WORLD  TRADE  
ORGANIZATION  RESTRICTED 
WT/TPR/S/264 
8 May 2012 
 
 (12-2413) 
Trade Policy Review Body  
  
 
   
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
CHINA 
 
   
This report, prepared for the fourth Tr ade Policy Review of China, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from China on its trade policies and practices. 
 
Any technical questions arising from this report may be addressed to 
Masahiro Hayafuji (tel:  022 739 5873).  
 
Document WT/TPR/G/264 contains the policy statement submitted by China. 
 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on China. China WT/TPR/S/264 
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  CONTENTS 
 
  Page 
SUMMARY ix 
I.  ECONOMIC ENVIRONMENT 1  
 (1)   MAIN ECONOMIC DEVELOPMENTS  1  
 (2)   STRUCTURAL POLICIES  4  
 (3)   DEVELOPMENTS IN TRADE AND FOREIGN DIRECT INVESTMENT  6  
II.  TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 11  
 (1)   INSTITUTIONAL AND LEGAL FRAMEWORK  11  
 (i)   Transparency 11  
 (ii)   Central-provincial relationships 14  
 (2)   DEVELOPMENT AND ADMINISTRATION OF TRADE POLICIES  15  
 (i)   Main trade laws 15  
 (ii)   Trade policy objectives 15  
 (iii)   Agencies involved in trade policy formulation and implementation 15  
 (3)   TRADE AGREEMENTS AND ARRANGEMENTS  16  
 (i)   Participation in the World Trade Organization 16  
 (ii)   Regional arrangements 16  
 (iii)   Unilateral preferences 18  
 (4)   FOREIGN INVESTMENT REGIME  18  
 (i)   Recent developments in FDI policy 18  
 (ii)   Regulatory framework 19  
 (iii)   Examination and approval procedure 21  
 (iv)   Bilateral investment treaties 23  
III.  TRADE POLICIES AND PRACTICES BY MEASURE 24  
 (1)   MEASURES DIRECTLY AFFECTING IMPORTS  24  
 (i)   Customs procedures, valuation, and rules of origin 24  
 (ii)   Tariffs 27  
 (iii)   Indirect taxes affecting imports 33  
 (iv)   Import prohibitions and licensing 33  
 (v)   State trading 35  
 (vi)   Contingency trade measures 36  
 (vii)  Standards and other technical requirements 45  
 (viii)  Government procurement 53  
 (ix)   Import-related financing 56  
 (2)   MEASURES DIRECTLY AFFECTING EXPORTS  57  
 (i)   Procedures 57  
 (ii)   Export subsidies 58  
 (iii)   Export taxes 58  
 (iv)   Tax rebates on exports 59  
 (v)   Tax concessions under processing trade 59  
 (vi)   Export prohibitions, restrictions, and licensing 59  
 (vii)  State trading on exports 61  
 (viii)  Export finance, insurance, and guarantees 61  
 (ix)   Promotion and marketing assistance 63 WT/TPR/S/264 Trade Policy Review 
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      Page 
 (3)   MEASURES AFFECTING PRODUCTION AND TRADE  63  
 (i)   Taxation and tax incentives 63  
 (ii)   Subsidies and other government assistance 68  
 (iii)   Industrial policies 72  
 (iv)   Price controls 72  
 (v)   State-owned enterprises, private ente rprises, and corporate governance 73  
 (vi)   Competition and consumer protection policy 77  
 (vii)  Intellectual property rights 85  
IV.  TRADE POLICIES BY SECTOR 98  
 (1)   AGRICULTURE  98  
 (i)   Agriculture in China 98  
 (ii)   Agriculture policies 102  
 (2)   FISHERIES  110 
 (i)   Fisheries in China 110  
 (ii)   Trade 112  
 (iii)   Fisheries policy 112  
 (3)   ENERGY   114 
 (i)   Policy objectives for the sector 114  
 (ii)   Electric utilities 114  
 (iii)   Oil and gas 115  
 (4)   MANUFACTURING  116  
 (i)   Recent development 116  
 (ii)   Selected subsectors 118  
 (5)   SERVICES  121 
 (i)   Overview 121  
 (ii)   Financial services 121  
 (iii)   Telecommunications 137  
 (iv)   Transport 145  
 (v)   Tourism 163  
 (vi)   Environmental services 166  
 (vii)  Postal and courier services 167  
 (viii)  Distribution services 168  
 (ix)   Logistics services 170  
REFERENCES   179 
APPENDIX TABLES  183 
 
 
 China WT/TPR/S/264 
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  CHARTS 
  Page 
I. ECONOMIC ENVIRONMENT 
 I.1 World merchandise trade, 2011 6 
I.2 Product composition of merchandise trade, 2009 and 2011 7 
I.3 Direction of merchandise trade, 2009 and 2011 8  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 III.1 Average applied MFN and bound tariff rates, by HS section, 2011 29 
III.2 Distribution of MFN tariff rates, 2011 30 
III.3 Tariff escalation by 2-digit ISIC industry, 2011 31 III.4 Anti-dumping initiations and final measures, 2006-11 41 
III.5 Structure of IPR administration and enforcement 88 
 IV. TRADE POLICIES BY SECTOR 
 
IV.1 Agriculture exports and imports, 1999-2010 100 
IV.2(a) Green Box support, 2001-08  108 
IV.2(b) Amber Box support in China, 2001-08 108  
 
TABLES 
 
I. ECONOMIC ENVIRONMENT 
 I.1 Selected macroeconomi c indicators, 2007-11 1 
I.2 GDP by sector, 2007-10 5 
I.3 Import content of Chinese exports, 2008 9 I.4 US-China trade balance, 2008 - adju sted for China's pr ocessing trade 10 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
III.1 China's tariff structure, 2007, 2009 and 2011 28 
III.2 Summary analysis of Chin a's preferential tariff, 2011 31 
III.3 China's anti-dumping measures by product and by country (in fo rce as of 31 December 2010) 41 
III.4 Countervailing investigations and measures, 2011 43 
III.5 China's standards, 2006-10 48 
III.6 Government procurement by procurement of goods, construction projects, and services, 2008-10 54 
III.7 Tax revenue, 2007-11 64 III.8 Number of enterprises, 2008-10 74 
III.9 Tradeable and non-tradeable shares of  companies listed in China, 2008-10 75 
III.10 Competition legislations and enforcement 79 III.11 Intellectual property rights applications, 2009-10 86 
III.12 Intellectual property  enforcement, 2008-10 95 
 IV. TRADE POLICIES BY SECTOR 
 
IV.1 Value of output for agriculture and selected products, 2002-10 99 IV.2 Volume of agricultural production for selected products, 2002-10 99 
IV.3 Yields of agricultural products for selected products, 2002-10 99 
IV.4 Imports of selected agricultural products, 2001-10 101 IV.5 Exports of selected agricultural products, 2001-10 101 WT/TPR/S/264 Trade Policy Review 
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IV.6 Minimum prices for rice and wheat, 2007-11 106 
IV.7 Total producer support estimate and single  commodity transfer values for selected 
 commodities, 2002-10 110 
IV.8 Fisheries production, 2002-09 111 
IV.9 Trade in fisheries products, 2002-10 112 IV.10 Certified high-tech enterprises by sector, 2009-11 117 
IV.11 Basic telecommunications service providers, 2011 138 
IV.12 Market shares for fixed lines, 2011 138 IV.13 Market shares for mobile telephones, 2011 138 
IV.14 Regulations on Internet Services 142 
IV.15 China's top ten above-scale goods seaports in terms of throughput, 2010 146 IV.16 China's top ten above-scale container seaports in terms of throughput, 2010 147 
IV.17 China's air transport industry main indicators, 2009-10 152 
IV.18 Foreign equity participation in Chinese airlines, 2011 153 IV.19 Liberalization of air transport services under China's bilateral air service agreements, 2011 157 
IV.20 Structure and development of the tourism sector, 2000 and 2008 164 
IV.21 Basic conditions of freight transport, 2006-10 171 
 
 
APPENDIX TABLES 
 
I. ECONOMIC ENVIRONMENT  
AI.1 Merchandise exports by group of products, 2007-11 185 
AI.2 Merchandise imports by group of products, 2007-11 186 AI.3 Merchandise exports by destination, 2007-11 187 
AI.4 Merchandise imports by origin, 2007-11 188 
AI.5 Trade in services, 2007-10 189  
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
 AII.1 China's major trade-related laws and regulations, September 2011 190 
AII.2 Principal notifications under WTO Agreements, March 2012 196 
AII.3 Overview of China's free-trade agreements, 2012 200  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
AIII.1 China's preferential rules of origin, 2012 204 
AIII.2 Imports allocated to state-trading enterprises, 2009-11 206 AIII.3 Export products subject to state-trading arrangements, 2011 207 
AIII.4 Revised vehicle and vessel tax, 1 January 2012 208 
AIII.5 Excise (or consumption) tax, 2010-11 209 AIII.6 Status of selected Central-Government  assistance measures in China since 2005, 
 as stipulated in relevant laws, regulations and rules, and circulars, March 2012 211 
AIII.7 China's membership of international intellectual property rights conventions, 2011 215  
IV. TRADE POLICIES BY SECTOR 
 AIV.1 Summarized trade regimes of maritime transport services 216 
AIV.2 Summarized trade regimes of inland waterways transport 221 
AIV.3 Summarized trade regimes of air transport services 222 
AIV.4 Summarized trade regimes of selected  railways transport services and related  
 construction services 225 China WT/TPR/S/264 
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    Page 
 
AIV.5 Summarized trade regi mes of road transport 228 
AIV.6 Summarized trade regimes of services auxiliary to all modes of transport 231 AIV.7 Summarized trade regimes of to urism and travel-related services 232 
AIV.8 Summarized trade regimes of environmental services 234 
  China WT/TPR/S/264 
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  SUMMARY 
 
1. China enjoyed strong economic growth in 2010 and 2011, boosted by a ¥4 trillion fiscal 
stimulus package implemented in 2008 -10.  Growth was also helped by the recovery of world trade, 
but China's exports recovered less rapidly than its imports and its merchandise trade surplus continued 
to fall, reaching 4.3% of GDP in 2010 from levels  of 9% and above before 2008.  Nominal GDP per 
capita increased in 2011 to the equivalent of US$5,400.   
2. The stimulus provided to domes tic consumption and investment was accompanied by rising 
prices in 2010, and in 2011 infla tion was above 5%, a level that ha d prevailed before 2009.  The 
authorities were concerned and reacted by tighteni ng China's fiscal and monetary policies.  At the 
recent National People's Congress, the GDP growth ta rget was reduced to 7.5%, reflecting also the 
projected slowdown in world trade growth for 2012-13.    
3. Since July 2005 (when China's exchange rate refo rm started), the renminbi has appreciated in 
nominal terms by about 31% against the U.S. dollar.   The rate of appreciation has been somewhat 
slower in the last few years than at the beginn ing of the reform programme.  According to the 
Government Report submitted to the National Pe ople's Congress in March 2012, China intends to 
improve the exchange rate determin ation mechanism for the renminbi and maintain the stability of the 
exchange rate around its equilibrium level, push fo rward the convertibility of the renminbi under the 
capital account gradually, and enlarge the scope of renminbi usage in cross-border transactions. 
4. Aside from macroeconomic developments in the past three years, resulting from the effects 
of, or reactions by the authorities to, the global fina ncial and economic crisis, China continues to have 
a large and persistent surplus of national savin gs over domestic investment and the external 
counterpart of a current account surplus in its balance of payments.  Addressing this structural 
imbalance in its economy, and making growth  less dependent on overseas demand for China's 
manufactured exports, remain important policy challenges for the authorities.    
5. China has become the world's second largest e xporter and remains the third largest importer 
of goods and services (excluding intra-EU trade).  The direction of its trade has not changed since 
2009.  Its main trading partners for exports and im ports are the EU, the United States, Japan, and the 
ASEAN countries, along with Hong Kong Special Ad ministrative Region (SAR) for exports and the 
Republic of Korea and Chinese Taipei for imports .  China's merchandise trade surplus has fallen 
significantly as a share of GDP.  Ch ina has large bilateral trade defi cits with Chinese Taipei, Korea, 
and Japan, from which it imports components for it s export processing activities, and large bilateral 
trade surpluses with the United States and the EU, to  which it exports final products.  When measured 
net of imported components used in China's exports, those bilateral surpluses are significantly smaller.   
6. China continues to expand its bilateral and regional free-trade agreements (FTAs).  Since 
2009, new FTAs with Costa Rica and Chinese Taipei en tered into force.  Supplementary agreements 
were signed with ASEAN countries, Hong Kong SAR and Macao SAR.  The authorities state that 
FTAs are a complement to the multilateral trading sy stem and are used to facilitate import growth. 
7. There were few changes to China's policies on imports and on inward foreign investment in 
the period under review.  Applied MFN tariffs rema in close to China's bound rates, and the simple 
average applied MFN tariff is unchanged, at 9. 5%.  China uses various non-tariff border measures, 
such as import and export licensi ng and state trading to "guide" the allocation of resources.  
Notice-and-comment procedures are becoming more prevalent in the process of drafting trade laws, WT/TPR/S/264 Trade Policy Review 
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  regulations, and departmental rules, but it seems that not all trade-related information is made 
available to the public. 
8. Subsidies and other government assistance are im portant features of China's trade policy and 
industrial policy making.  China submitted a new WTO notification of its subsidies in 2011, listing 
programmes providing government assistance at the central government level between 2005 and 
2008.  However, in many cases there are no figures on the magnitude of support provided, and no information is available on subsidies and other gove rnment assistance provided at the provincial level, 
which are believed to be considerable.   
9. China's institutional and procedural framework  on anti-dumping has not changed since 2009.  
Three challenges to Chinese anti-dumping measures  were brought to the WTO Dispute Settlement 
Mechanism in the period under review.  In th e WTO Committees on TBT and on SPS measures, some 
Members expressed concerns about TBT measures pr oposed and/or imposed by China on products 
ranging from cotton and textiles to lighting and li ght signalling devices for motorbikes, and about SPS 
measures proposed and/or imposed, including hy giene standards for distilled spirits, import 
restrictions on products, and quarantine tes ting, as well as China's notification practices. 
10. The value of agricultural production in China h as been increasing strongly over the past few 
years due to a combination of increased production and higher prices.  However, China remains a net 
importer of food and agricultural products (WTO definition), w ith imports of US$67 billion and 
exports of US$36 billion in 2010.  Agriculture pol icies have been changing, as well as support for 
infrastructure and direct payments decoupled  from prices, and production along with other 
programmes notified to the WTO as being in the Green  Box have gone up.  In addition, market price 
support programmes, input subsidies, and other mo re trade- and production-distorting forms of 
support have increased.  As China has the largest ag riculture sector of any country in the world and 
because it is a major importer and exporter, its  policies may affect other countries.   
11. China is in the process of becoming a party to the Government Procurement Agreement.  It 
submitted a revised offer in November 2011.  The va lue of procurement by government departments, 
institutions, and public organizations using fiscal funds was ¥842 billion in 2010.  It would appear 
that local governments account for a major part of government procurement in China, but no data are available on their procurement activities.  The authorities maintain that there is no longer any 
condition attached to govern ment procurement regarding "indigenous innovation".   
12. China's export regime is complex and measures continue to be used to manage certain 
exports.  Export duties on 17 tariff lines have been eliminated and interim export duty rates have been 
reduced on 21 tariff lines since 1 January 2010.  At  the same time, China has introduced requirements 
for enterprises to declare the weight percentage of rare-earth components contained in certain exports, 
increased the total number of tariff lines subject to export quotas, and adopted seasonal special export taxes.  The authorities consider that these measur es will help conserve natural resources and protect 
the environment 
13. More broadly, China remains concerned about en ergy and resources conservation.  A new tax 
rate of 5% of the sale value (previously a specifi c tax) is applied to crude oil and natural gas 
exploitation.  Preferential taxes are accorded to energy management projects for eligible energy 
services companies. 
14. The number of state-owned enterprises (SOEs) fell during the period under review, but SOEs 
remain dominant in certain sectors and subsectors th at are "vital to national economy".  According to China WT/TPR/S/264 
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  the authorities, the reform of non-tradeable shar es of SOEs was completed by May 2011.  In 
May 2010, China's State Council issued Certain Opinions on Encouraging and Guiding the Sound Development of Private Investment towards sectors that have been dominated by SOEs;  the policies 
set out in the Opinions are not applied to foreign investment. 
15. China revised its Catalogue for the Guidance of  Foreign Investment Industries , which entered 
into force on 30 January 2012.  More services se ctors were added as "encouraged", while some 
manufacturing sectors with excess capacity were removed.  The foreign equity ceilings for 11 subsectors were removed in the latest versio n of the Catalogue.  Regarding administrative 
procedures for inward and outward foreign direct investment, the provincial development and reform 
commissions and commercial departments have been  delegated to verify and approve investment 
projects not exceeding US$300 million (or not above ¥300 million if investment is made with 
offshore renminbi).    
16. Foreign investors (enterprises and individuals) have been subject to the same taxes and 
charges as domestic investors since 1 December 2010, when exemptions accorded to foreign investors 
from payment of city maintenance and construction ta x and educational surcharg es were abolished.   
17. In addition to going through anti-trust reviews,  foreigners investing through mergers and 
acquisitions of Chinese enterprises may be required to obtain clearance from national security reviews.  The National Security Review Mech anism was entered into force on 5 March 2011. 
18. A number of laws, regulations, and departme ntal rules on IPR protection have been 
promulgated or amended since 2009.  These in clude the Copyright Law, the Implementation 
Regulation of the Patent Law, a nd the Regulation on Custom Protec tion of Intellectual Property.  
China intends to promote its campaign for tackling IP R infringement.  In the latest version of the 
Catalogue of Guidance for Foreign Investment Industries , services for IPR protection is listed as 
"encouraged". 
19. Seven industries have been identified as "strateg ic emerging industries" in China and receive 
tax preferences.  Foreign-invested enterprises are encouraged to apply for the status of authentic 
high-tech enterprises in order to receive tax pr eferences.  According to the authorities, no 
technology-transfer requirements are imposed on foreign investment projects, including new-energy car manufacturing. 
20. The financial services sector is being opened up gradually.  Foreign investors are allowed to 
hold up to 100% ownership of non- bank financial institutions (e.g. personal consumption finance);  
subsidiaries of foreign banks are allowed to underwr ite financial bonds in the inter-bank bond market;  
clearing banks for the renminbi outside the Chinese te rritory are allowed to in vest in the inter-bank 
bond market with the renminbi from their clearing operations. 
21. Environmental services have grown rapidly in China since 2005.  Overall policy is still being 
designed.  The sector is "encouraged", in practi ce, with the aim of diversifying operators and 
attracting state-of-the-art technology.  There is no ownership limit on foreign investments to engage in 
the operation of professional categories of environmental pollution control facilities. 
22. Third-party logistics is in its early stage in Ch ina.  Most enterprises provide a single logistic 
service, and foreign-invested operators prevail in  the market.  Modern logistics is listed as 
"encouraged", and foreign investors can hold up to  100% ownership.  Currently, there is no single 
authority to regulate the sector. WT/TPR/S/264 Trade Policy Review 
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  23. Online retail distribution services grew by 44% in 2010.  Foreign presence of online retail 
continues to be "restricted" in the 2011 Catalogue for the Guidance of Foreign Investment Industries .  
Foreign-invested retailers prevail in the large s upermarket and high-end department stores subsector. 
24. Trade aspects of the regulatory framework fo r telecommunication, transport, and tourism 
remain largely unchanged since 2009.  In line wi th the amendment of the Postal Law in 2009, 
domestic express delivery services are listed as "prohibited" in the Catalogue.