. /.   WORLD TRADE  
ORGANIZATION  G/TRIMS/W/51 
23 October 2006 
 (06-5099) 
Committee on Trade-Related Investment Measures Original:   English 
  
 
 
COMMUNICATION FROM CHINA 
 
 
 The following communication, dated 20 October 2006, is being circulated at the request of 
the Delegation of the People's Republic of China. 
 
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TRANSITIONAL REVIEW MECHANISM PURSUANT TO PARAGRAPH 18 OF THE 
PROTOCOL ON THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA ("CHINA") 
 
Information notified by China on Annex 1A of the Protocol 
 
on Accession of the People's Republic of China  
 
 
II.    ECONOMIC POLICIES 
3. Investment Regime 
 (a) Completed revisions to investment guidelin es in conformity with the WTO Agreement   
 
The Law of People’s Republic of China on Sino-Foreign Equity Joint Ventures , the Law of People’s 
Republic of China on Sino-Foreign Cooperative Joint Ventures , the Law of People’s Republic of 
China on Foreign-invested Enterprises  as well as their implementing rules establish the fundamental 
legal framework of foreign investment administrati on. Before accession, China had already modified 
these three basic laws, making them consistent w ith WTO rules. At present, intention of the 
government for investment guidance is embodied in  the Regulation on Guiding Foreign Investment 
Direction  and the Industrial Catalogue for Foreign Investment . The Industrial Catalogue for Foreign 
was revised and promulgated on 30 November 2004, coming into effect on 1 January 2005. Thus, 
scope of allowed foreign investment was further expanded while high level of market access was 
achieved.  
 
At present, the Chinese government is planning to revise the Industrial Catalogue for Foreign 
Investment  in order to fulfill further opening-up and achieve “scientific development” of economy and 
trade.  
 G/TRIMS/W/51 
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  IV. POLICIES AFFECTING TRADE IN GOODS 
 8. Trade-Related Investment Measures  (a) Elimination and cessation of enforcement of trade and foreign exchange balancing 
requirements, local content and export performance offsets and technology transfer 
requirements made effective through laws, regulations or other measures 
 
Before accession to the WTO, China had already modifi ed three basic laws in respect of foreign direct 
investment, eliminating or ceasing the application of provisions on foreign exch ange balancing, local 
content, export performance and mandatory technology transfer requirements. Since last review, no 
change has occurred to this system.   
 (b) Amendments to ensure lifting of all me asures applicable to motor vehicle producers 
 restricting the categories, types or models of vehicles permitted for production (to be 
 completely removed two years after accession)  
The current policy guidance by government for automobile industry is embodied in the Automobile 
Industry Development Policy, which was promulgated on 31 May 2004. The Policy is a revised 
version of the Automobile Industry Policy 1994  and the revision shows China’s resolution on 
implementing its accession commitments.  
 
According to the Policy on Development of Auto Industry  promulgated on 1 June 2004, under the 
prerequisite of compliance with the national sta ndards, automobile manufacturers are free to choose 
the category, type and model of their products.  M eanwhile, the Policy also s tipulates that one foreign 
investor may establish not more than two joint ventures producing cars of the same category 
(passenger car, commercial vehicle or motorcycle).  This limit does not apply to foreign investors in 
cases where they acquire other domestic automob ile manufactories together with their Chinese 
partners. The situation remains the same after the transitional review last year.  
 
(c) Increased limits within which investment s in motor vehicle manufacturing could be 
approved at the provincial government at the levels outlined in the Report 
 
The new Policy on Development of Auto Industry  has reformed the government approval system on 
investment projects of automobile manufacturers.  Except for a few investment projects in certain 
categories (as specified in Article 43 of the Policy) , which are subject to verification system, all the 
other projects are only required to be put on gover nment record before they are implemented.  
Meanwhile, the administrative authority of the provi ncial government is also expanded in the Policy. 
The situation remains the same after the transitional review last year.      
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