start from 2012, change to 27101299); 
27101911; 27101912; 27101919; 27101921; 
27101922; 27101929; 27101991; 27101992; 
27101999; 27111100; 
27102000 (start from 2012) SINOCHEM Corporation; China International United 
Petroleum & Chemicals Co.;  China National United 
Oil Co.; China National Offshore Oil Corporation; 
China National Aviation Fuel Group Corporation. 
Tungsten ore and products 
26110000; 26209910; 26209090; 28418010; 
28418040; 28259012; 28259019; 28259011; 
28418020; 28418030; 28499020; 81011000; 
81019400; 81019700  STEs are listed in MOFCOM Circular Shang Mao Han 
No. 1135 of 2012. 
Antimony ore and products 
26171010; 26171090; 28258000; 81101010; 
81101020; 81102000; 81109000  STEs are listed in MOFCOM Circular Shang Mao Han 
No. 1135 of 2012. 
Silver 
71061011; 71061019; 71061021; 70161029; 
71069110; 71069190; 71069210; 71069290  STEs are listed in MOFCOM Circular Shang Mao Han 
No. 1135 of 2012. 
Tobacco and by-products 
55020010; 24011010; 24011090; 24012010; 
24012090; 24013000; 24021000; 24022000; 
24029000; 24031000; 24039100; 24039900; 
48131000; 48132000; 48139000; 56012210; 
84781000; 84789000  STEs are listed in MOFTEC Announcement No. 44 
of 2001a. 
Tea 
09021010; 09021090; 09022010; 09022090  State trading temporarily  abolished since 2005. 
Soybeans 
12011000; 12019010; 12019020; 12019030; 
12019090 China has not applied state trading since it joined 
the WTO. 
Silk 
5001; 5002; 5003; 5004; 5005  State trading temporarily  abolished since 2005. 
Unbleached silk 
50071010; 50072011; 50072021; 50072031 China has not applied state trading since it joined 
the WTO. WT/TPR/S/300 • China 
 
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  Product (HS code) Enterprises 
Cotton yarn 
520411; 5205 (excluding 520528; 520547; 
520548); 520710; 520419; 5206; 520790 China has not applied state trading since it joined 
the WTO. 
Woven fabrics of cotton 
520811; 520812; 520813; 520819; 520911; 
520912; 520919; 521011; 521019; 521111; 
521112; 521119 China has not applied state trading since it joined 
the WTO. 
a MOFCOM online information. Viewed at: 
http://www.mofcom.gov.cn/aarticle/b/c/200404/20040400210082.html . 
Source: Information provided by the Chinese authorities and WTO document WT/ACC/CHN/49, 
1 October 2001. 
3.3.4  Government procurement 
3.175.  There have been no major changes to China's legislative and regulatory regime for 
government procurement since the last Review. China continues to be engaged in the process 
of acceding to the WTO Agreement on Government Procurement (GPA). This may imply eventual changes to the legislative regime, currently in a preparatory stage, to align it with the provisions of 
the GPA. 
3.176.  In the context of the present Review, the Chinese authorities have highlighted that since 
2011, transparency in China's government procurement process has improved. In this connection, they point out the increasing resort to public-t endering methods: the percentage of government 
procurement through public tendering now exceeds 80% and the use of single-source procurement 
has been reduced (see below). Also, efforts to make government-procurement-related information publicly available have been stepped up, as mo re documents linked to the procurement process, 
as well as the results of investigations and penalties imposed for misusing the procurement 
process, have been published. 
3.177.  The Government Procurement Law (Order of the President of the People's Republic 
of China No. 68 of 29 June 2002, in effect since 1 January 2003), states that government 
procurement must be conducted in such a manner as to facilitate achievement of the goals designed by State policies for economic and social development including, but not limited to, environmental protection, assistance to under-developed or ethnic-minority areas, and promotion 
of small and medium-sized enterprises. The Go vernment Procurement Law aims at improving 
efficiency in the use of public f unds and promoting better governance.  
3.178.  According to information provided by the Chinese authorities, the total value 
of government procurement increased to RMB 1,133.2 billion in 2011, up from RMB 842.2 billion 
in 2010 (Table 3.18). Government procurement accounted for about 2.2% of GDP (2.1% in 2010). The data cover only procurement by governme nt departments, institutions, and public 
organizations using fiscal funds, for goods, construction, and services listed in the " Centralized 
Procurement Catalogue " or above the threshold using other financial resources. It does not cover 
procurement by SOEs, which the Chinese authoritie s do not consider falls under the definition 
of government procurement (see below). Local governments account for a major part 
of government procurement in China; they accoun ted for 87.6% of the total value of government 
procurement in 2011. 
3.179.  The main laws, rules and regulations on government procurement in China are the 
Government Procurement Law of 2002, the Te ndering and Bidding Law of 1999, and the 
Implementing Regulations on the Tendering and Bidding Law, promulgated in December 2011 and 
implemented from 1 February 2012 and the Measur es for the Administration of Tenders and 
Invitations to Bid in Government Procurement of Goods and Services (MOF Order No. 18 
of 11 August 2004). Other laws which could have an effect on government procurement include the Budget Law, the Contract Law, the Product Quality Law, the Price Law, and the Anti-Unfair Competition Law. In addition to the Government Procurement Law, procurement of construction WT/TPR/S/300 • China 
 
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  and engineering projects is also regulated by the Law on Bid Invitation and Bidding or Tendering, 
as stipulated by Article 4 of the Government Procurement Law.189 
Table 3.18 Government procurement by procur ement of goods, construction projects, 
and services, 2009-12  
(RMB billion) 
 2009 2010 2011 2012 
TOTAL 741.32 842.2 1,133.3 1,397.8 
Goods 301.06 317.63 383.0 439.0 
Central government entities 30.23 30.82 35.8 40.1 
Local government entities 270.83 286.81 347.2 398.9 
Construction and engineering services 385.84 453.66 661.4 837.4 
Central governme nt entities 23.41 17.59 23.0 25.5 
Local government entities 362.43 436.07 638.4 811.9 
Other services 54.42 70.91 88.9 121.4 
Central government entities 8.42 8.28 9.7 13.0 
Local government entities 46.00 62.63 79.2 108.4 
Source: Information provided by the Chinese authorities.  
3.180.  Government procurement can be centralized or decentralized. The Government 
Procurement Law covers the purchasing activities conducted with fiscal funds by government 
departments, institutions and public organizations at all levels, where the goods, construction and 
services concerned are included in the Centralized Procurement Catalogue issued by the Ministry of Finance, and their value exceeds th e respective prescribed procurement thresholds. 
Purchases of items listed in the  Centralized Procurement Catalogue, which is revised from time to 
time, must be carried out by centralized proc urement agencies. The threshold for procurement 
under the central budget in 2013 was RMB 500,000 for goods and services, and RMB 600,000 for construction projects. The thresholds for items that come under local budgets are prescribed and 
published by the respective governments of prov inces, autonomous regions or municipalities 
directly under the Central Government or the department authorized by them. Centralized procurement accounted for 87.6% of government procurement in 2012 (RMB 1.2 trillion). 
3.181.  Decentralized procurement of items not listed in the Centralized Procurement Catalogue, 
but with a value above a certain procurement threshold, which is specified by governments at various levels, is carried out by the procuring agency itself. 
3.182.  Under Article 10 of the Government Procurement Law, the Government is required to 
procure domestic goods, construction projects and services, subject to certain exceptions. These 
exceptions are: when the goods, projects, or services required are unavailable in China or, 
if available, cannot be procured on reasonable commercial terms; when the goods, projects, and 
services are procured for use abroad; or when it is otherwise provided for by other laws and 
administrative regulations. The Law itself does not contain a definition of domestic goods or provisions on local content, or rules of origin, to determine whether a product is produced 
domestically. Article 8 of MOF Order No. 18 of 11 August 2004 states that the suppliers 
participating in the bids for supply of goods or services under government procurement must be domestic suppliers who supply domestic goods or services. However, foreign suppliers may 
participate in tenders and invitations to bid concerning goods and services if other laws and 
administrative regulations so prescribe. Domestic-sourcing requirements will have to be modified 
for procurement above GPA thresholds for China to join the Agreement. Although official statistics 
do not contain data on procurement by foreign suppliers or of foreign products, this appears to 
occur. In this respect, the authorities noted that despite the " buy-domestic " provision included in 
the Government Procurement Law, the Chinese Government has been implementing a policy to facilitate the procurement of foreign products since 2007.  
3.183.  China adopts five methods for the government procurement of goods, services and works: 
public tendering, selective tendering, competitive negotiations, request for quotation, and single-source procurement. There is no difference in the procurement methods used at the central and local level. The Measures for the Administration of Tenders and Invitations to Bid in 
Government Procurement of Goods and Services (MOF Order No. 18 of 11 September 2004) 
provide the details on tendering procedures.  
                                               
189 WTO document WT/TPR/M/230/Add.1, 22 February 2011, p. 99. WT/TPR/S/300 • China 
 
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  3.184.  Public or selective tendering  are the main procurement methods; public tendering is 
required for procurement of items exceedin g the prescribed procurement thresholds. 
The thresholds for central government procurement for 2013-14 are still RMB 1.2 million for goods and services, and RMB 2 million for construction projects. Ministry of Finance approval is required 
for procurement exceeding these thresholds by  any other method. For procurement below the 
above-mentioned thresholds, the procuring entity may choose to apply another of the remaining four procurement methods specified in the Law. However, in accordance with the Government 
Procurement Law, if it is considered necessary  to adopt a method other than public tender, 
departmental approval is required. The Law forbids a procuring entity from breaking procurement up into parts to avoid the use of public tendering by being below the mandatory threshold. When public tendering is adopted as the procurement method, the period from the date 
of issuance of the tender to the deadline for su bmission of the bid documents by bidders must be 
not less than 20 days. The tender procedure is a nnulled when there are less than three suppliers 
that meet the qualifications required or the prices offered exceed the procurement budget. 
3.185.  Goods or services may be procured under the selective tendering method  when they are 
special and can only be procured from a limited number of suppliers or when the cost of holding a public tender represents an excessive proporti on of the total value of the procured items. 
At least three bidders must be invited to participate in a selective tendering process.
190 
3.186.  The competitive negotiation method  may be used if, after a selective tendering process has 
been attempted, no supplier has submitted an offer or the offers have been deemed inadequate, or when a second selective tendering process ha s been attempted but has failed. Procurement can 
take place under the method of competitive negotiation also due to the technical complexity or the 
special nature of the goods and services procured, in cases of urgency, or when the total value of the goods or services to be procured cannot be determined in advance. If competitive 
negotiation is used as the procurement method, a negotiation team composed of three or more 
representatives of the procuring entity and experts in the relevant fields must be formed. The negotiation team must choose no fewer than three suppliers from among all the qualified 
suppliers to participate in the negotiation and must provide them with the documents for 
negotiation. These must contain the negotiation procedures and contents as well as the criteria for evaluating an offer. All members of the negotiation team jointly negotiate with the suppliers individually. Once the negotiation is concluded, the negotiation team shall request all the suppliers 
participating in the negotiation to quote their final offering prices within a specified time limit. 
The procuring entity must decide on the su ccessful supplier from among the candidates 
recommended by the negotiation team on the principle that the supplier meets the procurement 
need and that the price it quotes is the lowest among the prices quoted for goods of equal quality 
and for equal services. 
3.187.  The single-source procurement  method can be used when goods or services can be 
procured from only one supplier, when they ca nnot be procured from other suppliers due to 
an unforeseeable emergency, or when procurement of additional items or services from the same 
supplier is expected to be required, provided that the total value of the additional procurement does not exceed 10% of the value of  the base procurement contract. The request for quotations  
method may be adopted for the procurement of goods with uniform specifications and standards, 
that are in sufficient supply and for which prices fluctuate little. The Law mandates that in cases of single-source procurement, the procuring entity carries out the procurement on the basis 
of guaranteed quality and reasonable price. 
3.188.  In cases where the request for quotations method  is used, a team with a similar 
composition as for competitive negotiation must be set up. The team must, on the basis of the 
procurement needs, choose not less than three suppliers from among all the qualified suppliers 
and send each of them a quotations-inquiry notice to solicit their quotations. The supplier offering the lowest price among the prices quoted for good s of equal quality and equal services must be 
chosen. 
3.189.  The procurement method most widely used is public tendering, which accounted for 80.7% 
of total procurement in 2011, up from 77% in 2010; competitive negotiation accounted for 6.4% of the total; single-source procurement 5.9% ; requests for quotation 4.1%; and selective 
tendering 2.9% (Table 3.19). 
                                               
190 MOF Order No. 18 of 11 August 2004, Article 3. WT/TPR/S/300 • China 
 
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  Table 3.19 Government procurement by procurement method, 2010-12 
(RMB billion) 
Year Procurement method 
Total Public 
tendering Selective 
tendering Competitive 
negotiation Request for 
quotations Single-source 
procurement 
2010 842.2 648.2 29.3 63.7 41.7 59.3 
2011 1133.2 914.7 32.9 72.0 46.3 67.6 
2012 1397.8 1170.6 38.6 72.3 67.9 48.4 
Source: Information provided by the Chinese authorities. 
3.190.  Procuring entities must announce government procurement and bidding information in 
media designated by the Ministry of Finance in "a timely and standard manner" to ensure transparency and fair competition. MOF Order No . 18 of 11 August 2004 sets out the contents and 
procedures for announcing procurement information, as well as the deadlines for the Tender 
Pre-Qualification Notice, and the closing dates for the tender, submission and announcement of bidding results.  
3.191.  There are three bid evaluation methods for procurement of goods or services in an 
invitation for bids, namely, the lowest-price me thod, comprehensive-scoring method and the price 
quality method. The lowest-price method refers  to the bid evaluation method in which the 
determination of candidate suppliers is mainly based on prices on the premise that all substantive 
requirements in the bid invitation documents have been met. Under the comprehensive-scoring method, choice falls between the bidders who get the highest total scores in the bid evaluation after the bids have been evaluated according to all the factors stated in the bid invitation 
documents, on the premise that the substantive re quirements in the bid invitation documents are 
met to the fullest extent. The main factors of co mprehensive scoring include: price, technical and 
financial status, credit standing, performance, services, the extent of the response to the bid 
invitation documents, and the corresponding propor tion or weight, amongst others; they must be 
clearly stated in the bid.
191 Under the price quality method, the total score of each effective bidder 
in terms of all scoring factors except the price fact or is calculated and divided by the bidding price 
quoted by the bidder. The bidder with the highest quotient is regarded as a candidate supplier for 
winning the bid or the bid-winning supplier. 
3.192.  Results are listed in bottom-to-top order according to the quoted bidding prices when the 
lowest price method is adopted. In case the quoted bidding prices are the same, the decision is 
made on the basis of technical indicators. If a bidding price is deemed unreasonable or below 
costs, the candidate supplier is required to provide relevant supporting documents. When the comprehensive scoring method is adopted, results are listed in bottom-to-top order according to 
the scores in the evaluation. When the price quality method is adopted, tender results are listed in 
bottom-to-top order according to the quotient scores. In case of ties, quoted bidding prices or technical indices, in that order, will be the deci ding factors for both methods. After the process is 
concluded, a bid evaluation report is issued. After the bid-winning supplier has been determined, 
the bidding result is announced. 
3.193.  Bidders, if unfairly excluded from procurement processes or treated in a discriminatory 
way, may complain to the procuring agency, a ppeal to the Government Procurement Division 
of the Ministry of Finance, or subsequently file a complaint with a court. According to information 
provided by the authorities, in 2011, the financ e authorities at various levels all over China 
accepted 521 complaints raised by suppliers against government procurement. 
3.194.  China has not signed any bilateral or regional agreement on market access for government 
procurement to date.
192 
3.195.  As was reported in the previous Review, imports used for procurement purposes still 
require approval from the Ministry of Finance, or its corresponding departments at the local level. 
                                               
191 In accordance with MOF Order No. 18 of 11 Augu st 2004, when the comprehensive-scoring method 
is adopted, the weight ascribed to the price score in the total score must be between 30% and 60% in the case 
of goods, and between 10% and 30% in the case of services. 
192 The agreement with Switzerland contains provisions regarding the exchange of information on 
government procurement. WT/TPR/S/300 • China 
 
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  They are governed by the Administrative Measures for Government Procurement of Imported 
Products, which set out the conditions for govern ment procurement of imported foreign products 
and technologies. No data on the percentage of imported goods and services in total procurement 
are available as yet. 
3.196.  Since 1 December 2011, there is no longer any condition attached to government 
procurement regarding "indigenous innovation". A State Council measure mandating that provincial and local governments eliminate any remaining linkages came into force on 
1 December 2011.  
3.197.  China is currently an observer to the GPA. China applied for accession to the GPA on 
28 December 2007 and its initial offer was circulated to Parties on 7 January 2008. Discussions dedicated to China's accession took place on multiple occasions during the 2008-2013 period. 
In November 2011, China submitted a second revised GPA accession offer to the WTO, covering 
local governments for the first time. The offe r included coverage for five provinces and 
municipalities directly under the Central Government, i.e. Beijing, Tianjin, Shanghai, Jiangsu and 
Zhejiang, lowered the thresholds for construction projects of Central Government entities and 
increased the types of service offers. 
3.198.  On 29 November 2012, China circulated its third revised coverage offer. The offer added 
annexes of goods, included the Shandong, Fu jian and Guangdong Provinces, expanded the 
coverage of sub-central government entities and further lowered the thresholds of construction projects. Substantive discussions on this offer were held on 5 December 2012, 27 February 2013, 29 May 2013 and 9 October 2013. China circulated its replies to the questions from the 
Republic of Korea and Japan regarding its replies to the Checklist of Issues on 27 February 2013. 
In the course of discussions, Parties expressed thei r appreciation to China for the improvements to 
coverage that were contained in the offer and for its commitment to its GPA accession. 
Nevertheless, several Parties also expressed disappointment that various other requests that had 
previously been made by the Parties concerning Ch ina's second revised offer were not reflected in 
the third revised offer. In particular, Members encouraged China to submit a revised offer to 
respond to Parties' requests by lowering thresh olds, further increasing coverage of sub-central 
entities, and making improvements in other areas. The GPA Committee has expressed the view that "China's GPA accession, on the appropriate terms, is a matter of great significance for the Agreement, for the WTO, and for the world economy; and a very important signal for other 
emerging economies".
193 
3.3.5  Intellectual property rights 3.3.5.1  Overview and in stitutional developments 
3.199.  The Inter-Ministerial Joint Conference fo r the Implementation of National Intellectual 
Property Strategy, established in October 2008, is  in charge of coordinating the implementation 
of intellectual property policy and regulations across relevant ministries and agencies. 
The Conference is chaired by the Commissioner of the State Intellectual Property Office (SIPO) and 
its tasks are executed by the National Intellectual Pr operty Strategy Office (NIPSO), situated in the 
SIPO.
194 The Conference annually issues a Promotion Pl an for the Implementation of the National 
Intellectual Property Strategy, with specific actions to be carried out during the year in question to 
attain the goals of the strategy. In 2013, the st rategic themes/actions identified were grouped 
under eight main goals: 
a. enhancing intellectual property (IP) creation by  raising the quality of intellectual property 
rights (IPRs), as well as innovation efficiency . The aim is to improve IPR protection by 
reinforcing the evaluation system and promotin g the quality of IP by upgrading the value 
generated by its protection. Measures proposed to attain this include: streamlining the 
process of patent applications and improving the patent examination system; improving 
the trademark examination process and comple ting the registration review cycle in 
10 months; continuing progress in the development of an automated trademark 
                                               
193 Report (2013) of the Committee on Government Procurement. WTO document GPA/121, 
24 October 2013. 
194 Information (in Chinese) on Chin a's intellectual property strategy  at the national, regional, and 
industrial level and NIPSO's activities can be found on the webs ite of the Office ( http://www.nipso.cn ). WT/TPR/S/300 • China 
 
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  registration and management system; enhancing the effectiveness of trademark 
registration; completing trademark opposition review proceedings within 18 months; developing and refining new plant varieties testing guidelines and approval rules;  
b. strengthening IP in key industries . This is to be done by: promoting the integration 
of IPR protection with industrial policy; developing and implementing a strategic 
industries IP work plan to take into account the IPR protection needs of these industries; promoting the development of green technolo gies and green patent applications by 
granting them a priority review process; developing an "industry IP risk assessment and 
early warning system" with respect to selected industrial transformation processes; 
c. promoting the use of IP . To be achieved by: improving the commercialization 
of IP-linked and IP-based innovation; implementing policies to facilitate the transfer 
of IP to enterprises; and promoting the commercialization of IPRs; 
d. strengthening IPR protection . To be achieved by: revising the key laws and 
implementing regulations; strengthening IPR pr otection for pharmaceuticals; stepping up 
copyright protection on the Internet; enha ncing the effectiveness of judicial IPR 
protection and the capacity of administrative  enforcement by, for example, continuing to 
expand the number of courts dealing with IPR issues (see enforcement section, below); 
stepping up efforts to continue fighting ag ainst counterfeiting and sale of fake goods, 
including on the Internet; stepping up efforts to combat cyber piracy "network operations", in audio, video, games, and software; launching a "patent law enforcement capacity-building project"; improving trademark protection through well-known brand 
programmes and the promotion of licensing; strengthening customs protection of IPRs; 
strengthening the protection of IP resources in fields with traditional advantages; enhancing the ability to deal with international cases; implementing the special 
protection operations and assistance programmes for key fields and industries, 
promoting the information disclosure of IP cases subject to administrative penalty; 
e. enhancing IP management capacity  through a revision of regulations and elaboration 
of policies to this end; 
f. development of IP services , including access to information, and support to other 
industries, and improvement in the qualification of patent lawyers. This is to be achieved by strengthening and promoting the use of IP information resources, promoting the 
expansion of IP service providers' busine sses, and training IP service providers; 
g. strengthening the public's IP culture  through education, public campaigns, and by 
combating IPR infringement in advertising. Also by strengthening the dissemination 
of IP knowledge, the training of personnel, fostering an IP culture climate of respect for 
knowledge, strengthening the supportive role of IP in the development of cultural industries, and providing support to the inte gration and development of IP in the media 
industries, in literature and in art
195; 
h. improving the organization and implementation of the IP strategy . To be achieved by: 
fulfilling the five-year goals established in the National Intellectual Property Strategy; strengthening the platform for the implementa tion of the IP strategy; holding special 
publicity activities; and carrying out an evalua tion and selection of the best performers 
in implementing the National IP Strategy. 
3.200.  During the period under review, China has continued to implement measures to improve 
its IPR protection regulatory environment. This has been done by amendm ents to legislation and 
regulations, as well as departmental rules. One of the most prominent changes during the period under review has been the enactment of the third amendment to the Trademarks Law in 
August 2013, effective 1 May 2014. China also promulgated the Administrative Measures on 
Prioritized Examination of Invent ion Patent Applications in 2012. 
                                               
195 NIPSO online information.  Viewed (in Chinese) at: http://www.nipso.cn/onews.asp?id=16983 . WT/TPR/S/300 • China 
 
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  3.201.  China is a member of the World Intellectual Property Organization (WIPO), and 
a contracting party to various international conventions and treaties (Table 3.20). During the period under review, China signed the Beijing Tr eaty on Audiovisual Performances (26 June 2012) 
and the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, 
Visually Impaired, or Otherwise Print Disabled (Marrakesh VIP Treaty) (28 June 2013). As at end 
2013, these treaties had not yet come into force. China has continued to increase the number of IPR protection applications through international treaties, particularly in the area of patents. 
In 2012, Chinese citizens filed 18,614 applications through the Patent Cooperation Treaty (PCT) 
system, an increase of 13.5% over 2011, and triple the number of applications filed in 2008.
196 
There were 2,100 trademark applications filed through the Madrid system in 2012, slightly less than in 2011, but a third more than in 2008. 
Table 3.20 China's membership of internationa l intellectual property rights conventions, 
2013 
Convention Status Date of accession 
Beijing Treaty on Audiovisual Performances Signature  
Berne Convention for the Protection  of Literary and Artistic Works In force 15 October 1992 
Budapest Treaty on the International Recognition of the Deposit of 
Microorganisms for the Purpos es of Patent Procedure In force 1 July 1995 
Convention Establishing WIPO In force 3 June 1980 
Convention for the Protection of Producers of Phonograms Against 
Unauthorized Duplication of Their Phonograms In force 30 April 1993 
International Convention for the Prot ection of New Varieties of Plants 
(UPOV Convention) In force 23 April 1999 
Locarno Agreement Establishing an International Classification for 
Industrial Designs In force 19 Se ptember 1996 
Madrid Agreement Concerning the International Registration of Marks In force 4 October 1989 
Marrakesh VIP Treaty Signature  
Protocol Relating to the Madrid Agreement concerning the International 
Registration of Marks In force 1 December 1995 
Nice Agreement Concerning the Intern ational Classification of Goods and 
Services for the Purpose of the Registration of Marks In force 9 August 1994 
Paris Convention for the Protection of Industrial Property In force 19 March 1985 
Patent Cooperation Treaty In force 1 January 1994 
Singapore Treaty Signature  
Strasbourg Agreement Concerning the International Patent Classification In force 19 June 1997 
Trademark Law Treaty (TLT) Signature  
Washington Treaty on Intellectual Property in Respect of Integrated 
Circuits Signature  
WIPO Copyright Treaty In force 9 June 2007 
WIPO Performances and Phonograms Treaty (WPPT) In force 9 June 2007 
Source:  WIPO online information. Viewed at: 
http://www.wipo.int/treaties/en/ShowResults.jsp?country_id=38C . 
3.3.5.2  Industrial property 
3.3.5.2.1  Patents 
3.202.  The institution in charge of patent administration nationwide in China is SIPO, under the 
State Council. The State Patent Office, under SIPO, is responsible for receiving and processing patent applications and granting patents. Local IPR administrative offices deal with hearing and 
settling controversies with respect to patents. 
                                               
196 WIPO statistics. Viewed at: http://www.wipo.int/ipstats/en/statistics/country_profile/countries/ 
cn.html . The ten main users of the PCT system in 2012 were: ZTE Corporation (3,906 applications); 
Huawei Technologies Co. Ltd. (1,801); Shenzhen China Star Optoelectronics Technology Co. Ltd. (204), 
Huawei Device Co. Ltd. (200); China Academy of Telecommunications Technology (171); Institute 
of Microelectronics of the Chinese Academy of Sciences  (161); Tencent Technology (Shenzhen) Co. Ltd. (122); 
Hunan Sany Intelligent Control Equipment Co. Ltd. ( 94); Peking University (92); and Da Tang Mobile 
Communications Equipment Co. Ltd. (82). WT/TPR/S/300 • China 
 
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  3.203.  The Patent Law, last amended in 2008, regulates patent protection for inventions, utility 
models, and industrial designs.197 The Patent Law is complemented by the Rules for 
Implementation of the Patent Law, last amended in 2010.198 Other regulations dealing with 
patents include the Measures for the Filing of Patent Exploitation License Contracts; the Measures 
for Compulsory Licensing for Patent Implementation; and the SIPO Rules on Administrative 
Reconsideration. In 2012, the Administrative Measures on Prioritized Examination of Invention Patent Applications were promulgated. 
3.204.  Patents are granted for 20 years from the date of filing for inventions, and 10 years from 
filing for utility models and industrial designs.  
3.205.  Patent applications are made to SIPO, which screens them for compliance with the 
requirements of the Patent Law. In case of conf ormity, SIPO must publish the application within 
18 months of the date of filing. The applicant must then submit a request for substantive 
examination by the SIPO. The request must be subm itted within three years of the date of filing, 
otherwise the application is considered to have been withdrawn. Patent rights are protected during 
the substantive examination period; in fact they are provisionally protected from the date 
of application to the date of granting the patent. SIPO issues a notification in this respect; within two months of receipt of this notification, the applicant must complete registration formalities, 
including paying the registration, annual, and printing fees. The average time required to complete 
substantive examination for an invention patent was 22.6 months in 2012, compared with 24 months in 2010. 
3.206.  Patent applications may be re-examined by the Patent Re-examination Board, which 
consists of technical and legal experts appointed by SIPO and headed by its director. Article 62 
of the Rules for the Implementation of the Patent Law stipulates that, if the Board finds that SIPO's decision does not comply with the provisions of the Patent Law and its accompanying rules 
and regulations, it may revoke the decision and ask SIPO to continue the patent examination. 
In 2012, the Patent Re-examination Board accepted 17,320 applications for re-examination, 11,427 of which were concluded. 
3.207.  The acceptance of applications for a foreign or international patent for an invention or 
utility model in which the "substantial content" of the technical solution was generated within the Chinese territory or resulted from R&D activities of major national projects is subject to a preliminary national-interest clearance.
199 A "confidentiality examination" must be conducted 
before an application can be filed. There is no definition of substantial content in the Implementing 
Regulations for the Patent Law. IPRs obtained from major national projects must first be non-exclusively licensed within the territory of ma inland China. The eventual licensing or transfer 
of these rights to foreign parties is subject to the provisions of the Regulations on the 
Administration of Technology Import and Export, as revised in December 2010. 
3.208.  China's patent law provides for compulsory licensing of patents. Compulsory licences may 
be granted in the public interest, or in the ev ent of a national emergency or any extraordinary 
state of affairs. A compulsory licence may al so be granted if the patent owner, without 
justification, has failed to sufficiently exploit patent rights for three years or uses the rights in a manner that eliminates or restricts competition. This is understood to mean that the exploitation 
of the patent by the right-holder or licensee is not able to satisfy the domestic demand for the 
patented product or patented know-how. Compulsory  licences for patented inventions or utility 
models may also be granted if the patent-holders are found to restrict/limit competition through 
the abuse of their IPRs. The Anti-Monopoly Law (AML ) does not, however, provide a definition of 
abuse of IPRs. A compulsory licence may also be granted under certain circumstances for patented pharmaceutical products in accordance with the amendment to the Patent Law introduced in 2009 
                                               
197 WTO documents IP/N/1/CHN/3, 15 December 2010 and IP/N/1/CHN/P/2, 21 December 2010. 
198 WTO documents IP/N/1/CHN/4, 24 August 2011 and IP/N/1/CHN/P/3, 26 August 2011. 
199 Major national projects have been identified in the 2006 Medium and Long-term Plan for Science and 
Technology; they are projects in 16 fi elds, coordinated by the Ministry of Science and Technology, that aim at 
fostering the development of core technologies and social and economic development. WT/TPR/S/300 • China 
 
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  to give effect to the WTO General Council Decision on Implementation of Paragraph 6 of the 
Doha Declaration on the TRIPS Agreement and Public Health.200 
3.209.  SIPO deals with issues related to compulsory licensing. If there is a request for 
a compulsory licence, patent right-holders are notified in writing and must respond to SIPO with 
comments within a specified period, which varies by case. Upon request by one the parties, SIPO 
may conduct open hearings. This is normally the case only when the compulsory licensing is requested for non-exploitation of the licence, sinc e if related to national secrets, trade secrets, 
national emergency, extraordinary state of affairs, or public interest, the hearings are not open to 
the public. Within three months, patent right-holders may challenge in court a SIPO decision with regard to granting or terminating compulsory licences. No compulsory licences were granted from 2010 to 2013. In fact, China has not granted any co mpulsory licences since the entry into force 
of the Patent Law. 
3.210.  In accordance with Article 69 of the Patent Law, parallel imports of patented goods are 
allowed. 
3.211.  During the period under review, China in troduced amendments to a number of regulations 
dealing with patents. China amended the Measures for the Filing of Patent Exploitation Licence 
Contracts in 2011 and amended the Measures for the Compulsory Licensing for Patent 
Implementation and the Rules of the SIPO on Ad ministrative Reconsideration and promulgated the 
Administrative Measures on Prioritized Examination of Invention Patent Applications in 2012. In the case of the amendment to the Measures for the Filing of Patent Exploitation Licence 
Contracts the goal is to improve the filing proced ures of patent exploitation licence contracts and 
provided better services to the parties. The amen dment to the compulsory licensing rules resulted 
in the integration of the measures regarding compulsory licensing for public health reasons with the general compulsory licensing rules; the am endment took effect on 1 May 2012. The purpose 
of issuing the Administrative Measures on Prioritized Examination of Invention Patent Applications, 
which were implemented as from 1 August 2012, is to establish a fast track for patent examination and approval in the case of patent applications linked to strategic emerging industries and to green 
technologies with significant economic and so cial impact and a high degree of invention.
 
The purpose of amending the SIPO Rules on Admi nistrative Reconsideration, implemented from 
1 August 2012, is to implement the provisions  of the State Council's 2007 Regulation on the 
Implementation of the Administrative Reconsideration Law, which provided for new rules on 
mediation, examinations and decisions in administrative reconsideration cases, and for their use 
for settling administrative patent disputes. 
3.212.  During the period under review, patent applications and grants continued to increase 
rapidly. In 2012, Chinese citizens filed 535,313 patent applications for inventions, 734,437 for 
utility models and 642,401 for industrial designs, compared with 415,829, 581,303 and 507,538 applications, respectively, in 2011. Similarly, there has been an upward trend in PCT applications. 
In 2012, the number of PCT applications submitted by Chinese citizens reached 18,614, up from 
16,402 in 2011 and 12,296 in 2010 (Table 3.21).  
Table 3.21 Intellectual property rights applications and grants, 2011-12 
 2011 2012 
Total 
Patent applications (inventions) 
Resident 415,829  535,313  
Non-resident 110,583 117,464 
International applications PCT system 16,402 18,617 
Utility model applications 
Resident 581,303 734,437 
Non-resident 4,164 5,853 
Industrial design applications 
Resident 507,538  642,401  
Non-resident 13,930 15,181 
Patents (invention) granted 
Resident 112,347 143,808 
Non-resident 59,766 73,297 
                                               
200 Articles 22 and 33 of the Measur es for Exercising Patent Comp ulsory Licences regulate the 
administration of compulsory licensing of patented drugs. WT/TPR/S/300 • China 
 
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   2011 2012 
Total 
Industrial design registrations 
Resident 366,328 452,629 
Non-resident 13,862 14,229 
Trademark applications  
Resident 1,273,827 1,502,540 
Non-resident 114,572 117,338 
Madrid system 2,205 2,178 
Trademark registration 
Resident 926,330 80,786 
Non-resident 919,951 75,173 
Source:  Data provided by the Chinese authorities and WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html . 
3.213.  According to information from WIPO, there were 875,385 patents in force in 2012. 
With respect to patent applications by top fields of technology, the main areas are digital 
communication (9% of the total); pharmaceuticals (6.8%); computer technology (6.5%); 
electrical machinery (5.9%), and measurement mate rial (5.1%), among others. Applications were 
widespread among the different fields of technology , as witnessed by the fact that no individual 
field reaches 10% of the total and that the cate gory "others" represented 47.3% of the total.201 
3.3.5.2.2  Trademarks 3.214.  The responsibility for the examination of  applications, registration and administration 
of trademarks lies with the State Trademark Office  (TMO), under SAIC. At the provincial level and 
below, local enforcement authorities are responsible for the administration of trademarks. The Trademark Review and Adjudication Board is  in charge of the settlement of disputes 
concerning trademarks. The Board is also responsible for reviewing decisions made by the TMO 
and ruling on disputed cases on trademarks. The review period of trademark registration was 
10 months as of mid-2013, down from 12 months in 2010. 
3.215.  Trademarks are protected under the Trademark Law, last amended in 2013, its 
Implementing Regulations, promulgated in 2002, and various rules issued by SAIC.
202 Trademarks 
are protected for ten years, renewable for ten years, indefinitely. Chinese applicants can submit their applications for trademark registrations either themselves or through an agent recognized or 
designated by SAIC. Foreign applicants, who do not have residence or business premises in China, 
must register their trademarks through an agent.  The Decision of the Standing Committee of the 
National People's Congress on Amending the Trademark Law of the People's Republic of China was adopted at the 4
th Meeting of the Standing Committee of the 12th National People's Congress on 
30 August 2013, to come into force on 1 May 2014. 
3.216.  Registration with the TMO is a prerequisite for protection under the Trademark Law. 
Foreign applicants must file applications on the basis of reciprocity between their country of origin 
and China, or of any international treaty to wh ich both are parties unless an agreement has been 
concluded between their country of origin and Chin a. 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, and it easily creates ambiguity or if the mark 
involves a copy, imitation, or translation of well-known brands that have been registered in China for goods and services that are not deemed identical or similar to the goods and services in question. This may mislead the public and result in possible harm to the interests of the 
well-known brand right-holders. 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. 
3.217.  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 
                                               
201 WIPO online information. Viewed at: 
http://www.wipo.int/ipstats/en/statistics/country_profile/countries/cn.html . 
202 The rules related to trademark admini stration in China may be viewed at: http://sbj.saic.gov.cn . WT/TPR/S/300 • China 
 
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  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.  
3.218.  SAIC's Rules on Recognition and Protection of Well-known Brands, promulgated in 
April 2003, define "well-known brands" as trademarks that are widely known and enjoy a high 
reputation among the relevant public in China.  China's third amendment to the Trademark Law 
provides more detailed guidelines for the identification of well-known trademarks. However, the Law does not set time limits for the identification process. As at end 2013, SAIC had recognized 
4,486 trademarks as well-known brands, of which 156 were owned by foreign-funded enterprises. 
3.219.  According to the Trademark Law, the TMO has the right to revoke any trademarks that are 
not used for three consecutive years without any justified reasons. 
3.220.  Several regulations have been introduced to enforce trademark protection in e-commerce. 
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, facilitates the procedures for cross-provincial investigations regarding IPR violations through the 
Internet. The Interim Measures on Administration of Commodities Trading on the Internet and its 
Related Services, SAIC Decree 2010/49, which ente red into effect on 1 July 2010, requires the 
operator of the Internet trading platform to  take the necessary actions against trademark 
infringement, and makes the operator responsible for disciplining users of the platform, as well as 
liable for any damage caused by misuse of the plat form. A judicial interpretation (JI) issued by the 
Supreme People's Court on the liability of Intern et intermediaries (Rules of Supreme 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, clarifies some enforcement issues by specifying that that those who facilitate online infringement will be held jointly liable for that conduct. 
3.221.  China currently has no explicit rules on parallel imports in the fields of trademarks or 
copyright. 
3.222.  The main change with respect to trademar ks during the period under review has been the 
enactment of the third amendment to the Trademar ks Law in August 2013. Entrusted by the State 
Council, SAIC undertook the task of amending  the Trademark Law for the third time. SAIC 
formulated a first draft of the new Trademark Law (Amendment Draft for Examination) to the State Council in November 2009. The Executive Meetings of the State Council adopted the draft in 
October 2012 and submitted it to the Standing Committee of the National People's Council (NPC) 
for consideration in November 2012. The 30
th meeting of the 11th Standing Committee of the NPC 
considered the draft amendment for the first time in December 2012 and solicited opinions from 
the public through the NPC website. The time frame for sending comments was from 
28 December 2012 to 31 January 2013. The Decision of the Standing Committee of the National People's Congress on Amending the Trademark Law of the People's Republic of China was adopted 
at the 4
th Meeting of the Standing Committee of the 12th National People's Congress on 
30 August 2013, and will come into force on 1 May 2014. 
3.223.   Among the changes to the Trademark La w introduced by the third amendment are: the 
acceptance of sound marks for protection; the adoption of a "one-trademark-registered-for-
multiple-class" system as a new way of application for registration, as well as of online electronic 
applications to facilitate registration; the protection of well-known trademarks; the introduction of the principle of good faith for the registration  and use of trademarks; the increase of penalties 
for trademark infringements; and the strengthen ing of the protection of exclusive trademark 
rights. 
3.3.5.2.3  Geographical indications 
3.224.  There is no specific legislation for geographical indications (GIs) in China. They are covered 
by the Trademark Law and its Implementing Regu lations and may be registered as collective 
marks or certification marks with the TMO under the same procedure as for trademarks. GIs may be also registered with AQSIQ or the Ministry of Agriculture. The party concerned can voluntarily 
choose under which governmental agency(ies) to register its GIs. Once infringements occur, the 
interests of the party will be protected pursuant to the relevant laws and regulations under which WT/TPR/S/300 • China 
 
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  its GIs are registered. In case a single GI is registered for protection with different agencies, each 
agency would play its due regulatory role strictly according to its respective mandate. 
3.225.  If registered with the TMO, the protection period of registered GIs is the same as for other 
trademarks, that is, they are granted ten-year pr otection, renewable for ten years, indefinitely. 
If registered with AQSIQ, GIs are protected perm anently. Agricultural-product GIs from foreign 
countries must be registered in China to be protected. Once registered, they are protected permanently.  
3.3.5.3  Copyright and related rights 
3.226.  Copyright registration and enforcement is carried out at both the central and provincial 
levels. The National Copyright Administration  of China (NCAC), under the State Council, 
administers copyright on a national scale. At the provincial level, copyright registration and 
administration is carried out by the respective local copyright administration offices. 
3.227.  Copyright is implemented and regulated in China under the Copyright Law, as revised in 
2010, its Implementing Regulation, last revised in 2010, and accompanying regulations, such as 
the Regulations for the Protection of Computer Software, the Regulation on the Collective 
Administration of Copyright, and the Regulation s on Protection of the Right of Communication 
through Information Networks. 
3.228.  The term of protection for natural persons is life plus 50 years (Article 21 of the Copyright 
Law).
203 The term of protection in respect of a work of a legal entity or other organization or 
a work which is created in the course of em ployment and the copyright (except the right 
of authorship) of which is held by a legal entity or other organization, is 50 years. The term 
of protection for cinematographic and photographic works is 50 years, and for typographical 
designs, 10 years. Software copyright exists from the date on which its development is completed. Audio and video productions, broadcasting, and pu blic performances are granted protection for 
50 years from the first day of production, broadcasting, or performance.
204 
3.229.  Chinese citizens, legal entities or other organizations enjoy copyright protection 
automatically on their works, whether published or not.205 In China, registration is voluntary and is 
not necessary for protection. Regardless of their nationality, foreigners whose works are first 
published in the territory of China enjoy copyright protection in accordance with the law. In addition, works of foreigners who are citizens or residents of countries or territories that have signed bilateral copyright protection agreements with China and/or are also parties to the same 
relevant international conventions on copyright as China are protected under the Copyright Law, 
provided their copyrights have been recogniz ed according to the above-mentioned relevant 
bilateral agreements or international conventions.  Protection under Chinese law may be granted to 
works of persons who are not citizens or residents of countries or territories as defined above, as 
long as their works are first (or simultaneously) published in country(ies) or territory(ies) party to the same relevant international conventions on copyright as China. 
3.230.  In accordance with the Copyright Law, copyright includes the following personal and 
property rights: publication; authorship; revision; integrity (the right to protect a work against distortion and mutilation); reproduction; dist ribution; rental; exhibition; performance; 
presentation; broadcasting; communication through information networks; cinematography; 
adaptation; translation; compilation; and other rights to be enjoyed by copyright owners. 
Copyright owners or owners of related rights may authorize collective non-profit copyright 
administration organizations to exercise their rights. 
                                               
203 In the case of more than one right-holder, protec tion is granted for 50 years after the death of the 
last surviving right-holder. 
204 Articles 39, 42 and 45 of the Copyright Law (revised in 2010). 
205 Under the Copyright Law, works are understood as: written works; oral works; musical, dramatic, 
quyi, choreographic and acrobatic works; works of th e fine arts and architectu re; photographic works; 
cinematographic works; graphic works such as drawings of engineering designs and product designs, maps and 
sketches, and model works; computer software; and other works as provided for in laws and administrative 
regulations. WT/TPR/S/300 • China 
 
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  3.231.  The Law provides for copyright licensing and the transfer of rights. Licensing can be 
exclusive or non-exclusive. 
3.232.  Parallel imports are not covered in the current copyright legislation. 3.233.  On 30 January 2013, the State Council promulgated the Decisions on Amending the 
Regulations for Protection of Computer Software, the Implementing Regulations of the Copyright 
Law and the Regulations on the Protection of th e Right to Network Dissemination of Information 
through Orders 632, 633 and 634, respective ly, which adjusted and amended the amount 
of administrative fines. The adjustments and amendments mainly include the following three 
aspects: (i) where the fines are calculated based on the illegal operation proceeds, the decisions provide for different fine levels, based on an illegal income threshold of RMB 50,000. The fine is less than RMB 250,000 if the illegal operation proceeds are less  than RMB 50,000; it is between 
100% and 500% of the illegal operational proc eeds if they are more than RMB 50,000. 
The Decisions adjusted the maximum amount of  the fines from 300% to 500% of the illegal 
operation proceeds; (ii) where the fines are calcul ated based on the value of products, the amount 
of the fines is changed to "more than 100% but less than 500% of the value of the products", 
from "less than 500% of the value of the products"; (iii) the ceiling limit of the fines is changed to 
RMB 250,000 from RMB 100,000 except for computer software, where it is increased to 
RMB 200,000 from RMB 50,000.
 The authorities have indicated that China amended the 
three above-mentioned administrative regulations mainly because the previous level of fines was low and their deterrent force on infringing and violating acts was weak or insufficient. 
3.234.  In accordance with the Interim Measures for Payment of Remuneration by Radio and 
Television Stations for Broadcasting Sound Recordings, implemented on 1 January 2010, 
broadcasting organizations must pay remuneration to the copyright owners for broadcasting musical works. The methods and amounts of such payment are subject to agreement with the 
copyright collective administration organization. Following implementation of the Measures, 
broadcasting organizations began to pay remuneration to copyright collective administration organizations in China. At the beginning of 2010,  the Music Copyright Society of China concluded 
a remuneration agreement with CCTV, the first such remuneration payment by a Chinese 
broadcasting organization for broadcasting music. At the beginning of 2012, the Music Copyright Society of China concluded a collective agreement on remuneration payment for using music with 32 television stations members of the Television Copyright Commission of the China Radio and 
Television Association. 
3.235.  The authorities have indicated that Chinese copyright collective administration 
organizations have been studying appropriate me thods for collecting and distributing royalties 
under collective administration. They have been absorbing new members to enhance their 
representative role and hence have become more influential. In 2011, Chinese copyright collective administration organizations received copyright royalties for a total of RMB 201.2 million and 
distributed copyright royalties of RMB 173.86 milli on. The Music Copyright Society of China is 
China's largest (by number of members) copyright collective administration organization, with 6,523 members and an annual income of RMB 88. 89 million. The China Audio-Video Copyright 
Association received the highest annual income in 2011, reaching RMB 110 million. The China 
Written Works Copyright Society enjoyed the mo st rapid growth in the number of members. 
In 2011, the Society accepted 1,715 new members, its total members reached 6,084, and the number of works authorized by its members amounted to 28,928. 
3.3.5.4  Other IPRs 
3.3.5.4.1  Layout-designs of integrated circuits 
3.236.  Layout-designs of integrated circuits are protected under the Regulations on the Protection 
of Layout-Designs of Integrated Circuits (promulgated by Decree No. 300 of the State Council in 
2001, and effective as of 1 October 2001) and und er the Rules for Implementing the Regulations 
on the Protection of Layout-Designs of Integrat ed Circuits (promulgated by Decree No. 11 of the 
Commissioner of the State Intellectual Property Office of the People's Republic of China on 
18 September 2001, and effective as of 1 October 2001). WT/TPR/S/300 • China 
 
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  3.237.  SIPO is responsible for the registration and granting of layout-designs of integrated 
circuits. Where any application for registration of layout-designs contains confidential information, the copy or drawing of the layer of layout-designs containing such confidential information can be submitted in a separate confidential file bag. 
3.238.  Layout-designs are protected for 10 years from the date of filing or the date of 
first commercial exploitation anywhere in the world, whichever expires earlier; the maximum duration of protection is 15 years from the date of creation. In cases of non-exploitation, and in 
special circumstances, or to remedy unfair competition practices, a "non-voluntary" licence may be 
issued to exploit a layout-design. No "non-voluntary" licences have been issued to date. 
3.3.5.4.2  New plant varieties 3.239.  New plant varieties are regulated by the Regulations on the Protection of New Varieties 
of Plants, 1997, amended most recently in March 2013. Plant varieties are protected for 20 years 
from the date of authorization in the case of vines, forest trees, and ornamental trees, and for 15 years for other plants. Applications for the protection of new plant varieties are made to the 
Ministry of Agriculture or the State Forestry Administration. Compulsory licences may be granted 
by the approval and examination authority for expl oitation of the protected plant variety where it 
is in the national or public interest. No such compulsory licences have been granted. 
3.240.  On 31 January 2013, the State Council promulgated the Decision on Amending the 
Regulations on the Protection of New Varieties of Plants. The amended Regulations took effect 
from 1 March 2013. The Decision mainly amended the rules on penalties for infringement, which 
were intensified to crack down on IPR infringement. 
3.3.5.4.3  Undisclosed information and trade secrets 
3.241.  There is no specific legislation or regulations on undisclosed information and trade secrets, 
with the exception of the Regulations for the Implementation of the Law on Drug Control. 
Undisclosed information and trade secrets are also covered under a number of other laws and 
regulations, including the Criminal Law, the Anti-Unfair Competition Law, the Labour Law, and regulations issued in accordance with these laws. 
3.242.  The People's Courts exercise their judicial power to try civil and criminal cases related to 
undisclosed information and the protection of tr ade secrets. The Public Security Agency is 
responsible for criminal investigations in cases that seriously infringe undisclosed information or trade secrets, while SAIC is in charge of the admi nistrative enforcement of the law in this regard. 
3.243.  Under the Regulations for the Implementation  of the Law on Drug Control, China protects 
test data and other data that are self-obtained, undisclosed, and submitted by manufacturers or sellers to obtain an approval for manufacturing or selling a drug that contains new chemical 
entities. It is forbidden to use such undisclosed test data and other data for improper commercial 
purposes. The protection term for the manufacturer or seller is of six years from the approval for manufacturing or selling the drug. During this period, the authorities are mandated to deny 
approval 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 . 
3.244.  In the course of the meetings held under  the auspices of the U.S.-China Strategic and 
Economic Dialogue (S&ED) and the U.S.-China Joint Commission on Commerce and Trade (JCCT), 
China committed to prioritize trade secrets in its IPR protection policies and to increase enforcement in this area. 
3.3.5.5  Enforcement 
3.3.5.5.1  Overview 3.245.  Enforcement of IPRs in China is done at the administrative and judicial levels and 
corresponding measures are adopted. Administrative actions are taken by the responsible 
governmental agencies. Judicial actions are taken through the public security authorities, WT/TPR/S/300 • China 
 
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  procuratorial organs, and the courts. The authorit ies underscored that, during the period under 
review, China had paid particular attention to strengthening its enforcement system. All public security authorities above the prefecture and city levels in China have established 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, including the industrial and commercial authorities, Customs and quality inspection authorities. This arrangement will facilitate 
the timely reporting of IPR infringements and prom pt early intervention by the public security 
authorities. 
3.246.  Table 3.22 gives an overview of enforcem ent actions taken by the authorities during the 
period under review. IPR cases dealt with by  the courts doubled between 2010 and 2012 and 
declined somewhat in 2013. 
Table 3.22 Intellectual property enforcement, 2010-13 
 2010  2011  2012 2013  
Cases dealt with by ad ministrative actions 
Patents     
Number of disputes (patent infringement disputes) 1,095 1,286 2,232 .. 
Copyright    .. 
Number of disputes/administrative penalties 10,590 12,023 .. .. 
Imposition of fines (RMB million) 22,143 15,029 .. .. 
Cases transferred to judicial agencies 538 501 .. .. 
Businesses inspected 963,842 1,303,855 .. .. 
Illegal operation units banned 61,995 15,002 .. .. 
Underground dens detected 727 753 .. .. 
Trademarks    .. 
Number of disputes 56,034 79,021 66,227 .. 
Trademark infringements 48,548 68,836 59,085 .. 
Other  7,486 10,185 7,142 .. 
Cases transferred to judicial agencies 175 421 576 .. 
Value of fines (RMB million) 460.01 595.52 525.07 .. 
Cases handled by Customs at the border (shipments)  21,073 18,188 15,690 .. 
Value (RMB million) 44.7 233 60.6 .. 
Cases dealt with by courts 54,779 75,103 110,232 99,842 
First instance civil IPR cases accepted 42,931 59,882 87,419 88,583 
First instance civil IPR cases closed 41,718 58,201 83,850 88,286 
Patent cases accepted 5,785 7,819 9,680 9,195 
Patent cases closed 5,298 7,413 9,173 9,174 
Trademark cases accepted 8,460 12,991 19,815 23,272 
Trademark cases closed 8,153 12,627 19,079 22,358 
Copyright cases accepted 24,719 35,185 53,848 51,351 
Copyright cases closed 24,138 34,300 51,794 52,254 
Technical contract cases accepted 670 557 746 949 
Technical contract cases closed 694 573 710 908 
Unfair competition cases accepted 1,131 1,137 1,123 1,302 
Unfair competition cases closed 1,176 1,133 1,092 1,195 
Other IPR cases accepted 2,166 2,193 2,207 2,514 
Other IPR cases closed 2,259 2,155 2,002 2,397 
Second instance civil IPR cases accepted 6,530 7,644 9,588 11,964 
Second instance civil IPR cases closed 6,488 7,662 9,301 11,556 
.. Not available. 
Source: Information provided by the Chinese authorities. 
3.247.  The authorities stated in the course of the present Review that China has intensified its 
strategy of combating IPR infringement. Since Nove mber 2010, the Ministry of Public Security has 
led the public security authorities around China to launch nationwide centralized campaigns such 
as "Drawing Sword" against various criminal offences related to counterfeit and shoddy goods, 
during which 72,000 cases were resolved, 121,000 suspects were arrested and goods with a total value of RMB 40 billion were involved. The authorities indicated that such campaigns are 
unprecedented in China in terms of their ex tent and scope of coverage. In 2013, the WT/TPR/S/300 • China 
 
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  Ministry of Public Security launched another "Campaign to Crack Down on Counterfeiting", directed 
mainly at crimes damaging public health and safety, crimes committed at their sources, gang crimes and crimes adopting new means. The auth orities noted that the campaign eradicated a 
large number of crimes featuring cross-region chains of manufacturing and selling counterfeit and 
shoddy commodities. 
3.248.  The authorities have attached great importance to publicity work and educational efforts to 
raise public awareness and help combat IPR-related criminal activities. The aim is to guide the 
public to take the initiative to prevent and resist IPR infringement crimes. The authorities pointed 
out that they consider that the media exposure of specific cases serves to warn against hazardous manufacturing methods, the sale of counterfeit an d shoddy commodities, and alerts the public to 
the damage caused by such criminal activities. Since 2011, the Ministry of Public Security has 
successively organized three nationwide special campaigns to destroy the criminal chains and 
networks that engage in the manufacturing an d sale of counterfeit and shoddy commodities. 
3.3.5.5.2  Administra tive enforcement  
3.249.  During the period under review, China continued to step up efforts for the enforcement of 
laws against the infringement of IPRs. The State Council established the Leading Group of the 
National Campaign Against IPR Infringement and Counterfeit Products ，as well as its standing 
Working Group with its office in MOFCOM. The Leading Group launched special campaigns to crack 
down on IPR infringement as well as on the manufacturing and sale of counterfeit and shoddy commodities all around China. Accordingly, all regions and member units have since established 
corresponding leading groups against IPR infr ingement and counterfeit products. In 2013, 
the Leading Group was reformed; it currently has 27 member units, and is led by Vice Premier Wang Yang. 
3.3.5.5.2.1  Patent admi nistrative enforcement  
3.250.  In 2011, SIPO promulgated a series of policy documents including the Decisions on 
Strengthening the Patent Administrative Law Enforcement Work, the Guidelines on Patent 
Administrative Law Enforcement and the Papers and Forms on Patent Administrative Law 
Enforcement, and implemented the amended Measures  on Patent Administrative Law Enforcement, 
to improve the procedures of patent administrative law enforcement. In 2012, SIPO launched special nationwide campaigns to enforce IPR laws in key areas such as circulation and production.  
3.3.5.5.2.2  Copyright admi nistrative law enforcement 
3.251.  The authorities have noted that China continued to enhance copyright administrative law 
enforcement during the period under review. To this end, China launched the special 
"Online Sword Campaign" to crack down on online  infringement under which, in 2012, 282 online 
infringement cases were reported for investigation, 210 of which were closed through administrative procedures and 72 of which were transferred to the judicial authority for the 
investigation of criminal responsibility. Also in 2012, 93 sets of servers and relevant equipment 
were confiscated and 129 websites were closed down. China has also strengthened the voluntary 
monitoring of video websites. In 2012, the NCAC conducted voluntary monitoring of 19 main video websites. 
3.252.  In January 2012, the Inter-Ministeria l Joint Group for Promoting the Application 
of Copyrighted Software was established. It is composed of 15 government departments, and has its offices in the NCAC. China has also launched a campaign advocating the application 
of copyrighted software. Under the campaign, pr ovincial governments undertook inspection and 
rectification work. The authorities have noted that there has been progress in the use of copyrighted software on the part of state-owned enterprises directly under the 
Central Government, policy banks, commercial banks, postal savings banks and large insurance 
companies, headquarters of press and publicatio n enterprise groups and key sectors including 
coal, tourism and hotels.  WT/TPR/S/300 • China 
 
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  3.3.5.5.2.3  Trademark admi nistrative law enforcement 
3.253.  The Chinese Government has formulated and promulgated a series of documents such as 
the Opinions on Further Combating IPR Infringe ment and Manufacturing and Selling Counterfeit 
and Shoddy Commodities, accelerated the process to amend the Trademark Law, further improved 
trademark registration procedures and enhanced the protection of the exclusive right to use 
trademarks. 
3.3.5.5.3  Judicial enforcement 
3.254.  During the period under review, China reinforced the judicial infrastructure needed for 
court enforcement of IPRs. The number of grassroot s People's Courts having jurisdiction over 
ordinary IPR cases was increased. In 2011, 18 grassr oots People's Courts having jurisdiction over 
first instance civil cases involving ordinary IPR violations were added, taking their total number to 
119; in 2012, 22 more grassroots People's Courts were added and the total number was increased 
to 141. Similarly, in 2011, six more Intermediate People's Courts having jurisdiction over first instance civil cases involving patent disputes were added and the total number was increased to 
82; another intermediate People's Court was added in 2012, increasing the number to 83. 
One more pilot grassroots People's Court having jurisdiction over cases involving utility model and industrial-design disputes was added in 2011 and the total number of such People's Courts was 
increased to three. In 2011-12, three more courts having jurisdiction over civil cases involving 
well-known trademark disputes were added and the total number of such courts was increased to 44. 
3.255.  The authorities have noted that China has unified the application of laws for IPR 
enforcement in a manner that connects administrative law enforcement with criminal law 
enforcement. In 2011, the Supreme People's Cour t, the Supreme People's Procuratorate and the 
Ministry of Public Security jointly promulgated the Opinions on Several Issues Concerning Laws 
Applicable to Criminal Cases Related to Intellectual Property Rights, further defining the criteria for 
applying penalties. In 2012, the Supreme People's Court promulgated a judicial interpretation of the Rules on Several Issues Concerning Laws applicable to Hearing of Civil Disputes Caused by 
Monopoly Acts and the Rules on Several Issues Concerning Laws Applicable to Trial of Civil 
Disputes caused by Infringement of the Online Information Dissemination Right, identifying the standards to apply laws. SAIC, the Procuratorate and the Ministry of Public Security jointly 
formulated the Opinions on Several Issues concer ning Strengthening Coordination and Cooperation 
between Administrative Law Enforcement by In dustry and Commerce Authorities and Criminal  
Justice, with a view to settling the problems arising from coordination and cooperation between administrative law enforcement by industry and commerce authorities and criminal justice. 
3.256.  China has also made an effort to make judicial issues public and ensure that all aspects 
of the trial of IPR-related cases are transpar ent. To this end, the "China IPR Judgments 
& Decisions" website ( http://ipr.chinacourt.org ) has been upgraded so that IPR judgments and 
decisions nationwide can be uploaded to the Internet in a timely manner. By end 2012, 
46,161 effective IPR judgments had been published on the website, up from 40,175 at end-2011. 
3.257.  The authorities have noted that China attaches great importance to the demonstrative and 
guiding role of typical cases in trials dealing with IPR-related issues. The Annual Reports of the 
Supreme People's Court on Intellectual Property Rights Cases of 2011 and 2012 selected 34 typical 
cases from the IPR-related cases closed in 2011 an d 2012, and provided a summary of the issues 
related to the application of laws. The authorities consider that these issues have universal guiding 
significance and can be used to guide the trial of IPR-related cases by all courts nationwide. The 
Supreme People's Court also published 10 signific ant cases and 50 typical cases heard by Chinese 
courts related to judicial protection of IPR in 2011 and 2012. 
3.3.5.5.3.1  Customs law enforcement 
3.258.  Customs is in charge of IPR enforcement at the border, in accordance with the revised 
Regulations on Customs Protection of Intellectual Property, which entered into effect on 1 April 2010. WT/TPR/S/300 • China 
 
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  3.259.  IPR holders may record their rights with Customs for border protection. Such recorded 
rights are valid for ten years, renewable. Despite this, right-holders may apply to Customs for detention of suspected infringing goods, whether or not they have recorded their rights with 
Customs. In accordance with the Regulations on  Customs Protection of Intellectual Property, 
counterfeit goods will be seized by Customs, and Customs shall destroy the goods if the infringing 
features cannot be removed. However, except in extraordinary circumstances ，the imported goods 
bearing counterfeit trademarks shall not be allowed to enter into the channel of commerce simply 
by removing the trademark logo from the goods.  
3.260.  Between October 2010 and June 2011, all customs offices in China launched special 
campaigns to crack down on IPR-infringing activities and the manufacture and sale of counterfeit 
goods. According to the authorities, 12,000 batches of goods suspected of IPR infringement were 
intercepted. In 2012, Chinese customs offices launched a Special Rectification Campaign Against Counterfeit Drugs, Foods and Auto Parts, which consisted of strengthening risk analysis and 
monitoring of key and sensitive commodities and directing enforcement to more specific targets. 
A total of 410 cases related to counterfeit food, drugs and auto parts were tracked down in 2012. 
3.261.  The authorities have noted that, during the period under review, Customs has further 
strengthened its cooperation with the Public Security Authority, to more effectively connect 
Customs' administrative law enforcement with criminal law enforcement. Customs has also cooperated with other law enforcement authorities: for example, in June 2012, the General Administration of Customs and SAIC concluded a Memorandum of Cooperation Between 
the General Administration of Customs and the State Administration of Industry and Commerce. 
3.3.5.5.3.2  International cooperation 3.262.  The authorities note that China advocates international cooperation in IPR enforcement. 
China participates in discussions and negotiations in multilateral and plurilateral frameworks such 
as WIPO, the WTO, and APEC. China is also engaged in bilateral cooperation on IPR protection with the United States, the EU, (and some EU members individually, such as France, the 
Czech Republic, Germany, Romania and the United Kingdom), Australia, Japan, Republic of Korea, 
Thailand, and the Russian Federation, in regard to trademarks, copyright, border measures, and 
other related issues. The authorities have indicated that, in recent years, China has expanded its cooperation with international organizations in relation to IPR law enforcement and strengthened 
customs monitoring cooperation with the United States, the EU and the Russian Federation, among 
others. In 2011, China and the United States signed the Letter of Acknowledgement on Revising the Memorandum of Cooperation between the Cust oms of China and the U.S. on Strengthening 
Intellectual Property  Rights (IPR) Law Enforcement. Also in 2011, China's General Administration 
of Customs convened the Meeting on Cooperation and Coordination in Strengthening Intellectual 
Property Rights Protection between Guangdong Province, Hong Kong, China and Macao, China 
Customs Authorities with the competent authorities of Hong Kong, China and Macao, China. 
3.263.  In 2011 and 2012, China held three Sino-European expert group meetings and one 
symposium on customs IPR protection. In 2012, a meeting of the Sino-Russian Working Group on 
Intellectual Property Cooperation was held. In January 2013, the first meeting of the Sino-U.S. 
Working Group on Intellectual Property Cooper ation and the Sino-U.S. Symposium on Customs 
Intellectual Property Rights Law Enforcement was held. WT/TPR/S/300 • China 
 
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  4  TRADE POLICIES BY SECTOR 
4.1  Agriculture 4.1.1  Features and market developments 4.1.  China has evolved into an industrialized economy in which the contribution of agriculture 
to GDP has remained more or less stable, despite falling somewhat, from 10.7% in 2008 to 10.1% 
in 2012 and 10% in 2013 (Table 4.1). At the same time, employment in the sector has continued to drop from 39.6% in 2008 to 33.6% in 2012 (latest year for which data were available).
1 
Labour productivity in agriculture continues to be lower than in the rest of the economy; this can 
be attributed to the small scale of production, structure imbalance and a lack of skilled farmers 
and modernization. China's main agricultural products are grains, cotton, oilseeds and sugar, which require large scale operations and mechanization to achieve higher productivity, two factors 
that China lacks at present, although mechanization has been on the increase.
2 Garden crops, 
which are more labour intensive, represent only a small percentage of China's agricultural production. 
Table 4.1 Principal indicators for agri culture, forestry and fishing, 2008-13  
  2008  2009  2010  2011  2012 2013  
Contribution to current GDP (%) 10.7 10.3 10.1 10.0 10.1 10.0 
Real growth rate (%) 5.4 4.2 4.3 4.3 4.5 4.0 
Employment (percentage of total 
employment) 39.6 38.1 36.7 34.8 33.6 .. 
Share of gross output value (%)       
Farming 50.1 53.0 55.3 53.5 54.4 55.1 
Forestry 3.8 3.8 3.9 4.0 4.0 4.2 
Animal husbandry 36.8 33.5 31.2 32.9 31.5 30.4 
Fisheries 9.3 9.7 9.6 9.6 10.1 10.3 
Exports       
Agricultural productsa (US$ 
million) 29,999.6 28,847.9 35,619.7 43,071.6 44,364.8 .. 
Top five exports by HS 4-
digit (% of total):       
2008 Fruit, nuts, 
 preserved, nes 6.0 5.4 5.2 5.5 5.9 .. 
1602  Other 
 prepared/preserved  meat products 3.3 3.6 3.7 4.0 4.4 .. 
2309 Animal feed 3.1 3.0 3.5 3.5 4.1 .. 
0703 Onions 2.7 4.4 7.3 5.8 3.9 .. 
0712 Dried vegetables 3.1 3.6 5.3 6.1 3.5 .. 
Agricultural productsa 
(% of total exports) 2.2 2.3 2.3 2.4 2.1 .. 
Agricultural productsa  
(growth rate, %) 10.0 -3.8 23.5 20.9 3.0 .. 
Fisheries (US$ million) 10,221.5 10,356.1 13,302.9 17,106.9 18,269.9 .. 
Fisheries (% of total exports) 0.9 0.9 0.8 0.9 0.7  
Fisheries (growth rate, %) 9.2 1.3 28.5 28.6 6.8 .. 
Imports       
Agricultural productsa (US$ 
million) 53,563.0 47,568.1 66,273.5 87,216.5 105,215.6 .. 
Top five imports by HS 4-
digit (% of total):       
1201 Soya beans 40.7 39.5 37.9 34.1 33.2 .. 
5201 Cotton 6.5 4.4 8.5 10.9 11.2 .. 
1511 Palm oil 9.7 8.9 7.1 7.6 6.2 .. 
5101 Wool 3.1 3.1 2.9 3.3 2.5 .. 
                                               
1 Data include employment in forestry and fishing. 
2 According to the authorities, the mechanization ra te for planting and harvesting main grains in 2012 
reached 57%. WT/TPR/S/300 • China 
 
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    2008  2009  2010  2011  2012 2013  
4101 Raw hides and skins 2.6 2.4 2.3 2.3 2.2 .. 
Agricultural productsa 
(% of total imports) 5.8 5.0 4.7 4.7 4.7 .. 
Agricultural productsa 
(growth rate, %) 45.5 -11.2 39.3 31.6 20.6 .. 
Fisheries (US$ million) 5,200.3 5,040.2 6,237.9 7,636.9 7,480.3 .. 
Fisheries (% of total imports) 0.3 0.3 0.4 0.8 0.7 .. 
Fisheries (growth rate, %) 13.5 -3.1 23.8 22.4 -2.1 .. 
.. Not available. 
a WTO definition. Source: UNSD, Comtrade database and National  Statistics of China online information. 
4.2.  In 2013, crops accounted for 55% of total agricultural production, up from 50.8% in 2008, 
while livestock and fisheries accounted for 30.4% (32.2% in 2008) and 10.3% (10.4% in 2008), respectively. The increase in the production of crops,  especially of grains, is consistent with China's 
policies, as the 12
th Five-Year Plan calls for an increase in grain production to attain food security 
and build stocks to ensure price stability. According to the authorities, total grain output has increased for 10 consecutive years and average yields have increased since 2004.
3 
In 2013,  average yields of grain products (rice, wheat, and maize) continued to increase. 
4.1.2  Policy objectives and administration 4.1.2.1  Policy formulation, institutional and legal framework 
4.3.   There have been no major changes in agri cultural policies since the previous Trade Policy 
Review in 2012. The broader policy goal of "building a new socialist countryside" was stated in the 11
th Five-Year Plan (2006-2010), and the 12th Five-Year Plan (2011-2015) reaffirms the policies 
set out in the former Plan. The 12th Five-Year Plan aims at accelerating modernization in the 
sector, making food security a primary goal and improving farmer's well-being. This was to be 
attained through, inter alia , increasing support to the sector and by providing more benefits 
to farmers. In this regard, the authorities noted that in 2011 and 2012, the Central Government 
allocated RMB 1 trillion and RMB 1.2 trillion for "agriculture, rural areas and water", with a 
year-on-year increase in outlays of 22.4% and 18%, respectively. In 2013, the Central Government's expenditure on agriculture, forestry and water continued to increase, albeit 
slightly by 0.2% from 2012. During 2011 and 2013, direct subsidies granted to farmers were 
increased and so was the minimum purchase price of wheat and rice. In order to reduce poverty, as mandated by the strategy promulgate d by the State Council at the end of 2011
4, Central 
Government direct transfers to poverty-stricken rural areas to benefit impoverished farmers were 
increased in 2011 and 2012 by 40.4% and 31.9%, respectively.5 
4.4.  More specific objectives of the 12th Five-Year Plan include: 
  Increasing production capacity for grains (i.e. rice, wheat, maize and soya beans) 
by 50 million tonnes by 2020.6 In 2013, total grain production reached 602 million tonnes. 
The measures adopted to attain this target incl uded the introduction of high-yield varieties, 
the use of technology, the building of infrastructure and training of farmers. 
  Increasing farm mechanization as well as the development and adoption of biotechnology. 
To attain this goal China increased the subsidy for purchases of agricultural machinery.7 
                                               
3 Information provided by the Chinese authorities. 
4 Outline for Poverty Reduction for China's Rural Areas (2011-2020) and New Progress 
in Development-oriented Poverty Reductio n Programme for Rural China. Viewed at: 
http://www.gov.cn/english/official/2011-11/16/content_1994729.htm . 
5 Information provided by the Chinese authorities. 
6 This is according to The Plan on Increasing Nation al Grain Productivity by 100 Billion Jins (2009-2020). 
7 During 2010-2013, the annual subsidy to purchase agricultural machinery and tools was increased 
to RMB 15.5 billion, 17.5 billion, 21.5 billion and 21.75 billion, respectively (Information provided by the Chinese authorities). WT/TPR/S/300 • China 
 
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    Increase in minimum purchase prices for key grains (i.e. rice and wheat) and improvement 
of the system of temporary purchase and st orage for bulk agricultural commodities. 
4.5.  The Central Government, through the State Council assisted by different ministries and 
departments, is responsible for establishing the general agricultural policy framework and the rules 
for its implementation. Agricultural policy implemen tation remains the responsibility of the Ministry 
of Agriculture at both the central and the local level; however, other institutions such as the Ministry of Commerce (MOFCOM)  play an important role in the implementation of specific 
policies (Table 4.2). The NDRC, in charge of overall development, also plays a central role in 
agricultural policy formulation. 
4.6.  Local governments are mainly responsible for implementing the agricultural policies 
stipulated by the Central Government. The funds required to implement the programmes 
at the local level come in general from the central budget and are allocated by the 
Central Government (e.g. agricultur al "four subsidies" (see below)
8, minimum purchase price and 
temporary purchase and storage polices, large-county award policies and farmers' training 
projects) and local governments are usually only required to finance the administration costs. 
Local governments also finance the construction of infrastructure and utilities, costs of preventing 
epidemics, and the agricultural insurance premium subsidy. 
Table 4.2 Institutions in charge of agricultural policies, 2013-14 
Institution Function Changes since 2012 
NDRC Responsible for overall development strategy 
and regarding agriculture in charge of: formulating policies to manage national reserves (imports and exports), allocating certain TRQs, and setting minimum purchase prices. No change 
Ministry 
of Agriculture Responsible for agriculture 
and rural development. 
Drafts medium- and long-term plans regarding 
the sector's development. 
Drafts agricultural laws and regulations. No change 
State Administration 
of Grain Responsible for the control of grain circulation. No change 
Ministry of Finance Designs financial policies to support agricultural 
development. 
Manages the funds used to support agricultural 
development and issues guidelines on how to use 
these funds. No change 
MOFCOM Responsible for controlling international trade 
of agricultural products. No change 
The China Food and 
Drug Administration Evaluates food safety risks and formulates food 
safety standards. Created to merge the functions 
of other institutio ns. As a result 
of its creation the State Food 
and Drug Administration and 
the Office of Food Safety 
Commission of the State Council 
ceased to operate. 
Agricultural 
Development Bank 
of China (ADBC) Provide financial services to agricultural 
enterprises and projects. No change 
Source: Information provided by the Chinese authorities. 
4.7.  Some of the main laws regulating the sector (Box 4.1) have been amended in recent years. 
4.8.  The land tenure system has not changed substantially since the enactment of China's 
Property Law of 2007. However, recently China has implemented several measures to provide 
more stability to farmers' contract rights.9 Farmland is owned by village collectives, which extend 
contracts to individual households, currently for "at least 30 years". Within the period of the contract, individual farmers are guaranteed  the rights to occupy, use and profit from the 
                                               
8 The authorities note that this subsidy is financ ed jointly by the central and local governments. 
9 Document No. 1 of the Central Go vernment of 2013, and Document No. 1 of th e Central Government 
of 2014. WT/TPR/S/300 • China 
 
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  tenure of the land. Prior to 2014 farmers did not have the right to sell or use the contracted land 
as collateral; however, as of 2014 contracted land can be sold and used as collateral.10 Farmers 
can transfer the user's right to another farmer, but cannot convert it into construction land for industrial or business development. 
Box 4.1 Agricultural legislation 
Laws 
1. Agriculture Law (issued on 2 July 1993, amended on 28 December 2002 and 28 December 2012). 
2. Agricultural Technology Promotion Law (iss ued on 2 July 1993 and amended on 31 August 2012). 
3. Seed Law (issued on 8 July 2000 and amended on 28 August 2004 and 29 June 2013). 
4. Law on Animal Epidemic Prevention (issued on  3 July 1997 and amended on  30 August 2007 and 29 June 
2013). 
5. Grassland Law (issued on 18 June 1985, amended on 28 December 2002 and 29 June 2013). 
6. Fisheries Law (issued on 20 January 1986, amended on 31 October 2000, 28 August 2004 
and 28 December 2013). 
7. Agriculture Machinery Promotion Law (issued on 25 June 2004). 
8. Livestock Law (issued on 29 December 2005). 
9. Produce Safety Law (issued on 29 April 2006). 
10. Farmers Specialized Cooperatives Law (issued on 31 October 2006). 
11. Rural land contract disputes mediation and Arbitration Law (issued on 27 June 2009). 
Regulations  
1. Agricultural insurance regulations (issued on 12 November 2012). 
2. Larger scale livestock pollution control regulations (issued on 11 November 2013). 
Opinions  
1. Opinions on promoting the development of modern  agriculture for rural deve lopment (No. 1 of 2013). 
2. Opinions on deepening rural reform and speeding up the modernization of agriculture (No. 1 of 2014). 
Source: Information provided by the Chinese authorities. 
4.1.3  Policy instruments 
4.9.  There have been no major changes in the policy instruments that China uses to attain 
its policy goals. China continues to use a broad range of measures including tariff protection, import and export licensing, state trading for certain products, export and import quotas, 
export tax rebates, minimum support prices for basic crops, support to promote the use of inputs, 
direct payments, and buffer stock for food security . More recently the People's Bank of China has 
guided financial institutions to enhance financial support to the agriculture sector. 
4.1.3.1  Border measures 
4.1.3.1.1  Measures affecting imports 4.10.  Agricultural products (WTO definition) are, with the exception of some animal products
11, 
all subject to ad valorem  applied rates. The average applied MFN rate in 2013 was 9.4%. 
Tariff protection continues to be higher for agricultural products (WTO definition), at 14.8%, 
showing a slight decline from 2009 (15.5%) and 2011 (15.1%) (Table 3.1). Sugars and confectionary (30.9%), cereals and preparations (23.4%), cotton (22.0%), and beverages, spirits 
and tobacco (21.8%) benefit from higher than aver age protection. Oil seeds, fats, and oils, China's 
major import products, have the lowest ta riff protection at 10.5% (Table A3.1).
12 
4.11.  China bound 100% of its tariff, at ad valorem  rates. Bound rates for agricultural products 
(WTO definition) range from 0 to 65% and are higher than bound rates for non-agricultural 
                                               
10 This Decision was adopted at the Third Plenary Session of the 18th Central Committee 
of the Communist Party of China and is set forth in  Document No. 1 of the Central Government of 2014. 
11 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). 
12 Average applied MFN rates for 2013 were not compared with those of 2011 because in general there 
have been no major changes in China's applied MFN ta riff rates. However, due to changes in nomenclature 
tariff lines in different Chapters of the HS have been  separated or merged, which could, when averages are 
calculated, lead to an increase or a decrease, even  if the applied rates have in fact not changed. WT/TPR/S/300 • China 
 
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  products which range from 0 to 50%. Bound tariff rates vary considerable by sector; 
with the higher bound rates applying to cereals and preparations, and beverages and spirits (Table A3.1). 
4.12.  Tariff rate quotas (TRQs) apply 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 fertilizer s), 51 (wool, carded or combed), and 52 (cotton). 
In-quota rates have not changed since 2011 and the out-of-quota rates are in most cases equal to 
the bound rates. All in-quota rates are ad valorem , with the exception of the out-of-quota rate that 
applies to a "certain portion" of imports of cotto n. Out-of-quota imports of cotton may be subject 
to a sliding duty based on a formula, which depe nds upon the price of cotton, but cannot exceed 
40% (i.e. the bound rate for cotton). Under this system, China fixes a threshold price (RMB 14/kg 
in 2012 and 2013). If the price of imports is equal to  or higher than the threshold price a specific 
duty of RMB 0.57/kg is levied on imports; if the actual import price is lower than the threshold price an ad valorem  rate based on the formula will be applied.
13 
4.13.  According to the authoritie s, the tariff quota allocation process has not changed since 2012. 
The NDRC allocates TRQs for grains and cotton, and MOFCOM allocates the rest. Some products subject to TRQs (i.e. grain, cotton, sugar, and chemical fertilizers) are also subject to state 
trading. In these cases, part of the quota is allo cated to state-trading enterprises and another part 
to private enterprises. The most recent information available for tariff quota utilization dates from 2011 when with the exception of sugar, wool and cotton, the utilization of the other TRQs was low. Historically, the fill rate of TRQs has been low (Table 4.3). 
Table 4.3 Tariff rate quotas and their utilization, 2011-12 
(Tonnes, unless otherwise indicated) 
Products Out-of-
quota 
rates 
(%) In-
quota 
rates 
(%) Tariff 
quota 
quantity In-quota 
imports 
(2011) In-quota 
imports 
(2012) 
Wheat (7 lines)   9,636,000 1,258,000 3,701,000 
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 65 10    
Corn (5 lines)   7,200,000 1,754,000 5,208,000 
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)   5,320,000 598,000 2,369,000 
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 
Fertilizers (3 lines) 50 4a .. .. .. 
Wool (9 lines)   287,000 287,000 287,000 
Wool, not carded or combed (6 lines) 38 1    
Wool, carded or combed (3 lines) 38 3    
Cotton (2 lines) 40 1 894,000 894,000 894,000 
.. Not available. 
a Interim duty applied at 1%. Note: Number of tariff lines in brackets refers to the 2012 tariff schedule. Source: WTO documents G/AG/N/CHN/25 and G/AG/N/CHN /26, and Customs Tariff of Import and Export 
of the People's Republic of China. 
4.14.  The VAT on agricultural domestic and imported goods is 13%. However, agricultural goods 
produced and sold directly by small-scale farmers remain exempt from the VAT. Units that 
                                               
13 The variable rate is calculated according to a fo rmula, which remains unclea r to the Secretariat. The 
formula may be viewed at: Ministry of Finance (2013), Customs Tariff of Import and Export of the People's Republic of China 2013 (The Legal Texts), Beijing, p. 518. WT/TPR/S/300 • China 
 
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  purchase tobacco in leaf (including dried and fl ue-cured tobacco leaf) are liable to tobacco leaf 
tax.14 The tobacco leaf tax is 20% of the purchase price. According to the authorities, China 
does not levy the tobacco leaf tax on imported tobacco leafs. 
4.15.  There are no agricultural products subject to non-automatic import licensing. Automatic 
import licences apply to 76 agricultural products (WTO definition) of a total of 442 products 
subject to automatic import licensing (17.2% of  the total). The main products concerned are: 
meat, dairy products, oil seeds, fats and oils, and tobacco. 
4.1.3.1.2  Measures affecting exports 
4.16.  In general, exports of agricultural goods are not subject to export taxes. There are only 
four tariff lines under HS 0506 which are subject to an export tax of 40% (Table 3.9).15 Exporters 
of agricultural products are entitled to VAT reba te at the time of exportation. However, there 
is no information regarding the rebate rates that apply to the different products, which can vary 
according to the product, nor regarding the products that are exempt from the rebate.16 
The authorities indicated that the rate of rebate is in general 5% with some exceptions. 
For instance, the rate of rebate for highly processed chicken and duck meats is 13% and there is 
no rebate for products from endangered animals or plants. 
4.17.  Agricultural exports subject to state trading are cotton, rice, maize, wheat and tobacco.17 
These products are still subject to export quotas and cannot be traded by private companies. 
Export quotas on these products are determined according to domestic supply and demand, they are managed by the NDRC and are alloca ted to state-trading enterprises according 
to performance. 
4.18.  Destination-specific quotas remain in place for exports of live cattle, live swine, 
and live chicken to the Special Administrative Regions of Hong Kong, China and Macao, China. These quotas are distributed through an export licensing system. 
4.19.  China implements an export licensing system  to administer goods subject to export quotas 
and other restrictions. There are three types of export licensing: export quota licences, export 
quota bidding licences and export licences (Table 4.4). The different types of licences apply 
according to the restrictions applicable to the goods in question. Export licensing applies 
to 71 tariff lines at the HS 8-digit level covering agricultural products (WTO definition); these account for 15.8% of total goods subject to export licences. The main products concerned are: live animals, meat, and cereals and other preparations thereof. The agricultural products 
subject to export quota licences are wheat, co rn, rice, wheat flour, corn flour and cotton.
18 
Table 4.4 Agricultural products subject to export quotas and licensing in 2013 
Products Type of licence Comment 
Goods subject to quota and licensing 
Rice, maize, wheat and cotton Export quota 
licensing The quota is allocated 
by NDRC 
Live cattle, swine and fowl (for export to Hong Kong, 
China and Macao, China), maize flour, and rice flour and wheat flour 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); beef, pork and chicken meat Export licence A licence is granted if the 
exporter has the relevant export contract 
Source: Information provided by the Chinese authorities. 
                                               
14 The Interim Regulations on Leaf Tobacco Tax of 28 April 2006. 
15 These items are: ossein and bones treated with acid ; powder and waste of bone s, of bovine animals, 
sheep or goats; other powder and waste of bones; and bones and horn -cores, unworked, defatted, simply 
prepared, not cut. 
16 Rebate rates for some products are available online. Viewed at: 
http://hd.chinatax.gov.cn/fagui/action/InitChukou.do . 
17 Exports of tea were subject to state trading until 2005. 
18 Ministry of Commerce, Announcement No. 96 of 2013. Viewed at: 
http://www.mofcom.gov.cn/article/b/c/201312/20131200446709.shtml . WT/TPR/S/300 • China 
 
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  4.20.  General export prohibitions continue to apply to eight agricultural products (i.e. bezoar, 
black moss, bones, ivory, musk, some plants used to make perfumes (2 HS tariff lines), and some 
plants for medicinal use. In addition, some 22 agricultural products (22 lines at the HS 8-digit level), including products of animal origin, beverages (e.g. mineral water and alcoholic spirits), 
raw fur skins, and silk-worm cocoons if processed "under processing trade", may not be exported. 
4.21.  China has notified to the WTO that it did not maintain or introduce any export subsidies 
on agricultural products during 2011 or 2012.
19 According to the authorities, thereafter China 
has not applied export subsidies. 
4.1.3.2  Internal measures 4.1.3.2.1  Support measures 4.22.  China has made no notifications to the WTO Agriculture Committee regarding the support 
given to the agriculture sector during the period under review. China's most recent notification 
regarding domestic support covers the period 2005-2008.
20 Several support programmes covering 
the period 2005 to 2008 were notified by China under the SCM Agreement (Table 4.5).21 
Table 4.5 Support to agriculture and forestry 
Description  Starting 
year Form 
of subsidy Legal background 
Preferential tax policies for 
enterprises engaged in projects 
of preliminary processing 
of agricultural, forestry, animal, and fisheries products 2008 Preferential 
tax treatment 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 
Fund for specialized economic 
cooperatives of farmers 2003 Financial 
appropriations MOF Circular Cai Nong No. 87 of 2004 
Fund for subsidizing the training of the rural migrant labour force 2004 Financial 
appropriations MOF Circular Cai Nong No. 18 of 2005 
Fund for popularization 
of agricultural technologies 1999 Financial 
appropriations MOF Circular Cai Nong No. 81 of 2004 
Fund for subsidizing 
transformation of agricultural technology 2001 Financial 
appropriations MOST Circular Guo Ke Ban Cai Zi No. 417 
of 2001 
Fund for promoting superior 
strains and seeds 2002 Financial 
appropriations MOF Circulars Cai Nong No. 16 and No. 17 
of 2004 
Subsidy for purchasing agricultural machinery and tools 1999 Financial 
appropriations MOF Circular Cai Nong No. 11 of 2005 
Comprehensive subsidies 
for agricultural inputs 2006 Financial 
appropriations General Office of the State Council Circular 
Guo Ban Fa No. 16 of 2006 
Direct subsidy to farmers 2004 Financial 
appropriations State Council Circular Guo Fa No. 17 
of 2004 
Fund for agricultural 
comprehensive development 1988 Financial 
appropriations MOF Decree No. 60 
Fund for interest discount on loans for the purpose of agricultural water-saving irrigation 1997 Financial 
appropriations MOF Circular Cai Nong No. 279 of 2005 
Subsidy for national key 
construction projects on water 
and soil conservation 1983 Financial 
appropriations MOF Circular Cai Nong Zi No. 402 of 1987 
Subsidy for prevention 
and control of pests and disease in forestry 1980 Financial 
appropriations MOF Circular Cai Nong No. 44 of 2005 
Subsidy for grass seed sowing 
by airplanes 1984 Financial 
appropriations MOF Circular Cai Nong No. 139 of 2004 
Preferential tax policies 
for enterprises of grain and soil reserves 1999 Preferential 
tax treatment MOF Circular Cai Shui Zi No. 198 of 1999 
                                               
19 WTO documents G/AG/N/CHN/24, 17 December 2012 and G/AG/N/CHN/27, 7 March 2014. 
20 WTO document G/AG/N/CHN/21, 13 October 2011. 
21 WTO document G/SCM/N/155/CHN and /SCM/N/186/CHN, 21 October 2011. WT/TPR/S/300 • China 
 
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  Description  Starting 
year Form 
of subsidy Legal background 
Preferential tax policies for: 
(a) relief grain an d disaster relief 
grain, 
(b) compensation grain for 
returning cultivated land to 
forests and to grassland, and  
(c) grain rations for migrants 
from the reservoir areas.  
1999 
 
2001 
 
 
1999 Preferential 
tax treatment MOF Circular Cai Shui Zi No. 198 of 1999; 
SAT Circular Guo Shui Fa No. 131 of 2001 
Source: WTO document G/SCM/N/155/CHN and /SCM/N/186/CHN, 21 October 2011. 
4.23.  Budgetary transfers to producers have cont inued to increase in China. Direct payments 
to farmers producing grains (rice, wheat and corn),  introduced in 2004, are still in place. They are 
paid at a flat rate per unit of land planted. The payment is provided to the person who holds the 
contract rights to the land, not to the person who cultivates the land. In general, the rate is of 
RMB 10-15 per mu (i.e. 0.06 ha) but it may vary according to locality. The programme is administered at the provincial level, hence the amount of the subsidies could vary; the specific 
arrangements and procedures for granting the su bsidies are formulated by the local provincial 
governments. Central Government funding for direct payments has increased each year up to 
2007, but then stabilized at RMB 15.1 billion (US$2.3 billion) per year in 2007-2012.
22 
4.24.  Subsidies have also been available to purchase inputs, improved crop strains, agricultural 
machinery, and tools.23 
4.25.  The centrally funded comprehensive subsidy on agricultural inputs was introduced in 2006 
and by 2008 had become one of the most impo rtant single budgetary transfers supporting 
agriculture. Budgetary transfers for this programme more than doubled in 2008 and have 
increased each year since to reach RMB 107.8 billion by 2012.24 The objective of this support 
programme is to compensate grain producers for any increase in the price of agricultural inputs such as fertilizer and diesel fuels; however, it is implemented as a payment per unit of land
25, it is 
not linked to the cost of production. According to the authorities the provincial governments 
formulate the specifics of the subsidy according to local conditions; there is no general rule regarding its application. 
4.26.  The New Variety Extension Payment scheme, which was introduced in 2002 to improve 
the quality of seeds and livestock, has been extend ed from its original coverage of wheat, rice, 
maize, and soya beans, to include: rapeseed and cotton in 2007; potatoes in 2009; and highland 
barley in 2010 and, on a trial basis, peanuts. Livestock covered by the scheme include pigs, dairy 
cows, beef cattle, sheep and yak. In addition to increasing the product coverage, the scheme has been extended to cover larger areas, with al l land sown with rice covered from 2008, and all 
land sown with wheat, maize, and cotton cove red from 2009, and substantial expansion of the 
eligible area for soya beans in 2008 and 2009. As a result, the cost of this programme tripled 
from RMB 6.7 billion in 2007 to RMB 20.4 billion in 2010 and then stabilized at RMB 22.0 billion in both 2011 and 2012. Initially, funds were distributed to designated seed companies which sold 
seeds at discounted prices. This system proved inefficient, and so the mechanism to implement 
the programme was changed in 2009; at present it  varies according to commodity. For improved 
hybrid seeds of rice, maize and rapeseed, the Government gives cash directly to farmers 
on the basis of the cultivated area, and for improved seeds of wheat, soya beans and cotton, 
the provinces decide if the subsidy is grante d as a direct payment or through a reduction 
in the price of seeds. In 2011 and 2012, the unit seed subsidy remained unchanged at RMB 10 per mu (i.e. 0.06 ha) for wheat, soya beans, maize, early indica rice, rapeseed, 
                                               
22 OECD (2013), Agricultural Policy Monitoring and Evaluation 2013, Paris. 
23 In "recent" years, Central Government funding for superior strains and seeds was on annual basis 
about RMB 20 billion annually. During 2010-2013, the Ce ntral Government annual subsidy for purchasing 
agricultural machinery and tools was RMB 15.5 billion, RMB 17.5 billion, RMB 21.5 billion and RMB 21.75 billion respectively; and annual comprehensive subsidies for agri cultural inputs were respectively RMB 71.6 billion, 
RMB 83.5 billion, RMB 107.8 billion and RMB 107.8 billion (information provided by the Chinese authorities). 
24 OECD (2013), Agricultural Policy Monitoring and Evaluation 2013, Paris. 
25 WTO (2012), Trade Policy Review - China, Geneva. WT/TPR/S/300 • China 
 
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  potatoes and highland barley; and at RMB 15 per mu (i.e. 0.06 ha) for cotton, middle indica rice, 
late indica rice and Japonica rice.26 
4.27.  Purchases of agricultural machines and t ools listed in the Catalogue of State Supported 
and Promoted Products or in the Catalogue of Provincially Supported and Promoted Products 
are subsidized at rates between 20% and 30%  of the sale price. Qualified farmers 
(including herdsmen and fishermen), farm workers, and rural production entities engaged in agriculture can apply for a subsidy when purchasing these listed goods. The subsidy may vary 
from province to province but not within a province. In 2009, the scheme was extended to cover 
the whole country. In principle, in 2012 the subsidy covered 12 categories of machines and 46 subcategories at the maximum level of RMB 50,000 per single item. However, this may vary, as the local authorities are responsible for running the scheme and deciding what machines 
are covered pursuant to the Catalogue issued by the central government 
(i.e. Ministry of Agriculture and Ministry of Financ e) and the level of the subsidy. The Catalogue is 
updated every 3 years and in 2013 it included 12 types of machines.
27 The cost of this subsidy, 
as the cost of other programmes, has continued to increase from RMB 2 billion in 2007 and 
RMB 15.5 billion in 2010 to RMB 21.75 billion in 2013.28 
4.1.3.2.2  Price controls and marketing 
4.28.  The price of some commodities remains controlled and others are still considered 
"important reserve materials" and originally subject to price controls. The agricultural products considered key reserve materials are grain, cotton, edible vegetable oil (materials), sugar, silkworm cocoons, and chemical fertilizers. Howe ver, according to the authorities, their price 
has been liberalized and the Catalogue of Reserve Materials is being revised. 
4.29.  China has gradually liberalized most agricultural markets, but the Government still 
intervenes when deemed necessary. Some controls remain in place regarding the marketing 
of grains and tobacco. According to the authorities, at present the Government only intervenes 
in the tobacco market. 
4.30.  A minimum procurement price scheme remains in place for rice and wheat in major 
producing areas. Minimum prices for grains (rice and wheat) are set every year by the National 
Development and Reform Commission (NDRC) in consultation with the Ministry of Agriculture and other governmental institutions. During 2007-12, the minimum prices for rice and wheat were increased each year on the basis of the growing co sts of agricultural production. If the "market" 
price goes below the established support level, the Government, through the state-owned 
company Sinograin, purchases grain. The Govern ment holds auctions as required to ensure 
a stable supply of grains and to prevent the price from increasing. The minimum procurement 
price scheme for grains is linked with China's grain reserves as the minimum prices system 
is in place supposedly to ensure a stable supply of grains. 
4.31.  Grain reserves for corn, rice, soya beans and wheat are maintained by central and local 
authorities to ensure food security. According to  the authorities, the purchase of the reserves 
is carried out by appointed enterprises at "mar ket" prices. The reserves are managed according 
to the Regulations on National Grain Reserves. However, to manage reserves at the local level, the government at the provincial level will formulate its own administrative regulations based 
on the national regulation. According to the author ities, these reserves were not used during 2012 
and 2013. 
4.32.  China's tobacco industry is still subject to a state monopoly, with strict controls over 
production, marketing, and trade of tobacco products. The purchase price of tobacco 
is set at the central level. On a yearly basis the NDRC and the State Tobacco Monopoly Bureau jointly formulate the purchase price of tobacco leaf based on production costs, demand 
and supply, and other factors.
29 
                                               
26 OECD (2013), Agricultural Policy Monitoring and Evaluation 2013, Paris. 
27 Information provided by the Chinese authorities. 
28 WTO (2012), Trade Policy Review - China, Geneva; and OECD (2013), Agricultural Policy Monitoring 
and Evaluation 2013, Paris. 
29 Information provided by the authorities. WT/TPR/S/300 • China 
 
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  4.1.3.2.2.1  Other measures 
4.33.  In 2007 China introduced the subsidized agricultural insurance scheme. Under this 
programme, insurance premiums are subsidized by the central and local governments so that farmers pay only a balance of 20-30% of the premium. This programme has grown in 
importance in recent years and entails growing budgetary transfers. 
4.34.  In addition to the support granted to rura l households to give them access to insurance, 
in recent years the People's Bank of China (PBC), through its "window guidance", has guided 
financial institutions to increase financial support to key sectors of the economy such 
as agriculture, rural areas, and farmers. The PBC has been taking additional measures to increase access to financial services in rural areas by promoting innovation of rural financial products and services. As a result, agriculture- related loans grew steadily in 2012. By the end 
of year, the outstanding balance of agriculture-related loans with financial institutions stood 
at RMB 17.62 trillion, accounting for 26.2% of the total loans, up 20.7% year on year. New agriculture-related loans in 2012 amounted to RMB 3 trillion, accounting for 33% of total 
new loans.
30 
4.35.  The PBC, to further promote financial penetration in the rural areas and to encourage small 
rural financial institutions to lend more to agriculture, rural areas and farmers, has put in place 
several incentives. At present, the PBC applies differentiated reserve requirement ratios for major 
agro-linked financial institutions; it has also increased agriculture-related central bank lending, and guided the provision of agro-linked loans. For instance, the reserve requirement ratios for Rural Commercial Banks, Rural Cooperative Banks and Rural Credit Cooperatives (RCC) 
are respectively 2 percentage points, 5.5 percentage points and 6 percentage points lower than 
that for large commercial banks. The PBC also set benchmarks on new deposits granted for county-level legal person financial institutions. If these benchmarks are reached, the 
institutions can benefit from lower reserve requir ement ratios and if the benchmarks are exceeded, 
the fiscal and taxation authorities implement policies to provide incremental rewards, give subsidies for key programmes, and restructure and write off non-performing agro-linked loans.
31 
In 2012, 43.3% of the county-level legal person financial institutions met the requirements for 
extending a certain proportion of new deposits to local loans and thus were awarded a total of RMB 30 billion of central bank lending.
32 
4.36.  The Agricultural Development Bank of China (ADBC), established as a policy bank to support 
the agricultural sector and related industries, has played a key role in this effort to expand 
financial services to the rural areas. As a result, instruments used by the ADBC to provide funds and the range of projects financed by the ADBC have expanded. For instance, at present the ADBC 
grants credit to finance the whole agro-industrial chain including harvesting, storage, processing 
and distribution of grain, cotton and oil, as well as for the construction of agricultural and rural infrastructure focusing on irrigation projects an d new rural areas. According to the PBC, branches 
of the ADBC at the county level that issue large agro-linked loans benefit from a reserve 
requirement ratio two percentage points lower than the ADBC as a whole.
33 
                                               
30 People's Bank of China (2013), Annual Report 2012. Viewed at: 
http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948
_.html . 
31 People's Bank of China (2013), Annual Report 2012, p. 39. Viewed at: 
http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948
_.html . 
32 For more details on these progra mmes please refer to: People's Ba nk of China (2013), Annual Report 
2012. Viewed at: http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948
_.html . 
33 People's Bank of China (2013), Annual Report 2012, p.38. Viewed at: 
http://www.pbc.gov.cn/publish/english/4133/2013/20130829090453489508948/20130829090453489508948
_.html . WT/TPR/S/300 • China 
 
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  4.2  Services 
4.2.1  Telecommunication services 4.37.  The trade regime of telecommunication services in China has been described in detail 
in previous TPR reports
34 and has remained largely unchanged. The most notable developments 
that have occurred since the last Report in 2012 are indicated below. 
4.2.1.1  Market overview  4.38.  The main economic characteristics of the telecommunication services sector are described 
in Box 4.2 below. 
Box 4.2 Telecom services sector main economic indicators 
Penetration rates (2012) 
Total telephone subscribers (per 100 inhab.): 103.1% (1,390,308 million) 
Mobile phone subscribers (% tot. tel. subscribers): 82.5% (1,112,155 million) 
Internet users (per 100 inhab.): 42.1% (564 million) 
Broadband Internet subscribers (per 100 inhab.): 13% (175,183 million) 
Revenues (2012) 
Total revenues of the sector: RMB 1,075.3 billion (+8.9%). 
Revenues of telecommunication business other than  voice telephony: RMB 525.1 billion (+15.6% to be 
compared with +17.8% the previous year) 
Revenues of data and Internet business: RMB 265.6 billion (+29%) 
Main actors 
Number of companies providing value-added telecom services (2012): 20,815 
 
Names and market shares of the leading companies for fixed-telecom services (2012): 
China Telecom: 60.6%; China Mobile: 6.3%; China Unicom: 33.1% 
 
Names and market shares of the leading companies for mobile telephone services (2011): 
China Telecom: 13.3%; China Mobile: 65.1%; China Unicom: 21.6% 
 
Names and market shares of broadband Inte rnet services (2011): China Telecom: 57.6%; 
China Mobile: 6%; China Unicom: 36.4% 
 
Foreign-ownership participation in telecom companies: 
  in the basic telecom sector, the proportions of foreign ownership participation by June 2013 
in China Telecom, China Mobile and China Un icom are respectively 19.53%, 25.92% and 23.72%; 
  in the value-added telecom sector, 34 joint ventures have so far obtained telecom service licences, 
among which the proportion of foreign owne rship participation ranges from 20% to 50%. 
Foreign investments are mainly from Hong Kong, Ch ina; the United States; Europe (Ireland and 
Finland), etc. 
 
State ownership: the proportions of state-ownership participation by June 2013 in China Telecom, China 
Mobile and China Unicom were respectively 70.89 %, 74.08% and 63.6% 
Source: Information provided by the Chinese authorities. 
4.2.1.2  Regulatory regime  
4.39.  The main regulatory changes that have occurred for the telecommunications subsector since 
the last TPR Report concern fixed interconnection regimes, number portability, spectrum 
management, licensing, universal services and preferential policies. 
4.2.1.2.1  Fixed interconnection regime 4.40.  Currently, China's Internet backbone netw orks achieve interconnection through backbone 
direct contact points and Internet exchange centres (IXP/NAP) located in Beijing, Shanghai and 
                                               
34 Notably in 2012 (WT/TPR/S/264/Rev.1, paragraphs 165 to 204, pages 137 to 145), 
2010 (WT/TPR/S/230/Rev.1, paragraphs 83 to 98, pages 88 to 91) and 2008 (WT/TPR/S/199/Rev.1, 
paragraphs 218 to 232, pages 161 to 166). 
 WT/TPR/S/300 • China 
 
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  Guangzhou. The Ministry of Industry and Inform ation Technology (MIIT) plans to optimize the 
structure of Internet interconnection and to create more Internet backbone direct contact points. Seven Internet backbone direct contact points are to be added in 2014. Meanwhile, the interconnection bandwidth will be expanded. By the end of 2013, the total bandwidth 
of Internet interconnection across the country was 1,652 Gbps, and it is expected to reach 
2,152 Gbps by further expanding by 500 Gbps in 2014. 
4.2.1.2.2  Number portability 
4.41.  Since November 2010, the MIIT has been carrying out successful mobile number portability 
tests in Tianjin municipality and Hainan prov ince on 83,000 users. The scope of the test 
will be enlarged in 2014. 
4.2.1.2.3  Spectrum management 
4.42.  In 2013, the MIIT promulgated plans for a point-to-point wireless access system for fixed 
business in the 40-50 GHz frequency bands and for a bandwidth wireless access system for mobile business in the 40-50 GHz frequency bands.
 The detailed criteria used for the allocation of radio 
frequencies are determined by the Regulations of the People's Republic of China on the Radio 
Frequency Allocation, the latest version being promulgated on 28 November 2013 as Decree No. 26 of the Ministry of Industry and Info rmation Technology, effective 1 February 2014. 
These Regulations also cover R&D, production, import, sale, testing and the set-up of radio 
equipment in the People's Republic of China (excluding Hong Kong, China; Macao, China; and Chinese Taipei). LTE/4G licences have been allocated in 2014 following these criteria to three national mobile operators: China Telecom, China Mobile and Unicom. 
4.2.1.2.4  Licensing 
4.43.  By end 2012, four enterprises (China Te lecom, China Mobile, China Unicom, and CITIC) 
had obtained licences for basic telecommunication business and 26,979 companies had obtained 
licences for value-added telecommunication business. 
4.2.1.2.5  Universal service 4.44.  In order to narrow the digital gap between urban and rural areas and gradually develop 
information communication in rural areas of China, since 2004 the telecom ordinance has required 
three basic telecommunication companies (China Telecom Corporation Limited, China Mobile Communications Corporation and China United Telecommunications Co. Ltd.) to provide universal telecom services to remote rural areas and vill ages. By the end of 2013, telephony and broadband 
covered all the towns in China's rural areas, telephony was available in most administrative 
villages, and broadband in 91% of administrative villages. The next step is to expand broadband 
to 95% of administrative villages by the end of  2015. The State provides the three operators 
with a total annual subsidy of US$50 million to offset part of the costs incurred. 
4.2.1.2.6  Preferential policies 4.45.  Since the conclusion of the Closer Econ omic Partnership Agreements (CEPA9 and CEPA10) 
with Hong Kong, China and Macao, China and the Economic Co-operation Framework Agreement 
(ECFA) with Chinese Taipei, China has adopted the following additional preferential policies in the telecommunications sector: 
  in accordance with CEPA, with respect to the offshore call centre business, 
Hong Kong, China/Macao, China service providers are permitted to set up wholly 
foreign-owned companies or joint ventures in Dongguan and Zhuhai, Guangdong Province, in which the capital stock held by Hong Kong, China/Macao, China investors is not subject 
to restrictions; with respect to the online data and transaction processing business (limited 
to operational e-commerce websites), Hong Kong, China/Macao, China service providers are permitted to set up joint ventures in Guangdong, in which the proportion of capital 
stock held by Hong Kong, China/Macao, China investors shall not exceed 55%; 
  in accordance with ECFA (signed but not entered into force) and in addition to the sectors 
already opened up for WTO, China has opened up the internet access service business WT/TPR/S/300 • China 
 
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  and the call centre business to Chinese Taipei investors, provided that the proportion of 
stock held by Chinese Taipei investors does not exceed 50%. In addition, with respect to the online data and transaction processing business (only limited to operational e-commerce websites), Chinese Taipei service providers may set up wholly foreign-owned 
companies or joint-ventures in Fuzhou, Fujian, in which the stock held by Chinese Taipei 
investors is not subject to restrictions. 
4.2.1.2.7  Experimental liberalization in the China (Shanghai) Pilot Free Trade Zone 
4.46.  All but one (Internet data centre) of the eight value-added telecommunication services 
categories have been liberalized as of March 2014 in the context of the China (Shanghai) Pilot Free 
Trade Zone (CSPFTZ), under the following conditions: 
  for domestic multiplayer telecommunications services, storage and forwarding business, 
call centres, Internet access services and the appstores segment of information services, 
wholly foreign-owned companies are now allowed;  
  for online data processing and transaction processing, the maximum foreign participation 
is raised to 55% except for the e-commerce segment (previously closed to foreign 
investment) where it is raised to 50%; IP and VPN business as well as information services other than appstores are also subject to a threshold of foreign ownership raised to 50%; 
  companies established in the CSPFTZ will be allowed to provide their services from the FTZ 
to the entire territory of China except for Internet access services whose geographical 
scope will be limited to the CSPFTZ.  
4.47.  This additional liberalization has to be  compared to China's WTO commitments where only 
three of the eight value-added telecommunications services (electronic data interchange, storage 
and forwarding and information services) were bound and at the level of maximum foreign 
ownership of 30%. 
4.2.2  Financial services 4.48.  The financial services regime in China has been described in detail in previous Trade Policy 
Review (TPR) reports, notably in 2012, 2010 and 2008
35 and has remained largely unchanged. The 
most notable developments that have occurred since the last report in 2012 are indicated below. 
4.2.2.1  Market overview 4.49.  The main economic characteristics of the financial services sector are described in Box 4.3 
and Table 4.6 below. 
Box 4.3 Financial services: statistical overview 
General 
Share of financial services in the GDP: 2009: 5.2%; 2012: 5.5% (provisional calculation) 
Employment in banks and financial institutions; 2009: 2.844 million; 2012: 3.362 million 
Employment in the securities and futures sector: 2013: 0.288 million 
Employment in the insurance sector: 2010: 4.468 million, April 2013: 3.538 million 
Financial services exports: 2010: US$1.331 billion; 2011: US$849 billion; 2013 (first three quarters): 
US$1.942 billion 
Financial services imports: 2010: US$1.387 billion; 2011: US$747 billion; 2013 (first three quarters): 
US$2.236 billion 
Significance of the financial services arm of China Post: 39,000 business outlets, with 28,000 outlets 
at or below county level and 9,000 outlets scattered in the urban communities all over the country, 
total value of assets: RMB 4.9 trillion 
Banking services 
Number of banks 
- in 2010, there were 3,769 banking financial institutions, of which 40 were foreign-legal person institutions; 
                                               
35 See WT/TPR/S/264/Rev.1, paragraphs 96 to 164, pages 121 to 137, WT/TPR/S/230/Rev.1, 
paragraphs 47 to 82, pages 79 to 87 and WT/TPR/S/199/Rev.1, paragraphs 125 to 217, pages 136 to 161. WT/TPR/S/300 • China 
 
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  90 were branches of foreign banks; 
- in 2012, there were 3,747 banking financial institutions, of which 42 were foreign-legal person institutions; 
95 were branches of foreign banks. 
Presence of foreign banking institutions: By the end of April 2013, banks from 15 countries and regions 
had set up 38 wholly foreign-funded banks (with 271 branches), 2 joint-venture banks (with 3 branches) 
and 1 wholly foreign-funded financial company in China; 72 foreign banks from 25 countries and regions 
had set up 93 branches in China, and 163 banks from 45 countries and regions had set up 
188 representative offices in China. By the end of 2012, 32 Chinese banks had brought in 42 foreign 
strategic investors. 
Share of assets by types of bank: (total assets of the banking system excluding non-bank financial 
institutions, i.e. consumer finance, 2012) 
- five major state-owned nationwide banks: 55.2%; joint-stock commercial banks: 23.5%; city commercial 
banks: 12.35%; rural commercial banks and village ba nks: 6.85% of total assets. Foreign-invested banks 
i.e. wholly-owned foreign banks, joint- venture banks and foreign branches: 2.13%. 
Concentration/share of the various types of banks in the total balance sheet for banks 
- top 5 banks: 55.2% of total assets (2012); 
- total assets (including non-bank financial institut ions): RMB 133,622 trillion, of which foreign banks: 
2.380 trillion RMB (i.e. 1.78%). 
Lending activities: RMB 67.2875 trillion (2012) of which domestic loans: RMB 65.921 trillion (98%), 
foreign loans: RMB 13.665 trillion (2%). 
Source: Information provided by the Chinese authorities and WTO-UNCTAD-ITC Trade in Services 
Statistics Database. 
Table 4.6 Number of legal entities and assets held by various types of banks operating in 
China, 2012 
Type of institutions Number of 
legal entities Total value of assets 
(100 million RMB)  
Total number of policy banks and the State Development Bank 3 112,174 
Large-scale commercial banks 5 600,401 
Joint-stock commercial banks 12 235,271 
City commercial banks 144 123,469 
Rural commercial banks 337 62,751 
Rural cooperation banks 147 12,835 
Rural credit cooperatives 1,927 79,535 
Non-banking financial institutions 262 32,299 
Foreign-funded financial institutions 42 23,804 
New-type rural financial and postal saving banks 864 53,511 
Asset management companies 4 .. 
Total 3,747 1,336,050 
.. Not available. 
Source: Information provided by the Chinese authorities. 
4.50.  Box 4.4 describes the main indicators of the insurance, pension fund and securities sectors 
in China. WT/TPR/S/300 • China 
 
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  Box 4.4 Insurance, pension funds an d securities: statistical overview  
Insurance  
Number of insurance companies 
2010: 115 companies of which life: 60 (of which foreign insurance companies: 25); non-life: 56 (of which 
foreign insurance companies: 20 ); reinsurance: 9; captives: 0 
Up to April 2013: 140 companies of which life: 68 (of which 26 foreign insurance companies) 
Non-life: 63 (of which 21 foreign insurance companies); reinsurance: 9; captives: 0 
Premiums (2012, RMB billion): property insurance: 533.092; life insurance: 890.805; health insurance: 
86.276; life accident insurance: 38.618 
Share of worldwide life premiums (2012): 5% 
Share of worldwide non-life premiums (2012): 5% 
Insurance density (premiums per capita in US$, 2012): 178.9 (of which life: 102.9, non-life: 76) 
Insurance penetration premiums (as % of GDP in 2012): 2.96% (of which life: 1.7%, non-life: 1.26%)  
Distribution of total balance sheet by subsector: life insurance: 84.17%; non-life: 13.45%; 
reinsurance: 2.38% 
Concentration: (cumulative market share of the top 5 companies): life insurance: 70.16%; non-life: 
74.69%; reinsurance: not available 
Pension funds 
Number of firms providing commercial pension fund services (2012): 68  
Total assets: 2010: RMB 121.5 billion; 2012: RMB 131.9 billion 
Stock exchange and securities 
Capitalization of the companies listed 
2010: RMB 26.542 trillion i.e. 66.11% of GDP 
2012: RMB 23.035 trillion i.e. 44.36% of GDP 
 
Value of exchange market bonds under cust ody (billion RMB): 2010: 687.83; 2012: 1,245.563 
Source: Information provided by the Chinese authorities and 2012 Sigma 400 Swiss Re report. 
4.2.2.2  Regulatory regime 
4.2.2.2.1  Recent regulatory changes in the banking sector 
4.51.  The main regulatory changes that have o ccurred in the banking subsector since the last TPR 
Report concern prudential regulations, anti-money-laundering measures, bank deposits insurance 
scheme, liberalization of interest rates and support and promotion policies. 
4.2.2.2.1.1  Prudential regulations and me asures taken to tackle systemic risks 
4.52.  Numerous measures have been taken in recent years to address the question 
of non-performing loans. Back in 1999, following the Asian financial crisis, and in order to mitigate 
financial risks, improve the competitiveness of commercial banks and promote reforms of state-owned enterprises, the Ministry of Finance implemented a decision of the State Council, establishing four asset management companie s (Huarong, Great Wall, Orient and Cinda). 
These companies are responsible for accepting, ma naging and disposing non-performing assets of 
state-owned banks and have the status of policy  banks. They initially acted as defeasance 
structures (policy stripping) by acquiring RMB 1. 4 trillion of non-performing loans from policy 
banks and state-owned commercial banks. Between 2004 and 2008, they acquired an additional 
RMB 800 billion of non-performing loans from the state-owned commercial banks. 
4.53.  Between 2009 and 2010, these asset-management companies acquired a small number 
of non-performing loans from the five major commercial banks.  Two of these asset management 
companies, the China Huarong Asset Manage ment Co. Ltd, and the China Cinda Asset 
Management Co. Ltd, established modern corporate governance structures in accordance with applicable requirements under the Company Law, with the latter being listed on the Hong Kong 
Exchanges and Clearing on 12 December 2013 and having introduced four strategic investors, 
namely Standard Chartered, UBS, Social Insurance Fund and CITIC Capital in its shareholding. Both companies are state-holding joint-stock companies. The China Orient Asset Management 
Corp. and the China Great Wall Asset Management Corp., although financial enterprises solely 
funded by the State at present, have also begun their commercial transformation. WT/TPR/S/300 • China 
 
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  4.54.  As from 2009 and 2010, the four companies changed policy, became commercially-oriented, 
thus ceasing to act as defeasance structures, and started buying only limited numbers of non-performing loans in small batches from commercial banks. According to the authorities, 
the four companies have so far basically completed the disposal of the policy-based 
non-performing loans through a variety of measur es such as debt restructuring and transfer, 
debt-to-equity swap, lawsuit withdrawal and secu ritization. The disposal of the non-performing 
loans of commercial banks includes cash recovery, payment for debt with in-kind assets, 
clearance of bad debts as well as debt restruct uring and transfer. Table 4.7 indicates the number 
of non-performing loans in recent years, including those held by commercial banks. 
Table 4.7 Non-performing loans, 2007-11 
 2007  2008  2009 2010 2011  
Gross non-performing loan stock (RMB billion) .. .. .. 1,240 1,050 
Of which non-performing loan stock of commercial banks 1,200 560.3 497.3 433.6 427.6 
.. Not available. 
Source: China Banking Regulatory Commission Annual Report . 
4.55.  The China Banking Regulatory Commission is in the process of identifying and defining 
regulatory policies for shadow banking, and pays close attention to its development, problems and 
risks. It considers that it is at an early stage of development, relatively small in scale and with controllable risks, but nonetheless still needs to be further regulated and standardized in order to 
effectively manage the risks. The measures under consideration in that respect include: first, 
further defining the division of responsibilities and clarifying the supervision and management responsibilities of all types of entities; second, defining supervision and segregation measures so as to promote standardized development of all types of institutions and businesses; third, 
investigating the potential risks; and fourth, educating public opinion and consumers. 
4.56.  With regard to the prevention of potential real estate bubbles, a regional housing credit 
policy adjustment mechanism was established in 2011 to take into account the local characteristics 
of the real estate market. The local branches of  the People's Bank of China may further raise 
the proportion of initial payment and the interest  rate of loans for the second house purchased, 
based on price control objectives and policy requirements for newly-established residential houses 
in cities where newly-built commercial residential housing prices rise too quickly. Since 2013, 
local branches of the People's Bank of China have raised the minimum proportion of initial payment from 60 to 70% of the loan for a second residential house in 13 cities such as Beijing, Shanghai, Guangzhou and Shenzhen and implemen ted differentiated residential housing loan 
policies in their respective jurisdictions based on the real estate control objectives and policies 
stipulated by local governments. 
4.57.  According to the Chinese authorities, in 2012 the growth rates of the loan balance in the 
real estate sector nationwide recovered slightly, the loan quality remained steady, 
and the non-performing ratios of both developmen t loans and individual loans were lower than the 
overall non-performing loan rate of commercial banks. However, from a dynamic perspective, 
default risks for real estate loans must still be assessed in the future since real estate loans are a 
form of medium- and long-term credit, most of the development loans are as yet not due and the 
accumulated repayment period for about 70% of th e individual loans has not yet reached 4 years. 
4.58.  Local governments' financing platforms are defined by the "Circular of the State Council on 
the Issues Concerning Strengthened Management of the Financing Platform by the Local 
Government" (Guo Fa [2010] No. 19), as an economic  entity with an independent legal personality 
which is established by the local government and its departments and organs, by means of 
budgetary allocation or asset injection, such as land and stock ownership and assuming the role of 
financing for the government investment project. 
4.59.  The China Banking Regulatory Commission (CBRC) actively monitors and controls those 
platforms by implementing a policy based on four pr inciples: control of the total amount, classified 
management, differentiated treatment and gradual dissolution. It focuses its actions on controlling overall quantity, optimizing structure, insula ting risks and identifying responsibilities, 
and promoting the disposal of loans by financing platforms. WT/TPR/S/300 • China 
 
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  4.60.  Regarding recent measures taken to ensure compliance with the Basel Committee's Core 
Principles for effective banking supervision, the CBRC issued in June 2012 the "Measures 
on Capital Management of Commercial Banks" . Those measures entered into force 
on 1 January 2013 on a trial basis. Since then, China has basically completed the establishment 
of new standards on capital regulation which: 
  establish a unified system of capital adequacy ratio supervision by defining regulatory 
capital requirements under the four tiers prescribed by the Basel III principles (minimum 
capital requirements/reserve countercyclical capital/additional capital requirements for 
systematically important banks/additional requirements under the second pillar). In normal conditions, the capital adequacy ratios for systemically important banks and non-systemically important banks are 11.5% and 10.5%, respectively; 
  define the qualification standards for all kinds of capital instruments, and increase the loss 
absorption capacity of capital instruments; 
  expand the risk scope of capital coverage, besides credit risks and market risks, 
to incorporate operational risks into the capital supervision framework. The new standards 
also define the capital regulations for such complex trading business as asset securitization and OTC derivatives; 
  classify banks and risks for the purpose of  differential regulation: the new standards 
classify the commercial banks into four types,  based on capital adequacy ratio, and apply 
corresponding supervision measures to each type of bank to increase the effectiveness of capital constraints. Meanwhile, the new stan dards redesign the risk weightings of each 
type of asset in accordance with the principle of prudence. They adjust the risk weightings 
of small and micro-business loans and personal loans in order to induce commercial banks to issue such loans, and thus promote the real economy more effectively. The new 
standards moderately increase the inter-bank risk weighting of commercial banks; 
  implement a transition period during which the capital adequacy ratio can reach 
the relevant standards: commercial banks are required to meet the new supervision 
requirements by end 2018, and qualified bank s are encouraged to reach the standard in 
advance. In the latest list published by the Financial Stability Board (FSB) in November 2012, the Bank of China is one of  the global systemically important banks. 
 
4.61.  Regarding the measures taken to prevent money laundering, the People's Bank of China has 
established and is refining an anti-money launder ing and anti-terrorism-financing regulatory and 
monitoring system based on the 40+9 recommendat ions made by the Financial Action Task Force 
(FATF) to encourage financial institutions and specific non-financial institutions to enhance internal 
money-laundering controls. In accordance with the "International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation" published by the FATF in 2012, the 
People's Bank of China has begun to further improve the relevant rules and taken the following 
measures: 
  the Measures on Administration of Anti-Money Laundering and Anti-Terrorist Financing 
for Payment Institutions (Yin Fa [2012] No. 54), announced by the People's Bank of China 
in March 2012, establish a basic framewor k of anti-money laundering supervision 
for payment institutions and determine the anti-money laundering obligations of non-financial institutions engaging in payment business; 
  the Circular on Freezing the Personal Assets of Terrorists (Yin Fa [2012] No. 100), 
announced by the People's Bank of China in April 2012, requires that the financial institutions take anti-money laundering measures against terrorists recognized 
by the Ministry of Public Security by freez ing their assets, and strengthens the reporting 
of suspicious transactions; 
  the Circular on Strengthening the Financial Practitioners' Obligation of Anti-Money 
Laundering and Enhancing Internal Control of Relevant Anti-Money Laundering 
(Yin Fa [2012] No. 178), announced by the People's Bank of China in July 2012, requires 
that financial institutions follow the principle of comprehensive risk management. It establishes an anti-money laundering internal control system and especially ensures that 
through systematic measures, senior management and staff in business departments 
perform their duties and prevent the risk of money laundering; 
  the Circular on Strengthening Anti-Mon ey Laundering in Cross-Border Remittances  
(Yin Fa [2012] No. 199), announced by the People's Bank of China in August 2012, 
updates the anti-money-laundering regulation s applicable to the telegraphic transfer 
service by imposing a series of requirements on financial institutions in accordance with WT/TPR/S/300 • China 
 
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  Article 16 of the new FATF40 Proposal on Anti-Money Laundering and Anti-Terrorism 
Financing; 
  the Circular on Strengthening Anti-Money Laundering in Cross Border Business 
Cooperation in Financial Institutions  (Yin Fa [2012] No. 201), announced by the People's 
Bank of China in August 2012, further streng thens the anti-money laundering supervision 
requirements for cross-border business by prohibiting financial institutions from establishing agency relationships with shell financial institutions. In addition, financial 
institutions must ensure strict due diligence and risk assessment on overseas financial 
partners, take strict anti-money laundering risk management measures on overseas partners with high risks, apply the most strict anti-money laundering compliance and risk control standards at the group level and strengthen internal audit to prevent risks; 
  the Guidelines on Risk Assessment of Money Laundering and Terrorism Financing 
in Financial Institutions and Classified Management for Customers (Yin Fa [2013] No. 2), announced by the People's Bank of China in January 2013, are designed to guide financial 
institutions to conduct risk assessment on money laundering and terrorism 
financing in respect of customer, product, region and industry, and take corresponding 
anti-money-laundering measures. 
 
4.62.  In December 2013, the People's Bank of Ch ina, the CBRC, the China Securities Regulatory 
Commission (CSRC), the China Insurance Regulato ry Commission (CIRC), and the MIIT jointly 
issued the "Circular on Preventing Bitcoin Risk s" (Yin Fa [2013] No. 289), requiring bitcoin 
registration and trading organizations to pe rform such anti-money-laundering obligations 
as reporting suspected transactions with a view to preventing money-laundering and terrorist-financing risks. Meanwhile, the People 's Bank of China has required various financial 
institutions to adopt enhanced measures of customer identification and transaction monitoring with 
a view to avoiding money-laundering and terrorism-financing activities involving bitcoins. 
4.63.  In January 2014, the People's Bank of China, the Ministry of Public Se curity and the Ministry 
of State Security jointly promulgated the "Administrative Measures on Freezing Assets Involving 
Terrorism Activities" (Order [2-14] No. 1 of the Pe ople's Bank of China, the Ministry of Public 
Security and the Ministry of State Security), explicitly specifying that financial institutions and specific non-financial institutions shall abide by the obligations of "discovering 
and immediately freezing" assets involving terrori sm, managing and disposing of frozen assets 
and protecting the parties' legitimate rights and interests, as well as monitoring and inspecting. 
4.2.2.2.1.2  Bank deposits insurance scheme 
4.64.  The People's Bank of China, through its relevant departments, is preparing draft deposit 
insurance regulations and the corresponding implementation plan, so as to accelerate and promote the establishment of the deposit and insurance sy stem and prepare for the implementation system 
before its promulgation. 
4.2.2.2.1.3  Allocation of credit and liberalization of interest rates 
4.65.  Following the listing of the Agricultural Bank of China in July 2010, all five major banks 
are now incorporated. By law, all banks should base their lending decisions purely on business 
considerations. 
4.66.  On 20 July 2013, the lending interest rate was liberalized by the Circular of the People's 
Bank of China on Further Implementation of Inte rest Liberalization. The centralized quotation and 
release mechanism of the prime loan rate was formally launched on 25 October 2013 to provide 
financial institutions with a reference for their loan pricing and to lay the foundation for a more liberalized interest rate formation mechanism.
36 On 8 June 2012, the upper limit of the floating 
range of the deposit rate was extended to 110% of the benchmark interest rate, while on 6 July 
2012, the lower limit of the floating range of the loan rate was extended to 70% of the benchmark interest rate. Fees are determined by the banks themselves. 
                                               
36 For further elements on  this reform, see the Monetary Policy Implementation Report of China  at: 
http://www.pbc.gov.cn/publish/zhengcehuobisi/591/index.html . WT/TPR/S/300 • China 
 
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  4.2.2.2.1.4  Support and promotion policies 
4.67.  Several measures have been taken recently by the Chinese authorities to promote 
the development of the banking system in rural areas and smaller cities. First, the "Guiding 
Opinions on Financial Support for Economic Restructuring and Industry Transformation and 
Upgrade", issued by the State Council in July 2013 (Guo Ban Fa [2013] No. 67), encourage private 
capital to invest in commercial city banks, commercial rural banks and village banks. In addition, the CBRC has encouraged private enterprises and natural persons to participate in the property 
rights reform of rural cooperative financial institutions, the reconstruction of high-risk institutions 
and the establishment of village banks by removing geographical restrictions for private capital to 
invest in small and medium financial institutions in the countryside, and by raising the shareholding ratio of an individual person from 2% to 5%, with a special increase in the 
shareholding ratio of an individual person in  a village bank to 10%. The CBRC Suggestions 
on Encouraging and Guiding Private Capital to Enter the Domestic Banking Industry  (Yin Jian Fa 
[2012] No. 27) of May 2012, designed to impl ement "Several Viewpoints on Encouraging 
and Guiding the Investment of Private Capital for Its Healthy Development"  (Guo Ban Fa [2010] 
No. 13), allow the shareholding ratio of a single enterprise and its affiliated parties that have merged and reorganized high-risk rural credit cooperatives to exceed 20%, and reduce the 
shareholding ratio of the major originating village bank from 20% to 15%. 
4.2.2.2.2  Recent regulatory changes in the insurance sector 4.68.  The main regulatory changes that have taken place in the insurance sector since the last 
TPR Report concern market access in one subsec tor and general licensing. Regarding market 
access, on 30 March 2012 a decision of the State Council allowed foreign-funded non-life insurance 
companies to provide compulsory traffic accident liability insurance. This decision became effective on 1 May 2012. 
4.69.  Regarding licensing, in May 2013 the China Insurance Regulatory Commission formulated 
the Measures for the Classified Administration of Business Scope for Insurance Companies, setting up detailed qualification requirements and procedures. These regulations stipulate that new 
entrants, be they national or foreign, can provide only so-called "basic insurance services" subject 
to these requirements. An insurance company may apply for so-called "extended services" only after it has obtained qualification for the first three basic services, provided that each application may not increase more than one type of service and that the interval between two applications 
shall be no less than six months and subject to ad ditional qualification requirements depending on 
the type of insurance activity concerned. These re quirements and the procedures applying to them 
are described in detail in Table A4.1. 
4.2.2.2.3  Recent regulatory changes in the securities and stock exchange sectors 
4.70.  The main regulatory developments in the securities and stock exchange sector concern: 
market access for foreign-capital firms entering the Chinese market, the pilot programme on fund 
management companies establishe d by commercial banks, the regulation of asset management 
companies, the business scope of securities companies,
 trading in futures, preferential policies, 
the Qualified Foreign Institutional Investors (QFII) regime , and the RMB qualified foreign 
institutional investors (RQFII) regime. 
4.71.  First, on market access for foreign-capital firms entering the Chinese market, foreign equity 
ceilings have been raised from 33% to 49% for joint-venture securities firms and for securities investment fund management firms by an amendment to the "Measures for the Administration of 
Securities Investment Fund Management Companies", by Decree of the China Securities 
Regulatory Commission No. 84 on 20 September 2012, effective 1 November 2012,  and by the 
Decision on Amending the "Rules on Establishmen t of Foreign-invested Securities Companies" of 
11 October 2012, which came into effect on the date of promulgation. 
4.72.  Secondly, the Pilot Programme on Fund Management Companies established by commercial 
banks, which was initiated in 2005, is  currently being enlarged. So far, 10 commercial banks have 
established fund management companies. WT/TPR/S/300 • China 
 
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  4.73.  Thirdly, regarding the regulation of asset management companies, the "Measures for the 
Administration of Securities Investment F und Management Companies", which regulate 
the establishment of domestically-owned and Sino-foreign joint-venture asset management 
companies, were amended in November 2012 to cancel the eligibility requirement for shareholders 
whose shares do not exceed 5%. The change fo r shareholders whose shares are less than 5% 
is now subject to ex post  filing requirements rather than prior approval. 
4.74.  Fourth, regarding the business scope of securities companies,  on 16 November 2012, the 
CSRC amended the "Regulations on the Investment Scope for the Proprietary Trading of Securities 
Companies and Related Matters", by allowing proprietary trading provided that securities companies shall not provide financing and guarante es to subsidiaries. The new regulations extend 
the investment scope of these companies by adding new  varieties of securities investment 
products for proprietary trading: securities whic h have been listed in the National SME Share 
Transfer System for transfer; private placement bo nds which have been or may be legally listed on 
a regional equity trading market in compliance with the relevant provisions, and stocks which have 
been listed on a regional equity trading market in compliance with the relevant provisions for 
transfer. 
4.75.  In addition, regulatory policies on securities companies' investment in financial derivatives 
have been further clarified: securities companies qualified to engage in proprietary trading 
may conduct trading of financial derivatives; securities companies not qualified to engage in proprietary trading can engage in the trading of financial derivatives only for risk-hedging 
purposes. 
4.76.  Fifth, regarding trading in futures,
 the "Regulations on the Administration of Futures 
Trading" were amended on 24 October 2012 so as to allow foreign institutions conforming 
to requirements to participate in specific  futures trading. Crude oil will be the first of these trading 
areas to be opened up. The other types of tr ades that will be allowed have not yet been 
determined. The China Securities Regulatory Commission (CSRC) is presently studying and preparing the relevant measures. Qualified foreign institutional investors may participate 
in stock index futures trading, while other foreign entities or individuals may not. 
4.77.  Concerning preferential policies, in Apri l 2013 the China Securities Depository and Clearing 
Corporation amended the "Management Rules for Securities Accounts" and the "Business  Guide", 
and defined more precisely the eligibility requirements applicable to residents of 
Hong Kong, China; Macao, China; and Chinese Taipei working and living on the Chinese mainland 
for opening a class A share account (i.e. denominated in RMB and traded in China). Residents from Hong Kong, China; Macao, China; and Chinese Taipei working and living on the Chinese mainland 
can open a class A share accounts to invest in the A share market. 
4.78.  The Qualified Foreign Institutional Investors (QFII) regime has been extensively amended 
by the "Notice on the Relevant Issues Concerning the Measures for the Administration of Securities 
Investment within the Territory of China by Qualified Foreign Institutional Investors" (CSRC Notice 
[2012] No. 17) issued by the CSRC in July 2012 so as to relax the requirements on Qualified Foreign Institutional Investors (QFII) and facilitate investment operations
. The main provisions of 
that regulation are the following: 
  the trial period of asset management is reduced from five to two years; the trial period 
of establishment for insurance companies and other institutional investors is also reduced from five to two years; the trial period of experience in the securities business for 
securities firms is reduced from 30 to five years, and the trial period of experience in the 
banking business for banks is reduced to 10 years; 
  requirements relating to minimum assets held or managed during the previous accounting 
year have been reduced respectively from US$5 billion for asset management institutions, 
insurance companies and other institutional investors to US$500 million, and for securities companies and commercial from US$10 billion to US$5 billion; 
  the net asset of securities companies shall be  no less than US$500 million while the tier 1 
capital of commercial banks shall be no less than US$300 million; 
  the limitation on total class A shares held by all foreign investors in any single listed 
company and the proportion of such shares in th e total shares of listed companies is raised 
from 20% to 30%; 
  restrictions on the number of capital accounts held by QFII clients have been abolished. WT/TPR/S/300 • China 
 
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4.79.  In addition, in December 2012 the State Admi nistration of Foreign Exchange (SAFE) issued 
the amended Announcement on the Promulgation of  the Interim Provisions on Foreign Exchange 
Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors 
(SAFE Announcement [2009] No. 1, amended on the basis of SAFE Announcement [2012] No. 2), 
which relaxes the ceiling on investment quotas and the restrictions on fund remittances in and out of China. Foreign institutions are still required to obtain approval from CSRC to become QFIIs 
and apply to SAFE for investment quotas. In particular: 
  the investment quota available to institutions such as sovereign funds, central banks 
and monetary authorities may exceed an amount equivalent to US$1 billion; 
  QFIIs may transfer the principal and income on investments out of China in instalments 
after the end of the lock-up period of the in vestment principal: provided that the sum 
of the capital transferred out of China per month (including both principal and income) 
does not exceed 20% of their total domestic assets at the end of the previous year. 
The capital of Chinese open-ended funds may be  remitted into or out of China by custody 
banks for QFIIs on a weekly basis based on the purchased or redeemed net amount, provided that the capital transferred out of China per month shall not exceed 20% of total 
domestic assets at the end of the previous year. 
 4.80.  At end April 2013, 198 approved QFIIs with domestic securities accounted for a cumulative investment of US$41,882 billion. 
4.81.  Finally, regarding the RMB Qualified Foreign Institutional Investors (RQFII) regime, 
following its launch in 2011, the total RQFII quota was raised several times and stood at RMB 270 billion at end April 2013. By the same date, 34 RQFIIs had been approved with a total 
investment amounting to RMB 76.3 billion. 
4.82.  In March 2013, the CSRC, the People's Bank of China and the SAFE jointly issued 
the amended Measures for the Pilot Programme of Securities Investment in China by RMB Qualified 
Foreign Institutional Investors (CSRC, People's Bank of China and SAFE Order 90) and the CSRC 
issued the Provisions on Implementing the Me asures for the Pilot Programme of Securities 
Investment in China by RMB Qualified Foreign Institutional Investors (CSRC Announcement [2013] 
No. 14). The main provisions of these regulations are the following: 
  domestic fund management companies, securities companies, commercial banks 
and insurance companies or financial institutions with their registered office or principal seat of operations in Hong Kong, China may participate in the pilot programme for RMB 
qualified foreign institutional investors (RQFII) as of 1 March 2013; 
  participating institutions shall obtain the qualification to conduct the asset-management 
business from the Hong Kong Securities and Futures Commission (HK SFC) and must have 
preliminary experience in the asset-management business; 
  participating institutions are still required to obtain approval from the CSRC to become 
RQFIIs and apply to SAFE for investment quotas; 
  RQFIIs may invest in stocks, bonds and warrants traded and transferred in stock 
exchanges, products with fixed income traded  in inter-bank bond markets, securities 
investment capital, stock index futures and other products and may participate in new share issues, convertible bond issues, additional share issues and purchases of allotted 
shares. Since March 2013, RQFIIs may participate in stock index futures trading; 
  RQFIIs are no longer subject to investment limitations according to which "the investment 
in stocks shall not exceed 20% and the investment in products with fixed income shall 
not exceed 80%" and may determine the types of products at their own discretion; 
  the investment quota of open-ended funds sponsored and established by RQFIIs 
are subject  to balance control by the SAFE, and the cumulative net inward RMB 
remittances of open-ended funds shall not exceed the approved investment quotas. Except 
for open-ended funds, other products or inve stment quotas of RQFIIs shall be subject 
to control based on the actual amount involved, so as to ensure that the cumulative inward remittances of funds shall not exceed the investment quota approved by the SAFE. 
 
4.83.  Where RQFIIs sponsor and establish open-ended funds, the custodians may go through the formalities to transfer RMB into and out of China or purchase and transfer the foreign currency 
out of China on a daily basis for and on their behalf. With regard to products and funds other than WT/TPR/S/300 • China 
 
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  open-ended funds, the custodians may transfer RM B capital out of China or purchase and transfer 
the foreign currency out of China on a monthly basis upon the expiry of the lock-up period 
of the principal. The custodians shall distinguis h between the principal an d income of the capital 
transferred out of China and shall not re-transfer principal that has been transferred out of China 
into China and shall decrease the investment quota accordingly. Where investment income 
is transferred out of China, audit reports issued by domestic accounting firms and relevant tax receipts shall be submitted to the custodians by the end of May 2013. 
4.2.2.2.4  Experimental liberalization in the China (Shanghai) Pilot Free Trade Zone 
4.84.  The measures already implemented and planne d for additional liberalization in the context 
of the China (Shanghai) Pilot Free Trade Zone are described above in section 2.5.4. 
4.2.3  Architecture and construction services 
4.2.3.1  Architectural services 
4.85.  The architectural market in China is und oubtedly one of the largest and most promising 
in terms of future growth. Numerous foreign architectural firms are present in China, notably 
in the form of wholly foreign-owned firms. However, individual foreign architects, who are also 
present in large numbers, can only work as consultants and, in the absence of mutual recognition agreements, may not currently become Chinese-registered architects nor sit the examination 
to become so. Box 4.5 below describes the main economic indicators for architectural services 
in China. 
Box 4.5 Main economic indicators and regulato ry framework of architectural services in 
China 
STATISTICAL DATA  
Practionners 
Number of architects: 44,848 
Architects/inhabitants ratio: 0.003% 
Number of architecture students: 32,000 
Student architects ratio: 88.89%  
Type of practice (in % of architects employed) : Employment by public inst itutions: 80%; partnership: 
5%; associations, limited-li ability companies and unlimited-liability companies: 5%; university-based project 
offices: 5%  
Source: Information provided by the Chinese authorities and the Union Internationale des Architectes (UIA). 
Viewed at: http://www.uia-architectes.org/en/exercer/exercer-dans-le-monde/commission-uia . 
4.86.  The regulatory regime applicable to the exercise of the architectural profession 
by foreigners is twofold: the MFN regime, which corresponds to the GATS commitments, 
themselves based on a standstill, and the preferenti al regime for Hong Kong , China; Macao, China; 
and Chinese Taipei (pending entry into force of the ECFA in the latter case).  
4.87.  As to the MFN regime, so far no foreign ar chitects have been licensed to practise in China 
since direct exercise of the profession is reserv ed to Chinese nationals. The types of practice 
allowed for foreign architects are defined by China's commitments on architecture and are based 
on a standstill of the applied regime, namely under mode 1 without any limitations and other 
forms of cross-border practice through cooperation with Chinese professional organizations; under mode 3, wholly-owned foreign enterprises are allowed but on condition that 
foreign-service suppliers are registered architects/engineers or enterprises engaged 
in architectural/engineering/urban planning services in their home country; under mode 4, according to the horizontal conditions stipulated in the standstill-based Chinese commitments, 
i.e. three years for intra-corporate transferee managers, executives and specialists and three 
years or the duration of the contract, whichever is shorter, for non-intra-corporate transferee executive managers and specialists. In all instances, individual foreign architects have the simple 
status of assistants or consultants. They have no signing rights, nor may they exercise 
the associated responsibilities.  WT/TPR/S/300 • China 
 
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  4.88.  In terms of recognition policy, foreign architects would be allowed to participate 
in the national uniform examination to become a registered architect on the same footing as Chinese nationals if a mutual recognition agreem ent were signed with their countries of origin. 
So far, China has signed no such agreement.  
4.89.  Only applicants from Macao, China; Hong Kong, China; and Chinese Taipei
37 are allowed 
to sit this examination based on the unilateral recognition policy of mainland China (see details below under the Free Trade Agreements commitments section). A six-months-per-year residency 
requirement is applicable in theory to such registered architects but is not enforced. 
4.90.  The free trade agreements of China
 with Chile, New Zealand, Singapore, Pakistan and Peru 
contain commitments for architecture identical to the GATS commitments.  
4.91.  The CEPAs with Hong Kong, China; and Macao, China contain in their initial text and in their 
supplements n° II, V, VII , VIII, IX  and X, a series of preferential provisions regarding construction 
services namely: 
  to relax the following requirements under Article 15 of the Ministry of Construction 
Decree No. 114 "Regulations on Administration of Foreign-Invested Construction 
and Engineering Design Enterprises", namely, on the criteria for application for construction and engineering design compan y qualifications by a wholly foreign-owned 
construction and engineering design company set up by a Hong Kong, China/Macao, China 
service supplier on the mainland, the number of Hong Kong, China residents qualified as certified architects or certified engineers in China and the number of Hong Kong, China/Macao, China residents having the relevant design experience should not be less 
than one quarter of all certified professional s and key technical personnel required under 
the qualification grading criteria; on the criteria for application for construction and engineering design enterprise qualifications by an equity or contractual joint-venture 
construction and engineering-design enterprise set up by a Hong Kong, China/Macao, 
China service supplier on the mainland, the number of Hong Kong, China/Macao, China residents qualified as certified architects or certified engineers in China and the number 
of Hong Kong, China residents having the relevant design experience should not be less 
than one eighth of all certified professionals and key technical personnel required under the qualification grading criteria; 
  relaxation of the mainland residential period requirement for Hong Kong, China/Macao, 
China professional and technical staff by counting their period of residence in Hong Kong, 
China/Macao, China as their period of residence on the mainland; 
  when Hong Kong, China/Macao, China service suppliers set up construction 
and engineering design enterprises in the form of equity joint ventures or contractual joint 
ventures on the mainland, there is no restriction on the proportion of total capital contributed by the mainland partners to the registered capital; 
  Hong Kong, China/Macao, China professionals who have obtained mainland class 1 
registered architect qualifications or mainland class 1 registered structural engineer qualifications are allowed to act as partners to set up construction and engineering design offices on the mainland in accordance with the relevant qualification requirements. For the 
above enterprises, there is no restriction on the ratio between the Hong Kong, 
China/Macao, China partners and the mainland partners, on the ratio of total capital contributed by the Hong Kong, China partners to that by the mainland partners, and on 
the residential period on the mainland for the Hong Kong, China/Macao, China partners; 
  Hong Kong, China/Macao, China professionals who have obtained by examination the 
mainland registered architect qualification, are allowed to register and practise 
in Guangdong Province regardless of whether they are registered practitioners 
in Hong Kong, China/Macao, China. They are recognized as registered practitioners for the purpose of engineering design enterprise qualifications within Guangdong Province, 
in accordance with the relevant mainland regulations; 
  regarding elective courses for continuing education which mainland-registered architects 
have to attend, Hong Kong, China/Macao, China service suppliers are allowed to complete elective courses in Hong Kong, China/Macao, China or to be taught by mainland teachers 
                                               
37 In the case of Chinese Taipei, through the  "Circular Concerning Relevant Issues on Permitting Chinese 
Taipei Residents to Obtain Qualifications of Certified Architects"  promulgated by the former Ministry of 
Personnel, the Ministry of Construction and the Chin ese Taipei Affairs Office of the State Council in 2006. WT/TPR/S/300 • China 
 
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  in Hong Kong, China/Macao, China. The arrangement for conducting elective courses for 
continuing education must be recognized by the mainland authorities; 
  contractual service-providers employed by  Hong Kong, China/Macao, China service 
suppliers are allowed to provide services under this sector or subsector on the mainland. 
4.92.  In the Cross-Strait Agreement on Trade in Services dated 21 June 2013 between 
the Association for Relations Across the Chinese Taipei Straits and the Straits Exchange Foundation, mainland China undertook commitments to open up Architectural services (CPC 
8671), Engineering services (CPC 8672) and Inte grated engineering services (CPC 8673) (Annex 
to the Agreement - List of Specific Commitments on Trade in Services) and "permits the natural persons who meet the relevant requirements and hold Chinese Taipei identity cards to attend the qualification exam of professional construction supervisory engineer". 
4.2.3.2  Construction  
4.93.  The construction market in China is one of the largest in the world and has grown rapidly 
over the last 30 years, which has allowed the emergence of large domestic firms also present on 
export markets, as evidenced by the presence of 56 Chinese firms among the top 300 
international contractors in 2013 (Table 4.8). 
Table 4.8 Chinese construction companies wi thin the top 300 international contractors, 
2012 and 2013 
(US$ million) 
Rank 
2013 Rank 
2012 Firm Location Revenue  
10 10 China Communications Construction Group Ltd. Beijing 11,187.20 
20 23 Sinohydro Group Ltd. Beijing 5,473.10 
24 22 China State Construction Eng'g Corp. Beijing 4,987.80 
25 24 China National Machinery Industry Corp. Beijing 4,947.70 
34 39 China Railway Group Ltd. Beijing 3,799.60 
43 46 CITIC Construction Co. Ltd. Beijing 2,635.80 
51 42 China Metallurgical Group Corp. Beijing 2,295.70 
53 30 China Railway Construction Corp. Ltd. Beijing 2,147.00 
54 53 SEPCOIII Electric Power Cons truction Corp. Qingdao 2,098.90 
56 62 China Gezhouba Group Co. Ltd. Wuhan City 2,009.30 
61 64 SEPCO Electric Power Construction Corp. Jinan City 1,879.60 
71 91 China Civil Engineering Constr. Corp. Beijing 1,411.10 
72 67 Shanghai Electric Group Co. Ltd. Shanghai 1,406.70 
81 89 China General Technology (Group) Holding Ltd. Beijing 1,208.30 
82 77 China National Chemical Engineering Group Beijing 1,193.50 
84 48 China Petroleum Eng'g & Construction Corp. Beijing 1,165.60 
86 92 China Int'l Water & Electric Corp. (CWE) Beijing 1,083.60 
89 93 CGC Overseas Construction Group Co. Ltd. Beijing 1,016.80 
91 114 Sinopec Engineering (Group) Co. Ltd. Beijing 958.6 
92 83 Dongfang Electric Corp. Chengdu 926.3 
95 104 Qingjian Group Co. Ltd. Qingdao 880 
96 86 Shanghai Construction Group Shanghai 870.4 
98 123 China Petroleum Pipeline Bureau (CPP) Langfang City 811.9 
110 127 China Geo-Engineering Corp. Beijing 665.6 
116 .. Sinopec Zhongyuan Petroleum Engineering Ltd. Puyang 630.4 
122 117 China Jiangsu Int'l Econ. And Technical Coop. Nanjing 556 
133 146 Beijing Construction Eng'g Group Co. Ltd. Beijing 486.4 
137 131 China Dalian Int'l Eco. & Techn. Cooperation Grp. Dalian 469.8 
138 .. XPCC Construction & Engi neering (Group) Co. Urumqi 458.1 
147 151 China Henan Int'l Cooperation Group Co. Ltd. Zhengzhou 419.1 
149 .. Daqing Oilfield Construction  Group Co. Ltd. Daqing City 413 
151 171 Anhui Construction Engineering Group Co. Ltd. Hefei 407.2 
152 166 Pan-China Construction Group Co. Ltd. Beijing 399.2 
155 .. China Petroleum Engineering Co. Ltd. Beijing 394.2 WT/TPR/S/300 • China 
 
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  Rank 
2013 Rank 
2012 Firm Location Revenue  
157 159 China Jiangxi Corp. For Int'l Eco. & Tech. Coop. Nanchang 392.3 
161 155 China Zhongyuan Engineering Corp. Beijing 377.7 
162 .. China Aluminium International Engineering Co. Beijing 377.6 
164 184 Zhongmei Engineering Group Ltd. Nanchang City 367.7 
169 208 China Yunan Construction Eng'g Group Co. Ltd. Kunming 350.7 
172 164 China Wu Yi Co. Ltd. Fuzhou 334.1 
183 .. ZhongDing International En gineering Co. Nanchang City 275.4 
185 219 Sinosteel Equipment & Engineering Co. Ltd. Beijing 271.3 
186 169 China HuanQiu Contracting & Engineering Corp. Beijing 264.5 
195 209 Nantong Construction Group Joint-Stock Co. Nantong 247.9 
197 205 Jiangsu Nantong No. 3 Construction Grp. Co. Ltd. Haimen 244.2 
199 .. Jiangsu Zhongxin Const. Group Co. Ltd. Qidong 240.3 
205 195 Zhejiang Constr. Investment Group Co. Ltd. Hangzhou 233.5 
209 225 Weihai International Eco. & Tech. Coop. Co. Ltd. Weihai 222.8 
211 215 Jiangsu Nantong Liujian Construction Group Co. Rugao 215.2 
216 .. International Co. of Yanjian Group Co. Ltd. Yantai City 199.7 
220 203 China Petroleum Pipeline Eng'g Corp. Langfang City 193.2 
221 .. Shengli Petroleum Admin. Bureau Sinopec 188.3 
227 .. Chongqing Int'l Construction Corp. Chongqing 169.7 
230 .. China Shenyang Int'l Eco. & Tech. Coop. Corp. Shenyang 160.3 
235 .. China National Complete Plant Imp. & Exp. Corp. Beijing 154.5 
.. Not available. 
Source: Engineering News Record (ENR). 
4.94.  Foreign firms have invested considerably in this market, as illustrated by the foreign direct 
investment statistics of Box 4.6 and the growth of construction imports by China. 
Box 4.6 Main economic indicators of the construction sector in China  
Share in GDP (2012): 6.84%* 
 
Exports (US$ million): 2010: 14,490; 2011: 14,724 (+2%); 2012: 12,245 (-17%) 
Average growth of exports (2005-2012): +25% 
 
Imports (US$ million): 2010: 5,071; 2011: 3,728 (-26%); 2012: 3,618 (-3%) 
Average growth of imports (2005 -2012): +12% 
 
FDI outward stock (US$ million): 2008: 2,681; 2009: 3,413 (+27%); 2010: 6,173 (+81%) 
FDI outward flow (US$ million): 2008: 733; 2009: 360 (-51%); 2010: 1,628 (+352%) 
 
FDI inward stock (US$ million): 2008:..; 2009:..; 2010: 4,322 
FDI inward flux (US$ million): 2008: 1,093; 2009: 692 (-37%); 2010: 1,461 (+111%) 
Employment absolute number and percentage share in total employment (2012): 41.808 million i.e. 5.45% 
of total employment, of which number of employed persons in state-owned companies in Urban Units by 
Sector and Registration Status: 17.248 million 
Labour productivity: RMB 267,860/person (based on gross output) 
Cement production (thousand metric tons monthly average) 2010: 153,663; 2011: 171,931; 2013: 182,004 
 
Construction of new buildings - residential (thousand square metres monthly average or calendar months): 
2010: 51,013; 2011: 59,744 
 
Construction of new buildings - non-residential (tho usand square metres monthly average or calendar 
months) 2010: 12,288; 2011: 14,627 
.. Not available. 
Source: WTO-UNCTAD-ITC Trade in services database, except *Chinese National  Bureau of Statistics. WT/TPR/S/300 • China 
 
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  4.2.3.2.1  Regulatory regime  
4.95.  In regulatory terms wholly foreign-owne d firms are allowed but the presence of foreign 
firms is limited to four specific segments, a situation reflected by China's GATS commitments 
which, being made on a standstill basis, reflect the applied regime. Hong Kong, China and Macao, 
China benefit from preferential commitments ensh rined in the CEPAs. Qualification requirements 
are applied on a national-treatment basis. However,  qualifications are granted only to independent 
newly established legal companies and do not therefore take into account the qualifications 
acquired abroad by their parent companies (so-called "global track record"). Foreign firms must 
thus start from the lowest grade of qualification. The status of constructor ("jian zao shi"), a function required for all large and medium-sized projects, remains reserved for Chinese nationals and Hong Kong, China and Macao, China residents. Boxes below describe in more detail the 
regulatory regimes of construction services in China, namely the multilaterally-bound regime 
(GATS commitments, Box 4.7), the preferential regimes (FTA commitments, Box 4.8), the applied regime in particular in terms of licensing, registration and qualification requirements (Applied 
regime, Box 4.9) and the additional liberalization measures undertaken in the context of the China 
(Shanghai) Pilot Free Trade Zone (CSPFTZ experimental liberalization measures, Box 4.10). 
Box 4.7 GATS commitments and applied market access and national treatment regime 
GATS commitments are made on a standstill basis an d reflect the applied regi me and notably Chapter 3 
of the Provisions on the Administration of Foreign-Invested Construction Enterprises (Decree No. 113) 
limiting the scope of contracting. 
For all construction services (CPC 511 to 518a): 
- cross border (market access and national treatmen t): unbound due to lack of technical feasibility; 
- consumption abroad (market access  and national treatment): none; 
- commercial presence: market access: wholly-owned foreign enterprises permitte d but restricted to the 
four following types of construction projects: 
1.  construction projects wholly financed  by foreign investme nt and/or grants; 
2.  construction projects financed by loans of inte rnational financial institutions and awarded through 
international tendering according to the terms of loans; 
3.  Chinese-foreign jointly constructed projects with foreign investment equal to or more than 50%; 
and Chinese-foreign join tly constructed projects with foreign investment less than 50% but 
technically difficult to implement by Chinese construction enterprises alone; 
4.  Chinese-invested construction projects which ar e difficult to implement by Chinese construction 
companies alone can be jointly undertaken by Ch inese and foreign construction companies with 
the approval of provincial government; 
Commercial presence national treatment: none; 
Movements of natural persons: unbound except as indicated in the horizontal commitments.b 
a The coverage of CPC 518 "renting services related to equipment for construction or demolition 
of buildings of civil engineering works with operator" being limited only to the rental and leasing 
services of construction and/or demolition machines with operator, which are owned and used by 
foreign construction enterprises in their supply of services. 
b For an analysis of the horizo ntal commitments on movement of natural persons see the section 
on movements of natural persons. 
Source: China's GATS Schedule of Commitments, WTO document GATS/SC/135, 14 February 2002. WT/TPR/S/300 • China 
 
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  Box 4.8 Free Trade Agreements commitments 
FTAs with Chile, New Zealand, Singapore, Pakistan an d Peru contain commitments for construction exactly 
identical to the GATS commitments. 
 
CEPAs with Hong Kong, China; and Macao, China contain in their initial text and in their supplements n° I, 
VI and X a series of preferential provisio ns regarding constructi on services namely: 
 construction companies on the mainland set up and invested in by Hong Kong, China/Macao, 
China service suppliers are exempted from foreign-investment restrictions when undertaking 
Chinese-foreign joint construction projects; 
 construction companies on the mainland invested in by Hong Kong, China/Macao, China service 
suppliers will follow the relevant laws and regulations on the mainland for application of construction 
qualification certificates. Those which have acquired such certification are permitted, in accordance with 
laws, to bid for construction projec ts in all parts of the mainland; 
 there will be no restriction on the proportion of  Hong Kong, China/Macao, China permanent residents 
being project managers approved by the qualificat ion administration author ities for construction 
companies on the mainland set up by Hong Kong, China service suppliers; 
 
 Hong Kong, China/Macao, China service suppliers who had already obtained the certificate of approval 
for establishment of companies with investment of Chinese Taipei, Hong Kong, China and Macao, China 
on the mainland but had not yet obtained the construction company qualification certificate could apply, 
before 1 July 2005, for a certificate for undertaking single construction projects based on their signed 
construction contract and "Construction Qualification Certificate for Chinese Taipei, Hong Kong and 
Macao Enterprise". Subject to the preliminary vetting and agreement of the construction administration 
department at provincial level, the application will be processe d by the Ministry of Construction;  
 the residency requirement is waived for Hong Kong, China/Macao, China permanent residents employed 
as engineering technical staff and econom ic managerial staff in construction; 
 from the signing date of this agreement and before promulgation of the new "Standards 
for the Qualifications of Construction Enterprises", the recognition policy of the then-Ministry 
of Construction for Hong Kong Project Manage rs concerning the qualification assessment 
of Hong Kong-invested construction enterprises with the mainland will remain unchanged. The 
recognition of Hong Kong Project Managers will remain valid for the purpose of qualification 
administration of such enterprises employing them originally. After promulgation of the new "Standards 
for the Qualifications of Construction Enterprises", the originally recognized Hong Kong Project Managers 
will be allowed to continue to act as Project Managers of projects that they contracted or where they 
have commenced construction before promulga tion of the standards, until completion; 
 contractual service-providers employ ed by Hong Kong, China/Macao, Ch ina service suppliers are allowed 
to provide services under this sect or or sub-sector on the mainland. 
Source: WTO RTA-IS Database. 
Box 4.9 Licensing, registration and qualification requirements 
Licensing, authorization or regist ration requirements and procedures (including pre-qualification 
standards and qualification rating systems) 
The "Provisions on the Administration of Foreign-Invested Construction Enterprises", Decree No. 113 
of the then MOFTEC and MOCa dated 27 September 2002, which entered into force on 1 December 2002, 
and the "Implementing Measures on the Qualification Administration Specified in the Provisions 
on the Administration of Foreign-Invested Constr uction Enterprises" of the MOC (Jinshi 2003 No. 73 
of 8 April 2003) stipulate the following: 
 a foreign investor intending to establish a fo reign-invested construction company shall: 
  apply for an approval certific ate from the MOFTEC at central le vel (for a super grade or grade 
A qualification applicant) or at local level (f or a grade B or lower qualification applicant). 
  register with the State Administra tion for Industry and Commerce at central level or at local level 
to obtain a business licence; 
  apply for a qualification certificate from the construction administration at central level (for a super 
grade or grade A qualification applicant) or at local level (for a grade B or lower qualification 
applicant). 
 for a super grade or grade A applicant, the applic ation for the approval certificate must be made 
at the local level of the administration of the MOFTEC, which has 30 days to complete a preliminary 
examination and to grant or refuse a preliminary approval. The preliminary approval, if granted, 
is transmitted to the central level of the MOFTEC, which must transmit the file within ten days 
to the MOC. The MOC must in turn transmit its opinion within 30 days, after which the MOFTEC has 
30 days to grant or refuse the approval. Reasons for disapproval must be given in written form. Within 
30 days of receiving the approval certificate the appl icant shall register with the State Administration 
for Industry and Commerce and ob tain a business licence. It will then apply for a qualification 
certificate in accordance with the regulations on the Qualification Standards for Construction 
Enterprises (see below the section on qualification requirements); 
 for grade B or lower the sa me procedure applies at local level mutatis mutandis; WT/TPR/S/300 • China 
 
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   Decree No. 155 of the MOC and MOFCOM on the "Provi sions on the Administra tion of Construction 
and Engineering Enterprises" of 20 December 2006 (e ntry into force on 26 March 2007), applies these 
procedures to both construction and engineerin g services companies and requires, in addition, 
in its Article 13, a preliminary experience condition: that the foreign investor shall be a company 
engaged in the relevant engineering services or [for an individual] a certified technician in his or her 
home country. 
Professional qualification requirements and procedures 
Main regulations 
"Implementing Measures on the Qualification Administration Specified in the Provisions on the Administration 
of Foreign-Invested Construction Enterprises" of the MOC (Jinshi 2003 No. 73 of 8 April 2003), Regulations 
on Administration of Construction En terprise Qualifications (Decree No. 87 of the Ministry of Construction), 
Opinions of Implementing the Regulations on Administration of Construction Enterprise Qualifications 
(JianBanJian [2001] No. 24), Criteria of Grading of Cons truction Enterprise Qualifications (JianJian [2001] 
No. 82) 
Main features of those regulations 
 the Qualification Standards  impose minimal capital requirements, qualitative staffing requirements, 
technological requirements, equipment requirem ents and track records for various grades 
of qualifications; 
 the detailed qualification requirements are organized in three large categories, themselves divided 
into specific subcategories which are again divided into one to four grades, the main categories and 
subcategories being general contracting (building, electrical, chemical etc.); special contracting (steel, 
bridges, roads railways etc.), and labour cont racting (carpentry, maso nry, painting etc.); 
 those qualification requirements are applied equally to Chinese and foreign companie s on a national 
treatment basis; 
 however, qualifications are granted only to newly established  independent legal companies. 
They do not therefore take into account the qualific ations acquired abroad by their parent companies 
(so-called "global track record") and thus must start from the lowest grade. 
However a newly-establ ished foreign funded construction ente rprise that has contracted projects 
may apply directly for grade B and/or above qualificat ions if its turnover meet s the turnover criteria 
prescribed by the qualification requirement; 
 the qualification requirements also establish a ceiling of contract value of five times the registered 
capital of the company, again applied on a national treatment basis. If a company wishes to undertake 
a project above this ceiling it must  apply for a higher grade of qualif ication. The "Criteria of Grading 
of Construction Enterprise Qualifications" (JianJian [2001] No. 82) and the "Administration Regulations 
on Certified Architects" (MOC Order 153) stipulate that the qualification requirements on some levels 
for certain professions are subject to a maximum contractual value; 
 the 2004 "Probation of Administration of Constructi on Projects" stipulates that project-management 
companies will be allowed to operate as long as they obtain one of the six following qualifications: 
engineering project prospecting/de sign/construction/supervision/costs consultancy/tendering agency. 
 in order to ensure the quality of construction work, a "constructor (jian zao shi)" [Jin Shi No. 81, 2011] 
is assigned to every large and me dium project site. The examination in order to gain qualification 
as a "constructor" is open only to Chinese national s and Hong Kong, China and Macao, China residents. 
 
Specific standards on foreign personnel, equipment and material 
 the 2003 implementing measures mentioned above st ipulate that "In the event a foreign-invested 
construction enterprise employs fore igners to be its engineering, technical, economic and management 
personnel, each of such persons shall reside in China for at least three months cumulatively 
in one year"; 
 qualification requirements set specific standa rds for equipment and technologies employed. 
a The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) has been renamed 
Ministry of Commerce (MOFCOM) , and the Ministry of Construction (MOC) has been renamed 
Ministry of Housing and Urban and Rural Development (MOHURD). 
Source: Information provided by the Chinese authorities. 
Box 4.10 Experimental liberalization in the context of the China (Shanghai) Pilot Free 
Trade Zone 
So far two measures have been taken to liberalize further constructi on and related engineering-design 
services, namely: 
 the 50%  investment ratio for Chinese shares in a Sino-foreign construction project is abolished 
for projects located in the China (Shanghai) Pilot Free Trade Zone; 
 the qualification requirements for engineering desi gn performance applicable  to foreign-invested 
engineering design companies will be  abolished when the project is located in the China (Shanghai) Pilot 
Free Trade Zone, and the contract concluded with the Shanghai municipality.  
Source: Information provided by the Chinese authorities. WT/TPR/S/300 • China 
 
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  4.2.4  Education 
4.96.  The main statistical indicators of the education services sector are described 
in Box 4.11 below. 
Box 4.11 Education services sector main statistical indicators 
International tertiary students hosted by China (2012): 328,330 
Chinese tertiary students abroad: (2010): 562,889 of which USA: 126,498; Australia: 87,588; 
Japan: 86,553; United Kingdom: 55,496; Republic of Korea: 45,757 
Percentage of primary students (I SCED1) by type of institution: 
Independent private: 0%; government-dep endent private: 6.7%; public: 93.3% 
Percentage of lower second ary students (ISCED2) by type of institution: 
Independent private: 0%; government-dep endent private: 0.3%; public: 99.7% 
Percentage of upper secondary students  (ISCED3) by type of institution: 
Independent private: 0%; government-dependent private: 10.6%; public: 89.4% 
Percentage of tertiary students (ISCED5-6) by type of institution: 
Independent private: 0%; government-d ependent private: 16.03%; public: 83.96%  
*Sino-foreign cooperation projects (2013): 1,986 (174 educational institutions and 1,812 projects) 
enrolling 550,000 students, 300,000 of which in higher education (i.e. 1.4% of enrolment at the higher 
education level) 
Origin of projects (by percentage of studen ts enrolled, 2013): Australia: 20.1%; UK: 17.7%; 
Canada: 12.1%; USA: 14.2%  
Intergovernmental education cooperation projects (2012): 77  
Number of countries and regions with which China has signed mutual recognition of diploma 
agreements (2013): 41 
Number of high-level bilateral mechanisms, State-to-State consultations in education (2008): 46 
Number of foreign-invested training companies regi stered with the State Administration for Industry 
and Commerce: 226, none operating for profit 
**FDI outward stock (US$ million): 2008:18; 2009: 21 (+21%); 2010: 24 (+13%) 
FDI outward flow (US$ million): 2008: 2; 2009: 3 (+67%); 2010: 2 (-33%) 
FDI inward stock (US$ million): 2008: not available; 2009: not available; 2010: 3,291 
FDI inward flow (US$ million): 2008:36; 2009:14 (-63%); 2010:8 (-39%) 
Value added (US$ million): 2009: 153, 435; 2010: 177,867 (+16%), 2011: not available 
Employment (thousand): 2009: 15,504; 2010:15,818 (+2%); 2011: 16,178 (+2%) 
Source: UNESCO except *MOFCOM Trade in Services/Trade in Education Report 2008 
and **WTO-UNCTAD-ITC Trade in Services Statistics Database. 
4.2.4.1  Regulatory regime 
4.2.4.1.1  Applied regimes 4.97.  The general investment regime for ed ucation services defined by the Catalogue 
for the Guidance of Foreign Investment Industries, as amended in 2011
38, is as follows: 
  "advanced educational institutions" (limited to joint venture or cooperative) 
and "vocational skills training" are classified in the "encouraged" category; 
  regular high school education institutions39 are classified in the "restricted" category; 
  "institutions of compulsory education and special education such as military police, political 
and party schools" are classified in the "prohibited" category; 
  the remaining education levels (e.g. primary, vocational secondary, adult, and other) 
are classified by default in the "permitted" category. 
 
4.98.  This regime also applies to the companies operating in the for-profit/training sector. 
4.99.  In terms of sector regulations, China has two main regimes for education services, 
one for education services stricto sensu , i.e. compulsory education and not-for-profit education 
services supervised by the Ministry of Education (MoE), and one for training/for-profit activities 
supervised by the Ministry of Labour and Social Security an d by the State Administration 
of Industry and Commerce.  
                                               
38 Viewed at:  http://english.mofcom.gov.cn/artic le/policyrelease/ aaa/201203/20120308027837.shtml . 
39 As opposed to vocational secondary education institutions. WT/TPR/S/300 • China 
 
- 152 - 
 
  4.100.  The regime administered by the Ministry of  Education is governed by the "Regulations of 
the People's Republic of China on Chinese-Foreign Cooperation in Running Schools" (Decree No. 372 of 1 March 2003 effective 1 September 2003)
40 and its implementation rules: 
the "Regulations on Sino-Foreign Cooperative Education" (promulgated by the Ministry 
of Education on 1 March 2004, which entered into force on 1 July 2004). 
4.101.  The main market access provisions of th ese regulations are the following: the president 
or the principal administrator must be of Chinese nationality and their nomination must 
be approved by the competent authorities; fo reign teachers and administrators shall possess 
a bachelor's degree or above, related occupational certificates, and at least two years' experience 
in the field of education and teaching; no foreign educational institution, other organization or individual may unilaterally establish schools or other educational institutions providing education 
mainly to Chinese citizens within the territory of China; the foreign partner must have a legal 
personality. Motives for rejection include cases where: (i) the application violates social and public interests, historical and cultural tradition and the public-interest nature of education and is not 
in line with the development of national or local educational undertakings; (ii) either partner 
of the Sino-foreign cooperative school fails to meet the stipulated conditions; (iii) the cooperation agreement fails to meet the statutory requirements and the parties still fail to make correction 
after being notified of such failure; (iv) the application documents contain fraudulent information; 
(v) other circumstances under which application shall not be approved as stipulated by laws and administrative regulations. 
4.102.  Regarding the procedure for approval of Sino -foreign education institutions, the role of the 
respective authorities for the various types of institutions and programmes is detailed in Table 4.9 
below. Delays prescribed by the regulation vary depending on the type of the request formulated 
and the level of education concerned: 45 working days to approve the initial proposal to set up 
Sino-foreign cooperative institutions; six months for the definitive set-up of an institution engaged 
in degree education (not including the time devoted to an expert panel discussion set up to examine the application); three months for non-degree education. Since the promulgation and 
implementation of the guidelines for education planning in 2010, the Ministry of Education has 
accepted, reviewed and examined Sino-foreign c ooperation projects at undergraduate level and 
above six times, and approved 412 projects submitted by domestic higher education institutions. The approved projects accounted for 30%-48% of all the accepted projects. Project examination 
and approval is carried out twice a year with a vi ew to controlling the entry of resources and to 
ensure their quality. The main reason for non-approval of projects is the failure to be designed and planned in accordance with the Regulations on Sino-Foreign Cooperative Education and the 
implementation rules thereof. 
4.103.  Regarding the interaction with the na tional degree awards system, Sino-foreign 
cooperative education institutions may become qualified to independently award Chinese 
bachelor's degrees if approved by the provin cial academic degree committees, as delegated 
by the Academic Degrees Committee of the State Council. For masters and PhD levels, the Academic Degrees Committee of the State Council is the relevant authority. 
4.104.  The accreditation and quality insurance policy is defined by the "State Guidelines 
for Medium-to-long-term Education Reform and Development (2010-2020)", promulgated 
in July 2010, which has designated quality improvement as the "core task of education reform 
and development" . The  China Academic Degrees and Graduate Education Development Centre 
of the MOE has become a member of the Intern ational Network for Quality Assurance Agencies 
in Higher Education (INQAAHE) in order to carry out cross-border higher education quality guarantee activities in accordance with international rules (notably UNESCO-OECD guidelines) 
in light of China's national conditions and educational practice. 
4.105.  In terms of international mobility policy,  the Chinese Government generally supports 
students and scholars studying abroad, encourages  them to return to China after completion 
of their studies and therefore imposes no limitations on Chinese students studying abroad. 
In addition, Chinese universities are encouraged to organize international exchange activities 
for their students to further open up the education sector. 
                                               
40 Viewed at: http://www.moe.edu.cn/publicfiles/bu siness/htmlfiles/moe/moe_861/200506/8646.html . 
 WT/TPR/S/300 • China 
 
- 153 - 
 
  4.106.  The main ongoing developments regardin g Sino-foreign institutions and programmes are 
evaluation programmes. China first undertook in July 2009 a pilot programme of evaluation of Sino-foreign cooperative education institutions and programmes at and above the undergraduate level in four provinces or municipalities: Liaoning, Tianjin, Jiangsu and Henan. 
The evaluations mainly focused on self-review complemented by random inspection. Examples 
of indicators used were for institutions: aims, management system, and quality management; and for programmes: education targets and schemes, project management, and education 
conditions. The evaluation had three possible outcomes for the institutions and programmes 
concerned: "qualified", "conditionally qualified" and "not qualified". The evaluation was completed 
at the end of 2011. The results were positive overall, but in some cases problems such as inadequate resources, repeated courses, lo w level of education, and lack of distinctive 
characteristics were also noted; 97% of the in stitutions and programmes achieved a "qualified" 
or "conditionally qualified" grade while 3% failed the test.  
4.107.  Based on this pilot programme, in 2013 the Ministry of Education (MOE) organized 
a nationwide evaluation of Sino-foreign coop erative education. The evaluation programme 
is organized by the Department of International Cooperation and Exchanges of the MOE and implemented by the China Academic Degrees and Graduate Education Development Centre 
of the MOE. The provincial (or municipal) education administrative authorities are responsible 
for coordinating and guiding the evaluation of th e Sino-foreign cooperative education within their 
respective administrative regions according to the arrangements of the MOE, and the relevant institutes of higher learning are responsible for evaluating their own institutions and programmes. 
The evaluation procedure is divided into three st eps, namely self-review, online announcement, 
and comprehensive review. The conclusions of the evaluation will focus on management 
mechanisms, funds management, recruitmen t and academic credentials management, 
diploma and certificates, management, teachers' qual ifications, teaching and learning organization, 
and education quality. By September 2013, 326 institutions and programmes approaching 
the expiry of the cooperation period in 22 provinces (municipalities) nationwide had participated 
in the evaluation and completed the step of self-review and were expected to complete 
the remaining evaluation steps before the end of 2013. The institutions found to have significant 
problems will be required to undertake rectification and reform within a stipulated period, and will be subject to sanctions such as  the suspension of pupils' recruitment. 
4.108.  Table 4.9 describes the roles of the variou s authorities in the approval of Sino-foreign 
cooperative education institutions and prog rammes for both administrative regimes. 
4.109.  The administrative regime for training/for pr ofit services is supervised by the Ministry of 
Human Resources and Social Security and the State Administration for Industry and Commerce. 
The registration procedures applicable to these ac tivities are the same as those applicable to any 
commercial or industrial activities. In terms of accreditation and certification, private training 
institutions issue certificates rather than diplomas. Those certificates are in turn accredited by 
sectoral professional associations under the purview and control of the Ministry of Labour and Social Security, which is in charge of vocational training and of the State Administration of Industry and Commerce. WT/TPR/S/300 • China 
 
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  Table 4.9 Roles of the various authorities in  the approval of Sino -foreign cooperative 
education institutions and programmes 
Nature of the 
cooperation Level of studies Role of the provincial 
authority Role of the national 
authority 
 
   Sino-foreign cooperative education institutions Undergraduate and above To be commented 
on by the local people's government in the provinces, autonomous regions and municipalities directly under the Central Government To be examined 
and approved by the MOE 
Higher professional education 
and non-degree higher 
education To be examined 
and approved by the local 
people's government 
in the provinces, 
autonomous regions 
and municipalities 
directly under the 
Central Government To be filed with the MOE 
Secondary degree education and education for self-taught examination, coaching and pre-school education To be examined 
and approved by the education departments/commissions under the local people's government in the provinces, autonomous 
regions and municipalities 
directly under the Central Government To be filed with the MOE 
Occupational training Labour administration departments under the local 
people's government in the provinces, autonomous 
regions and municipalities directly under the Central 
Government 
 
 
 
 
 
 
Sino-foreign 
cooperative education 
programmes Undergraduate and above To be commented 
on by the education departments/commissions under the local people's government in the provinces, autonomous regions and municipalities directly under the Central Government To be examined 
and approved by the MOE 
Higher education at college 
level, non-degree 
higher education, 
senior secondary education 
and education for self-taught 
examination, coaching 
and pre-school education To be examined 
and approved by the 
education departments 
under the local people's 
government in the 
provinces, autonomous 
regions and municipalities 
directly under the central 
government To be filed with the MOE 
Occupational training The labour administration department under the State 
Council (Ministry of Labour and Social Security) 
Source: Information provided by the Chinese authorities. 
4.2.4.1.2  Provisions in the GATS and FTAs 
4.110.  GATS commitments are based on the applied regime and amount, therefore, 
to a standstill. For primary, secondary, higher, ad ult and other education services excluding special 
education services (e.g. military, police, political and party school education), and excluding 
national compulsory education for primary and secondary, mode 1 is unbound for market access 
and national treatment; mode 2 has no restrictions for market access and national treatment; for mode 3 an entry for market access stipulates that joint schools will be established with foreign 
majority ownership allowed, while the national treatment column is unbound; finally mode 4 
is unbound except as indicated in the horizontal commitments and subject to the additional limitations that individual foreign education service suppliers may enter China to provide education 
services when invited or employed by Chinese sch ools, and other education institutions for market 
access and that qualifications required entail the possession of a bachelor's degree or higher WT/TPR/S/300 • China 
 
- 155 - 
 
  and an appropriate professional title or certif icate with two years' professional experience 
for national treatment. 
4.111.  Regarding free trade agreements, the education commitments undertaken by China in its 
FTAs with Peru, Pakistan, and Singapore are id entical to its GATS commitments. The Free Trade 
Agreement with Chile contains no sector qualification whatsoever ("educational services" 
are offered in general) but has the same restrictions as the GATS commitments in the market access and national treatment columns. 
4.112.  The CEPAs with Hong Kong, China and Macao, China contain a concession by which 
Hong Kong, China and Macao, China suppliers are allowed to set up international schools (for primary, secondary, adult and other education se rvices) on a wholly-owned basis in Qianhai and 
Hengqin. Their target students may be expanded to include children of Chinese nationals residing 
abroad and returnees who, after studying ab road, are working in Qianhai and Hengqin. 
Hong Kong, China and Macao, China suppliers are also allowed to set up business-based training bodies on the mainland on a wholly-owned, equity joint-venture or contractual joint-venture basis. 
4.113.  In addition to commitments similar to those in the GATS, the FTA with New Zealand 
contains an additional commitment by which China will list on its Ministry of Education "Study Abroad" website  the 8 New Zealand universities, the 20 Institutes of Technology and 
Polytechnics, TeWananga o Aotearoa, Te WhareWananga o Awanuiarangi and Te Wananga o 
Raukawa, and 6 degree-conferring Private Training  Establishments duly approved and accredited 
by the New Zealand Qualification Authority (NZQA). In addition, both parties will jointly initiate work at the official level on evaluation of the quality assurance criteria for qualifications, 
which include a distance delivery component. 
4.2.4.1.3  Experimental liberalization in th e context of the China (Shanghai) Pilot Free 
Trade Zone 
4.114.  So far, two measures have been taken to further liberalize education services 
in the context of the China (Shanghai) Pilot Free Trade Zone. First the establishment of a profit-making Sino-foreign cooperative educational training institution will be allowed; second, similarly, 
the establishment of profit-making Sino-foreign occupational training institutions will be allowed. 
In both instances, those institutions will not be allowed to branch out into the rest of the territory of China and their activities will  remain confined to the SFTZ. 
4.2.5  Transport services 
4.2.5.1  Maritime transport 
4.115.  The trade regime of maritime transport services in China has been described in detail 
in previous TPR reports
41 and has remained largely unchanged. The only notable developments 
that have occurred since the last Report in 2012 are the reform of tonnage dues and the renewal 
of the ad hoc tax-free Registration Policy for the Chinese Flag-of-Convenience Ship Programme.  
4.116.  The Interim Regulations on Vessel Tonnage Dues (the "Interim Regulations") 
were promulgated by Decree [2011] No. 610 of the State Council on 5 December 2011 
and entered into force on 1 January 2012. They re place the Provisional Procedures of the Customs 
of the People's Republic of China Governing th e Levying of Vessel Tonnage Dues (the "Interim 
Measures") issued in September 1952. This tonnage dues reform has modified the tax base, 
the tariffs and rates and rules on deductions and exemptions. 
4.117.  In terms of tax base, Chinese vessels engaged in international trade are now subject 
to the dues whereas they were not under the previous regime. The net tonnages are classified 
in four classes: less than 2,000 net tonnes; between 2,000 net tonnes and 10,000 net tonnes; 
more than 10,000 net tonnes but less than 50,000 net tonnes; and more than 50,000 net tonnes. In addition to the original 30-day and 90-day to nnage dues licence, a one-year tonnage dues 
                                               
41 Notably in 2012 (WT/TPR/S/264/Rev.1, paragraphs 205 to 228, pages 145 to 150 and tables, 
pages 216 to 220), 2010 (WT/TPR/S/230/Rev.1, paragraphs 111 to 126, pages 93 to 96) and 2008 (WT/TPR/S/199/Rev.1, paragraphs 248 to 271, pages 169 to 173). WT/TPR/S/300 • China 
 
- 156 - 
 
  licence was created. The rate for the first class was decreased while the rates for the largest 
vessels were increased.  Preferential rates are applicable to vessels of Chinese nationality 
and to vessels of flag States, which have entered into treaties or agreements that contain clauses offering most-favoured-nation treatment on a recipr ocal basis with the People's Republic of China 
with regard to taxes and dues levied on ve ssels. General rates are applicable to other 
taxable vessels. 
4.118.  Fishing ships, breeding boats, non-powered ships and military and armed police vessels 
are exempt from tonnage dues (while non-powered ba rges and tugs are entitled to a halved rate). 
The threshold for tonnage dues is increased to RMB 50 from RMB 1. 
4.119.  For the 12
th Five-Year Plan period (2011-2015), China has renewed its ad hoc tax-free 
Registration Policy for the Chinese Flag-of-Convenience Ship Programme via the "Notice 
on Renewing Tax-Free Registration Policy for the Chinese Flag-of-Convenience Ship Programme 
for the 12th Five-Year Plan Period" (Document [2011] No. 99 of the Ministry of Transport 
of 23 December 2011), exempting eligible vessels from customs duties and import value-added 
tax, in a bid to attract Chinese Flag-of-Convenience ships to register in China. 
4.120.  As mentioned in section 2.5.4 on services liberalization measures in the Shanghai Free 
Trade Zone, the "international relays" segment of coastal shipping has been partially liberalized. 
More specifically the Framework Plan for the China (Shanghai) Pilot Free Trade Zone approved 
and promulgated on 18 September 2013 by the State Council and the Announcement on the Trial 
Implementation in Shanghai of Domestic Coastal Shipping by Chinese-Invested Foreign-Flagged Ocean-going Vessels of the Ministry of Transp ort of 27 September 2013, contain a provision 
whereby as of 27 September 2013, non-Chinese-flagged container ships, directly or indirectly 
owned by Chinese invested shipping companies
42, will be allowed to move import/export 
containers on routes between domestic coastal ports and Shanghai Port (so-called "international 
relays") which contrasts with the previous policy of barring foreign-flagged ships from any coastal 
trade. This is not applicable to wholly foreign-owned shipping companies established in accordance with Chinese laws. 
4.121.  In addition, wholly foreign-owned international ship management enterprises 
will be allowed in the context of the China (Shanghai) Pilot Free Trade Zone while the foreign equity ratio restrictions of 49% applicable to both Sino-foreign joint-venture shipping companies and to Sino-foreign cooperative international shipping companies will be abolished in the zone. 
The establishment of an international ship re gistration system will also be explored. 
4.2.5.2  Air transport 4.122.  The air transport services trade regime in China has been described in detail in previous 
TPR reports
43 and has remained largely unchanged.  
4.123.  The only notable developments since th e last Review in 2012 is the long awaited 
promulgation on August 2012 of a new regulation on computer reservation systems, the "Interim 
Provisions on the Administration of Licences for Sales Agencies Designated by Foreign Air 
Transport Enterprises within the Territory of Ch ina to Directly Enter and Use Foreign Computer 
Reservation Systems" promulgated by the Civil Av iation Administration of China (Decree No. 214 
of the CAAC, implemented from 1 October 2012), which replaces a policy document promulgated 
in 1995. The new regulation does not create any additional market access opportunities for foreign 
firms as compared to the GATS and FTA commitment s but is geared towards stabilizing, upgrading 
and detailing the relevant regulatory framework hitherto based on provisional rules 
for authorization of sales agencies of foreign transport enterprises in terms of requirements 
and procedures.  
                                               
42 That is, business entities with legal person status that are registered in the Chinese territory, 
have obtained the International Liner Shipping Qualification Registration Certificate in accordance with the Regulations of the People's Republic of China on International Ocean Shipping, and engage in international ocean shipping business. 
43 Notably in 2012 (WT/TPR/S/264/Rev.1, paragraphs 235 to 263, pages 152 to 158, and pages 222 
to 224), 2010 (WT/TPR/S/230/Rev.1, paragraphs 100 to 110, pages 91 to 93) and 2008 (WT/TPR/S/199/Rev.1, paragraphs 233 to 247, pages 166 to 169). WT/TPR/S/300 • China 
 
- 157 - 
 
  4.124.  The regulation imposes an extensive code of conduct on the sales agent and defines 
the level of qualification required for staff and their legal responsibilities, notably regarding the protection of data. In order to guarantee in formation safety and stability, service providers 
of foreign computer reservation systems are required by the new provisions to establish back-up 
enquiry systems at designated places within the territory of China to keep sales agency 
information, flight information, passenger information and other similar data generated by sales agencies of foreign air transport enterprises th rough the use of foreign computer reservation 
systems to make reservations and issue tickets within the territory of China. All foreign airlines 
(10) and all agents (15) that have so far applied for authorization under this new legal framework have obtained licences. 
4.125.  Regarding bilateral air transport agreements, Table 4.10 below updates the table contained 
in the last TPR Report of China. Detailed data  on China's air transport policy until 2005 are 
contained in the "QUASAR profile" of China. China's weighted air liberalization index was 5.5
44, and 
the highest and lowest indexes of the agreements covered by the study were 0 and 14, 
respectively. Since that document was issued, China has amended or concluded 18 new 
agreements. 
Table 4.10 Liberalization of air transport se rvices under China's bilateral air service 
agreements, 2011  
Partner Date 5th 7th Cabotage Coop Designation Withholding Pricing Capacity Stat ALI 
Afghanistan 2006 Y N N N Multi SOE DA PD Y 10 
Algeria 2006 Y N N Y Multi SOE DA PD Y 13 
Myanmar 2006 Y N N Y Multi SOE DA FD Y 21 
Saudi 
Arabia 2007 Y N N Y Multi SOE DA PD Y 13 
Tajikistan 2007 N N N N Multi SOE DA PD Y 4 
Zambia 2007 Y N N Y Multi SOE DA PD Y 13 
United 
Statesa 2007 Y Y N Y Multi SOE DD PD Y 25 
Angola 2008 Y N N Y Multi SOE DA PD N 13 
Tanzania 2008 Y N N Y Multi SOE DA PD Y 13 
PDR Korea 2008 N N N N Single SOE DA PD Y 0 
Sudan 2009 Y N N Y Multi SOE DA PD Y 13 
Chile 2009 Y N N Y Multi SOE CoO FD Y 24 
Croatia 2009 Y N N Y Multi SOE DA PD Y 13 
Russia 2010 Y N N Y Multi SOE DA PD Y 13 
ASEAN 2010 Y N N Y Multi SOEb CoO FD Y 24/26 
Switzerland 2010 Y N N N Multi SOE/PPoBc CoO PD Y 17 
Cameroon 2010 N N N Y Multi SOE CoO PD Y 10 
Georgia 2011 N N N Y Multi SOE CoO PD Y 10 
a Amending protocol. 
b With optional CoI (Community of In terest clause) for the ASEAN parties. 
c SOE for China, PPoB for Switzerland. 
Note: "5th" stands for fifth freedom rights; "7th" for seventh freedom rights ; "Coop" for cooperation 
clauses; "Stat" for statistics; "A LI" for Air Liberalization Index; "Y" for yes; "N" for no; "Multi" 
for multi-designation; "Single" for single designat ion; "SOE" for substantia l ownership and effective 
control; "PPoB" for principal place of business; "D A" for double approval; "DD" for dual disapproval; 
"CoO" for country of origin; "PD" for pre-dete rmination; and "FD" for free determination.  
Source : ICAO WASA data base; Science Po RITS databa se; and information prov ided by the Chinese 
authorities (ALI computed by the Secretariat). 
4.126.  China's recent bilateral agreements are notably more liberal than those in its 2005 
QUASAR profile. Aside from the agreement with Kore a PDR, they all have an ALI equal to or above 
ten, close to the high score recorded in the QUASAR profile (14), and largely above it for 
four agreements (Myanmar (21), United States (25), Chile (24), ASEAN (24/26)). Essentially, liberalization has been included in clauses on fi fth freedom rights (present in all new agreements 
except four); multi-designation (present in all new agreements except one); and cooperation 
                                               
44 WTO document S/C/W/270/Add.2, "QUASAR profile" of China, pp. I.329 to I.336. The scale ranges 
from 0 (classical "Bermuda II" ag reements) to 50 (full common avia tion market); for more details 
on the QUASAR methodology, see document S/C/W/270/Add.1, pp. I.9 to I.21. WT/TPR/S/300 • China 
 
- 158 - 
 
  on code-share, which is typical of "modern" agreements (present in all new agreements except 
four). In addition, there has been some (semi-) liberalization in "country of origin" pricing (in five cases) and in the rare but very liberal free determination of capacity (in three cases).  
4.2.5.3  Rail transport 
4.127.  The trade regime of rail transport services in China has been described in detail in previous 
TPR reports
45 and has remained unchanged in terms of market access. However, in institutional 
terms, the sector is undergoing a major reform. 
4.128.  In March 2013, the first session of the 12th National People's Congress considered 
and passed the Institutional Reform and Transf ormation of Government functions proposed 
by the State Council. Regarding railways, the reform  is based on the principle of the separation 
between regulation and operation. The main fe atures of this reform are the suppression 
of the Ministry of Railways, which was an inte grated body in charge both of regulation 
and operation, and the re-allocation of its func tions to three different entities. The Ministry 
of Transport will be in charge of macro-regula tion and notably of railway development planning 
and policies. The Ministry of Transport therefor e becomes responsible for the overall planning 
of developments in rail, road, waterways and civil aviation, so as to accelerate construction of a comprehensive transportation system. 
4.129.  The National Railways Administration, a newly established organ subordinate 
to the Ministry of Transport, will be in charge of  sectoral regulation, i.e. drafting railway technical 
standards and supervising and administering railway safety production, quality of transportation services and quality of railway construction.  
4.130.  Finally, a newly established China Railway Corporation will assume the corporate duties 
of the former Ministry of Railways to uniformly dispatch and direct railway transportation, operate railway passenger and cargo transportation, handle specific and special transportation tasks, 
construct railways and assume responsibility for ra ilway safety production as the main stakeholder. 
4.131.  The general railway policy to be implemented by this new institution is to continue 
to support the development of railway construction, in particular in the central and western parts 
of China, accelerate the reform of the investment and financing system and pricing reform, 
establish and improve the standardized subsidy mechanism for public welfare railways and transport, and expand the reform of rail way enterprises. The precise implementation 
measures are still being devised and no timetable has yet been set. 
4.2.6  Movements of natural persons 
4.132.  As a general policy and in a developmental perspective, China encourages the movement 
of the following types of foreign natural persons: senior technicians, managers, academic research 
personnel and people with special expertise. To that effect, the Chinese authorities have developed 
a complete management system and provide facilitation services to such foreigners. This policy and its implementation regimes apply to all employing units within the territory of China, including 
employment in non-services sectors and employment of foreigners by Chinese companies 
or entities. The scope of these policies is therefore wider than mode 4 stricto sensu . 
4.133.  There are two "tracks" or two regimes under which these foreign persons can work 
in China: one that is targeted at general foreign labour, managed by the Ministry of Human 
Resources and Social Security (MHRSS), and a second specific regime targeted at high-level 
and urgently-needed foreign talent managed by the State Administration of Foreign Experts Affairs (SAFEA).  
4.134.  For the first regime, the basic rules are contained in the 1996 "Rules on the Management 
of Employment of Foreign People in China" issu ed by the Ministry of Labour on 22 January 1996 
and revised by Decree No. 7 of the Ministry of Human Resources and Social Security 
on 12 November 2010. It sets out the corresponding conditions, market tests, qualification 
                                               
45 Notably in 2012 (WT/TPR/S/264/Rev.1, paragraphs 264 to 282, pages 158 to 161 and tables, 
pages 225 to 227, 169). WT/TPR/S/300 • China 
 
- 159 - 
 
  requirements and procedures. For the second regime the rules set forth and implemented 
by SAFEA are contained in the following three documents issued on 30 September 2004: the "Regulations on Working Licences for Foreign Experts in China"; the "Regulations on Qualification Approval of the Units Employing Foreign Experts"; and the "Regulations 
on Qualification Approval of the Overseas Units Introducing Foreign Culture and Education Experts 
to Work in China".  
4.135.  A new law on "Entry and Exit in the National Territory" (promulgated by the State Council 
on 30 June 2012 and entering into force on July 2013), supplemented by the "Regulation 
of the People's Republic of China on the Administra tion of the Entry and Exit of Foreign Nationals" 
(promulgated on 12 July 2013 as Decree No. 637 of the State Council and effective as of 1 September 2013), has created, inter alia , a new visa category for highly-skilled individuals 
whose expertise is in demand in China (R visa), as  well as a new M visa, to  be used for commercial 
trading visits (different from the F "business visitor" visa). The R visa is issued to "high-level and urgently-needed special foreign talents" identified by the competent departments 
of the Chinese Government. This law confirms the previously existing regime stipulating that 
foreigners wishing to work in China shall first obtain work permits and residence permits.  
4.136.  In addition, the two administrations invo lved in the management of foreigners working 
in China (MHRSS and SAFEA) are jointly drafting the implementation rules for that legislation, 
which will amend the present management rules with  the aim of stepping up efforts to introduce 
high-level and urgently-needed special foreign talents. In addition, other departments involved in the administration of foreigners working in China, including the Ministry of Foreign Affairs 
and the Ministry of Public Security, are form ulating the supporting regulations and policies 
in accordance with the newly amended "Exit and En try Administration Law of the People's Republic 
of China". However, the date of inception and th e precise content of the revised rules are not yet 
known. The new regime will probably merge th e two present regimes. The draft measures will 
be submitted to the State Council for examination and approval and issued in the form of administrative regulations. 
4.137.  The basic criterion for admission is that no Chinese nationals are available to fill 
the vacancy, except in cases where China has undertaken GATS commitments where no such economic needs tests apply. The conditions that foreign applicants must fulfil are the following: they should be over 18 years of age, healthy an d have no criminal record; they should have 
the skills and experience for the job
46 and, finally, they should ha ve an employer to hire them. 
4.138.  The procedure applicable is outlined in  Table 4.11 below comparing the main regulatory 
features of the two regimes as well as their interaction with China's GATS commitments.  
4.139.  For intra-corporate transfers, and in accordance with GATS commitments, the maximum 
duration of the residence permit is three years. The maximum duration of a labour contract being five years, the foreign person can, after three ye ars, ask for an extension of the residence permit. 
For non-intra-corporate transferees, the extension can be granted if a new examination proves 
that there is still a need for the talents of the person concerned.  
4.140.  The qualification requirements are defined at the sector/industry level. For instance, 
pilots have to take the corresponding Chinese examination. China applies the national treatment 
principle to those qualification requirements. 
4.141.  No quotas are set in the management rules for the employment of foreign nationals 
in China, but there are some quotas at the sector /industry level, such as fisheries. Those quotas 
are set in proportion to the number of Chinese nati onals employed. So far, these quotas only exist 
in a limited number of industries/sectors but new quotas will probably be introduced in other sectors/industries in the future, while the level of the quotas themselves will be raised.  
                                               
46 The skills and the professional experience of  the foreign expert shall mainly be assessed 
and evaluated by the employer but examined and verifi ed by the competent department dealing with foreign 
expert work permits. The main meth od is to check the application documents submitted and, when necessary, 
to confirm their truthfulness and accuracy through other means - co ntact with the foreign expert 
to be employed or relevant units or consultation with the relevant  agency abroad for verification. WT/TPR/S/300 • China 
 
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  Table 4.11 Comparative table of the two regimes applicable to foreign persons 
Regulatory 
elements General foreign labour regime "Foreign experts" regime 
Scope Foreign personnel employed 
in agriculture, industry, mining, services sectors not covered by China's GATS commitments, categories 
of services personnel 
not covered by GATS commitments GATS Commitments
 
 
Services sectors and categories of personnel covered by China's GATS commitments, i.e.: 
 
- senior employees (managers, executives and specialists) temporarily moving as intra-corporate transferees 
 
- senior employees (managers, executives and specialists) of foreign-invested companies  
- services salespersons Foreign personnel employed 
in agriculture, industry, mining, services sectors not covered by China's GATS commitments, categories 
of services personnel 
not covered by GATS commitments and qualifying for the status 
of "expert" i.e. meeting one 
of the following requirements:  3.1 having the status of foreign technical and 
managerial professionals who 
are employed to work in China for the purpose of executing inter-governmental, 
inter-organizational 
agreements, protocols, or China-foreign trade contracts; 3.2 having the status 
of foreign professionals 
who are employed to work in China in the fields of education, science, etc.; 
3.3 having the status 
of high-ranking foreign technical or managerial professionals who are employed to take 
up positions above deputy 
general managers or enjoy equivalent treatment in enterprises within the territory of P.R. China;  
3.4 having the status 
of the status of foreign resident representatives in China of foreign experts organizations or foreign talent 
agencies approved by SAFEA; 
3.5 having the status of foreign technical and managerial professionals 
with extraordinary expertise 
of which China is in urgent need, who are employed to work in China in the fields of economics, technology, 
engineering, trade, finance 
and accounting, taxation and tourism.  
Foreign experts referred to in 3.2 and 3.3
 above shall 
hold a bachelor's or higher 
degree and have at least 5 years' work experience in related jobs 
(language teachers shall hold 
a bachelor's or higher degree and have at least 2 years' work experience in related jobs).  
Main 
regulation 1996 Management rules 
on the management 
of employment of foreigners in 
China + Document GATS/SC/144 +  Regulations on the Issuance 
of Foreign Experts Work 
Licence, No. 139 
of 30 September 2004 
Market test Economic needs test to check 
that no Chinese national is able to fill the vacancy No economic
 
needs test No economic needs test  WT/TPR/S/300 • China 
 
- 161 - 
 
  Regulatory 
elements General foreign labour regime "Foreign experts" regime 
  GATS Commitments   
Procedure Four stages:  
1 Submission of an 
application for work permit 
by the employer to the local bureau of the Ministry of Social Security and Human Resources (MSSHR) followed 
by a market test 
and a qualification check by the same administration. 2. Application for and issue of a visa by the consulate(s) 
or embassy of the country 
of residence. 3. Application for and issue of an employment certificate 
by the MSSHR. 
4. Application for and issue of a residence permit by the Ministry for Public Security. As described in
 the 
left-hand column As described 
in the 
right-hand 
column Four stages: 
1. Submission of an 
application for a work permit 
by the employer to the State Administration for Foreign Experts Affairs at local level or above and a qualification 
check by the same 
administration. 2. Application for and issue of a visa by the consulate(s) or embassy of the country 
of residence. 
3. Application for and issue "of a foreign expert certificate" by the State 
Administration for Foreign 
Experts Affairs at provincial level or above. 4. Application for and issue of a residence permit by the 
Ministry for Public Security. 
Qualification 
requirements - Set at sector/industry level 
- National treatment applies As described in the 
left-hand column As described 
in the 
right-hand 
column Bachelo r's degree and five 
years of professional 
experience (two years 
for teachers). 
- National treatment applies. 
Quotas - Only in a limited number 
of industries/sectors. - Set in proportion to Chinese nationals. No quotas
 No quotas  No quotas 
Duration and 
renewal/ 
extension Three years with a possibility 
of extension of the residence 
permit by the Public Security 
Ministry to five years, 
the maximum duration 
of the work contract being 
five years. 
- A new economic needs test 
is conducted for non-intra- 
corporate transferees. - Three years for intra-corporate 
transferee. 
 
- The duration stipulated in the work 
contract or three years, whichever is 
shorter, for senior employees of foreign-
invested companies. 
 
- 90 days for services salespersons.   Three years with a possibility 
of extension of the residence 
permit by the Public Security 
Ministry to five years, 
the maximum duration 
of the work contract being 
five years. 
- No new economic need test 
for the renewal. 
Source: Information provided by the Chinese au thorities and compiled by the Secretariat. 
4.142.  The regime for foreign experts is managed by the SAFEA which additionally provides 
services to foreign experts working in China. The relevant regulations are the "Regulations on the Issuance of Foreign Experts' Work Licences", the "Regulations on the Qualification Recognition of the Host Institution for Foreign Experts" and the "Regulations on the Qualification 
Recognition of Overseas Organizations Introducing Foreign Experts in the Cultural and Educational 
Fields to Work in China", all of which were  promulgated on 30 September 2004 (Wai Zhuan Fa 
[2004] No. 139). 
4.143.  The procedures of this regime are largely similar to those of the regime for general foreign 
labour and are outlined in Table 4.11 above. Th ere are no restrictions on the type of sectors 
in which the foreign experts can work. In terms of qualifications, a bachelor's degree 
and five years' professional experience are th e minimum requirements. These requirements are 
lowered to two years' experience for teachers. There are no labour market tests and no quotas. Again, the national treatment principle is applied for these qualification requirements. The duration 
o f  s t a y  i s  d e c i d e d  b y  t h e  S A F E A  a f t e r  a n  e x a m i n a t i o n  o f  t h e  w o r k  c o n t r a c t  w i t h  t h e  e m p l o y e r .  
The extension of the residence permit falls within  the purview of the Public Security Ministry. 
4.144.  With the expansion of international exchan ges, China decided to encourage further foreign 
experts and talents to work in China and in 2012, for instance, the four administrations concerned 
(Ministry of Social Security and Human Resources, State Administration of Foreign Experts Affairs, 
the Ministry of Foreign Affairs and the Ministry for Public Security) published a joint policy document allowing these "high-level foreign talents" to apply for multiple-entry visas and 
two to five years' residence. 
 WT/TPR/S/300 • China 
 
- 162 - 
 
  REFERENCES 
Haley U.C.V. and Haley G.T. (2013), Subsidies to Chinese Industry, Oxford University Press. 
 IMF Country Report No. 13/211, People's Republic of China, 2013 Article IV Consultation, 
July 2013. Viewed at:  http://www.imf.org/external/p ubs/ft/scr/2013/cr13211.pdf . 
 
National Bureau of Statistics of China (2014), Statistical Communiqué of the People's Republic of 
China on 2013. 
 National Economic and Social Develo pment, 24 February 2014. Viewed at: 
http://www.stats.gov.cn/english/PressR elease/201402/t2 0140224_515 103.html . 
 
OECD (2013), Agricultural Policy Monitoring and Evaluation 2013, Paris.  
People's Bank of China (2013), Annual Report, 2012, pp. 16-17. Viewed at: 
http://www.pbc.gov.cn/publish/english/957/index.html . 
 
People's Bank of China (2014), Highlights and China's Monetary Policy in 2013. Viewed at: 
http://www.pbc.gov.cn/image_public/UserFiles/english/upload/File/2013 年货币政策大事记 .pdf. 
 
UNCTAD (2013) World investment Report 2013 – Global value chains: investment and trade for 
development.  United Nations, New York and Geneva, 2013. Viewed at: 
http://unctad.org/en/publicationslibrary/wir2013_en.pdf .  
 
WTO (2006), "Trade Policy Review – China", Geneva.  
WTO (2012), "Trade Policy Review – China", Geneva. 
 WT/TPR/S/300 • China 
 
- 163 - 
 
  5  APPENDIX TABLES 
Table A1.1 China's merchandise exports by group of products, 2009-13 
(US$ billion and %) 
  2009  2010  2011 2012 2013  
Total exports (US$ billion) 1,201.6 1,577.8 1,898.4 2,048.8 2,210.0 
 (% of total) 
 Exports under processing trade 48.8 46.9 44.0 42.1 39.0 
Total primary products 6.3 6.3 6.5 6.0 5.9 
 Agriculture 3.4 3.3 3.4 3.2 3.2 
 Food 2.9 2.8 2.9 2.7 2.7 
 Agricultural raw material 0.5 0.5 0.6 0.5 0.5 
 Mining 2.9 3.0 3.1 2.7 2.7 
 Ores and other minerals 0.2 0.2 0.2 0.2 0.2 
 Non-ferrous metals 1.0 1.1 1.2 1.1 1.0 
 Fuels 1.7 1.7 1.7 1.5 1.5 
Manufactures 93.6 93.6 93.3 94.0 94.0 
 Iron and steel 2.0 2.5 2.9 2.6 2.5 
 Chemicals 5.2 5.5 6.0 5.5 5.4 
 Other semi-manufactures 7.4 7.3 7.7 8.0 8.0 
 Machinery and transport equipment 49.2 49.5 47.5 47.1 47.0 
 Power generating machines 1.3 1.2 1.3 1.2 .. 
 Other non-electrical machinery 6.0 5.9 6.2 6.2 6.2 
 Office machines & telecommunication equipment 28.8 28.5 26.2 26.3 .. 
 7522 Data processing machines, with at least processing, 
 input and output units 6.1 6.4 5.8 5.8 .. 
 7643 Radio or television transmission apparatus 3.3 3.0 3.3 4.0 .. 
 7649 Parts and accessories for apparatus of division 76 2.9 3.0 2.9 2.7 .. 
 7764 Electronic integrated circuits and microassemblies 2.0 1.9 1.8 2.7 .. 
 7599 Parts and accessories of 751.1, 751.2, 751.9 and 752 2.2 2.0 1.6 1.5 .. 
 7763 Diodes, transistors, etc. 1.2 1.9 1.8 1.2 .. 
 7611 Colour television receivers 1.4 1.4 1.2 1.1 .. 
 7638 Sound/video recording/reproduc ing apparatus 1.8 1.3 1.1 1.0 .. 
 7527 Storage units for data processing 0.9 0.8 0.8 0.9 .. 
 Other electrical machines 7.7 7.9 7.7 7.5 .. 
 7712 Other electric power machinery; parts of 771 1.0 1.1 1.0 1.0 .. 
 7731 Insulated wire, cable etc.; optical fibre cables 0.8 0.8 0.8 0.9 .. 
 Automotive products 1.7 1.8 2.0 2.1 .. 
 7843 Other motor vehicle parts and accessories of 722, 
 781 to 783 1.0 1.1 1.1 1.1 .. 
 Other transport equipment 3.7 4.3 4.3 3.7 .. 
 7932 Ships, boats, etc. (excl. pleasure craft, tugs, etc.) 2.1 2.3 2.0 1.6 .. 
 Textiles 5.0 4.9 5.0 4.7 4.8 
 Clothing 8.9 8.2 8.1 7.8 8.0 
 8442 Suits, ensembles, jackets, dresses, etc. 0.9 0.9 1.0 1.2 .. 
 8453 Jerseys, pullovers, cardigans, etc., knitted/crocheted 1.2 1.1 1.1 1.0 .. 
 Other consumer goods 15.9 15.7 16.0 18.3 .. 
 8719 Liquid crystal devices, n.e.s.; lasers (excl. Laser 
 diodes) 1.7 1.8 1.7 1.9 .. 
 8973 Jewellery of gold, silver or platinum metals 
 (except watches) 0.2 0.5 0.9 1.2 .. 
 8211 Seats (excl. of 872.4), and parts 1.0 0.9 0.9 1.1 .. 
 8513 Footwear, n.e.s., rubber or plastic soles and uppers 0.9 0.9 0.9 0.9 .. 
Other 0.1 0.1 0.1 0.1 0.1 
.. Not available. 
Source: UNSD, Comtrade database (SITC Rev. 3), and General Administration of Customs (2013), 
China's Customs Statistics: Monthly Exports & Imports, 12, Series, No. 292. WT/TPR/S/300 • China 
 
- 164 - 
 
  Table A1.2 China's merchandise imports by group of products, 2009-13 
(US$ billion and %) 
  2009  2010  2011 2012 2013  
Total imports (US$ billion) 1,005.6 1,396.0 1,743.4 1,818.2 1,950.3 
 (% of total) 
 Imports under processing trade 32.1 29.9 26.9 26.5 25.5 
Total primary products 32.5 34.6 37.9 38.0 36.4 
 Agriculture 7.6 7.8 8.3 8.6 8.4 
 Food 4.5 4.3 4.3 5.0 5.0 
 2222 Soya beans 1.9 1.8 1.7 1.9 .. 
 Agricultural raw material 3.1 3.5 4.0 3.6 3.4 
 Mining 24.9 26.9 29.6 29.4 27.9 
 Ores and other minerals 8.8 9.8 10.6 9.1 9.1 
 2815 Iron ores and concentrates, not agglomerated 4.7 5.4 6.1 5.0 .. 
 2882 Other non-ferrous base metal waste and scrap, n.e.s. 0.9 1.2 1.2 1.0 .. 
 2831 Copper ores and concentrates 0.8 0.9 0.9 0.9 .. 
 Non-ferrous metals 3.8 3.5 3.2 3.0 2.6 
 6821 Copper anodes; alloys; unwrought 1.7 1.8 1.7 1.8 .. 
 Fuels 12.3 13.5 15.8 17.2 16.1 
 3330 Crude oils of petroleum and bituminous minerals 8.9 9.7 11.3 12.1 .. 
 3212 Other coal, whether or not pulverized, not agglomerated 0.8 1.1 1.0 1.2 .. 
Manufactures 67.1 64.1 59.2 58.2 .. 
 Iron and steel 2.6 1.8 1.6 1.3 1.1 
 Chemicals 11.1 10.7 10.4 9.8 9.8 
 5112 Cyclic hydrocarbons 0.8 0.7 0.9 0.9 .. 
 Other semi-manufactures 2.8 2.8 2.8 2.7 2.8 
 Machinery and transport equipment 40.6 39.4 36.2 35.9 36.4 
 Power generating machines 1.1 0.9 0.8 0.8 .. 
 Other non-electrical machinery 7.0 7.3 7.1 5.7 5.1 
 7284 Machinery and appliances for particular industries, n.e.s. 1.2 1.6 1.7 1.0 .. 
 Office machines & telecommunication equipment 21.3 19.9 17.5 19.1 .. 
 7764 Electronic integrated circuits and microassemblies 12.0 11.3 9.8 10.6 .. 
 7649 Parts and accessories for apparatus of division 76 2.3 1.9 2.0 2.3 .. 
 7527 Storage units for data processing 1.7 1.5 1.3 1.4 .. 
 7599 Parts and accessories of 751.1, 751.2, 751.9 and 752 1.4 1.4 1.0 1.0 .. 
 7763 Diodes, transistors, etc. 1.1 1.2 1.0 1.0 .. 
 Other electrical machines 6.1 5.7 5.1 4.7 .. 
 7722 Printed circuits 0.9 0.9 0.8 0.8 .. 
 Automotive products 3.1 3.8 4.0 4.1 .. 
 7812 Motor vehicles for the transport of persons, n.e.s. 1.4 2.1 2.3 2.5 .. 
 7843 Other motor vehicle parts and accessories of 722, 
 781 to 783 1.2 1.3 1.2 1.2 .. 
 Other transport equipment 2.1 1.8 1.6 1.6 .. 
 7924 Aeroplanes, etc. (excl. helicopters), >15,000 kg unladen 0.9 0.7 0.6 0.8 .. 
 Textiles 1.5 1.3 1.1 1.1 1.1 
 Clothing 0.2 0.2 0.2 0.2 0.3 
 Other consumer goods 8.3 7.9 7.1 7.2 .. 
 8719 Liquid crystal devices, n.e.s.; lasers (excl. laser diodes) 3.8 3.7 3.0 3.1 .. 
Other 0.3 1.3 2.8 3.8 .. 
.. Not available. 
Source: UNSD, Comtrade database (SITC Rev. 3), and General Administration of Customs (2013 ), 
China's Customs Statistics: Monthly Exports & Imports, 12, Series No. 292. WT/TPR/S/300 • China 
 
- 165 - 
 
  Table A1.3 China's merchandise exports by destination, 2009-13 
(US$ billion and %) 
  2009  2010  2011 2012 2013  
Total exports (US$ billion) 1,201.6 1,577.8 1,898.4 2,048.8 2,210.0 
 (% of total) 
 America 24.6 25.2 24.8 25.1 24.1 
 United States 18.4 18.0 17.1 17.2 16.7 
 Other America 6.2 7.2 7.7 7.9 7.4 
 Brazil 1.2 1.6 1.7 1.6 1.6 
 Canada 1.5 1.4 1.3 1.4 1.3 
 Mexico 1.0 1.1 1.3 1.3 1.3 
 Europe 21.0 21.0 20.1 17.5 16.5 
 EU (28) 19.8 19.8 18.8 16.4 15.3 
 Germany 4.2 4.3 4.0 3.4 3.0 
 The Netherlands 3.1 3.2 3.1 2.9 2.7 
 United Kingdom 2.6 2.5 2.3 2.3 2.3 
 France 1.8 1.8 1.6 1.3 1.2 
 Italy 1.7 2.0 1.8 1.3 1.2 
 EFTA 0.4 0.4 0.4 0.3 0.3 
 Other Europe 0.8 0.8 0.9 0.8 0.9 
 Commonwealth of Independent States (CIS) 3.2 3.4 3.5 3.7 3.8 
 Russian Federation 1.5 1.9 2.0 2.2 2.2 
 Africa 4.0 3.8 3.8 4.2 4.2 
 Middle East 4.3 4.0 4.2 4.2 4.3 
 United Arab Emirates 1.6 1.3 1.4 1.4 1.5 
 Asia 43.0 42.6 43.5 45.3 47.1 
 Japan 8.1 7.7 7.8 7.4 6.8 
 Six East Asian Traders 25.2 24.9 25.0 27.2 29.0 
 Hong Kong, China 13.8 13.8 14.1 15.8 17.4 
 Korea, the Republic of 4.5 4.4 4.4 4.3 4.1 
 Malaysia 1.6 1.5 1.5 1.8 2.1 
 Singapore 2.5 2.1 1.9 2.0 2.1 
 Chinese Taipei 1.7 1.9 1.8 1.8 1.8 
 Thailand 1.1 1.3 1.4 1.5 1.5 
 Other Asia 9.6 10.1 10.6 10.7 11.3 
 Viet Nam 1.4 1.5 1.5 1.7 2.2 
 India 2.5 2.6 2.7 2.3 2.2 
 Australia 1.7 1.7 1.8 1.8 1.7 
 Indonesia 1.2 1.4 1.5 1.7 1.7 
Memorandum:      
APEC 61.6 61.2 61.3 63.8 65.0 
ASEAN 8.8 8.8 9.0 10.0 11.0 
Source: UNSD, Comtrade database (SITC Rev. 3), and General Administration of Customs (2013 ), 
China's Customs Statistics: Monthly Exports & Imports, 12, Series No. 292. WT/TPR/S/300 • China 
 
- 166 - 
 
  Table A1.4 China's merchandise imports by origin, 2009-13 
(US$ billion and %) 
  2009  2010  2011  2012 2013  
Total imports (US$ billion) 1,005.6 1,396.0 1,743.4 1,818.2 1,950.3 
 (% of total) 
 America 15.3 15.0 15.1 15.5 15.6 
 United States 7.7 7.4 7.1 7.4 7.8 
 Other America 7.6 7.6 8.1 8.2 7.8 
 Brazil 2.8 2.7 3.0 2.9 2.8 
 Canada 1.2 1.1 1.3 1.3 1.3 
 Chile 1.3 1.3 1.2 1.1 1.1 
 Europe 13.9 13.8 14.1 13.3 14.6 
 EU (28) 12.7 12.1 12.1 11.7 11.3 
 Germany 5.5 5.3 5.3 5.1 4.8 
 France 1.3 1.2 1.3 1.3 1.2 
 EFTA 1.0 1.5 1.8 1.4 3.1 
 Switzerland 0.7 1.2 1.6 1.3 2.9 
 Other Europe 0.2 0.3 0.2 0.2 0.3 
 Commonwealth of Independent States (CIS) 3.1 3.0 3.8 4.0 3.6 
 Russian Federation 2.1 1.9 2.3 2.4 2.0 
 Africa 4.3 4.8 5.3 6.2 6.0 
 Angola 1.5 1.6 1.4 1.8 2.5 
 South Africa 0.9 1.1 1.8 2.5 1.6 
 Middle East 5.6 6.2 7.7 8.0 8.0 
 Saudi Arabia 2.3 2.4 2.8 3.0 2.7 
 Iran, Islamic Republic 1.3 1.3 1.7 1.4 1.3 
 Oman 0.5 0.7 0.9 0.9 1.1 
 Asia 49.2 49.5 46.6 44.7 43.8 
 Japan 13.0 12.7 11.2 9.8 8.3 
 Six East Asian Traders 27.1 26.8 24.8 24.4 24.0 
 Korea, the Republic of 10.2 9.9 9.3 9.3 9.4 
 Chinese Taipei 8.5 8.3 7.2 7.3 8.0 
 Malaysia 3.2 3.6 3.6 3.2 3.1 
 Thailand 2.5 2.4 2.2 2.1 2.0 
 Singapore 1.8 1.8 1.6 1.6 1.5 
 Other Asia 9.1 10.0 10.6 10.5 5.6 
 Australia 3.9 4.4 4.7 4.7 5.1 
 Indonesia 1.4 1.5 1.8 1.8 1.6 
 Philippines 1.2 1.2 1.0 1.1 0.9 
 Other 8.6 7.8 7.4 8.2 8.3 
 Chinaa 8.6 7.7 7.0 7.9 8.1 
Memorandum:      
APEC 69.0 67.6 64.4 64.0 63.4 
ASEAN 10.6 11.1 11.1 10.8 10.2 
a Includes goods that have been  exported from China and therea fter reimported into China. 
Source: UNSD, Comtrade database (SITC Rev. 3), and General Administration of Customs (2013), 
China's Customs Statistics: Monthly Exports & Imports, 12, Series No. 292. WT/TPR/S/300 • China 
 
- 167 - 
 
  Table A2. 1 Principal notifications unde r WTO Agreements (as at 30 April 2014)   
Agreement Requirement/content  Document symbol and date 
of latest notification 
Agreement on Agriculture  
Articles 10 and 18.2 Table ES:1 – Export subsidies for 2012   G/AG/N/CHN/27, 07/03/2014 
Article 18.2 Table MA:2 – Tariff quotas  G/AG/N/CHN/26, 07/03/2014 
Article 18.2 Table MA:1 – Administration of tariff quotas  G/AG/N/CHN/2, 25/09/2003 
Article 18.2 Table DS:1 and appropriate supporting tables –  
Domestic support G/AG/N/CHN/21, 13/10/2011 
Article 18.3 Table DS:2 – Domestic support  G/AG/N/CHN/18, 25/03/2010 
Article XXIV of GATT 1994  
Article XXIV:7(a) of GATT 
1994 and Article V:7(a) 
of GATS Free Trade Agreement between China 
and Costa Rica WT/REG310/N/1 and S/C/N/618, 
28/02/2012 
Article XXIV:7(a) of GATT 
1994 and Article V:7(a) of GATS Free Trade Agreement between China and
 Peru WT/REG281/N/1 and S/C/N/537, 
03/03/2010 
Article XXIV:7(a) of GATT 
1994 and Article V:7(a) 
of GATS Free Trade Agreement between China 
and New Zealand WT/REG266/N/1 and S/C/N/491, 
23/04/2009 
Article XXIV:7(a) of GATT 1994 and Article V:7(a) of GATS  Free Trade Agreement between China 
and Singapore WT/REG262/N/1 and S/C/N/483, 
04/03/2009 
Enabling Clause  
Enabling Clause - LDCs Duty-free treatment for LDCs  WT/COMTD/N/39, 18/10/2011 
G/C/W/656/Rev.1 WT/COMTD/N/39/Add.1/Rev.1, 01/12/2011 
Enabling Clause - integration Framework agreement on comprehensive 
economic cooperation between ASEAN and China  WT/COMTD/N/20/Add.1, 26/09/2005  
 China's accession to the Bangkok Agreement  WT/COMTD/N/19, 29/07/2004 
 Amendment to the Bangkok Agreement  WT/COMTD/N/22, 27/07/2007 
Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping)  
Article 5.8 Time-period for determination of negligible 
import volumes G/ADP/N/100/CHN, 20/10/2004 
Article 16.4 Semi-annual reports of anti-dumping actions 
(taken within the preceding six months) G/ADP/N/252/CHN, 05/02/2014 
Article 18.5, and Article 32.6 
of the Agreement on Subsidies 
and Countervailing Measures Decree of the Ministry of Commerce concerning 
Publication of Rules on Information Access 
and Information Disclosure in Industry Injury 
Investigations No. 19, 2006 G/ADP/N/1/CHN/2/Suppl.6, 
19/10/2007 
 Rules of the Supreme People's Court on Certain 
Issues Related to Application of Law in Hearings 
of Anti-Dumping Administrative Cases G/ADP/N/1/CHN/2/Suppl.5, 
11/01/2007 
 Notification of the newly amended Foreign 
Trade Law G/SCM/N/1/CHN/1/Suppl.4 
G/ADP/N/1/CHN/2/Suppl.4 
G/SG/N/1/CHN/2/Suppl.4, 
01/12/2004 
 Names of laws and regulations relevant 
to the Agreement  G/ADP/N/1/CHN/1, 31/05/2002 
 Regulations on anti-dumping  G/ADP/N/1/CHN/2/Suppl.3, 
20/10/2004 
 Provisional rules on initiation of anti-dumping 
investigations G/ADP/N/1/CHN/2/Suppl.1, 
18/02/2003 
 Rules on anti-dumping investigations 
and determinations of industry injury; 
rules on public hearings with regard 
to investigations of injury to industry G/ADP/N/1/CHN/2/Suppl.2, 
14/04/2003 
Article 16.5, and Article 25.12 of the Agreement on Subsidies and Countervailing Measures Notification of competent authority
 G/ADP/N/14/Add.22 
G/SCM/N/18/Add.22, 10/10/2006 
Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation)  
Article 22.2 Administrative measure regarding 
customs valuation G/VAL/N/1/CHN/5, 11/04/2008 
 Regulations on import and export duties  G/VAL/N/1/CHN/4, 07/06/2004 
 Notification of the customs regulations regarding 
determination of customs value of royalties 
and licence fees related to imports G/VAL/N/1/CHN/3, 24/09/2003 
 Customs law  G/VAL/N/1/CHN/2, 16/06/2003 
 Customs administration regarding determination 
of customs valuation of imports and exports G/VAL/N/1/CHN/1, 05/07/2002 
Decision on the checklist 
of issues Checklist of issues  G/VAL/N/2/CHN/1, 05/07/2002 
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 G/STR/N/9/CHN/Add.1, 14/07/2003, 
and G/STR/N/9/CHN/Add.1/Corr.1, 
25/09/2003 WT/TPR/S/300 • China 
 
- 168 - 
 
  Agreement Requirement/content  Document symbol and date 
of latest notification 
Article VII  Notifications on the valuation of carrier 
media-bearing software for data processing equipment, and on the treatment of interest charges in customs value of imported goods G/VAL/N/3/CHN/1, 27/02/2004 
General Agreement on Trade in Services  
Article III:3 Significant changes  No notifications in 2008 
 Regulations on Administration 
of Foreign-Invested Construction Enterprises S/C/N/566, 15/09/2010 
 Regulations on Administration 
of Foreign-Invested Construction 
and Engineering Service Enterprises S/C/N/565, 15/09/2010 
 Measures for the Administration on the 
Establishment of Partnership Business 
by Foreign Enterprises or Individuals in China S/C/N/564, 15/09/2010 
Articles III:4 and IV:2 Contact and enquiry points  S/ENQ/78/Rev.11, 26/10/2009 
Article V:7(a) of GATS  
(already referred to) Notification of RTA –  China and Costa Rica  WT/REG310/N/1 and S/C/N/618 
28/02/2012 
 Free Trade Agreement between China 
and Pakistan S/C/N/551, 21/05/2010 
Paragraph 14 of the 
Transparency Mechanism for 
Regional Trade Agreements 
(WT/L/671) and Article V:7(a) 
of GATS  Supplement VII to the Closer Economic 
Partnership Arrangement between China 
and Hong Kong, China and Supplement VII 
to the Closer Economic Partnership Arrangement 
between China and Macao, China WT/REG162/N/1/Add.4 
S/C/N/264/Add.4, 03/12/2010 
WT/REG163/N/1/Add.4  
S/C/N/265/Add.4, 17/12/2010 
Article VII:4 Existing Article VII:1 recognition measures  None 
Agreement on Preshipment Inspection  
Article 5  Notification of laws and regulations related 
to the Agreement None 
Agreement on Import Licensing Procedures  
Articles 1.4(a) and 8.2(b) Rules and measures on import licensing 
and import quotas  G/LIC/N/1/CHN/1, 20/09/2002 
G/LIC/N/1/CHN/1/Add.1, 23/09//2002  
G/MA/W/41, 23/09/2002 
Article 8.2(b) Notification of rules and measures on import 
quotas for various products G/LIC/N/1/CHN/2, 25/09/2002 
 Products subject to import licence (2004)  G/LIC/N/1/CHN/4, 17/01/2005 
 Notification of regulations and rules on import 
licensing G/LIC/N/1/CHN/6, 24/03/2010  
Article 7.3 Responses to questionnaire on import licensing 
procedures G/LIC/N/3/CHN/12, 28/02/2014 
Quantitative Restrictions  
QR - (G/L/59) - biennial  Notification of quantitative restrictions  G/MA/NTM/QR/1/Add.11, 11/04/2008  
Agreement on Rules of Origin  
Article 5 and Paragraph 4 of 
Annex II Preferential rules of origin  G/RO/N/37/Rev.1, 02/08/2002 
Agreement on Safeguards  
Article 12.1(a) - (c), and 
Article 9.1 footnote 2 Safeguard investigations, findings, and decisions  G/SG/N/10/CHN/1/Suppl.1, 
04/02/2004 
Article 12.4  Consultations  G/SG/N/11/CHN/1; G/SG/N/6/CHN/1; 
G/SG/N/7/CHN/1, 23/05/2002 
Article 12.5 and Article 8.2 Notification of proposed  suspension 
of concessions and other obligations referred to in Article 8.2 of the 
Agreement on Safeguards. G/C/17; G/SG/46, 21/05/2002 
Article 12.6 Notification of laws, regulations 
and administrative procedures relating 
to safeguard measures  G/SG/N/1/CHN/1, 07/06/2002 
 Regulations on Safeguards  G/SG/N/1/CHN/2/Suppl.3, 
20/10/2004 
 Rules on investigations and determinations 
of industry injury for safeguards; rules on public 
hearings with regard to investigations of injury 
to industry G/SG/N/1/CHN/2/Suppl.2, 
15/04/2003 
Agreement on the Application of Sanitary and Phytosanitary Measures  
Article 7 and Annex B Notifications in 2014  = 15 
Notifications in 2013 = 90 
Notifications in 2012 = 25 G/SPS/N/CHN/635-649 
G/SPS/N/CHN/545-634 
G/SPS/N/CHN/520-544 
Article 7 and Annex B Enquiry points  G/SPS/ENQ/25, 15/10/2009 
Agreement on Subsidies and Countervailing Measures  
Article 25.1  Programmes granted or maintained at the 
central government level during the period from 2005 to 2008. G/SCM/N/186/CHN   
G/SCM/N/155/CHN  
21/10/2011 
Article 25.11 Semi-annual report on countervailing 
duty actions G/SCM/N/267/CHN, 05/02/2014 WT/TPR/S/300 • China 
 
- 169 - 
 
  Agreement Requirement/content  Document symbol and date 
of latest notification 
Article 32.6 Notification of the amended Foreign Trade Law  G/SCM/N/1/CHN/2/Suppl.4, 
01/12/2004 
 Regulations on countervailing measures  G/SCM/N/1/CHN/1/Suppl.3, 
20/10/2004 
 Rules on investigations and determinations 
of industry injury for countervailing measures; 
rules on public hearings with regard to investigations of injury to industry G/SCM/N/1/CHN/1/Suppl.2, 
14/04/2003 
  Provisional rules on countervailing investigations  G/SCM/N/1/CHN/1/Suppl.1, 
18/02/2003 
Agreement on Technical Barriers to Trade (TBT)  
Annex 3C Acceptance of code of good practice  G/TBT/CS/N/143, 21/05/2002 
G/TBT/CS/N/138, 12/12/2001 and 
Corr.1, 30/01/2002 
Article 15.2 Laws and regulations on the implementation 
and administration of the TBT Agreement G/TBT/2/Add.65, 29/01/2002 
Article 2.10 Notification – Gasoline for motor vehicles  G/TBT/N/CHN/1017,  
20/12/2013 
Article 2.9 Notification of technical regulations:  
Notifications in 2012 = 74  
 
 
Notifications in 2013 = 81 
 
 
 
 
 
 
 
 
 
 
 
Notifications in 2014 = 12 G/TBT/N/CHN/863-908,912-937;  
G/TBT/N/CHN/448/Rev.1; 
G/TBT/N/CHN/162/Rev.1. 
 
G/TBT/N/CHN/938-964, 967-989, 
996-1016; 
G/TBT/N/CHN/681/Rev.1; 
G/TBT/N/CHN/331/Rev.1; 
G/TBT/N/CHN/299/Rev.1; 
G/TBT/N/CHN/263/Rev.1; 
G/TBT/N/CHN/236/Rev.1; 
G/TBT/N/CHN/233/Rev.1; 
G/TBT/N/CHN/169/Rev.1; 
G/TBT/N/CHN/119/Rev.1; 
G/TBT/N/CHN/23/Rev.1; 
 
G/TBT/N/CHN/1018-1029. 
Article 5.6 Notifications in 2012 = 1  
Notifications in 2013 = 6 G/TBT/N/CHN/911; 
G/TBT/N/CHN/990-995. 
Article 5.7 Notification – Medical devices  G/TBT/N/CHN/966, 
04/06/2013 
Agreement on Trade-Related Aspect s of Intellectual Property Rights   
Article 63.2 Revised Rules for the Implementation of the 
Patent Law  IP/N/1/CHN/4, 24/08/2011 
IP/N/1/CHN/P/3, 26/08/2011 
 Revised Patent Law  IP/N/1/CHN/3, 15/12/2010 
IP/N/1/CHN/P/2, 21/12/2010 
 Laws and regulations  IP/N/1/CHN/2, 10/10/2003 
IP/N/1/CHN/2/Add.1, 25/08/2004 
 Checklist of issues on enforcement  IP/N/6/CHN/1, 19/07/2002 
 Regulations on computer software protection  IP/N/1/CHN/C/2/Rev.1, 13/10/2003  
 Regulations on protection of new varieties 
of plants IP/N/1/CHN/P/1, 08/07/2002 
Article 69 Contact points IP/N/3/Rev.9/Add.1, 31/01/2006  
Agreement on Trade-Related Investment Measures   
Article 6.2 Publications G/TRIMS/N/2/Rev.19, 30/09/2009 
Source: WTO documents. 
 WT/TPR/S/300 • China 
 
- 170 - 
 
  Table A2. 2 WTO dispute settlement cases,  1 January 2012 - 31 December 2013  
(In reverse chronological order) 
Subject Respondent/ 
complainant/ 
appellant Request for 
consultation 
received  Status (as at 
31 Dec. 2013) WTO  
document  
series 
China as respondent     
Measures Imposing Anti-Dumping 
Duties on High-Pe rformance Stainless 
Steel Seamless Tubes ("HP-SSST") 
from the European Union China/ 
European Union 13/06/2013 Panel composed WT/DS460 
Measures Imposing Anti-Dumping 
Duties on High-Pe rformance Stainless 
Steel Seamless Tubes ("HP-SSST") from Japan China/ 
Japan 20/12/2012 Panel composed WT/DS454 
Measures Relating to the Production 
and Exportation of Apparel 
and Textile Products China/ 
Mexico 15/10/2012 In consultations WT/DS451 
Certain Measures Affecting 
the Automobile and Automobile-Parts 
Industries China/ 
United States 17/09/2012 In consultations WT/DS450 
Anti-Dumping and Countervailing 
Duties on Certain Automobiles from the 
United States China/ 
United States 05/07/2012 Panel composed WT/DS440 
Measures Related to the Exportation 
of Rare Earths, Tungsten 
and Molybdenum China/ 
Japan 13/03/2012 Panel composed WT/DS433 
Measures Related to the Exportation 
of Rare Earths, Tungsten 
and Molybdenum China/ 
European Union 13/03/2012 Panel composed WT/DS432 
Measures Related to the Exportation 
of Rare Earths, Tungsten 
and Molybdenum China/ 
United States 13/03/2012 Panel composed WT/DS431 
China as complainant      
Certain Methodologies and their 
Application to Anti-Dumping Proceedings Involving China United States/ 
China 03/12/2013 In consultations WT/DS471 
Certain Measures  Affecting the 
Renewable Energy Generation Sector European Union 
and Certain 
Member States/ 
China 05/11/2012 In consultations WT/DS452 
Countervailing and Anti-Dumping 
Measures on Certain Products 
from China United States/ 
China 17/09/2012 Panel composed WT/DS449 
Countervailing Duty Measures 
on Certain Products from China United States/ 
China 25/05/2012 Panel composed WT/DS437 
China as a third party      
Anti-Dumping and Countervailing 
Measures on Large Residential Washers 
from Korea,  the Republic of United States/ 
Korea, Republic 
of 29/08/2013 Panel 
established, 
but not yet 
composed WT/DS464 
Recycling Fee on Motor Vehicles Russian 
Federation/ 
European Union 09/07/2013 Panel 
established, 
but not yet composed WT/DS462 
Measures Relating to the Importation 
of Textiles, Apparel and Footwear Colombia/ 
Panama 18/06/2013 Panel composed WT/DS461 
Additional Duty on Imports of Certain 
Agricultural Products Peru/ 
Guatemala 12/04/2013 Panel composed WT/DS457 WT/TPR/S/300 • China 
 
- 171 - 
 
  Subject Respondent/ 
complainant/ 
appellant Request for 
consultation 
received  Status (as at 
31 Dec. 2013) WTO  
document  
series 
Importation of Horticultural Products, 
Animals and Animal Products Indonesia/ 
United States 10/01/2013 Panel 
established, 
but not yet 
composed WT/DS455 
Measures Relating to Trade in Goods 
and Services Argentina/ 
Panama 12/12/2012 Panel composed WT/DS453 
Measures Affectin g the Importation 
of Animals, Meat and Other Animal 
Products from Argentina United States/ 
Argentina 30/08/2012 Panel composed WT/DS447 
Measures Affectin g the Importation 
of Goods Argentina/ 
Japan 21/08/2012 Panel composed WT/DS445 
Measures Affectin g the Importation 
of Goods Argentina/ 
United States 21/08/2012 Panel composed WT/DS444 
Measures Affectin g the Importation 
of Goods Argentina/ 
European Union 25/05/2012 Panel composed WT/DS438 
Countervailing Measures on Certain 
Hot-Rolled Carbon Steel Flat Products 
from India United States/ 
India 12/04/2012 Panel composed WT/DS436 
Certain Measures Concerning 
Trademarks, Geographical Indications 
and Other Plain Packaging 
Requirements Applicable to Tobacco Products and Packaging Australia/ 
Honduras 04/04/2012 Panel 
established, 
but not yet 
composed WT/DS435 
Certain Measures Concerning 
Trademarks and Other Plain Packaging 
Requirements Applicable to Tobacco 
Products and Packaging Australia/ 
Ukraine 13/03/2012 Panel 
established, 
but not yet 
composed WT/DS434 
Measures Concerning the Importation 
of Certain Agricultural Products India/ 
United States 06/03/2012 Panel composed WT/DS430 
Anti-Dumping Measures on Certain 
Shrimp from Viet Nam United States/ 
Viet Nam 22/02/2012 Panel composed WT/DS429 
Appeals to the Appellate Body 
involving China as a complainant 
or respondent to the dispute, and/or as an appellant      
Countervailing and Anti-Dumping 
Duties on Grain Oriented Flat-rolled 
Electrical Steel from the United States China/ 
United States/ 
China 15/09/2010 Report(s) 
adopted, with 
recommendation 
to bring 
measure(s) into 
conformity WT/DS414 
Implementation (Articles 21.5 
and 22.6)      
None     
Source:  WTO Secretariat.  WT/TPR/S/300 • China 
 
- 172 - 
 
  Table A2. 3 Special Administrative Measures  (Negative List) on Foreign Investment 
Access to the China (Shanghai) Pilot Free Trade Zone (2013)  
Category/ 
Sub-category  Specific regulations  
Agriculture, forestry, husbandry and fisheries 
Agriculture 1. Planting/breeding for traditional Chinese medicine 
(equity or cooperative joint ventures only)  
2. Breeding of new crops, seeds production 
(restricted, equity controlled by Chinese partya)  
3. Crops seeds enterprises (equity or cooperative joint ventures only; minimum 
registered capital of US$2 million for investing in seeds of grain, cotton and oil 
crops, with Chinese participation over 50%; minimum registered capital of US$0.5 
million for investing in other seeds)  
4. Cotton (seed cotton) processing (restricted)  
Forestry 5. Processing of logs derive d from rare species of woods 
(restricted, equity or cooperative joint ventures only)  
Agriculture, forestry, 
husbandry, fisheries services  R&D, breeding, cultivation of rare or pe culiar species and production of relevant 
propagation materials including superior genes in crops, husbandry and aquatic 
sectors; R&D in Genetically Modified Orga nisms (GMO) and production of genetically 
modified crop seeds, animal and aquatic breeds (prohibited) 
Fisheries Fishing of aquatic products of sea areas and inland waters within China (prohibited)  
Mining 
Coal exploitation and cleaning  Exploitation of special and rare types of coal resources 
(restricted, equity controlled by Chinese party)  
Oil and natural gas exploration  1. Coal bed gas exploration and comprehensive utilization of mine gas 
(equity or cooperative joint ventures only)  
2. Oil and natural gas exploitation (equity or cooperative joint ventures only)  
3. Exploitation of low permeability oil and gas reservoirs (fields) 
(equity or cooperation joint ventures only)  
4. Development and application of new technologies to improve oil recovery 
(equity or cooperative joint ventures only)  
5. Development and application of new technologies in oil exploration and 
exploitation (e.g. geophysical prospecting, drilling, measuring, logging, down-hole 
operation) (equity or cooper ative joint ventures only)  
6. Exploitation of unconventional oil resources such as oil shale, oil sands, heavy 
crude oil and extra-heavy crude oil (equity or cooperative joint ventures only)  
7. Exploitation of unconventional natural gas resources such as shale gas, 
submarine natural gas hydrate (equity or cooperative joint ventures only) 
Ferrous metal mining  Pyrites exploitation and ore dressing/beneficiation operations; 
and ludwigite exploitation (restricted)  
Non-ferrous metal mining  1. Szaibelyite exploitation; lithium exploitation and ore dressing/beneficiation 
operations; and exploitation of noble metals (gold, silver and platinum group) 
(restricted)  
2. Exploitation of tungsten, molybdenum, tin and antimony; and exploitation and 
ore dressing/beneficiation operations of rare earth, radioactive minerals 
(prohibited) 
Non-metals mining  1. Exploitation of barytes (restricted, equity or cooperative joint ventures only)  
2. Exploitation of important non-metal ores  such as diamond, high aluminium fire 
clay, wollastonite, graphite; phosphorite exploitation and ore dressing/beneficiation operations; refinery of salt-lake brine resources; and exploitation of celestite (restricted)  3. Exploitation of marine manganese nodules and sea sands (restricted, equity controlled by Chinese party)  4. Exploitation of fluorite (prohibited) 
Ancillary mining activities  Processing of ludwigite ores (restricted)  
Manufacturing 
Grain grinding Processing of rice and flour (restricted) 
Plant oil processing Processing of edible oils such as soy oil, rapeseed oil, peanut oil, cottonseed oil, 
camellia oil, sunflower oil, palm oil (restricted, equity controlled by Chinese party) 
Aquatic product processing  2. Production of biological liquid fuels (ethanol fuel, biodiesel) 
(restricted, equity controlled by Chinese party)  
Other farm and sideline food processing  Corns deep-processing (restricted)  
Alcohol manufacturing Production of yellow rice wine ("huangjiu"), famous and high-quality Chinese spirits 
(restricted, equity controlled by Chinese party)  
Refined tea processing  Processing of green tea with Chinese traditional handicraft and special tea 
(including famous tea, dark tea, etc.) (prohibited) 
Tobacco redrying Processing and production of leaf tobacco (i.e. threshing and redrying) (restricted)  
Other tobacco related 
products  Processing of cellulose diacetate or tow (e quity or cooperative joint ventures only)  WT/TPR/S/300 • China 
 
- 173 - 
 
  Category/ 
Sub-category  Specific regulations  
Paper pulp and paper 
manufacturing Mainly using overseas timber resources, pr oduction of chemical wood pulp with a 
single production line of 300,000-ton capa city per year or above, and chemical 
ground wood pulp with a single production  line of 100,000-ton capacity per year or 
above, as well as simultaneous production  of high-quality paper or containerboard 
(equity or cooperative joint ventures only)  
Printing  Printing of publications (restricted,  equity controlled by Chinese party with minimum 
registered capital of RMB 10 million)  
Reproduction of recorded 
media  Read-only CD reproduction (e quity or cooperative joint ventures only, and equity 
controlled or dominated by Chinese party)  
Arts and crafts products 
manufacturing  Ivory carving, tiger bone processing, production of bodiless lacquer ware, 
enamelwork, Chinese art paper and ink ingot (prohibited) 
Refined petroleum products 
manufacturing Atmospheric and vacuum oil refining below 10 million tons per year; catalytic 
cracking below 1.5 million tons per year; continuous catalytic reforming below 1 
million tons per year (including aromatics extraction); and hydrocracking below 1.5 
million tons per year (restricted)  
Nuclear fuel processing  Smelting and processing of radioactive minerals (prohibited) 
Basic chemical raw materials 
manufacturing Production of polyvinyl chloride (through  acetylene method only), ethene with 
limited capacity and post-processing products, calcined soda, caustic soda, 
sulphuric acid, nitric acid, potassium carbonate and inorganic salt (restricted)  
Coating, printing ink, pigment 
and similar products manufacturing  Production of benzidine, dyes and coatings (restricted)  
Synthetic materials 
manufacturing Production of butadiene rubber (excluding high cis-butadiene rubber), emulsion 
polymerized styrene butadiene rubber and thermoplastic styrene-butadiene-styrene 
rubber (restricted)  
Specialty chemical products 
manufacturing Production of precursor chemicals (ephedrine, 3,4-methylenedioxyphenyl-2-
propanone, phenylacetic acid, 1-phenyl2- propanone, piperonal, safrole, isosafrole and acetic anhydride), hydrogen fluoride and other low-end chlorofluorocarbon or chlorofluoro-compounds, and photos ensitive materials (restricted)  
Explosive, fire engineering 
and fireworks manufacturing Arms and ammunition manufacturing (prohibited) 
Manufacturing of active 
pharmaceutical ingredients for chemical medicines  Production of narcotic drugs and active pharmaceutical ingredients for first class 
of psychotropic drugs (restricted, equity controlled by Chinese party) 
Chemical medicines 
manufacturing Production of chloramphenicol, penicillin G, jiemycin, gentamicin, 
dihydrostreptomycin, amikacin, totomycin, oxytetracycline, mydecamycin, 
kitasamycin, ciprofloxacin, norfloxacin, ofloxacin, analgin, paracetamol, vitamin B1, 
vitamin B2, vitamin C, vitamin E, multiple x vitamin preparations and oral calcium 
preparations (restricted)  
Traditional Chinese medicine 
decoction pieces processing  Processing of materials for traditional Chinese medicines as listed in the 
"Regulations on Protection of Wild Medical Resources"  and the "Catalogue of 
Rare and Endangered Chinese Plants" (prohibited)  
Traditional Chinese medicine 
patent drug manufacturing Processing of traditional Chinese medicines (through steaming, frying, 
moxibustion, calcination, etc.); and production of traditional Chinese medicine 
patent drugs with secret formulas (prohibited) 
Biopharmaceuticals 
manufacturing  Production of blood products, vaccines which fall inside the scope of the national 
immunization plan (restricted)  
Synthetic fibre manufacturing  Chemical fibres spinning of conventional chipper, production of viscose fibre 
(restricted)  
Commonly used non-ferrous 
metal smelting Smelting of non-ferrous metals (e.g. elec trolytic aluminium, copper, lead, zinc) 
(restricted) 
Rare earth metal smelting  1. Smelting of rare non-ferrous metals (e.g. tungsten, molybdenum, tin (excluding 
tin compounds), antimony (including antimony oxides and antimony sulphides)) 
(restricted)  
2. Rare earth metal smelting and separation 
(restricted, equity or cooperative joint ventures only)  
Material handling/moving 
equipment manufacturing 1. Production of wheeled or craw ler cranes (400 tons and above) 
(equity or cooperative joint ventures only)  
2. Production of wheeled or crawler cranes (below 400 tons) 
(restricted, equity or cooperative joint ventures only)  
Bearings, gears and 
transmission components 
manufacturing  Production of all types of ordinary leve l (P0) bearings and parts (steel balls, 
retainers), blanks (restricted)  WT/TPR/S/300 • China 
 
- 174 - 
 
  Category/ 
Sub-category  Specific regulations  
Mining, metallurgy 
and construction specialty equipment manufacturing  1. Design of deep water (more than 3,000 metres) marine engineering equipment 
(equity or cooperative joint ventures only)  2. Manufacturing of marine engineering equipment (including modules) 
(equity controlled by Chinese party). 
3. Manufacturing of bulldozers (less than 320 horsepower), hydraulic excavators (less than 30 tons), wheeled loaders (less than 6 tons), graders (less than 220 horsepower), rollers, fork lifts, electric drive off-highway self-dumping trucks (less than 135 tons), hydraulic mechanical tr ansmission and off-highway self-dumping 
trucks (less than 60 tons), asphalt concrete mixing and paving equipment and aerial work machinery, garden machinery and equipment, and concrete machinery (pump, mixer vehicle, mixing station, pump vehicle) (restricted) 
Chemical, wood, non-metallic 
processing specialty 
equipment manufacturing Manufacturing of large-scale coal chemical equipment 
(equity or cooperative joint ventures only) 
Textiles, clothing and leather processing specialty equipment manufacturing Manufacturing of equipment in respect of general polyester filament, staple fibre 
(restricted) 
Environmental, social and 
public services and other 
specialty equipment 
manufacturing Manufacturing of air traffic control system equipment 
(equity or cooperative joint ventures only) 
Automobile manufacturing, 
modified car manufacturing, 
low-speed truck manufacturing, trolley car manufacturing, car body shell and trailer manufacturing Manufacturing of automobiles, special purpose motor vehicles and agricultural 
transportation trucks (Chinese participation reaching 50% in the equity joint 
venture).  For a joint stock company as a manufacturer of automobiles, special purpose motor vehicles and agricultural transportation trucks, if its shares were sold by a corporate shareholder, the company must still be controlled by one of its Chinese corporate shareholders, whose shareholding must exceed the total shareholdings by foreign corporate shareholders;  One foreign investor may establish up to two equity joint ventures to manufacture automobiles in the same category (note: two categories - passenger vehicle and commercial vehicle), but this restriction may not apply to the case of acquiring other domestic automobile manufacturing companies together with its Chinese partners.  
Auto component and 
accessories manufacturing  1. Manufacturing, research and development of automobile electronics: automobile 
electronic bus-network technology and electronic controller of electric power 
steering system (equity joint ventures only); embedded electronic integrated 
system (equity or cooperative joint ventures only)  
2. Manufacturing of energy-type power cells of clean energy vehicles 
(energy density less than 110Wh/kg and cycle life less than 2,000 cycles) 
(foreign participation within 50%)  
Rail and urban transportation 
equipment manufacturing.  Rail transportation equipment (equity or cooperative joint ventures only): R&D, 
design and manufacturing of trains used in high-speed railway, passenger dedicated railway line, inter-city railway, main railway line and urban rail transportation and their key components (traction drive system, control system and braking system); R&D, design and manufacturing of passenger service facilities and 
equipment used in high-speed railway, passenger dedicated railway line, inter-city 
railway and urban rail transportation, as well as R&D and design work relating to information systems;  Rail transportation equipment (equity or cooperative joint ventures only): R&D, 
design and manufacturing of rails and brid ge-related equipment used in high-speed 
railways, passenger dedicated railway lines and inter-city railways; R&D, design and manufacturing of communications & signals systems of rail transportation; manufacturing of electrified railway equipment; R&D of rail noise and vibration control technology; manufacturing of sewerage disposal equipment for passenger trains, as well as safety monitoring equipment for railway transportation  
Vessel and relevant devices 
manufacturing  1. Design of luxury cruise vessels, design of low- and medium-speed diesel engines 
for vessels and their components, design and manufacturing of yachts 
(equity or cooperative joint ventures only)  
2. Manufacturing of low- and medium-speed diesel engines and crankshafts for 
vessels (equity controlled by Chinese party)  
3. Design and manufacturing of machinery for ship cabins 
(majority share of equity controlled by Chinese party)  
4. Design and manufacturing of vessels (sub-block included)  
(restricted, equity controlled by Chinese party)  WT/TPR/S/300 • China 
 
- 175 - 
 
  Category/ 
Sub-category  Specific regulations  
Manufacturing of aircraft, 
spacecraft and relevant equipment 1. Design and manufacturing of civil ai rcraft for general aviation purposes 
(equity or cooperative joint ventures only)  2. Design and manufacturing of aero-engines and related components, aviation 
auxiliary power systems and airborne equipment for civil aviation 
(equity or cooperative joint ventures only)  3. Design and manufacturing of civil helicopters (<3 tons) (equity or cooperative joint ventures only); design and manufacturing of civil helicopters (less than 3 tons) (equity controlled by Chinese party). 4. Design and manufacturing of civil aircraft for trunk line and feeder line (equity controlled by Chinese party)  5. Manufacturing of ground effect and water surface effect aircraft (equity controlled by Chinese party)  6. Design and manufacturing of unmanned aerial vehicle and aerostat (equity controlled by Chinese party) 
Motorcycle  
manufacturing 1. Manufacturing of motorcycles 
(Chinese participation reaching 50% in the equity joint venture);  
For a joint stock company as a manufacturer of motorcycles, if its shares were sold 
by a corporate shareholder, the company must still be controlled by one of its 
Chinese corporate shareholders, whose shareholding must exceed the total 
shareholdings by foreign corporate shareholders;  
One foreign investor may establish up to two equity joint ventures to manufacture 
motorcycles, but this restriction may not apply to the case of acquiring other 
domestic automobile manufacturing companies together with its Chinese partners.  
2. Manufacturing of key parts of high engine displacement motorcycles 
(displacement > 250ml): motorcycle electronic fuel injection technology 
(equity or cooperative joint ventures only) 
Electric motor manufacturing 1. Manufacturing of key supporting machinery used in 1 million kW supercritical 
thermal power units (equity or cooperative joint ventures only): safety valves, control valves  2. Manufacturing of electrical transmission and transformation equipment (equity or cooperative joint ventures only): amorphous metal transformers, 500+ 
kV high voltage switch operating mechanisms, arc-control devices, large disc insulators (1000 kV+, 50 Ka+), outlet devices used in transformer of 500 kV+, casing pipes (AC 500, 750, 1000 kV, all type of DC)  3. Manufacturing of electrical transmission and transformation equipment (equity or cooperative joint ventures only): voltage regulation switches (AC500, 750, 1000kv on-load and no-load voltage swit ch), air core smoothing reactors used 
in AC power transmission, 800 kV converter valves used in AC power transmission 
(water cooling equipment, DC field equipment), electric contact material and Pb, Cd 
free solders in accordance with EU RoHS directive  4. Manufacturing of large pumped-storage aggregate with rated power of 350MW and above (equity or cooperative joint ventures only): accessory equipment like pump turbines and governors, large variable speed reversible pump turbine aggregates, generator-motors an d excitation and starter gear 
C384-Battery cell 
manufacturing Manufacturing of vented lead-acid batteries (i.e. direct acid mist discharge), silver 
oxide batteries with mercury button, alkaline zinc-manganese batteries with 
mercury button, paste zinc-manganese ba ttery and Cd-Ni battery (prohibited) 
Communications equipment 
manufacturing Design and manufacturing of commercial satellites; manufacturing of commercial 
satellite payloads (equity controlled by Chinese party) 
Radio and television 
equipment manufacturing Manufacturing of ground satellite TV broadcasting receiving facility and key parts 
(restricted) 
Specialty equipment maintenance 1. Repair of civil aircraft for general aviation, aircraft engine and parts, auxiliary 
power units (equity or cooperative joint ventures only)  2. Repair of trunk and regional civil airliners (equity controlled by Chinese party)  3. Repair of marine engineering equipment (module included) (equity controlled by Chinese party)  4. Repair of vessels (blocks included) (restricted, equity controlled by Chinese party) 
Electricity and heating 
production and supply 
 1. Construction and operation of nuclear power stations 
(equity controlled by Chinese party)  
2. Within small power grids, construction and operation of coal-fired condensing 
power plants with unit capacity of 300,000 kW or below, and coal-fired power 
of condensing-extraction steam plants with dual-use unit cogeneration, with unit 
capacity of 100,000 kW or below (restricted)  
3. Construction and operation of powe r grid (restricted, equity controlled 
by Chinese party), and heat-supply pipe networks in cities with populations 
greater than 500,000 (restricted, equity controlled by Chinese party)  
4. Outside small power grids, construction and operation of coal-fired condensing 
power plants with unit capacity of 300,000 kW or below, and coal-fired power of 
condensing-extraction steam plants with dual-use unit cogeneration, with unit 
capacity of 100,000 kW or below (prohibited) WT/TPR/S/300 • China 
 
- 176 - 
 
  Category/ 
Sub-category  Specific regulations  
Electricity, heating, gas and water production and Supply 
Gas production and supply, 
water production and supply  Construction and operation of gas-supply, water-supply and drainage pipe network 
in cities with populations greater than  
500,000 (restricted, equity controlled by Chinese party) 
Railway, road, tunnel 
and bridge construction  1. Construction and operation of feeder railways, local railways with relevant 
bridges, tunnels, ferry facilities and station facilities (equity or cooperative joint ventures only)  2. Construction and operation of railway networks (equity controlled by Chinese party)  3. Comprehensive maintenance of infrastructure of high-speed railways, 
passenger dedicated railway lines and inter-city railway (equity controlled by 
Chinese party)  4. Construction and operation of city subways and light railways (equity controlled by Chinese party) 
Construction 
Wholesale of agricultural, forestry and husbandry products Purchase of grain, wholesale and distribution of grain and cotton (restricted) 
Wholesale and retail 
Wholesale of food, beverages 
and tobacco products 1. Wholesale and distribution of vegetable oil, sugar and tobacco  
(restricted)  
2. Wholesale of salt (prohibited) 
Wholesale of cultural, sports 
and appliances products Qualified service suppliers from Hong Kong, China and Macao, China are allowed to 
invest in the business of distribution of audio and video products (including 
post-movie products) in the form of wholly  owned enterprise, equity or cooperative 
joint venture  
Distribution of audio and video products  (excluding movies) for non-Hong Kong, 
China/Macao, China investors (restricted, cooperative joint ventures only) 
Wholesale of mineral 
products, building materials and chemical products. Wholesale and distribution of crude oil, chemical fertilizer, pesticide, agricultural 
film, refined oil products (including bonded oil) (restricted) 
Trading brokerage and 
agency Auction of cultural relics (prohibited) 
General retail Retail and distribution of cotton, crude oil, pesticide, agricultural film and chemical 
fertilizer (restricted); chain stores with more than 30 branches and selling goods of different kinds and brands from multip le vendors (equity controlled by Chinese 
party) 
Retail of food, beverage and 
tobacco products  Retail and distribution of gr ain, vegetable oil, sugar and tobacco (restricted); chain 
stores with more than 30 branches and selling goods of different kinds and brands 
from multiple vendors (equity controlled by Chinese party) 
Retail of cultural, sports and 
appliances products 1. Chain stores retailing books, newspapers and periodicals - Qualified 
Hong Kong,China/Macao,China service suppliers:  participation rate for a single 
investor must be within 65%; 
- Investors from other jurisdictions:  no controlling interest is permitted if the 
number of chain stores is more than 30  2. Qualified service suppliers from Hong Kong, China and Macao, China are allowed to invest in the business of distribution of audio and video products (including post-movie products) in the form of wholly owne d enterprise, equity or cooperative joint 
venture.  Distribution of audio and video products  (excluding movies) for non-Hong Kong, 
China/Macao, China investors (restricted, cooperative joint ventures only)  3. Cultural relic shops (prohibited) 
Retailing of automobiles, 
motorcycle, fuel and 
components Establishment and operation of gasoline stations (restricted); chain stations with 
more than 30 branches and selling processe d oils of different kinds and brands from 
multiple vendors (equity controlled by Chinese party) 
Stalls, non-store and other 
retails Direct selling, mail order selling and online retailing (restricted) 
Transport, warehouse and postal service 
Railway passenger transport Investment in railway passenger transport companies 
(restricted, equity controlled by Chinese party)  
Railway cargo transport  Investment in railway cargo transport companies 
(restricted, equity or cooperative joint ventures only)  
Highway passenger transport  Investme nt in highway passenger transport companies (restricted; equity joint 
ventures only; foreign participation within 49%; one of major investors as a 
Chinese enterprise engaged in the business of highway passenger transport in China for more than five years)  
Road cargo transport  Investment in motor transport companies engaged in cross-border road transport 
business (restricted)  
Water passenger transport, 
Water cargo transport  Investment in water transport companies (restricted, equity controlled by Chinese 
party); international maritime transport, whether scheduled or not (equity controlled by Chinese party)  WT/TPR/S/300 • China 
 
- 177 - 
 
  Category/ 
Sub-category  Specific regulations  
Water transport supporting 
activities 1. Cargo handling for international maritime freight transport, container freight 
station and container yard businesses (equity or cooperative joint ventures only)  
2. Shipping agency (restricted, equity controlled by Chinese party)  
3. Cargo tally (restricted, equity or cooperative joint ventures only)  
Air passenger and cargo 
transport Investment in air transport companies (equity controlled by Chinese party); 
operation period within 30 years; a foreign investor's participation (including that of its related parties) within 25% for a public-transport air company whose legal representative has to be a Chinese national 
General aviation service  1. Investment in general aviation compan ies in the sectors of farming, forestry 
and fisheries (equity or cooperative joint ventures only)  
2. Investment in general aviation companies in the sectors of business flights, 
sightseeing flights and industrial services (equity controlled by Chinese party)  
3. Investment in general aviation comp anies for aviation photography, mining 
exploration and industry purposes (restricted, equity controlled by Chinese party)  
4. Operation period for a general aviation company must be within 30 years and the 
legal representative must be a Chinese national  
Aviation supporting activities  1. Except for qualified Hong Kong, China/Macao, China service suppliers, investors 
from other jurisdictions must comply with relevant stipulations on foreign participation when they invest in aviation supporting services, and operation period of the invested enterprise must be within 30 years  2. Aircraft repair (with obligation of taking business from international market) 
and aviation fuel project (equity controlled by Chinese party)  3. Computerized airline reservations system (prohibited for non-Hong Kong, 
China/Macao, China investors; equity controlled by mainland China party for qualified Hong Kong, China/Macao, China service suppliers)  4. Construction and operation of civil airports (majority share of equity controlled by 
Chinese party)  
5. Air transport agency (equity or cooperative joint ventures only for non-Hong Kong, China/Macao, China investors; a wholly-owned enterprise allowed for qualified Hong Kong, China/Macao, China service suppliers)  6. Investment in air traffic control companies (prohibited) 
Warehousing of agricultural 
products like grain, cotton Food enterprises which are responsible for operation and management of grain 
reserves and supplying military food (solely owned or equity controlled by the 
State)  
Basic postal and courier 
services  Domestic courier business of delivering letters, investment in postal service 
companies (prohibited) 
Information transmission, software and information technology (IT) services 
Telecommunication, Radio and television transmission service, Satellite transmission service 1. Telecommunication; radio, TV and satellite transmission (restricted)  
2. Investment in any radio station, TV station, radio and TV channel and 
transmission network (transmitting station, relay station, broadcast satellite, satellite uplink station, satellite receiving and broadcasting stations, microwave station, monitoring station, and cable TV network) (prohibited) 
Internet access and related 
service, Internet information 
service, Other Internet 
service 1. Information service (other than app stores) (foreign participation within 50%)  
2. Domestic internet virtual private network (VPN) service 
(foreign participation within 50%)  
3. News websites, online audio-visual programme service, venues to provide 
Internet access (i.e. cybercafe), and Internet culture-related services (excluding 
music service) (prohibited) 
4.Direct or indirect participation in online game operations (prohibited) 
Data processing and storage, I659-Other IT service  1. E-commerce business (foreign participation within 55%); other online data 
and transaction processing service (foreign participation within 50%)  2. Internet data centre service (prohibited) 
Financial services 
Central bank services, 
monetary banking service, 
non-monetary banking service, bank supervision service, securities market services, futures market services, securities and futures supervision service, capital investment service, other capital market services, life insurance, property insurance, reinsurance, pension, 
insurance brokerage and 
agency, insurance supervision services, other insurance activities, financial trust and management services, holding company services, 1. Investment in banks, finance co mpanies, trust companies and currency 
brokerage companies (restricted)  
2. Investment in insurance companies (including group companies), insurance intermediary institutions (including insurance brokers, agents and assessment companies) and insurance asset management companies (restricted, foreign participation in a life insurance company within 50%)  3. Investment in securities companies (restricted; foreign participation within 
49%); initial business scope including underwriting and sponsorship of shares (A shares and foreign invested shares) and bonds (government/corporate bonds), brokerage of foreign invested shares, trading and brokerage of bonds; business scope to be expanded upon application after two-year operation if other conditions are met, securities investment fund ma nagement companies (restricted; foreign 
participation within 49%), securities investment consulting institutions (restricted; 
foreign participation limited to Hong Kong, China/Macao, China securities firms and 
within 49%), future companies (restricted; foreign participation limited to qualified 
Hong Kong, China/Macao, China service suppliers and within 49%)  4. Investment in micro-credit companies and financing guarantee companies must comply with relevant regulations  5. Investment in financial leasing companie s (total assets of the foreign investor WT/TPR/S/300 • China 
 
- 178 - 
 
  Category/ 
Sub-category  Specific regulations  
payment services by 
non-financial institutions, financial information services, 
other unspecified financial 
services reaching US$5 million; minimum registered capital of US$10 million for the leasing 
company; senior management with required  expertise and professional experience 
of no less than three years)  
Real estate 
Real estate development and operation 1. Development of pieces of land (restricted, equity or cooperative joint ventures 
only)  2. Construction and operation of luxury hotels, high-class office buildings, international conference and exhibition centres and large wholesale markets for agricultural products (restricted)  3. Construction and operation of villas (prohibited) 
Real estate 
intermediary service Real estate transaction in secondary market, investment in real estate agents 
or brokerage firms (restricted)  
Leasing and business services 
Leasing of cultural goods and 
daily consumables  1. Chain stores leasing books, newspapers and periodicals  
- Qualified Hong Kong, China/Macao, China service suppliers:  participation rate for 
a single investor must be within 65%; 
- Investors from other jurisdictions:  no controlling interest is permitted if the 
number of chain stores is more than 30  
2. Qualified service suppliers from Hong Kong, China and Macao, China are allowed 
to invest in the business of leasing audio and video products (including post-movie 
products) in the form of wholly-owned enterprise, equity or cooperative joint 
venture.  
Leasing of audio and video products (excluding movies) for non-Hong Kong, 
China/Macao, China investors (restricted, cooperative joint ventures only)  
Enterprise management 
services  Requirements to set up an investment company: (1) (i) Total assets of the foreign 
investor reached US$400 million in the year preceding the application, and such investor has established enterprises in China with US$10 million of paid registered capital; or (ii) The foreign investor has established more than ten enterprises in 
China with US$30 million of paid registered capital; (2) The registered capital of the investment company is not less than US$30 million; and (3) The foreign investor is a foreign company, enterprise or business organization; if there are more than two foreign investors, one of them with greater equity interest must meet the 
requirement set out in (1)  
Legal services 1. Legal consultation (restricted)  
2. Foreign law firms can provide legal services only by setting up representative 
offices  
Consultation and investigation 1. Accounting firms (partnerships only)  
2. Market research (restricted, equity or cooperative joint ventures only)  3. Social research (prohibited) 
Human resources services 
(HR services)  1. Except for qualified Hong Kong, China/Macao, China service suppliers which are 
allowed to set up wholly-owned HR agen cies, non-Hong Kong, China/Macao, China 
investors may only set up HR agencies in the form of equity joint ventures with 
70% foreign participation or below  
2. Minimum registered capital for HR agencies is US$125,000; the foreign investor 
must be a foreign company, enterprise or other business organization with at least 
three years of experience in HR agency service  
Travel agencies and related 
services  Overseas travel agencies (excluding tourism business in Chinese Taipei) 
(equity joint ventures only)  
Security services  Security companies engaged in armed security service 
(foreign participation within 49%)  
Other business services  Rating service (restricted)  
Scientific research and technology services 
Research and experimental development on natural sciences Development and application of technologies in respect of human stem cells 
(prohibited) 
Medical research and 
experimental development  Development and application of gene technologies in diagnosis and medical 
treatment (prohibited) 
Surveying and mapping service  1. Investment in surveying and mapping companies (restricted, equity controlled by 
Chinese party)  2. Geodetic surveying, marine charting, aerial photography for surveying and 
mapping, surveying and mapping of territorial boundaries of administrative 
divisions, compiling topographic and common maps and navigation e-maps (prohibited) 
Quality inspection service  1. Investment in companies engaged in ce rtification service for import/export goods 
(restricted)  
2. A foreign investor of a certification institution must be accredited by authorities 
in its home country and have three years of experience in certification activities  WT/TPR/S/300 • China 
 
- 179 - 
 
  Category/ 
Sub-category  Specific regulations  
Geological survey  1. Exploration of coal bed gas, junior exploration of oil and natural gas, exploration 
of unconventional oil resources (e.g. oil shale, oil sands, heavy crude oil and extra-heavy crude oil, etc.) and unconventional natural gas resources (e.g. 
shale gas, submarine natural gas hydrate, etc.) (equity or cooperative joint 
ventures only)  2. Exploration of noble metals (gold, silver and platinum group) and important non-metal ores such as diamond, high-alu minium fire-clay, wollastonite, graphite 
etc. (restricted) 3. Exploration of barytes (restricted, equi ty or cooperative joint ventures only)  
4. Exploration of special and rare types of coal resources (restricted, equity controlled by Chinese party)  5. Exploration of tungsten, molybdenum, tin, antimony, fluorite, rare earth and radioactive minerals (prohibited) 
Other special technology 
service Photography service (including special photography such as aerial photography) 
(restricted, equity joint ventures only) 
Management of water conservancy, environment and public facilities 
Water resource management, 
Natural water collection and 
resource allocation Construction and operation of comprehensive hydro projects 
(equity controlled by Chinese party)  
Ecological protection  1. Construc tion and operation of nature reserves and internationally important 
wetland (prohibited) 2. Exploitation of wildlife animals and plants originating from China and protected by the State (prohibited) 
Education 
Preschool education, Primary education, Secondary education, Higher education, Special education, Vocational and skills training, education support and other forms of education  1. Investment in profit-seeking education and training institutions, profit-seeking 
vocational skills training institutions (cooperative joint ventures only)  2. Investment in non-profit education in stitutions (preschool education, secondary 
vocational education, normal high school education and higher education), non-profit education and training institutions, non-profit vocational skills training institutions (cooperative joint ventures only; no branch is allowed)  3. Investment in compulsory education, as well as special education institutions focusing on military affairs, police training, political, religious and Party schools (prohibited); investment in profit-seeking education institutions (preschool education, secondary vocational education, normal high school education and higher education) (prohibited) 
Health and social activities 
Hospitals, medical and health centres, clinics, maternal- and child-care service centres, other health-related activities Minimum total investment in a medical institution is RMB 20 million; no branch 
is allowed; maximum operation period is 20 years  
Culture, sports and entertainment 
News agency, publishing  1. Investment in news agencies (prohibited) 
2. Publishing of books, newspapers and periodicals (prohibited) 3. Production and publishing of audio-vi sual products and electric publications 
(prohibited) 
R861-Radio, Television, Film 
and TV programme 
production, Film and TV 
programme distribution, Film 
broadcasting, Audio recording 1. Construction and operation of movie theatres 
(restricted, equity controlled by Chinese party)  
2. Production of radio, TV  programmes (works) and films 
(restricted, cooperative joint ventures only)  
3. Investment in production companie s of radio and TV programmes (works), 
film-making companies, film distribution and marketing companies (prohibited) 
Literary and artistic creation 
and performance, arts performance venues, library and archives, Protection of cultural relics and intangible cultural heritage, museums, memorial halls, public, cultural activities, other 
culture and arts industry Investment in culture and art industry must comply with relevant regulations  
Stadiums  Construction and operation of golf courses (prohibited) 
Indoor entertainment 
activities  Investment in venues to provide Internet  access (i.e. cybercafes) (prohibited) 
Amusement parks  Construction and operation of large-scale theme parks (restricted)  
Betting activities  Gambling (including investment in betting horse racing courses) (prohibited) 
Other entertainment activities Pornographic industry (prohibited)  
a "Equity controlled by Chinese part y" refers to a situation where Chin ese investors' participation rate 
is 51% or above. 
Source: China (Shanghai) Pilot Free Zone online information. Viewed at: http://en.shftz.gov.cn/Special.html. WT/TPR/S/300 • China 
 
- 180 - 
 
  Table A3. 1 Areas under special customs supervision, 2013  
 Legal basis Main functions Tax policies Bonded area Measures of 
Customs Supervision and Control over Bonded Areas Decree No. 65 of the General Administration of Customs [1997] 1. Bonded 
processing; 2. Bonded logistics; 3. International trade; 4. Display of commodities. 1. Goods entering into the bonded area are exempt from 
taxes (including import duties and VAT); 2.Sales of goods within the Bonded Area are exempt from VAT; 3. Materials to be used as infrastructure , machinery and 
items imported by enterprises for their own use within the bonded area are exempt from taxes (including tariff and VAT); 4. Import duties and VAT are levied on goods shipped from 
the Bonded Area into the domestic customs area. If goods are processed in the Bonded Area when shipped to the domestic territory, only the imported materials contained 
therein will be subject to taxes;  5. VAT levied on domestic goods entering the Bonded Area will be refunded after departure from China's territory. Export processing zone Interim Measures of 
Customs 
Supervision of 
Export Processing 
Zones (amended in 
2003) 
Decree of the State 
Council [2003] 
No.389 Same functions as 
those of bonded 
area: 
1. Bonded 
processing; 
2. Bonded logistics; 
Differences with 
bonded area: 
1. International trade 
is not allowed; 
2. Display of 
commodities is not 
allowed; 
Additional 
functions: 
1. Repairs and after 
sale services; 
2. R&D activities can 
be carried out in the 
export processing 
zone. Same incentives as those granted under the bonded 
area regime: 
1. Goods entering the export processing zone are exempt 
from taxes (including im port duties and VAT); 
2. Sales of goods within the export processing zone are 
exempted from VAT; 
3. Materials to be used as infrastructure , machinery and 
items imported by enterprises for their own use within the 
export processing zones are exempt from taxes (including 
tariff and VAT); 
Differences with bonded area:  
1. Import duties and VAT ar e levied on goods moved from 
the Export Processing Zone in to the domestic customs area 
based on the value of the goods when being exported from 
the Export Processing Zone; 
2. VAT can be refunded  once the domestic goods enter into 
the export processing zone. Bonded logistics park Measures of 
Customs Supervision of 
Bonded Logistics 
Parks (amended in 2010)  Decree No. 190 of the General Administration of Customs Same functions as 
those of bonded areas: 
1. Bonded logistics; 
2. International trade; 3. Display of commodities; 4. Display of commodities; Differences with bonded area: 1. Goods can be transported to specific ports; 2. Repair services; 3. Bonded processing is forbidden. Same incentives as those granted under the bonded 
area regime: 1. Goods entering into the bonded logistics park are bonded 
(including tariff and VAT);  
2. Trade of bonded goods within the Bonded Logistics Park is exempted from import duties and VAT; 3. Materials to be used as infrastructure, machinery and 
items imported by enterprises for their own use within the Bonded Logistics Park are exempt from taxes (including import duties and VAT);  Differences with bonded area: 4. Tariff and VAT are levied on goods moving from the bonded logistics park into th e domestic area based on the 
actual value of the goods when they are being exported from the Bonded Lo gistics Park); 
5. VAT can be refunded once the domestic goods enter into the Bonded Logistics Park. WT/TPR/S/300 • China 
 
- 181 - 
 
   Legal basis Main functions Tax policies Bonded port zone Interim Measures of 
Customs 
Supervision of the 
Bonded Port Zone 
(amended in 2010)  
No. 191 Decree of 
the General 
Administration of 
Customs Same functions as 
those of Bonded 
Area: 
1. Bonded 
processing; 
2. Bonded logistics; 
3. International 
trade; 
4. Display of 
commodities; 
Differences 
compared with 
bonded area: 
1. It functions as 
a port; 
2. Repairs and after-
sale services; 
3. R&D activities. Same incentives as those granted under the bonded 
area regime: 
1. Goods entering into the bo nded port zone are exempt 
from taxes (including im port duties and VAT); 
2. Sales of bonded goods within the Bonded Port Zone are 
exempted from VAT; 
3. Materials to be used as infrastructure, machinery and 
items imported by enterprises for their own use within the 
Bonded Port Zone are exempt from taxes (including import 
duties and VAT); 
Differences with bonded area: 
4. Tariff and VAT are levied on goods moving from the 
Bonded Port Zone into the domestic area based on the 
actual value of the goods; 
5. VAT can be refunded once the domestic goods enter into 
the Bonded Port Zone. Comprehensive bonded zone Article 45 of the 
Interim Measures of Customs Supervision of the Bonded Port Zone 
(amended in 2010)  Same functions as 
those of bonded area:  
1. Bonded processing; 
2. Bonded logistics; 
3. International trade; 4. Display of commodities; Differences compared with bonded area: 1. Repair and after-sale services; 2. R&D activities. Same incentives as those granted under the bonded 
area regime: 1. Goods entering into the comprehensive bonded zone are exempt from taxes (including im port duties tariff and VAT); 
2. Trade of bonded goods within the comprehensive bonded 
zone is exempted from VAT; 
3. Materials to be used as infrastructure, machinery and 
items imported by enterprises for their own use within the Comprehensive Bonded Zone are exempt from taxes (including import duties and VAT). Differences with the bonded area: 4. Tariff and VAT are levied on goods moving from the Comprehensive Bonded Zone to the domestic area based on the actual value of the goods; 5. VAT can be refunded once the domestic goods enter into the Comprehensive Bonded Zone. Othersa Measures of the 
Customs for the 
Zhuhai-Macao 
Cross-border 
Industrial Zone 
(amended in 2010) 
Decree No. 189 of 
the General 
Administration of 
Customs  Same functions as 
those of bonded 
area: 
1. Bonded 
processing; 
2. Bonded logistics; 
3. International 
trade; 4. Commodity 
display; 
Differences 
compared with 
bonded area: 
1. Port functions; 
2. Repair and after-
sale services; 
3. R&D activities. Same incentives as those granted under the bonded 
area regime: 
1. Goods entering into the Zhuhai Park are bonded 
(including tariff and VAT); 
2. Trade of bonded goods within the Zhuhai Park is 
exempted from VAT; 
3. Infrastructure materials, machinery and self-use items 
imported by enterprises within  the Zhuhai Park are duty free 
(including tariff and VAT); 
Differences compared with bonded area: 
4. Tariff and VAT are levied on goods moving from the 
Zhuhai Park to the domestic area based on the actual value 
of the goods; 
5. VAT can be refunded once the domestic goods enter the 
Zhuhai Park. 
a Mainly referring to the Zhuhai-Macao Cr oss-border Industrial Zone, Zhuhai Park. 
Source: Information provided by the Chinese authorities. WT/TPR/S/300 • China 
 
- 182 - 
 
  Table A3. 2 China's MFN applied tariff summary, 2013  
 Number  Average  Range (%)  Standard Nuisancea Duty 
free 
  of lines  (%) MFN 
applied Bound  deviation (%) (%)  
        
Total 8,238  9.4 0-65  0-65  7.5 2.9 9.8  
        
HS 01-24 1,358  13.9 0-65 0-65 10.6 1.3 9.0  
HS 25-97 6,880  8.6 0-50 0-50 6.4 3.3 10.0 
        
By WTO category        
WTO agricultural products 1,161  14.8 0-65 0-65 11.3 1.3 8.1  
   Animals and products thereof  170 12.7 0-25 0-25 7.5 0.0 18.2 
   Dairy products 21  12.1 2-20 6-20 3.8 4.8 0.0  
   Fruit, vegetables, and plants  388 13.9 0-30 0-30 7.6 0.0 6.2 
   Coffee and tea 31  14.9 2-32 8-32 7.2 3.2 0.0  
   Cereals and preparations 126 23.4 0-65 0-65 20.6 4.8 7.9 
   Oils seeds, fats, oil and their products 108  10.5 0-30 0-30 7 0.0 12.0  
   Sugars and confectionary 19 30.9 8-50 8-50 16.7 0.0 0.0 
   Beverages, spirits and tobacco 62  21.8 0-65 0-65 15 0.0 1.6  
   Cotton 5 22.0 10-40  10-40  14.7 0.0 0.0 
   Other agricultural products, n.e.s. 231  12.1 0-38 0-38 7.8 3.0 6.5  
WTO non-agricultural products  7,077  8.6 0-50 0-50 6.2 3.2 10.1 
   Fish and fishery products 306  10.1 0-23 0-23 4.4 1.6 9.2  
   Minerals and metals 1,235  7.4 0-50 0-50 6.3 7.7 9.5 
   Chemicals and photographic  supplies 1,354  6.3 0-47 0-47 3.9 4.1 5.1  
   Wood, pulp, paper and furniture 387 4.1 0-20 0-20 3.9 2.3 37.5 
   Textiles 845  9.6 2-38 2-38 3.9 0.1 0.0  
   Clothing 299 16.0 14-25  14-25  2.1 0.0 0.0 
   Leather, rubber, footwear and 
 travel goods 222 12.8 0-25 0-25 6.3 1.4 0.5  
   Non-electric machinery 1,005  7.5 0-35 0-35 5.1 2.7 13.9 
   Electric machinery 454  8.3 0-35 0-35 7.9 2.0 26.9  
   Transport equipment 336 13.3 0-45 0-45 9.5 2.4 0.3 
   Non-agricultural products, n.e.s. 614  10.9 0-35 0-35 7.6 2.3 14.3  
   Petroleum 20 4.8 0-9 0-9 3.1 10.0 20.0 
        
By ISIC sector        
   ISIC 1 - Agriculture, hunting and 
 fishing 634 10.8 0-65 0-65 9.9 1.7 20.7  
   ISIC 2 - Mining 123 1.5 0-5 0-8 1.7 17.9 43.1 
   ISIC 3 - Manufacturing 7,480  9.8 0-65 0-65 7.2 2.8 8.3  
        Manufacturing excluding food 
 processing 6,689  8.7 0-50 0-50 6.3 3.0 9.1 
   ISIC 4 - Electrical energy 1  0.0 0 0 0.0 0.0 100.0  
        
By stage of processing        
   First stage of processing 1,142  9.4 0-65 0-65 9.7 3.5 20.1 
   Semi-processed products 2,531  7.0 0-65 0-65 5.6 5.3 5.6  
   Fully processed products 4,565  10.8 0-65 0-65 7.4 1.5 9.6 
        
By HS section        
  01   Live animals and products 488  11.5 0-25 0-25 6.1 1.0 13.3  
  02   Vegetable products 510 14.1 0-65 0-65 12.9 1.8 11.0 
  03   Fats and oils 56  12.6 4-30 5-30 5.8 0.0 0.0  
  04   Prepared food, beverages and 
  tobacco 304 17.5 0-65 0-65 11.5 1.3 0.3 
  05   Mineral products 201  2.8 0-11 0-12 2.7 13.9 30.3  
  06   Chemicals and products thereof 1,282  6.4 0-50 0-50 4.8 5.2 5.4 
  07   Plastics, rubber, and articles 
  thereof 271 9.3 0-25 0-25 4.4 1.1 0.4  
  08   Raw hides and skins, leather,  
  and its products 106 12.1 3-23 5-23 5.5 0.0 0.0 
  09   Wood and articles of wood 207  4.4 0-20 0-20 4.3 1.0 36.2  
  10   Pulp of wood, paper and   
  paperboard 161 5.2 0-7.5  0-7.5  3.1 4.3 21.7 
  11   Textiles and textile articles 1,141  11.3 1-40 3-40 5.0 0.2 0.0  
  12   Footwear, headgear, etc.  71 17.9 10-25  10-25  5.8 0.0 0.0 
  13   Articles of stone, plaster,   
  cement 194 12.7 0-28 0-28 5.3 1.0 0.5  
  14   Precious stones and metals,  
  pearls 87 10.0 0-35 0-35 12.7 0.0 40.2 WT/TPR/S/300 • China 
 
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   Number  Average  Range (%)  Standard Nuisancea Duty 
free 
  15   Base metals and articles thereof 764  7.0 0-30 0-30 4.3 7.2 3.3  
  16   Machinery, electrical equipment,  
  etc. 1,496  7.8 0-35 0-35 6.4 2.4 19.0 
  17   Transport equipment 351  13.1 0-45 0-45 9.4 3.4 0.3  
  18   Precision equipment 334 9.4 0-30 0-30 6.4 3.3 10.5 
  19   Arms and ammunition 21  13.0 13-13  13-15  0.0 0.0 0.0  
  20   Miscellaneous manufactured  
  articles 184 10.8 0-25 0-25 8.9 0.0 34.2 
  21   Works of art, etc. 9  7.6 0-14 0-14 5.2 0.0 22.2  
a Nuisance rates are those greater than zero, but less than or equal to 2%. 
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 au thorities. 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. WT/TPR/S/300 • China 
 
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  Table A3. 3 Tax preferences at the central level 
Government tax preference policies 
Enterprise income 
tax (the income tax is 25%) 1. Enterprises that plant flowers, spices, te as and other beverages should pay income tax 
of 12.5% (half the actual rate). Sea farming and inland farming should pay income tax of 12.5% (half the actual rate). Enterprises engaged in agriculture, forestry, animal husbandry and fisheries are exempt from income tax or are granted a preferential income tax rate. 
2. Enterprises engaged in projects stipulated in the "Catalogue of Public infrastructure 
projects eligible for preferential enterprise income tax treatment", including ports and 
harbours, airports, railways, highways, public transportation, electric power and water 
conservancy, are exempt from income tax from the first to the third year that income starts 
to be generated, and the income tax from the fourth to the sixth year would be 12.5% (half 
of the actual rate). 
3. Enterprises that undertake environmental and energy conservation projects, including public sewage treatment, public garbage disposal, methane comprehensive exploitation and desalination of sea water, are exempt from income tax from the first to the third year that income starts to be generated, and the income tax from the fourth to the sixth year would be 
12.5% (half the actual rate). 
4. Income generated by enterp rises that transfer qualified technology i.e. patented 
technologies transferred by resident enterprises,  copyrights of computer software, integrated 
circuit layout design rights, new plant varieties, new biological medicinal products, and other 
technologies determined by the Ministry of Finance and the State Administration of Taxation. 
The first RMB 5 million of income generated is exempt from income tax and income that 
exceeds RMB 5 million will be taxed at the rate of 12.5% (half the actual rate). 
5. Small-scale enterprises with minimal profitsa that conduct business in the non-restricted 
industries and satisfy the following conditions are subject to the applicable enterprise income tax rate of 20%: (i) Industrial enterprises with an annual taxable income not exceeding RMB 300,000, fewer than 100 employers, and total assets not exceeding RMB 30 million. (ii) Other enterprises, with annual taxable income not exceeding RMB 300,000, with fewer than 80 employers, and total assets not exceeding RMB 10 million. 
6. High and new technology enterprises that ha ve been registered in China for one or more 
years which require key state support and possess core proprietary intellectual property 
rights, engage in business involving products (services) that fall into the scope specified in 
the Advanced and New Technology Areas Eligible for the Key Support of the State, and with 
R&D expenses, income of high and new technological products and number of R&D 
personnel reaching a certain proportion, can be recognized as high and new technology 
enterprises and are subject to an enterprise income tax rate of 15%. 
7. Key software enterprises and integrated circuit enterprises within the "national layout 
plan" are subject to an enterprise income tax rate of 10%. 
8. Where non-resident enterprises have not set up institutions or establishments in China, or 
where institutions or establishments are set up but there is no actual relationship with the 
income obtained by the institutions or establishments set up by such enterprises, they pay 
a preferential enterprise income tax of 10% on income originating in China. 
9. Research and development fees incurred by enterprises in the development of new 
technology, new products and new skills can be deducted from the taxable income at 150% of the intangible assets cost; 100% of the wages paid by enterprises for hiring disabled and other personnel can be deducted from the taxable income. 
10. Venture investment enterprises that engage in equity investment in medium and small 
high-tech enterprises (not listed in domestic or foreign stock markets) for more than 
two years, may deduct 70% of the invested capital from the taxable income in the second 
year. If the taxable income is less than 70% of the invested capital, the deduction may 
take place in the following tax year. 
11. The income obtained by enterprises from the production of products in line with state 
industrial policies through comprehensive use of materials stipulated in the "Category of comprehensive use of resources for preferential  enterprise income tax treatment" may be 
deducted from the taxable income by 90%. 
12. 10% of cost of the investment made by en terprises in special facilities for environmental 
protection, energy and water conservation and safe production which are listed in the: 
"Environmental special facilities enterprise income tax preferential category", "Water and 
energy conservation special facilities enterprise income tax preferential category" and "Safety 
production special facilities enterprise income  tax preferential category" can be deducted 
from the taxable income. If the taxable income is not sufficient, the deduction can be made 
in the next five fiscal years. WT/TPR/S/300 • China 
 
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  Government tax preference policies 
Other tax 
exemptions 1. Imported items to be used in: the encourag ed industries listed in the "Category for the 
Guidance of Foreign Investment Industries", the foreign investment projects that meet the requirement of the "Category of Priority Industries for Foreign Investment in the Mid-Western Region", and the domestic funded projects supp orted by the county, are exempt from import 
duties. Exception applies for the commodities li sted in the "Category of non-tax-exempted 
imported items under foreign investment projects"
b and the "Category of non-tax-
exempted imported items under domestically funded projects"c. 
2. For encouraged industries (including those that meet the requirement of the "Category 
of Priority Industries for Foreign Investment in the Mid-Western Region"), foreign investment 
enterprises, foreign-invested research centres, advanced technical and export product type 
of foreign investment enterprises, the import of the equipment to be used in the project and 
technology, components and spare parts are exempt  from import duties if imports are within 
the originally approved business scope and the purchase is funded by the project, and the 
equipment and the supported technology, compon ents and spare parts cannot be produced in 
China. 
3. Imports of equipment to be used by foreign-invested enterprises for the production 
of items listed in the "National high tech products category", along with the imported technology and supporting components and spare parts, are exempt from import duties and 
other related import taxes.
d 
4. For the advanced technology listed in the "National high-tech products category"d imported 
by foreign investment enterprises, the software fees paid overseas are exempted from import 
duties and other import-related tax.e 
5. The VAT on the products and services produced with "integrated" utilization of resources 
(e.g. electric power generated from urban waste and renewable water) is subject to such preferential taxation policies as exemption, re fund upon collection or refund after collection. 
Several polices on 
software and 
integrated circuits 1. Certified domestic new software enterprise s and integrated circuit design enterprises, 
from the first profit earning year, are exempted from enterprise income tax in the first and 
second year; the tax is collected at 50% from the third to the fifth year. 
2. For an integrated circuit enterprise with investment of more than RMB 8 billion or 
a bandwidth of an integrated circuit of less than 0.25 um, if the business period exceeds 15 years, from the first profit earning year, it is exempted from enterprise income tax from 
the first to the fifth year and 50% of the tax is collected from the sixth to the tenth year. 
3. For an integrated circuit enterprise with bandwidth of integrated circuit equal to or less 
than 0.8 um, after certification, from the profit earning year, it is exempted from enterprise 
income tax in the first and the second year and 50% tax is collected from the third to the 
fifth year. 
4. For software purchased by enterprises and public institutions with the approval of the tax 
authorities, its depreciation years may be shorte ned to a minimum of 2 years, if software is 
deemed a fixed or intangible asset from an accounting point of view. 
5. For the production equipment of enterprises manufacturing integrated circuits, with the 
approval of the tax authorities, its deprecia tion years may be shor tened appropriately and 
the minimum is 3 years. 
6. Qualifying software and integrated circuit manufacturing enterprises can deduct the cost 
of training their staff from the taxable income. 
a The definition of small-scale enterprises with minimal profits can be found in Article 92 of the 
Implementing Regulations of the PRC Enterprise Income Tax Law. 
b Customs Notice No. 65 of 5 September 2008. Viewed at: 
http://www.customs.gov.cn/publish/portal0/tab399/info125825.htm . 
c Ministry of Finance Notice No. 83 of 24 December 2012. Viewed at: 
http://gss.mof.gov.cn/zhengwuxinxi/zhengcefabu/201212/t20121231_723618.html . 
d For the list of products under the "National high-tech products category" please refer to: 
http://www.most.gov.cn/tztg/200612/t20061220_38987.htm . 
e These polices are based on: "Regulation of the State Council on the adjustment of the imported and 
exported equipment tax policy" (No. [1997]37); "Views of the Committee of Economic Trade for Foreign Countries on further Encouraging Foreign Investment"(No. [1999]73); "National medium- and long-term planning for science and technology development outline (2006-2020)" (No. [2005]44). 
Source: Viewed at: http://en.xasourcing.gov.cn/swj/policys/localpolicy/local0013.html ; and information 
provided by the Chinese authorities. WT/TPR/S/300 • China 
 
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  Table A3. 4 Support programmes notified to the WTO   
 Programme Forms of subsidy Period/Validitya 
1 Preferential tax policies for foreign-invested enterprises  Preferential tax 
treatment Valid until 1 January 2008  
2 Preferential tax policies for foreign-invested export 
enterprises Preferential tax 
treatment Valid until 1 January 2008  
3 Preferential tax policies for foreign-invested enterprises 
engaged in agriculture, forestry or animal husbandry and foreign-invested enterprises established in remote underdeveloped areas Preferential tax 
treatment Valid until 1 January 2008
 
4 Preferential tax policies for foreign-invested  enterprises 
engaged in energy, transportation infrastructure projects Preferential tax 
treatment Valid until 1 January 2008  
5 Preferential tax policies for Chinese-foreign equity joint 
ventures engaged in port and dock construction Preferential tax 
treatment Valid until 1 January 2008  
6 Preferential tax policies for advanced technology 
enterprises with foreign investment Preferential tax 
treatment Valid until 1 January 2008  
7 Preferential tax policies for enterprises with foreign 
investment in the border cities Preferential tax 
treatment Valid until 1 January 2008  
8 Preferential tax policies for enterprises with foreign 
investment recognized as high- or new-technology 
enterprises established in the State high- or 
new-technology industrial development zones Preferential tax 
treatment Valid until 1 January 2008  
9 Preferential tax policies for enterprises recognized as 
high- or new-technology enterprises established in the State high-or new-technology industrial development 
zones Preferential tax 
treatment Valid until 1 January 2008
 
10 Preferential tax policies for high- or new-technology 
enterprises Preferential tax 
treatment In effect 
11 Preferential tax policies for enterprises with foreign 
investment established in Special Economic Zones 
(excluding Shanghai Pudong area) Preferential tax 
treatment Valid until 1 January 2008  
12 Preferential tax policies for enterprises with foreign 
investment established in the costal economic open areas 
and in the economic and technological development zones Preferential tax 
treatment Valid until 1 January 2008  
13 Preferential tax policies for enterprises with foreign 
investment established in Pudong area of Shanghai Preferential tax 
treatment Valid until 1 January 2008  
14 Preferential tax policies for enterprises with foreign 
investment established in the Three Gorges of Yangtze 
River Economic Zone Preferential tax 
treatment Valid until 1 January 2008  
15 Preferential tax policies in the western regions  Preferential tax 
treatment Partially in effect 
16 Preferential tax policies for enterprises in Binhai New  Area 
of Tianjin Preferential tax 
treatment Valid until 1 January 2008  
17 Preferential tax policies for enterprises established in 
poverty stricken areas Preferential tax 
treatment Valid until 1 January 2008  
18 Fiscal fund to alleviate poverty Financial 
appropriations In effect 
19 Preferential tax treatment for public infrastructure projects 
that are particularly supported by the State Preferential tax 
treatment In effect 
20 Preferential tax treatment for projects for environmental 
protection, water and energy conservation Preferential tax 
treatment In effect 
21 Preferential tax policies for enterprises which utilise waste 
materials Preferential tax 
treatment Valid until 1 January 2008  
22 Preferential tax treatment for building material products 
produced with integrated utilization of resources Preferential tax 
treatment In effect 
23 Preferential tax treatment for building material products 
produced with integrated utilization of resources Preferential tax 
treatment Modified by Circular [2008] 
No. 156 
24 Preferential tax treatment for products produced with 
integrated utilization of resources Preferential tax 
treatment Modified by Circular [2008] 
No. 156 
25 Preferential tax treatment fo r renewable resources  Preferential tax treatment Abolished by Circular [2008] 
No. 157 
26 Special fund for the industrialization of wind power 
equipment Financial 
appropriations Valid until end 2009 
27 Preferential tax policies for Clean Development Mechanism  Preferential tax treatment In effect 
28 Preferential tax policies for en terprises making little profit  Preferential tax 
treatment Valid until 1 January 2008  
29 Preferential tax policies for enterprises making little profit  Preferential tax 
treatment In effect 
30 Preferential tax policies for township enterprises  Preferential tax 
treatment Valid until 1 January 2008  
31 Preferential tax policies fo r enterprises that employ 
disabled people Preferential tax 
treatment Abolished by Circular Cashui 
[2007] No. 92 
32 Preferential tax policies fo r enterprises that employ 
disabled people Preferential tax 
treatment In effect 
33 Preferential tax policies fo r enterprises that employ 
disabled people Preferential tax 
treatment Valid until 1 January 2008  
34 Preferential tax policies fo r enterprises that employ 
disabled people Preferential tax 
treatment In effect WT/TPR/S/300 • China 
 
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   Programme Forms of subsidy Period/Validitya 
35 Preferential tax treatment for imported products 
exclusively used by disabled people Preferential tax 
treatment In effect 
36 Preferential tax treatment for products for disabled people  Preferential tax 
treatment In effect 
37 Preferential tax treatment for enterprises producing 
products exclusively used by disabled people Preferential tax 
treatment In effect 
38 Preferential tax policies for enterprises which provide 
employment for unemployed people Preferential tax 
treatment Valid until 1 January 2008  
39 Preferential tax policies for scientific research institutions 
undergoing transformation Preferential tax 
treatment Valid until 1 January 2008  
40 Preferential tax policies for the research and development 
of enterprises Preferential tax 
treatment Valid until 1 January 2008  
41 Preferential tax policies for the research and development 
of enterprises Preferential tax 
treatment Valid until 1 January 2008  
42 Preferential tax policies for the research and development 
of enterprises Preferential tax 
treatment In effect 
43 Preferential tax policies for enterprises transferring 
technology Preferential tax 
treatment Valid until 1 January 2008  
44 Preferential tax policies for ente rprises transferring 
technology Preferential tax 
treatment In effect 
45 Research and development fund for industrial technologies  Financial 
appropriations In effect 
46 Fund to support technological innovation by small and 
medium-sized enterprises (SMEs) Financial 
appropriations Valid until end of 2013 
47 Development fund for SMEs Financial 
appropriations In effect 
48 Special fund for establishment of service system for SMEs  Financial 
appropriations In effect 
49 Fund for international market exploration by SMEs  Financial 
appropriations Valid until end of 2013 
50 Fund for optimizing the import and export structure  of 
mechanical and electrical products as well as high-tech 
products Financial 
appropriations Invalid (as per MOFCOM 
Announcement [2010] No. 9) 
51 Fund for promoting trade in agricultural, light industry and 
textile products Financial 
appropriations Invalid (as per MOFCOM 
Announcement [2010] No. 109) 
52 Fund for promotion of coordinated development of foreign 
trade and economic relations among regions Financial 
appropriations In effect 
53 Preferential tax policies for key leading enterprises 
engaged in agricultural industrialization Preferential tax 
treatment Valid until 1 January 2008  
54 Preferential tax policies for enterprises engaged in  projects 
of preliminary processing of agricultural, forestry, animal 
and fisheries products Preferential tax 
treatment In effect 
55 Fund for specialized economic cooperatives of farmers  Financial 
appropriations  In effect 
56 Fund for subsidizing the training of rural migrant labour 
force Financial 
appropriations  In effect 
57 Fund for training of young farmers in science and 
technology Financial 
appropriations Invalid (as per 
MOFCOM Decree No. 63 of 22 February 2011) 
58 Fund for popularization of agricultural technologies  Financial 
appropriations In effect 
59 Fund for subsidizing transformation of agricultural 
technology Financial 
appropriations In effect 
60 Subsidy for promoting superior strains and seeds  Financial 
appropriations In effect 
61 Subsidy for purchasing agricultural machinery and tools  Financial 
appropriations In effect 
62 Comprehensive subsidies fo r agricultural inputs  Financial 
appropriations In effect 
63 Direct subsidy to farmers Financial 
appropriations In effect 
64 Fund for agricultu ral comprehensive development  Financial 
appropriations In effect 
65 Fund subsidizing agricultural industrialization  and 
agricultural products processing Financial 
appropriations Invalid 
66 Fund for interest discount on loans for the purpose of 
agricultural water-saving irrigation Financial 
appropriations In effect 
67 Subsidy for national key construction projects on water 
and soil conservation Financial 
appropriations In effect  
68 Preferential tax policies for the enterprises engaged in 
forestry Preferential tax 
treatment Valid until 1 January 2008  
69 Subsidy for prevention and control of pests and disease in 
forestry Financial 
appropriations In effect  
70 Subsidy for grass seed sowing by airplanes  Financial 
appropriations In effect WT/TPR/S/300 • China 
 
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   Programme Forms of subsidy Period/Validitya 
71 Preferential tax policies for enterprises of grain or oil 
reserves Preferential tax 
treatment In effect 
72 Preferential tax policies for the imports of China Grain 
Reserves Corporation for the purpose of rotation of grain 
reserves Preferential tax 
treatment Replaced (as per Circular 
Caiguanshi [2011] No. 30) 
73 Preferential tax policies for relief grain and disaster relief 
grain, compensation grain for returning cultivated land to 
forests and to grassland, and grain rations for migrants 
from the reservoir areas Preferential tax 
treatment In effect 
74 Preferential tax treatment for poultry industry  Preferential tax 
treatment Invalid (as per MOF 
Decree 62 of 21.02.2011) 
75 Interest discount for poultry industry Financial 
appropriations In effect 
76 Preferential tax treatment for tea sold in the border areas  Preferential tax 
treatment Modified by Circular Caishui 
[2011] No. 89 
77 Preferential tax treatment for imported products for the 
purpose of replacing the planting of poppies Preferential tax 
treatment In effect 
78 Preferential tax policies on imports of seeds (seedlings), 
breeding stock (fowl), fish fries (breeds) and non-profit-
making wild animals and plants kept as breeds during the 
period of the "Tenth Five-Year Plan" Preferential tax 
treatment Invalid since 1 January  2006 
79 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 "Eleventh Five-Year Plan" Preferential tax 
treatment Invalid since 1 January
 2011 
80 Preferential tax treatment for endangered wild animals and 
plants as well as their products returned by foreign 
governments, by the government of Hong Kong, China or 
the government of Macao, China to China Preferential tax 
treatment In effect 
81 Preferential tax policies for foreign invested enterprises 
and foreign enterprises which have establishments or 
premises in China and are engaged in production or 
business operations purchasing domestically produced equipment Preferential tax 
treatment Invalid (as per Circular 
CaishuiFa [2008] No. 52) 
82 Preferential tax policies for domestic enterprises 
purchasing domestically produced equipment for 
technology upgrading purposes Preferential tax 
treatment Invalid (as per Circular 
CaishuiFa [2008] No. 52) 
83 Exemption from tariffs and import VAT for imported 
technologies and equipment Preferential tax 
treatment In effect 
84 Subsidy for scrapping old vehicles  Financial 
appropriations Updated (as per Circular 
Caishui [2012] No. 27) 
85 Preferential tax policies for the integrated circuit industry  Preferential tax 
treatment In effect 
86 Fund for research and development of the integrated 
circuit industry Financial 
appropriations In effect 
87 Fund for development of electrical information industry  Financial 
appropriations In effect 
88 Fund for high technology R&D for packaging industry  Financial 
appropriations In effect 
89 Preferential tax treatment for raw copper materials  Preferential tax 
treatment Invalid since 1 January  2006 
(as per MOF Decree 48 
of 2005)  
90 Preferential tax treatment for casting and forging products  Preferential tax 
treatment Invalid since 1 January  2009 
(as per MOF Decree 48 
of 2008) 
91 Preferential tax treatment to dye products  Preferential tax treatment Invalid since 1 January
 2009 
(as per MOF Decree 48 of 2008) 
92 Preferential tax treatment for numerically controlled 
machine tool products Preferential tax 
treatment Invalid since 1 January 2009 
(as per Circular Caishui 
[2009] No. 138) 
93 Preferential tax treatment for anti-HIV-AIDS medicine  Preferential tax treatment In effect 
a Based on information provided by the authorities of China. 
Source: WTO Secretariat based on documents G/SCM/N/155/CHN and G/SCM/N/186/CHN, 21 October 2011, 
and information provided by the authorities of China. WT/TPR/S/300 • China 
 
- 189 - 
 
  Table A3. 5 Selected fore ign investment incentivesa  
Incentive Form of 
Subsidyb Description Statusb 
Tianjin Foreign Investment Incentives 
Financial Institutions .. The city government offers  significant subsidies and 
other incentives for th e following investment 
activities: registered capital investment greater than 
RMB 100 million, employee housing construction, or 
establishment of Chinese residence by senior 
management. .. 
Establishment of 
Headquarters/Regional Headquarters .. As an incentive to  relocate a company's 
headquarters to Tianjin or establish a regional 
headquarters in Tianjin, th e city government offers 
the following subsidies: registered capital reimbursement and employee housing construction subsidies. .. 
Advanced Agricultural 
Technology Companies .. The city government offers  significant subsidies and 
investment incentives for the following investment 
activities: agricultural technology R&D and other 
agricultural technology industries. .. 
Scientific and Technological  
R&D .. The city government offe rs significant subsidies and 
other incentives for th e following investment 
activities: establishment of an R&D centre, advanced technical industrialized projects and the creation of locally designed products. .. 
Sino-Foreign Joint Ventures .. The city government offers  significant subsidies and 
financial incentives specifically for incorporated joint 
ventures between Chinese and foreign partners. .. 
Shanghai Foreign Investment Incentives 
Investing in the Waigaoqiao 
Free Trade Zone .. All imports and exports from the WFTZ are exempt 
from customs duty and value-added tax. .. 
Computer Technology 
Enterprise .. Extensive incentives are available for companies 
investing in R&D, or in Software Development, 
Integrated Circuit Chip Manufacturing and Information Security Industries. .. 
New and Advanced 
Technology Enterprise .. Shanghai Government offers tax subsidies and 
monetary awards/funding fo r: investment by private 
equity groups with over 70 % of total capital in 
Shanghai advanced technology industry. .. 
Establishing Headquarters or 
Regional Headquarters .. As an incentive to  relocate a company's 
headquarters to Shanghai or establish a regional headquarters, the municipal government offers significant subsidies provided the regional headquarters meets the following criteria: total net assets of the parent company greater than US$ 400 million, an investment in China greater than US$ 30 million, and an already established multinational network. .. 
Priority Industries .. Significant subsidies and investment incentives for 
"priority industries": info rmation and consultation 
services, real estate de velopment, design, and 
construction, distribution, foreign trade, logistics and 
transportation, iron an d steel manufacturing, 
automobile, shipbuild ing and equipment 
manufacturing, and ch emical/petrochemical 
industries. .. 
Shenzhen Investment Incentives 
High-Tech Enterprise .. As an incentive to encourage high-tech development 
in Shenzhen, the municipa l government offers tax 
subsidies for the following investment activities: 
development of high-tech R&D programmes and 
institutions, construction of laboratories, contribution 
to scientific and technological research, development 
of local products, approv ed-product creation, and 
capital investment in existing high-tech industry. 
In addition, the Shenzh en Government offers 
various incentives to the fo llowing high-tech industry 
areas: automobile enterprise, software, and the 
information service industry. .. WT/TPR/S/300 • China 
 
- 190 - 
 
  Incentive Form of 
Subsidyb Description Statusb 
Biological Industry .. The munici pal government o ffers significant 
subsidies for the following investment activities: creation of R&D centres/en gineering centres/public 
technological service platforms, participation in international and domestic standardization activities, development of patent pools, investment exceeding RMB 200 million by bio-industrial programmes, capital market financing, and organizing and participating in exhibitions. .. 
Modern Logistics Industries .. As an incentive to establ ish foreign enterprises in 
the modern logistics industry, the municipal 
government offers sign ificant subsidies and 
investment incentives in the following areas: 
construction of regional 
distribution/allocation/procurement centres, trucking 
enterprise, air cargo and passenger airlines, and 
other logistical industries. .. 
Service Outsourcing .. As  an incentive to encourage the outsourcing of 
service industry to Shenzhen, the municipal government offers sign ificant subsidies and 
investment incentives for the following investment activities: establishment of approved high-tech service enterprises, ou tsourcing of training 
organizations to Shenzhen, installation of internationally certified information service enterprises, and the employment of Chinese nationals in outsourced enterprises. .. 
Financial Enterprise .. The municipal government  offers significant 
subsidies and investment incentives for the following 
groups of financial enterp rises: enterprises with 
headquarters in Shenzhen, branch offices in 
Shenzhen, financial support ing services with more 
than 100 employees, insurance brokers and 
agencies, financial training organizations, 
enterprises engaged in fina ncial restructuring, and 
enterprises engaged in rent ing or purchasing office 
space in Shenzhen for the first time. .. 
Establishment of 
Headquarters or Regional Headquarters .. As an incentive to  relocate a company's 
headquarters to Shenzhen or establish a regional headquarters in Shenzhen, the municipal government offers  significant subsidies for the 
following investment activities: purchase/rental of office space, establis hment of headquarters 
according to Shenzhen Municipal Government industrial clustering plans and master urban plans, creation of public use facilities, and the establishment of comprehensive headquarters with registered capital exceeding RMB 200 million. .. 
Cultural Industry .. As an incentive to establish enterprise in the cultural 
industry of Shenzhen, the municipal government 
offers significant subsidies and investment incentives 
for any enterprise that assi sts in the advancement of 
the culture of Shenzhen such as: media enterprises, 
institutions of higher learning, enterprises exporting 
cultural products, or those that engage in the 
promotion of R&D achievements in cultural fields. .. 
.. Not available. 
a The authorities could not verify this information. 
b Information not provided  by the authorities. 
Note: Many incentives must be repa id at the provincial and/or city level in the event that the company 
leaves the region. National incentives are not typically subject to these restrictions. 
Source: Viewed at: http://understand-china.com/manufacturing/tianjin-investment-incentives-2 ; 
http://understand-china.com/manufacturing/shanghai-investment-incentives ; and 
http://understand-china.com/manufacturing/shenzhen-investment-incentives .  
  WT/TPR/S/300 • China  
 
- 191 - Table A3. 6 Support to fisheriesa 
Programme Type of Support Source Beneficiary 
China Pelagic Fisheries Association and China Minsheng Bank signed an 
agreement on strategic financial cooperation in Beijing on 7 January 2013 to improve equipment, production efficiency, technology and comprehensive development capacity in the pelagic fisheries sector. 
Major fish stocks affected by the programme include: all pelagic fish 
species. 
Year established: 2013 Department responsible for the programme: .. Capital and infrastructure 
programmes Other capital and infrastructure support programmes: public-private 
partnership to improve 
infrastructure Ministry of Agriculture. Viewed at: 
http://english.agri.gov.cn/news/201301/t2013011
5_9240.htm  Overall fisheries 
The Chinese Government provides corporate tax relief in the form of 
income tax exemptions to Chinese dome stically funded deep water fishing 
enterprises. This exemption means that they are exempt from paying 
corporate income tax (currently levied at 25%) until the end of 2015. 
Generally, all fisheries projects that attract investment to bolster the 
fishing industry are exempted or given a 50% reduction of corporate 
income tax. This is applied as long as the enterprise is engaged in the 
fishing project. 
Major fish stocks affected by the programme include: all fisheries. 
Year established: 1997 
Department responsible for the programme: Department of Finance 
("MOF") and the State Administration of Taxation ("SAT"). Tax preferences and 
insurance support 
programmes 
Income tax deferral - for 
fishermen Pacific Islands Forum Fisheries Agency (FFA). 
Viewed at: 
http://www.ffa.int/system/files/FFA%20Secretariat
%20Paper%20-
%20Fisheries%20Subsidies%20and%20Incentives
%20provided%20by%20the%20PRC%20to%20its
%20DWF%20Industry.pdf  Fisheries 
enterprises 
Tax incentives are provided to shipyards in China that build and export 
fishing vessels. The incentives are in the form of a five-year tax holiday and a five-year half-tax policy on the construction of the shipyard and export tax rebates. In addition to preferential taxes preferential credit conditions are provided to shipyards. 
Year established: ..   
Major fish stocks affected by the programme include: all fisheries. Department responsible for the programme: .. Tax preferences and 
insurance support programmes Favourable tax rates on specific inputs or outputs Pacific Islands Forum Fisheries Agency (FFA). 
Viewed at: http://www.ffa.int/system/files/FFA%20Secretariat
%20Paper%20-
%20Fisheries%20Subsidies%20and%20Incentives
%20provided%20by%20the%20PRC%20to%20its
%20DWF%20Industry.pdf  Ship 
manufacturers 
Preferential import duties on imported equipment used for refitting, 
building and renovating vessels fitted with ultra-low temperature freezers 
including tuna longliners. 
Year established: .. 
Major fish stocks affected by the programme include: tuna. 
Department responsible for the programme: .. Tax preferences and 
insurance support 
programmes 
Favourable tax rates on 
specific inputs or outputs Pacific Islands Forum Fisheries Agency (FFA). 
Viewed at: 
http://www.ffa.int/system/files/FFA%20Secretariat
%20Paper%20-
%20Fisheries%20Subsidies%20and%20Incentives
%20provided%20by%20the%20PRC%20to%20its
%20DWF%20Industry.pdf  Fisheries 
enterprises  
  WT/TPR/S/300 • China  
 
- 192 - Programme Type of Support Source Beneficiary 
Accelerated depreciation for fishing vessels to encourage the modernization 
of fishing fleets. 
Major fish stocks affected by the programme include: all fisheries. 
Year established: 2001 Department responsible for the programme: .. Tax preferences and 
insurance support 
programmes Accelerated depreciation - for taxation of fishing vessels and gear Pacific Islands Forum Fisheries Agency (FFA). 
Viewed at:  
http://www.ffa.int/system/files/FFA%20Secretariat
%20Paper%20-
%20Fisheries%20Subsidies%20and%20Incentives
%20provided%20by%20the%20PRC%20to%20its
%20DWF%20Industry.pdf  Fisheries 
enterprises 
Government investment to develop new fisheries and technology. 
Major fish stocks affected by the programme: all fisheries. 
Year established: 2001 
Department responsible for the programme: .. Fisheries management and 
conservation programmes 
R&D - to develop new 
fisheries technologies Pacific Islands Forum Fisheries Agency (FFA). 
Viewed at: 
http://www.ffa.int/system/files/FFA%20Secretariat
%20Paper%20-
%20Fisheries%20Subsidies%20and%20Incentives
%20provided%20by%20the%20PRC%20to%20its
%20DWF%20Industry.pdf  Overall fisheries 
Fuel subsidies for fishermen and fisheries enterprises that use motorized 
fishing vessels for near-shore and inland fishing and aquatic production. Subsidies for deep-water fishing fleets are based on annual fluctuations in oil prices and are paid retrospectively. 
Major fish stocks affected by the programme include: all fisheries. 
Year established: 2006 Department responsible for the programme: Ministry of Agriculture Tax preferences and 
insurance support programmes Fuel tax exemption - for fishing vessels Pacific Islands Forum Fisheries Agency (FFA). 
Viewed at: http://www.ffa.int/system/files/FFA%20Secretariat
%20Paper%20-
%20Fisheries%20Subsidies%20and%20Incentives
%20provided%20by%20the%20PRC%20to%20its
%20DWF%20Industry.pdf  Fishermen and 
enterprises 
The National Fisheries Technical Extension Station was established in 1991 
in order to promote the development of fisheries through the introduction 
of advanced technologies and scientific expertise. There are extension 
agencies throughout the whole economy: in 2004, there were 13,514 
fisheries technical extension services, 10,000 more than in 1999. 
Major fish stocks affected by the programme include: all fisheries. 
Year established: 1991 
Department responsible for the programme: .. Fisheries management and 
conservation programmes 
R&D - to develop new 
fisheries technologies European Parliament. Viewed at: 
http://www.europarl.europa.eu/meetdocs/2009_2
014/documents/pech/dv/chi/china.pdf  Fishermen 
Project to renovate outdated fishing vessels to implement domestic safety 
standards and reduce energy consumption. 
Major fish stocks affected by the programme include: all fisheries. 
Year established: 2012 Department responsible for the programme: .. Capital and infrastructure 
programmes Fleet renewal and modernization China Daily . Viewed at: 
http://www.chinadaily.com.cn/m/fujian/pingtan/2
013-03/12/content_16302839.htm  Fisheries 
enterprises  
  WT/TPR/S/300 • China  
 
- 193 - Programme Type of Support Source Beneficiary 
Programme to improve the efficiency of aquaculture and coastal fisheries 
enterprises. Support is for a wide range of activities and includes direct 
assistance for investment. Support to enterprises is limited to a maximum 
of one-third of the cost of the new investment. 
Major fish stocks affected by the programme include: Not specified 
Year established: 2013 
Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises 
Aquatic breeding 
The programme has three components: 1. Seed field capacity development projects. To develop and improve infrastructure related to seed production in fisheries, and to purchase equipment necessary for the preservation of genetic materials. Grants range from RMB 800,000 – 1,000,000 per project for a maximum of 10 
projects province wide. 
2. Seed conservation project. This is to support the work done in the public interest by certain provincial-level aquatic breeding centres. Support cannot exceed RMB 250,000 per project for a maximum of 20 projects province-wide. 3. Seed variety update project. To support renovating the genetic varieties of certain aquaculture species. Su pport cannot exceed RMB 200,000 per 
project for a maximum of 10 projects province-wide. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises 
Development and utilization of fisheries species with the integration of new 
technologies. 
The programme supports the protection of rare freshwater fisheries 
resources as well as the development of potential local and specialty 
breeds. Projects focus on searching for new species using green 
technology, and the use of information systems. Support is limited to a 
maximum of RMB 500,000 in total for a maximum of 45 projects province-
wide. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: .. Fisheries Management and 
Conservation Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises  
  WT/TPR/S/300 • China  
 
- 194 - Programme Type of Support Source Beneficiary 
Fisheries major technology integr ation and demonstration projects 
To support the development and marketing of technologies that could 
range from those to process fish products to those to breed multiple species. The funding for each project cannot exceed RMB 1,500,000 individually. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises 
Aquatic product quality and safety testing 
Grants are primarily intended for quality inspection and the purchase of 
samples. 
Major fish stocks affected by the programme include: .. 
Year established: ..  
Department responsible for the programme: ..  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises 
Aquatic product quality certification awards. 
Awards of RMB 10,000 are granted for each certificate earned for healthy aquatic products. RMB 50,000 are granted for each aquatic geographical indication. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: .. Marketing and Price 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises 
Export of aquatic product brands  with development incentives  
Exports of aquatic products whose trademarks are registered overseas will 
be rewarded with RMB 30,000. Enterprises can apply for multiple grants up 
to a maximum of RMB 150,000. 
Major fish stocks affected by the programme include: not specified 
Year established: 2013 
Department responsible for the programme: ..  Marketing and Price 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Aquaculture 
enterprises 
Monitoring and evaluation of marine economy 
Support for the monitoring and evaluation of fisheries industry operation and maintenance. Provincial level subsidies amount to a maximum of RMB 300,000. Municipal level subsidies amount to a maximum of RMB 100,000. 
Major fish stocks affected by the programme include: Not specified. 
Year established: 2013 Department responsible for the programme: .. Fisheries Management and 
Conservation Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Overall fisheries  
  WT/TPR/S/300 • China  
 
- 195 - Programme Type of Support Source Beneficiary 
Marine fishing vessels standardized renovation grants. 
During 2013, the provincial government intended to provide support to 180 
fishing boats for their renovation. Some 70 vessels above 24 metres will be 
granted RMB 200,000 each; some 90 vessels above 36 metres will be 
granted RMB 300,000 each; some 20 vessels above 40 metres will be 
granted RMB 450,000 each. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.jsof.gov.cn/ar t/2013/3/26/art_70_116
851.html  Fisheries 
enterprises 
The programme involves standardization of aquaculture pond construction 
projects, breeding projects, aquacult ure cages, closed recirculation. 
The grants are applicable in 14 cities or districts. The provincial grants 
cannot exceed 1/3 of enterprises' actual investment. The maximum 
amount for each enterprise cannot exceed RMB 1 million. For each of the 
enterprises, the 2013 grant cannot exceed 120% of the 2012 grant. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: ..  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.fjof.gov.cn/_bsdt/bszn/yyl/article.htm
1?id=76592  
See also: 
http://fgw.fuzhou.gov.cn /fzgh/zxgh/201111/t2011
1111_500399.htm  Aquaculture 
enterprises 
Aquatic breeding, breeding demonstration projects. 
Grants to support aquatic genetic breeding projects. The grants provided 
under this programme range from RMB 100,000 to 300,000. The grants 
are limited to projects undertaken in nine cities. 
Major fish stocks affected by the programme include: Not specified. 
Year established: 2013 
Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.ahny.gov.cn/ Html/2013_04_09/2_965
601_2013_04_09_1328977.html  
See also: 
http://www.ahzwgk.gov.cn/xxgkweb/showGKconte
nt.aspx?xxnr_id=89569  Aquaculture 
enterprises 
Standardization of quality breeding projects. 
Grants of RMB 100,000 will be granted to support standardization of quality breeding programmes. The progra mme is limited to projects in six 
cities. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: .. Fisheries Management and 
Conservation Programmes Viewed at: 
http://www.ahny.gov.cn/ Html/2013_04_09/2_965
601_2013_04_09_1328977.html ; and 
http://www.ahzwgk.gov.cn/xxgkweb/showGKconte
nt.aspx?xxnr_id=89569  Aquaculture 
enterprises  
  WT/TPR/S/300 • China  
 
- 196 - Programme Type of Support Source Beneficiary 
Subsidies to purchase refined oil. Beneficiaries include ocean, offshore 
fishing and aquaculture companies that use motorized boats. The subsidy 
is based on the price for refined oil in 2006 (gasoline 4,400 RMB/tonne, 
diesel 3,870 RMB/tonne). 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: .. Direct Assistance to 
Fishermen and Fisheries 
Workers Viewed at: 
http://www.zjputuo.gov.cn/zwxx/20102/25164512
97448713.html  
See also: 
http://www.zj.gov.cn/art/ 2013/8/15/art_5495_85
6995.html  Fisheries 
producers 
Enterprises in Guangdong Province engaged in breeding projects. 
Two subsidies of RMB 1,000,000 each will be granted to aquatic breeding farms. 10 provincial aquatic breeding farms will be selected to carry out breeding, with support of up to RMB 800,000 each. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.gdofa.gov.cn/index.php/Catagories/vie
w/id/173196  
 Aquaculture 
enterprises 
Enterprises in Guangdong Province engaged in breeding projects. 
Technical Development Projects. 
RMB 7,000,000 will be granted to su pport technical development projects 
annually. Ten provincial projects and ten municipal projects will be 
awarded the subsidies. Grants for provincial projects are of RMB 500,000 
each; while grants for municipal projects are of RMB 200,000 each. 
Major fish stocks affected by the programme include: all species. 
Year established: 2013 
Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.gdofa.gov.cn/index.php/Catagories/vie
w/id/173196  
 Aquaculture 
enterprises 
Enterprises in Guangdong Province. 
Seed Varieties Update Project. 
A RMB 2.4 million annual grant is allocated to 20 projects engaged in developing fishery seed; each project will received a grant of a maximum of RMB 120,000. 
Major fish stocks affected by the programme include: Not specified. 
Year established: 2013 Department responsible for the programme: .. Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.gdofa.gov.cn/index.php/Catagories/vie
w/id/173196  
 Aquaculture 
enterprises  
  WT/TPR/S/300 • China  
 
- 197 - Programme Type of Support Source Beneficiary 
The programme provides insurance support to fishermen. Eligibility is 
restricted to registered fishermen less than 65 years old who operate 
registered fishing vessels. The type of insurance coverage includes 
accidental death insurance and property insurance for fishing vessels that 
have a minimum of 20 horsepower. 
Provincial subsidy amount: 25% of insurance cost. 
County level subsidy amount: 10% of insurance cost. 
Other city level subsidy amount: not less than 5% of insurance cost. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: .. Tax Preference and 
Insurance Support 
Programme Viewed at: 
http://news.southcn.com/g/2012-
09/21/content_55249341.htm  
 
Kaiping is a city in Guangdong Province. Their 
formal website has an update which was very 
recent, and the mechanism of the subsidy was the 
same as the provincial one described in the news. 
Viewed at: 
http://cct.kaiping.gov.cn/shownews.aspx?guid=67
708 Fisheries 
enterprises 
The project is intended to improve safety levels in the provincial fisheries 
industry and protect the safety of individual fishermen. 
The programme has three key areas of focus: 
  Fishing vessel life rafts: Each fishing vessel of more than 100 
horsepower will be granted RMB 2,000 per vessel to purchase 
and upgrade life rafts. 
  Automatic Identification Devices: Fishing vessels of more than 60 
horsepower will be granted RMB 1,800 per vessel to purchase 
and upgrade AID systems. 
  Intelligent Identification Devices: full cost will be covered for 
certified fishing vessels. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2010 Department responsible for the programme: ..  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.moa.gov.cn/sjzz/yyj/yugang/201002/t
20100221_2080745.htm  
See also: 
http://hyj.yantai.gov.cn/HYJHYGH1/2012/05/08/1
0029855.html  Fisheries 
enterprises 
Construction of fisheries facilities. 
Provincial support of RMB 2 million per project will be granted for the 
construction of five fisheries facilities. 
Beneficiaries should be provincial-level large enterprises with registered 
capital of not less than RMB 5 million and annual production of more than 
RMB 30 million. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: ..  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.hbfm.gov.cn/cyfz/xmdt/2013-07-
12/20201.html  
See also: 
http://www.hbshuichan.com/2011/1231/63555.ht
ml Fisheries 
enterprises 
Fish pond reconstruction project. 
Provincial support for the reconstruction of 90 standardized fisheries ponds that meet certain government requirements. Pingyuanhu Area has a limit 
of 50 projects with funding of RMB 600,000 per project. Qiukang area has 
a limit of 40 projects with funding of RMB 250,000 per project. Eligible enterprises must be legally certified at provincial government level or above. Reconstruction area must not be less than 500 acres.  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.hbfm.gov.cn/cyfz/xmdt/2013-07-
12/20201.html  
see also: 
http://www.hbshuichan.com/2011/1231/63555.ht
ml Aquaculture 
enterprises  
  WT/TPR/S/300 • China  
 
- 198 - Programme Type of Support Source Beneficiary 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: ..  
Aquatic breeding base construction project. 
Provincial support of RMB 300,000 for 25  projects that meet the production 
requirements and exceed aquatic breeding requirements. 
Eligible enterprises must have breeding production of more than RMB 
1 million per year. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: ..  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.hbfm.gov.cn/cyfz/xmdt/2013-07-
12/20201.html  
See also: 
http://www.hbshuichan.com/2011/1231/63555.ht
ml Aquaculture 
enterprises 
Eco-efficient fisheries model. 
Eight eco-efficient fisheries projects will be funded if they meet certain 
provincial requirements on usage of high-efficiency and eco-friendly 
breeding models. Funding will be a maximum of RMB 250,000 per project. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: ..  Capital and Infrastructure 
Support Programmes Viewed at: 
http://www.hbfm.gov.cn/cyfz/xmdt/2013-07-
12/20201.html  
See also: 
http://www.hbshuichan.com/2011/1231/63555.ht
ml Aquaculture 
enterprises 
Duty-free importation of aquatic breeds. 
Based on geographic location; coverage ; breeding type; annual production 
capacity; technical capacity. 
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 
Department responsible for the programme: ..  Tax Preference and 
Insurance Support 
Programme Viewed at: 
http://dof.hainan.gov.cn/wsbs/bszn/201002/t2010
0208_993950.html  Aquaculture 
enterprises 
Since 1999, in an effort to rehabilitate marine fisheries resources covering 
areas north of the 12th parallel, the Hainan provincial marine and fishing 
department has imposed a fishing mora torium. A total of 9,007 registered 
fishing vessels have been affected. As a result, the provincial bureau has allocated RMB 600,000 in subsidies for fishermen to make up for loss of income while the ban is still in place.  
Major fish stocks affected by the programme include: not specified. 
Year established: 2013 Department responsible for the programme: ..  Fisheries Management and 
Conservation Programmes Viewed at: 
http://www.china.org.cn/china/2013-
05/16/content_28842159.html  Fisheries 
enterprises 
.. Not available. 
a The authorities could not verify this information. Source: WTO Secretariat.  
  WT/TPR/S/300 • China  
 
- 199 - Table A4. 1 Type of insurance  
Type of 
insurance Basic services Requirements applicable 
to newly-established 
insurance companies 
applying for the provision 
of basic services Extended services  Requirements applicable to insurance companies applying for the provision 
of extended services 
    Conditions  common to property insurance and to life insurance. An insurance 
company may apply for extended services after it has obtained qualifications for the 
first three basic services, provided that each application may not increase more than one type of service and that the interval between two applications shall be no less than six months. 
Property 
insurance (1) auto insurance, including 
compulsory traffic accident 
liability insurance 
and commercial auto 
insurance; 
(2) enterprise/household 
property insurance 
and engineering insurance 
(except special risk 
insurance); 
(3) liability insurance; 
(4) vessel/cargo insurance; 
(5) short-term health/accident 
insurance. A new property insurance 
company: 
(1) may only apply 
for one type of basic service 
in the case of an insurance 
company established with 
a minimum registered capital 
of RMB 200 million; 
(2) may increase its 
registered capital by no less 
than RMB 200 million for each 
additional basic service. (1) agricultural 
insurance; 
(2) special-risk 
insurance, including 
aviation and space 
insurance, marine 
development 
insurance, petroleum 
and gas insurance 
and nuclear insurance; 
(3) credit and 
guarantee insurance; 
(4) investment 
insurance. (1) it has continuously operated for more than  three full accounting years;  
(2) its average year-end net assets in the last three years are no less than 
RMB 1 billion (RMB 2 billion for credit and guarantee insurance and RMB 3 billion+ 
net profits for the last three years for investment insurance); 
(3) its solvency margin ratio at the end of the previous year and in the last four 
quarters is no less than 150%; 
(4) it has committed no major illegal or law-breaking act in the last three years; 
(5) for special risk insurance, credit and guarantee insurance and investment 
insurance: it has a sound corporate governance structure and effective internal 
management; its risk control indicators comply with provisions; and its classified 
supervision review of the previous quarter is A or B; it has special internal control 
systems, professional service capacity, an information system and reinsurance 
programme.a 
Life 
insurance (1) common insurance, 
including life insurance 
and annuity insurance; (2) health insurance; (3) accident insurance; (4) participating insurance; 
(5) universal insurance. A new life insurance 
company: 
(1) may only apply for one of the first three types of basic services in the case of an insurance company 
established with a minimum 
registered capital of RMB 200 million; (2) may increase its 
registered capital by no less 
than RMB 200 million in order to add any of the first three types of basic service; (3) must have registered 
capital of no less than 
RMB 1 billion in case of application for the first three types and the fourth or the fifth type of basic service; 
(4) must have registered 
capital of no less than RMB 1.5 billion in case of application for engagement in 
all types of basic services; 
 (1) investment-linked 
insurance; 
(2) variable annuity. (1) its solvency ma
rgin ratio at the end of the previous year and in the last fou r 
quarters is no less than 150%; 
(2) it has a sound corporate governance structure and effective internal management; its risk control indicators comply with provisions; and its classified supervision review of the previous quarter is A or B; (3) it has special internal control systems, professional service capacity, 
an information system and reinsurance programme; 
(4) it has committed no major illegal or law-breaking act in the last three years; In addition, for investment-linked insurance: (1) it has continuously operated for more than three entire accounting years; 
(2) its average year-end net assets in the last three years is no less than 
RMB 2 billion; in addition, for variable annuity business:  (1) it has continuously operated for more than six full accounting years; (2) three full years have passed since it was approved to run an investment-linked insurance business;  
(3) its average year-end net assets in the last three years are not less than 
RMB 3 billion;  (4) it has stable investment management teams and a steady investment track record.  
  WT/TPR/S/300 • China  
 
- 200 - Type of 
insurance Basic services Requirements applicable 
to newly-established 
insurance companies 
applying for the provision 
of basic services Extended services  Requirements applicable to insurance companies applying for the provision 
of extended services 
(5) must apply simultaneously 
for the first three types of basic services in case of application for the fourth 
or the fifth type; 
(6) must have special internal control systems, professional service capacity, an information system 
and reinsurance programme 
in case of application for the second, fourth and fifth types. 
a The reinsurance programme obligation does not apply to investment insurance. 
Source: Information provided by the Chinese authorities. 
 
 
 
__________