China WT/TPR/S/230/Rev.1 
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. China's overall trade policy aim has remained unchanged since its previous Trade Policy 
Review;  it is to accelerate the opening of its ec onomy to the outside world, to introduce foreign 
technology and know-how, develop foreign trade,  and promote economic development that is 
"mutually beneficial" with its trading partners.  In this context, China has r ecently concentrated more 
on the opening up of its services sectors.   
2. China has continued to attach high importance to  the multilateral trading system and has been 
participating actively in the Doha Development Ag enda negotiations.  China grants at least MFN 
treatment to all WTO Members, except El Salvador and the territories of Ceuta, Gibraltar, and 
Melilla.  China has been a party to 15 WTO di sputes since 2008, 4 as a complainant and 11 as a 
respondent. 
3. China has continued to intensify its pursuit of  bilateral/regional free-trade agreements;  it 
considers that such agreements are complementar y to the multilateral trading system.  During the 
period under review, two free-trade agreements en tered into force (China–New Zealand FTA on 
1 October 2008, and China–Singapore FTA on 1 Janua ry 2009), and one was signed (China–Peru on 
28 April 2009).  Furthermore, one agreement on trad e in services (China–Pakistan FTA Agreement on 
Trade in Services) entered into force on 10 Octo ber 2009, and one investment agreement (China–
ASEAN FTA on Investment) was signed on 15 August 2009.  Five further free trade agreements (with 
Australia, Costa–Rica, GCC, Iceland,  and Norway) are being negotiated. 
4. In 2009, China unilaterally granted preferen tial treatment to some products from 41 least 
developed countries (LDCs). 
5. Although some aspects of China's trade policy regi me remain unclear (e.g. apparent lack of 
criteria regarding the publication of regulations), China has continued to adopt measures to increase 
the transparency of its trade and trade-related polic ies, practices, and measures.  Since its previous 
Trade Policy Review in 2008, it has adopted several new or revised trade-related laws, including the 
Anti-Monopoly Law, the Enterprise Income Tax Law, the Patent Law, and the Provisions on 
Disclosure of Government Information.  
6. Since its previous review, China has relaxed restrictions on FDI in services, notably in 
telecommunications and tourism.  Also, the cen tral government has been delegating licensing 
authority to local governments for the establishment and modification of opera tions of "encouraged" 
FIEs and certain selected sectors (e.g. distributi on, whose licensing process was fully decentralized on 
12 September 2008), as well as certain types of FIEs, su ch as foreign invested joint-stock companies.  
Since 2008, all tax incentives apply equally to domes tic firms and FIEs, except for some remaining 
preferential treatment accorded to FIEs due to "grandfathering", under the Enterprise Income Tax 
Law, and the exemption of FIEs from city  maintenance and construction tax.   
(2) INSTITUTIONAL AND LEGAL FRAMEWORK  
7. In 2008, an institutional change took place i nvolving the restructuring and establishment of 
some agencies responsible for trade policy implementation (section (3)(ii)).1  Since its previous 
Review, there has been no change in China's proc ess of judicial review or for appeal regarding 
                                                      
1 The role of the Communist Party of China (CPC) in the legislative and law enforcement activities of 
the Natural People's Congress (NPC) has also largel y remained unchanged.  See WTO (2006), p. 31. WT/TPR/S/230/Rev.1 Trade Policy Review 
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administrative actions related to the implementation of laws, regulations, judicial decisions, etc. in 
trade in goods and services, investment, and intellect ual property rights, nor has there been change to 
the role of legislature and the Central Government. China's judicial system consists of the Supreme 
People's Court, the local people's courts at different  levels, and special courts (e.g. military, railway, 
and maritime courts).  The Na tional People's Congress (NPC) and its Standing Committee exercise the 
legislative power of the State.  The State Council, in which executive power is vested, is the Central 
Government. 
8. China is party to the United Nations Conve ntion on the Recognition and Enforcement of 
Foreign Arbitral Awards (for commercial disput es only).  Under the Constitution and the Law on the 
Procedures of the Conclusion of Treaties, the WTO Ag reements fall within the category of "important 
international agreements", subject to ratificati on by the Standing Committee of the NPC.  The WTO 
Agreements and China's Protocol of Accession are implemented domestically through enabling 
legislation.2  Both China's Civil Procedure Law and the relevant judicial interpretations accept the 
principle that, when an international treaty conclude d 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 for cases in which it has made reservations. 
(i) Transparency 
9. Since its previous Trade Policy Review in 2008, China has continued to take steps to improve 
transparency.  Nonetheless, some aspects of China's trade policy regime remain complex and opaque.  
For example, China ranked 38th among 48 countries in the 2009 Opacity Index, which measures the 
degree to which countries lack clear, accurate, easily discernible, and widely accepted practices 
governing the relationshi ps among governments, businesses, and investors.3  The complexity and 
opacity can leave scope for administrative discre tion and thus corruption.  According to a 2008 
Corruption Perceptions Index, which measures per ceptions of corruption among public officials and 
politicians in 180 countries, China ranked 72nd, with a score of 3.6 out of 10;  in 2005, it ranked 78th 
(out of 159 countries) with a score of 3.2.4  A 2007 joint Circular by the Supreme People's Court and 
Supreme People's Procuratorate on the Opinions to  Address the Issues in Handling Criminal Cases 
Involving the Taking of Bribes explicitly classifies as bribery certain acts by government officials, such as securing benefits for someone and, in  return, accepting corporate shares from the person 
without due payment.  The Government recently adop ted various measures to enhance transparency in 
the public sector.  The General Office of the State Council is in charge of guiding and supervising the 
disclosure of government information. The Nati onal Corruption Prevention Bureau, which reports 
directly to the State Council, is responsible for assuring the transparency of government information 
at various levels, with a view to preventing corr uption, and studying measures to prevent and reduce 
corruption;  the Bureau monitors the flow of suspicious assets and corruption activities through an 
information-sharing system among the judiciary, police and banks.   
10. Since February 2008, most of administrative re gulations promulgated at the legislative level 
of the State Council have been published on the Ch ina Legislative Information Network System, a 
single platform maintained by the Legislative Offi ce of the State Council, for public comments before 
promulgation.  All foreign trade-related laws , regulations, and rules are published in the China 
Foreign Trade and Economic Gazette,  edited and published by MOFC OM.  Enquiry points and 
enquiry websites are established under the MOFCOM  and the General Administration of Quality 
Supervision, Inspection and Quarantine (AQSIQ).  It was not clear to the Secretariat which 
                                                     
 
2 See WTO (2006), p. 33 for details.   
3 Milken Institute (2009). 
4 Transparency International online information.  Viewed at:  http://www.transparency.org 
[29.01.2009]. China WT/TPR/S/230/Rev.1 
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regulations are not published or why.  Since July 2008, departmental rules by the central government 
agencies have also been published through this system.5 Data indicating how many drafts of 
administrative regulations and departmental rules have been published for public comments since 
July 2008 were not made available to the Secretariat. 
11. The Provisions on the Disclosure of Government Information, which entered into force on 
1 May 2008 specify:  which agencies are required to disclose information;  the scope of information 
for disclosure and the way to do it;  the processes of disclosure;  and the supervision of the system.  
The Regulations, inter alia,  require governments at various levels  to:  establish the processes for 
information disclosure;  formulate guides and cat alogues on the information to be disclosed;  and 
improve the publication of information and systems concerning performance review, public 
comments, annual reporting, and accountability.   
12. Since 2008, there has been no change to the Ad ministrative Permission Law, which stipulates 
that provisions on administrative permission must be promulgated before their entry into force and all 
administrative permission outcomes, except for those related to state or business secrets or individual privacy, must be published.  In addition, the Legisl ation Law specifies that, when drafting legislation, 
apart from laws enacted or amended by the NPC, opinions from organizations and the public must be 
solicited, through, inter alia , seminars, appraisal meetings, and h earings.  Draft legislation is also 
made public for comment when necessary, in  official gazettes or newspapers.    
13. It would appear that the economic evaluation of  policies and measures, including tax and non-
tax incentives,  is not published, indicating that this  form of transparency is not a major feature of 
China's institutional framework, to the detrim ent of public accountability and thus governance. 
(ii) Central-Provincial relations in the public sector and local barriers to internal trade 
14. China intends to narrow regional gaps in income and living standards.  In this respect, the 
Central Government implements an overarching st rategy to promote "coor dinated and balanced 
development" between regions.  Nonetheless, c oordination between central and local governments 
remains weak, and barriers to internal trade may ex ist as a result of provincial protectionism, even 
though policy coherence between th e central and local governments is partly assured through a system 
in which top local government officials are appoint ed by the Central Government and there is a 
regular exchange of personnel be tween central and local governments.
6  The authorities state that the 
Central Government has various programmes to reduce inter-provincial trade barriers and other 
barriers to internal trade, for example, the in troduction of:  Certain Regulations on Prohibiting Anti-
competitive Practices by Public Enterprises;  th e Interim Regulations on the Prohibition of 
Commercial Bribery;  and the Interim Regulations on the Prohibition of Collusive Bidding Practices; 
as well as the Anti-Monopoly Law.  The State Counc il Legislative Affairs Office reviews local 
regulations to assure policy coherence. 
(3) FORMULATION , ADMINISTRATION , AND IMPLEMENTATION OF TRADE POLICY  
(i) Main trade laws 
15. China's main laws covering international trad e include the Foreign Trade Law, the Customs 
Law, and the Regulations on Import and Export Tariffs, which contain the tariff schedules, as well as 
laws and regulations relating to  standards, SPS, anti-dumping meas ures, countervailing and safeguard 
measures, and intellectual property rights (Table A II.1).  Various trade-rela ted laws and regulations 
                                                      
5 WTO document S/C/M/92, 12 December 2008. 
6 WTO (2006). WT/TPR/S/230/Rev.1 Trade Policy Review 
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have been adopted or amended during the review period, including:  the Provisions on the Disclosure 
of Government Information (1 May 2008), which stipulate disclosure requirements of government 
agencies;  the Enterprise Income Tax Law (1 Janua ry 2008), which unified income tax rates for all 
companies (domestic or foreign-invested);  the Interim Regulations on Va lue-added Tax (Amended) 
(1 January 2009), which transformed its VAT from production-based to consumption based tax;  the 
Anti-Monopoly Law (1 August 2008), the first compre hensive competition law in China;  the Patent 
Law (1 October  2009), which, inter alia , increased penalties against infringement;  the 
Administrative Regulations on Foreign Investment  in Telecommunications Enterprises (Amended) 
(10 September 2008), which lowered the minimum regist ered capital requirement for foreign-invested 
basic telecommunication providers;  and the Regula tions on the Administration and Supervision of 
Securities Firms (1 June 2008), which strengthened supervision of securities firms and protection of 
consumer rights.  Other main trade-related laws, regulations and rules (and their amendments) that 
have entered into force since 2008 include:  the Implementing Regulations for the Enterprise Income 
Tax Law (1 January 2008);  the Regulations on the Ri sk Disposal of Securities Firms (23 April 2008);  
the Administrative Regulations on Contracting Fore ign Engineering Projects (1 September 2008);  the 
Provisions on Thresholds for Prior Notification of Concentration of Undertakings (3 August 2008);  
the Measures for the Examination and Approval of th e Entry-Exit and Foreign- related Joint Research 
and Utilization of Livestock and Poultry Genetic Resources (1 Oct ober 2008);  the Regulations on 
Foreign Exchange Control (Amended) (5 August 2008 );    the Interim Regulations on Business Tax 
(Amended) (1 January 2009);  and the Interi m Regulations on Consumption Tax (Amended) 
(1 January 2009). 
(ii) Agencies involved in trade policy implementation  
16. An institutional change in the State Council, conducted in 2008, affected some agencies 
responsible for China's trade policy implementati on.  The change, which largely involved reassigning 
of regulatory functions among ministries and agenci es (and, consequently, establishment and abolition 
of ministries and agencies), included:  the estab lishment of the National Bureau of Energy, the 
Ministry of Industry and Information Technology (MIIT), the Ministry of Transport, and the Ministry of Environmental Protection, and the abolition of  the Commission of Science, Technology, and 
Industry for National Defence (COSTIND), the Mini stry of Information Industry (MII), and the 
Ministry of Construction.  Despite the change, the Ministry of Commerce (MOFCOM) still has main 
responsibility for policy coordination and implementation in respect of all trade-related issues.  Other 
key agencies that have an influence on trade polic y include:  the National Development and Reform 
Commission (NDRC), which is in charge of overall national economic and social  development policy;  
and the Ministries of Finance, Agriculture , Transportation, and Land and Resources.
7 
17. Several industry associations also collect a nd share information, identify and deal with 
problems related to industries, discuss trade policy issues that affect their industries, and represent 
their sectors in relation to Government.8 
(4) TRADE POLICY OBJECTIVES  
18. China's overall trade policy objective has remained largely  unchanged since its previous 
Trade Policy Review:  to accelerate its opening to  the outside world (with a view to introducing 
foreign technology and know-how), develop foreign trade, and promote sound economic 
                                                      
7 See WTO (2008) for other agencies that  have influence on trade policies.  
8 These include:  the Chin a Coal Industry Association;  China Iron and Steel Association;  China 
National Textiles and Clothing Association;  China Machine Industry Federation;  China Petroleum and 
Chemical Industry Association;  China Light Industry Federation;  China Building Material Industry Association;  China Nonferrous Metals Society.   China WT/TPR/S/230/Rev.1 
 Page 15 
 
 
development.  The authorities stress China's co mmitment to the DDA and its intention to make 
every effort toward reaching agreement in the ne gotiations.  China provides at least MFN treatment 
for all WTO Members except El Salvador and the territories of Ceuta, Gibraltar, and Melilla (Chapter III(2)(ii)). 
19. At the same time, China has continued to intensify its pursuit of bilateral/regional 
arrangements involving free-trade agreements (section (5)(ii) below).  Nonetheless, the share of trade 
involving China's trading partners with which it ha s adopted bilateral/regional free trade agreements 
still account for a minor share of its total trade;  imports with these trading partners accounted for 
24.7% of China's overall imports in 2009, down fro m 26.4% in 2006, and exports to these partners 
accounted for 31.3% of its exports, up slightly from 31.1% in 2006.
9  China considers that regional 
and bilateral trade arrangements serve as new plat forms and complement the multilateral system;  and 
that regional/bilateral trade arrangements interact wi th the multilateral trading system in a mutually 
beneficial way.  From the relatively low degree of tariff and trade liberalization in some of its RTAs, 
however (Table III.2), it is not clear how these agreements complement the multilateral trading 
system.  It would appear that all China's bilate ral/regional FTA partners recognize China as a market 
economy.   
20. China also participates in th e Asia-Pacific Economic Coopera tion (APEC) forum, the Asia-
Europe Meeting (ASEM), the ASEAN+3, and the East Asia Summit. 
(5) TRADE AGREEMENTS AND ARRANGEMENTS  
(i) WTO 
(a) Participation in the WTO 
21. China acceded to the WTO on 11 December 2001;  it is not a signatory to the plurilateral 
Agreement on Government Procurement or the Ag reement on Trade in Civil Aircraft.  China 
submitted its initial offer to join the GPA, together  with its initial Appendix I offer of coverage, on 
28 December 2007.  It is an observer to the Agreem ent on Trade in Civil Aircraft.  China is also a 
Member of the Agreement on Information Technology (ITA), which it joined on 23 April 2003;  it is 
not a party to the Pharmaceutical Agreement.  Chin a has been participating in the WTO, including in 
the Doha Development Agenda (DDA), as a strong supporter of the multilateral trading system.   
(b) Notifications 
22. China's regular notifications to the WTO are detailed in Table AII.2. 
(c) Disputes 
23. Since 2008, China has been involved in 4 disputes as a complainant10 and 11 as a respondent 
(Table AII.3).11  In addition, China participated as a third party in 13 dispute cases during the period 
under review.12   
                                                      
9 These partners are:  Chile;  H ong Kong, China;  Macao, China;  Pakistan;  New Zealand; ASEAN 
countries;  and member countries of APTA (see below). 
10 WT/DS379, WT/DS392, WT/DS397, and WT/DS399. 
11 WT/DS340, WT/DS342, WT/DS339, WT/DS362, WT/DS363, WT/DS387, WT/DS388, 
WT/DS390, WT/DS394, WT/DS395, and WT/DS398. WT/TPR/S/230/Rev.1 Trade Policy Review 
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(ii) Regional arrangements 
(a) Asia-Pacific Economic  Cooperation (APEC) 
24. China has been a member of APEC since 1991.  In 2009, 69.0% of China's merchandise 
imports were from APEC members (down from 73.6 % in 2006), and 61.6% of its merchandise 
exports went to APEC (down from 66.6% in 2006), re flecting faster growth of China's trade with 
Africa and Middle East.  Other APEC members accounted for 64.1% of China's FDI in 2008 (60.6% in 2006).
13  At the Seventeenth APEC Leaders' Meeti ng, held on 14-15 November 2009 in Singapore, 
leaders of APEC economies, inter alia,  reaffirmed that the most effective means of dealing with 
protectionist pressures and delivering a global stimulus  package to sustain and secure recovery is an 
ambitious and balanced conc lusion to the Doha Developm ent Agenda (DDA) in 2010.14 
(b) ASEM (Asia-Europe Meeting) 
25. At the seventh ASEM Summit, chaired by China and held in Beijing in October 2008, 
leaders, inter alia, reaffirmed the importance of an open, fair, rule-based and stable multilateral 
trading system under the WTO to achieve economic growth and development, and to reduce global 
disparities and trade imbalances.15 
(c) China and ASEAN (Association of Southeast Asian Nations) 
26. China, Japan, and the Republic of Korea, hold regular meetings with ASEAN under the 
ASEAN+3 framework of cooperation.  The 12th ASEAN+3 Summit was held in Cha-am Hua Hin, 
Thailand, on 24 October 2009 to exchange views on i ssues including the global financial crisis, and 
reaffirmed the parties' support to the efforts to resist protectionism16;  the parties also supported the 
need to reach an ambitious and balanced c onclusion of the Doha De velopment Agenda.   
China–ASEAN FTA 
27. Under the Framework Agreement on Comprehe nsive Economic Cooperation between China 
and ASEAN, which entered into force on 1 July 2003, the two parties agreed to negotiate the 
establishment of a China–ASEAN Free Trade Area (CAFTA) within ten years, including by:  
progressively eliminating tariff and non-tariff ba rriers to substantially all trade in goods;  
progressively liberalizing trade in services;  estab lishing an open and competitive investment regime 
to facilitate and promote investment among partners  to the CAFTA;  simplifying customs procedures;  
and developing mutual recognitio n arrangements.  The CAFTA, involving the original ASEAN 6 
(Brunei, Indonesia, Malaysia, the Philippines, Singa pore, and Thailand), is to be established by 2010;  
flexibility up to 2015 has been provided for Cambodi a, Laos, Myanmar, and Viet Nam. ASEAN and 
China agreed to strengthen economic cooperation by  building upon existing activities and developing 
new programmes in five priority sectors:  agricu lture;  human resources development;  information 
                                                                                                                                                                     
12 WT/DS320, WT/DS321, WT/DS322, WT/DS332, WT/DS336, WT/DS337, WT/DS341, 
WT/DS343, WT/DS344, WT/DS345, WT/DS350, WT/DS353, and WT/DS366. 
13 National Bureau of Statistics (2009). 
14 APEC secretariat online information.  Viewed at:  http://www.apec.org/apec/leaders__declarations 
/2009.html [26.11.2009]. 
15 Chair's Statement of the Seventh Asia-Europe Meeting Beijing, 24-25 October 2008.  Viewed at:  
http://www.aseminfoboard.org/content/documents /ASEM7_Chair-Statement.pdf. [08.10.2009]. 
16 Leaders of ASEAN countries agreed to "stand firm against protectionism and to refrain from 
introducing and raising new barriers" (ASEAN online information, "Press Statement on the Global Economic 
and Financial Crisis, Cha-am, Thailand, 1 March 2009" .  Viewed at:  http://www.aseansec.org/22387.htm 
[25.02.2010]). China WT/TPR/S/230/Rev.1 
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and communication technology;  investment;  and Mekong River basin development.  In accordance 
with the CAFTA Agreement on Trade in Goods, two rounds of tariff reduction took place on 
1 January 2009 and 1 January 2010.  In 2009, the share of duty-free tariff lines applicable to China's imports from individual ASEAN countries ranged from 14.4% to 60.5%.  An Agreement on Trade in 
Goods and an Agreement on the Dispute Settleme nt Mechanism of the Framework Agreement on 
Comprehensive Economic Coopera tion between ASEAN and China entered into force on 
1 January 2005.  On 1 July 2007, the Agreemen t on Trade in Services of the China-ASEAN Free 
Trade Area entered into force.
17   
(d) The Asia-Pacific Trade Agreement (APTA)  
28. China is party to the Asia-Pacific Trade Ag reement, a preferential trading arrangement 
between developing countries in the Asia-Pacific region;  other members are Bangladesh, India, the 
Republic of Korea, the Lao People's Democratic Re public, and Sri Lanka.  Under the agreement, in 
2009, 1,662 tariff lines carried rates below the MFN rates;  as a result, the overall average tariff 
applied to parties to the APTA was 8.9%, compared with an MFN rate of 9.5% (Chapter III(2)(iii)).  
In February 2009, the 31st meeting of the APTA Standing Committee was held in Bangkok;  the 
authorities state that consensus was reached on such issues as trade in services, investment, 
framework agreements on trade facilitation, and rules of origin.  On 15 December 2009, the third 
session of the Ministerial Council of the Asia-Pacif ic Trade Agreement was held in Seoul, and the 
Framework Agreements on trade facilitation and promotion, protection and liberalization of 
investment were signed.  In addition, the framewo rk agreement on promotion and liberalization of 
trade in services was finalized (to be signed).  The Ministers declared that the fourth round of negotiations under the APTA had reached its final stage.    
(iii) Bilateral arrangements 
29. China has concluded several bilateral FTAs a nd has been negotiating (or seeking negotiations 
on) free-trade agreements with some other trading partners.  China has established an official FTA 
Network website, which provides information re garding all FTAs it has signed and recent updates.
18  
The share of China's trade with its current bila teral FTA partners (i.e. the Hong Kong and Macao 
SARs, Chile, New Zealand, Pakistan, and Singapore)  accounts for small and declining shares of its 
total trade;  exports to these partners decreased  from 19.6% in 2006 to 17.5% in 2009, and imports 
from them decreased from 4.6% in 2006 to 4.3% in 2009. 
(a) China–Hong Kong, China;  and China–Macao, China CEPAs 
30. Under the Closer Economic Partnership Arrangements (CEPAs) with the Special 
Administrative Regions (SARs) of Hong Kong an d Macao, the simple average applied rates for 
imports originating in Hong Kong, China and Maca o, China were 7.2% and 8.3%, respectively, 
compared with the simple average MFN applied rate  of 9.5% in 2009.  Both CEPAs have provisions 
regarding non-tariff measures, non-application of  tariff-rate quotas, anti-dumping and countervailing 
measures, safeguard measures, trade in services, tr ansparency, standards and conformity assessments, 
and information exchange. Between 2007 and 2009,  the fourth, fifth and sixth Supplemental 
Agreements of the Closer Economic Partnership Ar rangements were signed se parately with the Hong 
Kong and Macao SARs.  The authorities indicate that, with the sixth supplementary agreement of the CEPA, mainland China's services areas open to th e Hong Kong and Macao SARs totalled 42 and 41, 
and preferential trade measures amounted to 250  and 237, respectively.  The mainland also 
strengthened its cooperation with th e Hong Kong and Macao SARs in, inter alia : promotion of trade 
                                                     
 
17 This agreement was notified to the WTO on 26 June 2008.  WTO document S/C/N/463, 2 July 2008. 
18 China FTA Network online information.  Viewed  at:  http://fta.mofcom.gov.cn [14.02.2010]. WT/TPR/S/230/Rev.1 Trade Policy Review 
Page 18 
 
 
and investment, facilitation of customs clearance, electronic commerce, transparency in laws and 
regulations, commodity inspection and quarantine,  food safety, quality standards, cooperation in 
SMEs, industrial cooperation, coope ration on the protection of IPRs , and brand cooperation.  The 
shares of China's exports to the Hong Kong and M acao SARs in its total exports were 13.8% and 
0.2%, respectively, in 2009 (16.0% and 0.2%, in 2006);  the shares of its imports from the Hong Kong 
and Macao SARs were 0.9% and 0.0%, respec tively, in 2009 (1.4% and 0.0%, in 2006). 
(b) China–Chile FTA 
31. The China–Chile FTA entered into force on 1 October 2006.19  China's overall average tariff 
on imports from Chile was 2.3% in 2009, the lo west overall average among China's bilateral FTA 
partners.  In 2009, the share of duty-free tariff lin es applicable to China's imports from Chile was 
62.6%.  The authorities indicated that under the FTA, 74% of Chile's tariffs (in terms of tariff lines) 
were eliminated immediately, and most other tariffs ar e to be eliminated within five or ten years, with 
97% of both countries' tariffs eliminated by 1 January 2015.  The two countries eliminated and reduced tariffs on 1 October 2006, 1 January 2007, 1 January 2008, and 1 Ja nuary 2009 in accordance 
with the FTA.  Negotiations on trade in services and investment were la unched in September 2006.
20  
In April 2008, the two parties signed the Suppleme nt Agreement on Trade in Services of the China–
Chile FTA.  By the end of 2009, five rounds of ne gotiations for the Agreement on Investment of the 
China–Chile FTA had been concluded.  In 2009, the share of China's exports to Chile in its total 
exports was 0.4%, up from 0.3% in 2006;  the share of  imports from Chile in China's total imports in 
2009 was 1.3%, up from 0.7% in 2006. 
(c) China–Pakistan FTA 
32. The China–Pakistan Free Trade Agreement entered into force on 1 July 2007.  The FTA was 
reviewed by the WTO Committee on Regional Trad e Agreements on 20 April 2009, with several 
Members expressing disappointment on the relatively lo w tariff line and bilateral trade coverage in 
the Agreement.21  The Agreement covers trade in goods a nd investment.  It was notified to the WTO 
in January 2008.22  Under the Agreement, China committed to liberalize 36.4% of its tariff by the end 
of implementation in 2012.23  In 2009, the share of duty-free tariff lines applicable to China's imports 
from Pakistan was 19.2%.  China's overall average tariff on imports from Pakistan was 6.9% in 2009 
(overall MFN average was 9.5%) (Chapter III(2)(iii)).   Furthermore, the Agreement on Trade in 
Services of the China-Pakistan FTA was signed on 21 February 2009 and entered into force on 
10 October 2009, but has not been notified to the WTO.  Under the Agreement, China has committed 
to further open its market to Pakistan in 28 subsectors, including healthcare, tourism, sports, 
transportation.  In 2009, the share of  China's exports to Pakistan in its total exports was 0.5%, up from 
0.4% in 2006;  the share of imports from Pakistan  in China's total imports was 0.1%, unchanged since 
2006. 
(d) China–Singapore FTA 
33. The Sino-Singaporean Free Trade Agreem ent on goods and services was signed on 
23 October 2008;  it entered into force on 1 January 2009.  The agreement was notified to the WTO 
                                                      
19 WTO (2008). 
20 MOFCOM online information.  Viewed at: h ttp://english.mofcom.gov.cn/aarticle/newsrelease/ 
significantnews/200904/20090406167872.html [12.05.2009]. 
21 WTO document WT/REG237/M/1, 4 May 2009. 
22 WTO document WT/REG237/N/1, 21 January 2008. 
23 The overall average tariff is expected to fall to 6.1% by 2012.  WTO document WT/REG237/1, 
1 December 2008, Factual Presentation:  Free Tr ade Agreement between Pa kistan and China.   China WT/TPR/S/230/Rev.1 
 Page 19 
 
 
on 2 March 2009.24  It is scheduled to be considered by the CRTA in June 2010.  While Singapore 
eliminated all tariffs on imports from China on Ja nuary 2009, the authorities maintain that China 
undertook reduce tariffs to zero on 97.1% (in terms of  tariff lines) of all imports from Singapore by 
1 January 2010.  In 2009, the share of duty-fr ee tariff lines applicable to China's imports from 
Singapore was 19.2% under the FTA;  by including duty-free tariff lines provided in the context of 
preferential tariffs under the China – ASEAN FTA,  the share becomes 68.5%.  The two countries 
have also made commitments in health, educati on, and accounting;  improvements in commitments 
are mainly represented by either a relaxation of requirements for the form of establishment under mode 3 or new commitments in subsectors such as computer and related services, real estate, 
environment, and air and road transport.  In a ddition, China has added certain subsectors such as 
hospital services, and sports prom otion services and facility operation services, in which it has no 
GATS commitment.  The two countries have also made commitments on the movement of natural 
persons (to establish transparent criteria and streamlined procedures for temporary entry), customs 
procedures (to, inter alia,  simplify and harmonize customs procedures), SPS ( inter alia,  notification 
and information exchange between  the parties), and TBT (to, inter alia,  enhance cooperation between 
the regulatory authorities and between standards and conformance bodies).  In 2009, the share of 
China's exports to Singapore in its total exports was 2.5%, up from 2.4% in 2006;  the share of imports from Singapore in China's total imports was 1.8%, down from 2.2% in 2006. 
(e) China–New Zealand FTA 
34. The FTA between China and New Zealand, signed on 24 July 2008, entered into force on 
1 October 2008.
25  On trade in goods, China is to eliminat e the tariffs on 97.2% (in terms of tariff 
lines) of imports from New Zealand by 1 January 2019 .  In 2009, the share of duty-free tariff lines 
applicable to China's imports from New Zealand was 24.7%.  Preferential TRQs started to be applied 
on 1 January 2009, to some wool and wool top (9 tariff lines at the HS 8-digit level) originating from New Zealand under the FTA.
26  The in-quota rates for these imports were zero.  As of 1 January 2009, 
China reserved the right to apply special safegua rd measures to 11 agricultural products (at the 
HS 8-digit level) imported from New Zealand.27  These agricultural products are milk and cream, 
butter and other fats and oil deri ved from milk, and cheese;  apart from cheese, by the end of 2009, 
China took special safeguard measures against th e other products originating from New Zealand.28  
On services, China made commitments in 15 sub sectors of 4 main services sectors (i.e. business, 
environment, sports and entertainment, and tran sportation).  Like in the GATS, China took no 
commitments, inter alia,  in rental/leasing services without operators, postal services, health and 
related services and tourist guide services.  The two countries made commitments on the movement of 
natural persons.  The FTA contains  provisions for the promotion and protection of investment as well 
as cooperation in customs, SPS, and IPR.  In 2009, th e share of China's exports to New Zealand in its 
total exports was 0.2%, unchanged since 2006;  the share of imports from New Zealand in China's 
total imports in 2009 was also 0.2%, unchanged since 2006.  
                                                      
24  WTO document WT/REG262/N/1, 4 March 2009.   
25 It was notified to the WTO on 23 April 2009 (W TO document WT/REG266/N/1, 23 April 2009).  It 
is scheduled to be considered in the CRTA in June 2010. 
26 Customs announcement No. 94 in 2008.  Viewed at:  http://www.customs. gov.cn/publish/portal0/ 
tab3889/module1188/info150129.htm (in Chinese). [05/01/2009]. 
27 Customs Announcement No. 91 in 2008.  Viewed at:  http://www.c ustoms.gov.cn/publish/ portal0/ 
tab399/info150742.htm (in Chinese) [05/01/2009]. 
28 Customs online information.  Viewed at:  http://www.customs.gov.cn/publish/portal0/tab33196/  
[20/01/10]. WT/TPR/S/230/Rev.1 Trade Policy Review 
Page 20 
 
 
(f) China–Peru FTA 
35. The China-Peru Free Trade Agreement was signe d on 28 April 2009;  it entered into force on 
1 March 2010.29  The Chinese authorities maintain that th e FTA is to eliminate tariffs on 90% (in 
terms of tariff lines) of each other's imports.  Ch ina agreed to further open up sectors such as mining, 
management consulting, R&D, translation a nd interpretation, sports, and tourism.   
(g) Other agreements  
36. China and Australia signed a Trade and Economic Framew ork Agreement on 
24 October 2003.  An early announcement of negotiations, made to the WTO, indicate that they started on 23 May 2005.  A 13
th round of talks was concluded in December 2008.  
37. In June 2004, China and the Southern Afri can Customs Union (SACU) issued a joint 
declaration, in which SACU granted China market economy status.  At the same time, FTA negotiations were launched.  No negotiations have taken place. 
38. In July 2004, China and the Gulf Cooperation Council (Bahrain, Kuwait,  Oman, Qatar, Saudi 
Arabia, and the UAE) announced that they had signed a Framework Agreement on Economic, Trade, 
Investment and Technology Cooperation, and agreed  to launch FTA negotiati ons.  Five rounds of 
negotiations had been held by December 2009.  
39. On 4 December 2006, China and Iceland agreed to  start negotiating an FTA;  a fourth round 
of negotiations was held in April 2008.   
40. China and Norway started FTA negotiations in September 2008
30;  six rounds of negotiations 
had been held by December 2009.31 
41. Negotiations for a China–Costa Rica FTA began in January 2009;  by the end of 2009, 
five rounds of negotiations had been held.  
42. In addition to recent changes in  the cross-strait relationship in transport and postal services 
(Chapter IV), China and Chinese Taipei starte d negotiating a "cross-strait economic cooperation 
framework agreement (ECFA)".  The first round of negotiations took place on 26 January 2010.  The 
scope of the possible agreement remains to be announced.32 
(h) Other potential bilateral agreements 
43. Feasibility studies on a China–India FTA, Ch ina–Korea FTA, and China–Switzerland FTA  
started in April 2005, November 2006, and November 2009, respectively.   
(iv) Unilateral preferences 
44. As of 1 January 2009, unilateral preferential tariffs on certain produc ts were offered to 
41 least developed countries (Chapter III(2)(iii)).  The authorities intend to increase the coverage of 
                                                      
29 WTO document WT/REG281/N/1 (S/C/N/537), 3 March 2010. 
30 An early announcement of these ne gotiations was made to the WTO. 
31 MOFCOM online information.  Viewed at:  http://english.mofcom.gov.cn/aarticle/newsrelease/ 
significantnews/200903/20090306104277.html [12.05.2009]. 
32 MOFCOM online information.  Viewed at:  http://tradeinservices.mofcom.gov.cn/en/a/2010-01-
28/79549.shtml. [15.02.2010]. China WT/TPR/S/230/Rev.1 
 Page 21 
 
 
this scheme to 95% of imports from LDCs (in terms of  national tariff lines) at an unspecified time in 
the future.  Chinese imports from the 41 LD Cs increased from US$11.7 billion in 2004 to 
US$27.7 billion in 2009;  imports from Angola accounted for about 53% of the total imports 
in 2009.33 
(6) FOREIGN INVESTMENT REGIME  
45. In 2008, China was the third largest recipient of  FDI in the world, after the United States and 
France.34  Foreign investment has been encouraged main ly in manufacturing with particular emphasis 
on high-value-added prod uction; recently, FDI in services has been more encouraged by, inter alia , 
the relaxation, if not liberalization, of FDI restric tions, in certain sectors, such as telecommunications 
and tourism (Chapter IV(5)).  During the period under review, China adopted a few measures to 
further liberalize or facilitate FDI in China, incl uding an amendment to the Catalogue of Priority 
Industries for Foreign Investment in the Cent ral-Western Region, which further opened up the 
coverage and scope of sectors for foreign invest ment.  In 2005, the Central Government began 
delegating to local governments licensing author ity for the establishment and modification of 
operations of "encouraged" FIEs and certain select ed sectors (e.g. distribution, whose licensing 
process was fully decentralized on 12 September 2008), as well as certain types of FIEs, such as 
foreign-invested joint-stock companies.  The authorit ies expect this to facilitate FDI approval.  There 
was also FDI liberalization in the context of th e bilateral agreements (CEPAs) between Hong Kong, 
China and Macao, China (section (5)(ii)).  Furthe rmore, since 2007, China has promoted the online 
licensing system for FDI. 
46. China also encourages outward FDI in areas such as research and development, production 
and marketing, and energy.  The authorities maintain  that outward FDI is encouraged in order to 
expand the width and depth of opening up to the ou tside world, promoting international economic and 
trade cooperation, and achieving common development,  on the basic principle of "mutual benefit, all-
win, and common development".  Since 1 May 2009 , the Ministry of Commerce has officially 
delegated the authority of examination and approval of overseas FDI to the local commerce 
authorities of various provinces, autonomous regi ons, and municipalities directly under the Central 
Government.  In accordance with the Circular on the Adjustment of Foreign Exchange Management 
Policy concerning Overseas Investment, issued by the State Administration of Foreign Exchange 
(SAFE), there are no restrictions on the purchase of foreign currency for the purpose of outward FDI.  
China's sovereign wealth fund, China Investment Cor poration, aims to invest a part of the country's 
large foreign reserves;  the fund's operational assets amount to about US$200 billion.35 
47. Main laws and regulations specifically related to FDI remained largely unchanged during the 
review period.  Measures for Administration of Es tablishment of Partnership Enterprise by Foreign 
Enterprises or Individuals within China were publis hed on 25 November 2009, and are to enter into 
force on 1 March 2010. 
48. Since China's previous Review, there has been no change in the Catalogue for the Guidance 
of Foreign Investment Industries36, which lists industries that ar e encouraged, restricted, and 
prohibited;  projects that do not fall into these three groups are "permitted".  The current Catalogue of 
Advantaged Industries for Foreign Investment in  Central-Western China entered into force in 
                                                      
33 UN Comtrade database and China's Customs Statistics. 
34 In 2008, inflows of FDI into China were US$108.3 billion;  inflows into the United States and France 
were US$316.1 billion and US$117.5 billion, respectively (UNCTAD, 2009). 
35 China Investment Corporation online information.  Viewed at:  http://www.china-inv.cn/cicen/ 
about_ cic/aboutcic_overview.html. [29.09.2009]. 
36 The latest revision of the Catalogu e entered into force on 1 December 2007. WT/TPR/S/230/Rev.1 Trade Policy Review 
Page 22 
 
 
January 2009 to further promote FDI in the central  and western regions of China.  The authorities 
indicate that the new catalogue includes about 410 subsectors and projects;  the Government encourages foreign investment in these subsectors and projects, which are eligible for certain 
preferential measures. 
49. Since its previous Review in 2008, examin ation and approval procedures for FDI have 
remained largely the same, except for some dele gation of authority to local governments.  The 
Catalogue of Investment Projects Approved by the G overnment, which is the annex to the Decision of 
the State Council on the Reform of Investment System, clarifies the scope and the level of authorities 
verifying foreign investment project.  For some industries, the NDRC must verify projects above 
certain thresholds (US$100 million for "permitted"  and "encouraged" industries, and US$50 million 
for restricted industries);  those valued at or below the threshold must be verified by the local DRCs.   
50. Before 2009, FIEs were subject to the urban r eal-estate tax, while domestic enterprises had to 
pay the house property tax.  On 1 January 2009, th e State Council abolished the urban real-estate tax, 
and FIEs and domestic enterprises are subject to the house property tax.  As a result, domestic enterprises and FIEs are now subject to equal tax treat ment except that FIEs do not need to pay city 
maintenance and construc tion tax, which domestic companies do pay.  Since 2007, land allocation has 
been through tendering and bidding procedures for domestic firms and FIEs.  Since 2008, a statutory 
rate of 25%, set in accordance with the Enterprise  Income Tax Law, has been applicable to all 
enterprises, except for some "grandfathering" of in centives during a transitional period of five years
37 
(Chapter III(4)(i)).   
51. MOFCOM promotes foreign investment in Chin a mainly through its Investment Promotion 
Agency.  Many provinces provide one-stop services to  foreign investors, and each province has set up 
an investment promotion centre.  China also promotes investment through, inter alia , the International 
Fair for Investment and Trade, Hi-Tech Fair, and Central China Investment and Trade Fair. 
Bilateral investment and tax agreements 
52. China had signed 113 bilateral investment  protection agreements by the end of 
September 200938;  and 94 agreements or arrangements on a voidance of double taxation.  Some of the 
agreements on avoidance of double taxation incorporat e "tax sparing" provisio ns, which stipulate that 
in respect of certain "taxable income", tax is to be levied only by one party to the agreement;  they 
have no MFN provisions.  In addition, China's CEPAs with the SARs of Hong Kong and Macao 
provide certain privileges to investors from these SARs (section (iii) above).39   
(7) FOREIGN ASSISTANCE  
(i) Assistance to China 
53. MOFCOM estimates that China received US$6.7 billion in bilateral and multilateral 
development assistance between January 1979 and May 2009.  China believes that this economic and 
development assistance has greatly contributed to  its reform process and its economic and social 
development.  According to estimates by the OECD , commitments by developed nations for official 
development assistance to China amounted to US$1.4 billion in 2007;  approximately US$335 million 
                                                      
37 See WTO (2008) for details. 
38 The bilateral investment protection agreements provide protection against expropriation without 
adequate compensation and include provisions on dispute settlement. 
39 Other international agreements signed by China include:  the United Nations Convention on 
Contracts for the International Sale of Goods (Vienna Convention), in 1991;  and the Hague Convention on the Service of Documents Abroad, in 1991. China WT/TPR/S/230/Rev.1 
 Page 23 
 
 
was in categories within the scope of the definiti on of aid for trade given by the WTO Aid-for-Trade 
Task Force.40  Among the international financial in stitutions, World Bank lending totalled 
approximately US$2.36 billion in IBRD loans in its  financial year 2009 for 13 projects, focusing on 
agriculture, transportation, city construction and environment, ener gy, and reconstruction after the 
Wen Chuan earthquake.  In 2008, the operations of  the Asian Development Bank (ADB) in China 
included sovereign loans worth US$1.5 billion and US$224 million in private-sector loans.  The ADB 
also provided China with US$19.5 million in techni cal assistance. Multilateral assistance through the 
United Nations is based on a Developmen t Assistance Framework for 2006-2010. 
(ii) China's assistance to foreign countries 
54. The MOFCOM has a mandate to formulate Chin a's foreign assistance policies, and plan, 
implement, monitor, and evaluate China's foreign assistance operations.41  China offers assistance 
mainly through bilateral channels.42  Its foreign assistance projects include social welfare projects, 
infrastructure and public facility projects, human  resources development cooperation, dispatching 
medical teams, provision of general goods and mate rials, emergency humanitarian and cash aid, and 
youth volunteers.43  Information provided by the authorities indicates that China had provided more 
than Y 210 billion in the form of grants and inte rest-free loans by the end of 2008.  China has 
provided assistance to more than 120 developing countr ies.  The authorities indicate that a significant 
proportion of China's aid activities may fall within the scope of the definition of aid for trade given by 
the WTO Aid-for-Trade Task Force. 
55. The annual disbursement of grants and interest -free loans offered by the Government, in the 
context of its south-south cooperation, trip led between 2000 and 2008, to approximately 
US$1.9 billion.  During the same period, offi cial concessional loans increased tenfold, to 
approximately US$1.5 billion.44  Between 2006 and 2009, China doubl ed its grants and interest-free 
loans to African counties and offered US$5 billion in preferential loans.  In 2009, China pledged to 
offer US$10 billion in preferential loans to African countries mainly for infrastructure construction. 
56. China also actively supports infrastructure construction in Asia.  Between 2006 and 2008, 
China provided US$8.3 billion in preferential loans to ASEAN countries.  In 2009, China pledged to provide ASEAN with credit (including commercial lo ans and preferential loans) of US$15 billlion in 
the following 3-5 years, and also pledged to establish the China-ASEAN Investment Cooperation 
Fund, amounting to US$10 billion, for regional coopera tion in infrastructure, energy and resources,  
and communications.  Regional coope ration fora structure China’s aid relations with other regions.
45    
                                                      
40 See WTO document WT/AFT/1, 27 July 2006, for these definitions. 
41 MOFCOM's Department of Aid to Foreign Countries holds regular coordination meetings and works 
closely with the Ministry of Foreign Affairs, Ministry of Finance, the Export-Import Bank of China, and some 
20 other ministries and organizations. 
42 China is a signatory to the Paris Declaration on Ai d Effectiveness, and the Accra Agenda for Action.   
43 At the Second Global Review of Aid for Trade, China provided various examples of its trade-related 
infrastructure projects (WTO document WT/COMTD/AFT/W/15, 28 October 2009).  Some 35 African 
countries have received Chinese infrastructure finance.   The World Bank has published a review of China's 
infratructure activities in Afri ca (IBRD/World Bank, 2008). 
44 China does not follow the OECD definition of Official Development Assistance.   
45 These fora include China-Pacific Island Countr ies Economic Development and Cooperation Forum 
and China-Arab Co-operation Forum (see MOFCOM on line information.  Viewed at: http://cpicforum 
english.mofcom.gov.cn, and Ministry of Foreign Affair s online information.  Vi ewed at:  http://www.mfa. 
gov.cn/eng/wjdt/wshd/t569478.htm).  In November 2008 , China published a policy paper on Latin America and 
the Caribbean region (see Ministry of Foreign Affairs on line information.  Viewed at:  http://www.fmprc.gov. 
cn/eng/zxxx/t521025.htm).