RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/230 
26 April 2010  
 
(10-2014) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
CHINA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by China is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on China. China WT/TPR/G/230 
 Page 3 
 
 
CONTENTS 
  Page 
I. INTRODUCTION 5 
II. GENERAL ECONOMIC ENVIRONMENT AND POLICY DIRECTION 5 (1) E
CONOMIC ENVIRONMENT  5 
(i) Severe impact of the global financial crisis 5 
(ii) Unprecedented natural disasters 6 (iii) General economic situation and ba sic national reality remain unchanged 6 
(2) S
TIMULUS PACKAGE IN RESPONSE TO THE GLOBAL FINANCIAL CRISIS  7 
(i) Proactive fiscal policy 7 
(ii) Moderately easy monetary policy 7 
(iii) Advancing industrial restructuring 8 
(iv) Increasing consumer demand 8 (v) Effectiveness of the stimulus package 9 
(3) P
ROMOTING THE TRANSFORMATION OF THE PATTERN OF ECONOMIC DEVELOPMENT  10 
(i) Increasing support to agricult ure, rural areas and farmers 10 
(ii) Accelerating the developm ent of the service sector 10 
(iii) Advancing strategies for scientific and technological innovation and intellectual 
property rights 11 
(iv) Intensifying efforts for energy conservation and pollution reduction 12 
(v) Improving the well-being of the people 12 
(4) C ONTINUE TO DEEPEN THE REFORM  13 
(i) Reform of the administrative system 13 
(ii) Reform in taxation system 13 (iii) Price reform 13 
(iv) Reform of state-owned enterprises and development of the non-public sector 14 
(v) Reform in specific sectors 14 (vi) Reform in the financial sector and the capital market 14 
(vii) Reform in the social security system 15 
III. TRADE DEVELOPMENT AND TRADE POLICIES 15 
(1) T
RADE DEVELOPMENT AND BASIC CHARACTERISTIC  15 
(i) Declines in both foreign trade and inward foreign direct investment (FDI) 15 
(ii) Basic characteristic of  China's foreign trade 16 
(iii) Mounting risks of global protectionism 17 
(2) P ROMOTING TRADE AND INVESTMENT  17 
(i) Launching the pilot program of settlement of cross-border trade in RMB 18 
(ii) Improving trade financing 18 
(iii) Streamlining procedures to facilitate trade and investment 18 
(iv) Committed to balanced development of import and export 19 
(v) Continuing to implement the Going Global Strategy 19 
(vi) Continuing to promote the transformation of the pattern of foreign trade 20 WT/TPR/G/230 Trade Policy Review 
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  Page 
(3) A DHERING TO FURTHER OPENING UP TO THE OUTSIDE WORLD  20 
(i) New vehicle and new fields for foreign investment 20 
(ii) Financial services 20 (iii) Tourism service 21 
(iv) Telecommunication services 21 
(v) Distribution service of chemical fertilizers 21 
(4) S
TRENGTHENING AND ENHANCING THE MULTILATERAL TRADING SYSTEM  22 
(i) Doha Development Agenda (DDA) 22 
(ii) Opposing protectionism 23 
(5) D EVELOPING REGIONAL AND BILATERAL ECONOMIC AND TRADE RELATIONS  24 
(i) Free trade agreements 24 
(ii) Aid for Trade 24 (iii) Assistance under South-South Cooperation 24 
IV. THE WAY FORWARD 25 
(1) M
AINTAINING THE CONSISTENCY AND STABILITY OF THE MACROECONOMIC POLICIES  25 
(2) A CCELERATING THE TRANSFORMATION OF THE PATTERN OF ECONOMIC DEVELOPMENT  26 
(3) R EFORM AND OPENING UP REMAINING THE THEME OF CHINA 'S DEVELOPMENT  26 
 
 
 China WT/TPR/G/230 
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I. INTRODUCTION 
1. China is at a critical development stage of build ing a moderately prosperous society. Guided 
by the strategic concept of Scientific Developmen t and putting the interests of the people first, the 
Chinese Government is reconsidering its thinki ng on development, intro ducing new development 
pattern and improving development quality so th at the socio-economic development will be 
accelerated on a more comprehensive,  balanced and sustainable track.  
2. Over the past two years, due to the impact of the global financial crisis and catastrophic 
natural disasters, China has encountered most serious  difficulties in its economic growth since the turn 
of the century. Balancing the short-term growth target and the long-term development goal, the 
Chinese Government has been work ing hard to boost domestic demand, adjust economic structures, 
advance reform and increase benefit and welfare of the people. As a result, the marked decline in 
economic growth has been checked and the general economic situation has turned for the better.  
3. In tackling the global financial crisis, th e Chinese Government has relied mainly on 
expansion of domestic demand to stabilize the growth  of the economy. At the same time it  has also 
made great efforts to promote and facilitate tr ade and investment and to achieve balanced 
development of import and export . Domestic and international markets are both indispensable in 
China's economic restructuring and sustained develo pment and the growth should be driven by both 
domestic and external demands in a balanced and coordinated manner.  
4. Although severely affected by the global fina ncial crisis, the Chinese Government has 
steadfastly pushed ahead reform and opening up and has constantly adhered to the win-win principle 
in opening up. China is committed to further c onsolidation and development of the multilateral 
trading system. At the same time, China continues its participation in regional trade liberalization, 
taking that as useful supplement to the fundamental ro le of the multilateral trading system.  In a world 
where economic globalization continues to develop and the interests of all countries are closely 
intertwined, the Chinese Government is ready, as always, to shoulder its due responsibilities and work 
with all other countries to pursue cooperation and further opening up and to fight against 
protectionism so as to safeguard the stability of  the world trade and investment environment. 
II. GENERAL ECONOMIC ENVIRONMENT AND POLICY DIRECTION 
(1) ECONOMIC ENVIRONMENT  
(i) Severe impact of the global financial crisis 
5. In the latter half of 2008, the global financia l crisis triggered by the subprime mortgage 
problem in the United States began to inflict incr easing impact on China's economy and development. 
The crisis brought the world economy into deep r ecession. External demand contracted drastically, 
resulting in a sharp decline in China's foreign trade, in particular in its exports. A lot of enterprises 
encountered difficulties; some even suspended production or closed down. Unemployed people 
increased significantly and many migrant workers ha d to return to their home villages. The global 
financial crisis not only brought greater downward pressure on China's economic growth in the short 
term, but also posed serious challenges to the Chin ese Government in its long-term efforts to develop 
the economy in a more balanced way. 
6. The fourth quarter of 2008 saw China's total value of imports and exports reverse to a 
negative growth of 1.6% year on year, compared  with the increases of 24.7%, 26.9% and 24.3% 
registered respectively in the previous three quarters.  In the fourth quarter, the first decline came in 
November, with a rate of 9.3%. This was the first mo nthly decline year on year  in China's total value WT/TPR/G/230 Trade Policy Review 
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of imports and exports since March 2002. In December , the figure continued to decline by 11.2%. In 
the first quarter of 2009, China's total imports a nd exports dropped further by 24.9%. After that the 
figure was not as big but still reached 22.0% and 16. 6% in the second and third quarter of the year. 
7. China's year-on-year gross domestic product (GDP) slowed down in the fourth quarter of 
2008 to 6.8% (before adjustment) following 10.6%, 10.1% and 9.0% respectively in the previous 
three quarters. It went down further in the first quarter of 2009 to 6.1% (before adjustment), the 
lowest quarterly figure since 1992 when such quarterly  statistics first became available. (See Chart 1.) 
8. With respect to employment, an estimate based  on a sample survey suggested that among the 
130 million migrant workers in China, 15.3% or as many as 20 million either might have lost their 
jobs or could not find any at the time around the 2009 Spring Festival (late January to early February) 
due to the fact that under the shadow of the global financial crisis many enterprises were not able to 
operate at full capacity. 
(ii) Unprecedented natural disasters 
9. In 2008 and 2009 China suffered from a series of unprecedented natural disasters. The 
Wenchuan earthquake measuring 8.0 on the Richter scale that occurred on 12  May 2008 in Sichuan 
Province was particularly devastating. The earthquake  left hundreds of thousands of people dead or 
injured, and caused massive damage to infrast ructure, production capacity and the ecological 
environment. 51 counties (cities or districts) in the three Provinces of Sichuan, Gansu and Shaanxi were confirmed to be seriously or extremely ser iously stricken areas, covering 116,656 square 
kilometres, with a direct economic loss of 650.34 billion Yuan. 
10. As a matter of fact, China is one of the countri es in the world that are most seriously affected 
by natural disasters. Over the past two years Chin a has also suffered from heavy snow and ice storms 
in the south and severe drought in large areas of the north that had been rarely seen before. The direct 
economic loss in China as result of various types of  natural disasters averaged over 200 billion Yuan 
annually between 1990 and 2008, and in 2009 the loss was estimated to be 252.3 billion Yuan. 
(iii) General economic situation and basi c national reality remain unchanged 
11. Although China encountered the most serious di fficulties in its economic development since 
the turn of the century, the difficulties did not reve rse the general trend of China's long-term economic 
growth. Despite the natural disasters, China' s GDP in 2008 still reached 31.40 trillion Yuan, an 
increase of 9.6% over 2007 (after adjustment). In 2009, facing the unprecedented global financial 
crisis, China, in a relatively short time, contai ned the decline in growth, stabilized the national 
economy and witnessed an overall picking up again.  China's GDP in 2009 was 33.54 trillion Yuan, an 
increase of 8.7% over 2008. 
12. China is experiencing rapid industrialization and urbanization. Infrastructure construction, 
upgrading in industries and consumption struct ure, environmental protection and ecological 
improvement as well as the development of other so cial programs all have great potential of demand 
and expansion to sustain the growth of China's economy at a relatively high speed over a relatively 
long period. 
13. On the other hand, China's per-capita GDP still ranks behind more than 100 countries. 
Calculated by the World Bank's poverty standard of 1.25 USD per person per day, China still had 
some 150 million people living in poverty by the end of 2008. China must be prepared to provide long-term financial input and to work hard to solve the problems in the course of development, 
including insufficient consumer demand, slow devel opment of the tertiary industry, weak capacity for China WT/TPR/G/230 
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innovation, high consumption of resources and ener gy, serious environmental pollution, and wide 
disparity in development between urban a nd rural areas and between different regions. 
14. In summary, although China has made great ach ievements over the past 30 years in its 
reform, opening up and economic development, the fact  that China is still a developing country with a 
population of 1.3 billion has by no means changed.  Specific national situations and development 
needs of developing members such as those of China are the set macro environment that should 
always be highlighted and given special consideration in WTO Trade Policy Reviews.  
(2) STIMULUS PACKAGE IN RESPONSE TO THE GLOBAL FINANCIAL CRISIS  
15. Facing the severe challenges posed by the global financial crisis, the Chinese Government has 
primarily relied on expanding effec tive domestic demand to maintain a steady growth of the economy, 
and has made up a stimulus package reflecting both the short-term target of addressing the economic 
downturn and the long-term goal of promoting th e transformation of the economic development 
pattern.  
(i) Proactive fiscal policy 
16. The first major point of the stimulus package is the proactive fiscal policy, or specifically, 
substantially increasing government spending and implementing structural tax reductions. As a 
countermeasure to the global financial crisis, the Chinese Government put forth a plan of additional 
investment of 4 trillion Yuan to be implemented fro m the fourth quarter of 2008 to the end of 2010, in 
which direct investment from the central  government would be 1.18 trillion Yuan. 
17. Of the total 924.3 billion Yuan public investme nt by the central government for year 2009, 
44% goes to housing projects for low-income urban residents, projects to improve the well-being of 
rural residents and rural infrastructure, and so cial programs;  23% to major infrastructure 
construction; 16% to economic restructuring,  energy-conservation and emission-reduction and 
ecological improvement; and 14% to post-earthquak e recovery and reconstruction. None of these 
investments translates into new large-scale produc tion capacities. The purpose is to expand domestic 
demand through consolidation of the foundation for long-term economic development so that the 
economic downturn could be arrested and a steady growth be maintained. 
18. In tax reductions the most significant one w as the transformation on 1 January 2009 of the 
value-added tax system from production-oriented to consumption-oriented. Others included reform of 
the prices of refined oil products and taxes and fe es on them, reduction by half of purchase tax on 
small-displacement automobiles, and abolition or susp ension of 100 items of administrative fees, etc. 
It was expected to bring about a total saving of  500 billion Yuan for businesses and households in 
2009, which would in turn promote both cor porate investment and consumer spending. 
19. With the implementation of the proactive fiscal  policy, China's fiscal budget deficit for 2009 
was 950 billion Yuan, or around 2.8% of the GDP; and the outstanding balance on government debt in 
the central budget at the end of 2009 was 6,023.768  billion Yuan, its ratio to GDP at around 18%. 
Both are relatively low and therefore are safe and acceptable. 
(ii) Moderately easy monetary policy 
20. In response to the impact of the global financ ial crisis, the People's Bank of China promptly 
adjusted policy orientation and began to implem ent a moderately easy monetary policy. Between 
September and December of 2008, the People's Bank of China lowered the deposits reserve ratio four 
times, adding up to a total reduction of 2-4 percenta ge points. It also cut the benchmark deposit and WT/TPR/G/230 Trade Policy Review 
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lending rates of financial institutions five tim es, with the one-year benchmark deposit and lending 
rates down by 1.89 and 2.16 percentage points respectively. Transmission of the moderately easy monetary policy in general was effective, and su pplies of money and credit increased rapidly. The 
policy played an important role in enhanci ng confidence, expanding demand and achieving 
turnaround in the development of the economy. 
(iii) Advancing industrial restructuring 
21. Another key element of China's stimulus packag e in response to the global financial crisis 
was formulation of programs for industrial rest ructuring and rejuvenation so as to accelerate 
elimination of backward production capacities, to raise the efficiency of energy use and to help small 
and medium-sized enterprises (SMEs) survive the cr isis. The global financia l crisis exposed again 
those deep-rooted problems of China's industrial de velopment and highlighted further the urgency of 
industrial restructuring and upgrading and transfor mation of the economic development pattern. These 
are tasks that the Chinese Government has already been devoted to over the years. 
22. As the shrinking external demand made China's surplus production capacities even 
prominent, the Chinese Government implemented more strictly policies on access of production 
capacities already in excess to restrict their redundant development, and made greater efforts to close 
down production capacities with high energy cons umption, serious environmental pollution or 
backward technology. In 2009, 26.17 million kilowatt  of small thermal power generating units were 
shut down and the goal of phasing out 50 million kilo watts of small thermal power generating units 
set in the 11th Five-year Plan (2006-2010) was achi eved one year and a half ahead of schedule. 
Backward facilities with total production capacity of  16.91 million tons in steel making industry, 
21.13 million tons in iron-smelting industry, 74.16 million tons in cement industry and 18.09 million 
tons in coke industry were also eliminated. In coal mining, calcium carbide, iron alloy, paper and 
chemical fibre industries, capacities closed down in the year were 50 million tons, 460,000 tons, 
1.62 million tons, 500,000 tons and 1.37 million tons respectively. 
23. SMEs were the hardest hit by the global financ ial crisis. To alleviate their difficulties, the 
Chinese Government in 2009 increased the fund for the development of SMEs from 3.9 billion Yuan 
to 9.6 billion Yuan to enhance support to SMEs including in such areas as technological innovation 
and structural adjustment. In September 2009 the State Council issued Certain Opinions on Further 
Promoting the Development of SMEs, providing principles on further lowering access barriers, alleviating difficulties in obtaining financing and strengthening services system for SMEs. At the end 
of 2009 the State Council also established an in ter-agency Leading Group on Promotion of the 
Development of SMEs to further strengt hen policy coordination in this respect. 
(iv) Increasing consumer demand 
24. Increasing consumer spending is a key element in  the efforts of the Chinese Government to 
expand domestic demand. In 2 008, the Chinese government increas ed the threshold for personal 
income tax, suspended personal income taxes on interest earnings  from savings and stock account 
balance, and reduced or exempted taxes related to  the purchase or sale of homes for residential uses. 
In 2009, the Chinese central government provided 32 billion Yuan for implementation of a series of 
consumption stimulus programs including those for rural residents to purchase home appliances and motor vehicles and motorbikes, and others for people to trade-in old motor vehicles and home appliances for new ones. The purchase tax on small- displacement automobiles was also halved. 
Throughout the year 13.64 million motor vehicles were  sold, which was an increase of 46.2% over the 
previous year; and commodity housing sales amo unted to 937 million squa re meters, up 42.1%; China WT/TPR/G/230 
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nearly 90 million home appliances were delivered by  manufacturers participating in related programs, 
with total sales for the year exceeding 150 billion Yuan. 
25. The Chinese Government continued to pus h forward the improvement of commercial 
facilities in countryside and in urban residential communities, promote construction and improvement 
of credit system, and encourage spending on tourism,  cultural and recreational activities and sports. In 
July 2009 consumer financing companies were in troduced in four cities including Beijing on pilot 
basis. Many local governments with fiscal capab ilities adopted measures such as issuing admission 
tickets to tourist attractions or other service coupons in their efforts to tackle the economic downturn. 
26. In the course of addressing the impact of the global financial crisis the Chinese Government 
has always given priority to improving the well-being of the people. Measures adopted in this respect 
include those to stabilize and promote employment, in  particular those targe ting university graduates 
and migrant workers; increasing the pension for enterprise retirees; expanding the coverage of 
medical insurance and increasing the funding and the le vel of remuneration; raising the level of basic 
living allowances for low-income groups in both urba n and rural areas; increasing investment on the 
construction of housing for low-income families etc. 
(v) Effectiveness of the stimulus package 
27. The stimulus package has brought positive results . China's GDP achieved a 7.9% year on year 
growth in the second quarter of 2009, reversing the trend of continuous decline since the first quarter 
of 2008. From then on, the growth pace of GDP furt her picked up, registering a 9.1% increase for the 
third quarter of 2009 and 10.7% for the fourth quarter. Personal income, government revenue and 
corporate profits all increased rapidly in the fourth  quarter of 2009. The C onsumer Price Index (CPI) 
also came back to growth from a nine-month dr op at the year end. The foundation of economic 
recovery has been consolidated. (See Chart 1.) 
9.0%
6.1%10.7%
9.1%
7.9%6.8%10.1%10.6%
0.0%2.0%4.0%6.0%8.0%10.0%12.0%
2008 2008 2008 2008 2009 2009 2009 2009
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4Chart 1
GDP Quarterly Growth
 
28. Domestic consumer market saw relatively rapid expansion. In 2009 retail sales of consumer 
goods in China totalled 12.53 trillion Yuan, up 15.5%  from the previous year. The increase in real 
terms was 16.9% after adjustment for price cha nges and was the highest yearly increase since 1986. 
Retail sales in rural areas grew by 15.7% over the previous year, 0.2 percentage points higher than WT/TPR/G/230 Trade Policy Review 
Page 10 
 
 
that in urban areas. This was the first time since 1987 that retail sales in rural areas grew faster than 
that in cities.  
29. Of the 8.7% increase of China's GDP in 2009, domestic demand contributed 12.6 percentage 
points, which offset the 3.9 percentage point shortf all due to the contraction of the external demand. 
Within the domestic demand, investment cont ributed 8 percentage points and consumption 
contributed 4.6 percentage points. Domestic demand plays a more significant role in fuelling China's 
economic growth. 
(3) PROMOTING THE TRANSFORMATION OF THE PATTERN OF ECONOMIC DEVELOPMENT  
30. Transformation of the pattern of economic deve lopment is a major long-term strategic task 
faced by China in its course of building a moderately  prosperous society. In addition to the stimulus 
package in response to the global financial crisis, efforts of the Chinese Government over the past two 
years to advance the transformation of the pattern  of economic development are also reflected as 
follows. 
(i) Increasing support to agricult ure, rural areas and farmers 
31. Since the last review, the Chinese Governme nt has continued pursuing the "pay-back" 
policies and strengthened further its support for ag riculture, rural areas and farmers in a bid to 
continuously increase the incomes of the farmer s. Over the past two years, investment in 
infrastructure and social programs in rural areas as well as direct financial support to farmers increased significantly. In the effort to increase the employment of the rural labour forces, training 
programs to improve the skills of rural migrant workers were launched on a large scale and policies 
were implemented to encourage rural migrant work ers who returned to their home to start up their 
own businesses. Financial support for poverty allevi ation purposes was also increased. From 2008 
onwards the new poverty line of annual per-capita in come of 1,196 Yuan was adopted to cover all 
low-income rural population. According to the ne w standard, 40.07 million people are eligible to 
receive assistance under poverty-relief programs. 
(ii) Accelerating the development of the service sector 
32. It was mentioned in the Government Report of Ch ina for the last review that in 2007 the State 
Council issued Opinions on Accelerating the Devel opment of the Service Sector, setting out general 
policy direction and consideration for the developm ent of China's service industry. As a follow-up, 
Opinions on the Implementation of Certain Polic ies and Measures for Accelerating the Development 
of the Service Sector was promulgated in 2008. The paper provided guiding principles for 
implementing policies and measures to accelerate the development of the service sector. 
33. Over the past two years, China formulated or amended a series of laws, regulations and rules 
concerning services sectors including insurance, secu rities, consumer credit, financial information 
service, telecommunication, legal service, postal service,  tourism, etc. The legal framework for further 
development of the service industry continued to be  consolidated. On many specific services sectors 
such as tourism, film industry, cultural industries, etc., guidelines on acceleration of their 
development were also issued, proposing to lowe r further the access thresholds, to have more 
participation of private and foreign capital and to  encourage the development of SMEs. To keep 
abreast of the technological and market developmen t, the Chinese Government also proposed to phase 
in the integration of telecommunication networks, cable television networks and the Internet for 
ultimate interconnection and resource sharing. China WT/TPR/G/230 
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34. In 2008, the added value of the tertiary i ndustry in China amounted to 13.13 trillion Yuan, 
growing by 10.4% over 2007 (after adjustment). This  was the first time since 2003 that the tertiary 
industry had a higher annual growth rate than the sec ondary industry. In 2009, the added value of the 
tertiary industry reached 14.29 trillion Yuan, which was another year-on-year increase of 8.9% and 
0.2 percentage points higher than the GDP growth rate. Proportion of the added value in GDP also 
came to 42.6% that year, up by 0.8 percentage points over 2008, and the figure has been increasing 
steadily since 2005. (See Chart 2.) 
40.5%40.9%41.9% 41.8%42.6%
30.0%32.5%35.0%37.5%40.0%42.5%45.0%
2005 2006 2007 2008 2009Chart 2
Share of the Tertiary Sector in GDP
 
(iii) Advancing strategies for scientific and technological innovation and intellectual 
property rights 
35. Scientific and technological innovation is the key to China's transformation of the pattern of 
economic development to achieve sustained ec onomic growth. In 2006, the Chinese Government 
promulgated Outline of the National Program for Long and Medium-Term Scientific and 
Technological Development (2006-2020), striving to create an environment in favour of scientific and technological innovation and to speed up the construction of an innovative society. As a developing country, China still lags behind in its overall deve lopment level of science and technology, with 
quality of scientific research not high enough and fu nding in the field of science and technology still 
insufficient. In particular, with respect to import of  hi-tech products and transfer of technology, China, 
like other developing countries, has long been subject to unfair and unreasonable unilateral restrictions imposed by some developed countri es having comparative advantages in this regard. 
36. In the course of advancing the developmen t of science and technology, the Chinese 
Government welcomes and encourages foreign co mpanies to establish research and development 
(R&D) centres in China. Foreign-invested enterpri ses have already become important participants of 
R&D activities in China. In 2008, the proportion of R&D expenditure of foreign-invested enterprises 
(Fees) accounted for 27.2% of the total R&D expe nditure of large and medium-sized industrial 
enterprises in China, up from 19.7% in 2002, with  an average annual growth rate of 21.2%. The 
number of patents for inventions owned by foreig n-invested enterprises accounted for 29% of the 
national total, while their expenditure for new pr oducts development, sales revenue and exports were 
31%, 41% and 60% of the national total respectively.  WT/TPR/G/230 Trade Policy Review 
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37. Intellectual property rights are of utmost impor tance for China in its transformation of the 
pattern of economic development.  In June 2008, the State Council promulgated Outline of National 
Intellectual Property Rights Strategy. The paper su mmarized the intellectual property rights system 
and their protection in China, and made the intell ectual property rights strategy a clear and important 
national strategy. It also proposed to enhance co mprehensively the capabilities of creating, using, 
protecting and managing intellectual property rights to contribute to the innovation capacity of the 
nation and to the building of an innovative society.  Over the past two years, a number of laws and 
regulations concerning intellectual property rights  were improved with new amendments, including 
for example the Patent Law and its implementation re gulations, and the efforts of law enforcement to 
protect intellectual property rights were also further strengthened. 
(iv) Intensifying efforts for energy conservation and pollution reduction 
38. Pushing forward energy-saving and emission reduction and promoting clean production and 
green consumption have always been important elem ents of the work of the Chinese Government to 
accelerate the transformation of the pattern of econom ic development. Since the promulgation by the 
State Council of the General Work Plan for Sa ving Energy and Reducing Emissions in 2007, the 
Chinese Government has further intensified its effort s in this regard. Use and promotion of energy-
saving products and technologies such as efficient light bulbs received support from the central government. Implementation of key energy conser vation projects continued to make progress. 
Environmental standards and supe rvision further tightened up. Development of clean energy 
accelerated. Pollution prevention and control and ecological conservation strengthened. 
Comprehensive utilization of resources further enhanced. 
39. In 2009, the Chinese Government released th e system of indices for clean production 
assessment in 11 industries. Desulphurization facili ties were installed in thermal power generating 
units with a total capacity of another 102 million kilo watts, raising the percentage of the total capacity 
of thermal power generating units so equippe d to 72%. From 2006 to 2009, China's energy 
consumption per unit of GDP decreased by 14.38%, and chemical oxygen demand and sulfur dioxide 
emissions reduced by 9.66% and 13.14% respectively. Forest coverage rate in China now stands at 
20.36%. 
40. The Chinese Government has recently set new targets of energy saving and emission 
reduction. By 2020, the GDP carbon dioxide intensity will be reduced by 40-45% from the 2005 level, 
and the share in the primary energy consumption of non-fossil fuels includi ng renewable and nuclear 
energy will be increased to around 15%. 
(v) Improving the well-being of the people 
41. Development of social programs and enhancem ent of people's well-being have always been 
major focus of the Chinese Government when strivi ng to promote transformation of the development 
pattern and to strengthen the role  of consumption in sustaining the economic growth. As early as in 
the Outline of the 11th Five-year Plan issued in 2006 the Chinese Government stated that in economic 
development it "should further boost the domestic dema nd, adjust the relationship between investment 
and consumption, keep investment within a reasona ble scale, and strengthen the role of consumption 
in driving the economic growth".  In t+he face of th e reality that the per-capita national income is still 
low, the Chinese Government must make long-term  and strenuous efforts to ensure continuous 
increase of people's income, to enhance the developmen t levels of social security and social programs 
in order to finally realize the transformation.  China WT/TPR/G/230 
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42. Over the past two years, the Chinese Government has continued its efforts in this regard with 
various measures in addition to those in the stimulus  package in response to the global financial crisis. 
They included, for example, enforcing the mini mum wage system; expandi ng the coverage of all 
social security schemes and raising remuneration le vels; increasing further investment in education 
and implementing free compulsory education both in urban and rural areas; and increasing greatly 
investment in the medical and health care system and accelerating its reform process. 
(4) CONTINUE TO DEEPEN THE REFORM  
43. Reform is China's basic state policy. The Ch inese Government holds that only by improving 
the socialist market economy system through cons tant reform, can a fundamental institutional 
guarantee be established for China to transform the economic growth pattern in the long run and to 
achieve healthy and sustainable development of the economy. In the past two years reform has been 
further advanced in many aspects of China's economic and social life.  
(i) Reform of the administrative system 
44. In March 2008, China implemented institutiona l restructuring of the State Council. The 
reform focused on transforming government functi ons and straightening out responsibilities of 
different agencies and explored the establishment of larger departments with more integrated 
functions. The functions of macro-economic depa rtments were more reasonably deployed. The 
administration on energy and environment was st rengthened. Institutions concerning industry, 
information technology and transport were adjusted . Public administration and public service agencies 
were strengthened and integrated with more emphasis on people's well- being. The number of agencies 
adjusted or changed in this restructuring totalled 15, and that of ministerial-level agencies reduced 
by 4. Apart from the General Office of the State Council, the State Council currently has 27 administrative agencies. In additi on, the transparency of the public sectors further improved. With 
the implementation of Regulations on Government Information Release since 1 May 2008, work on 
government information release has been further enhanced.  
(ii) Reform in taxation system 
45. With respect to taxation system, following the re form in 2007 of tax for use of land in urban 
areas and vehicle and vessel tax, and the introductio n in 2008 of the new Law on Enterprise Income 
Tax and Interim Regulations on Ta x for Farmland Occupation which ha ve been applied uniformly to 
both domestic and foreign-invested enterprises, the Chinese Government further unified the real estate 
tax for Chinese and foreign-invested enterpri ses and individuals. Thus , except for the urban 
construction and maintenance tax and the education surcharge, the taxation system for Chinese and 
foreign-invested enterprises and individuals has b een unified in China. In addition, with the 
implementation in 2009 of the amended Interi m Regulations on Value-added Tax, Interim 
Regulations on Business Tax, and Interim Regulat ions on Consumption Tax,  value-added tax has 
been transformed, and the systems of business tax and consumption tax have been further improved. 
(iii) Price reform 
46. With respect to price, the Chinese Government carried out reform of the prices and taxes and 
charges of refined oil on 1 January 2009, taking an important step forward in the reform of pricing 
mechanism of resource products. Further progress was also made in the reform of prices concerning 
water, electricity and other resource products. The re form aims at having prices of resource products 
to timely reflect the market situation of supply and demand as well as the scarcity level of the 
resources, and giving full play to the fundamental role of the market in forming the prices of resource 
products. On 25 January 2009 the prices of chemical fe rtilizers were reformed with restrictions on the WT/TPR/G/230 Trade Policy Review 
Page 14 
 
 
prices lifted. The prices of fertilizers from local fa ctories are now determined by market, instead of 
being guided by the government.  
(iv) Reform of state-owned enterprises and development of the non-public sector 
47. With respect to state-owned enterprises, in October 2008 Law on State-owned Assets of 
Enterprises was adopted at the Fifth Session of the Standing Committee of the 11th National People's 
Congress, and established the legal framework for th e supervision of state-owned assets. Introduction 
of corporate and share-holding systems for state- owned enterprises has further advanced through 
participation of strategic investors, restructuri ng and going public. Corporate governance structure has 
also improved with measures such as  establishment of standard board  of directors and introduction of 
external directors, etc. The budget system for the use of state capital has basically taken shape.  
Institutional improvement has also advanced in areas such as financial supervision, ownership 
management and supervision by board of  supervisors over the state-owned assets. 
48. By the end of February 2010, the number of state-owned enterprises for which the State-
owned Assets Supervision and Administration Co mmission of the State Council performed the 
responsibilities of an investor had decreased from 151 at the beginning of 2008 to 128. The recently 
published results of the Second Nati onal Economic Census showed that  at the end of 2008 China had 
altogether 4.959 million enterprise legal persons, among which 143,000 was state-owned enterprises, 
36,000 less than that at the end of 2004 as show n in the First National Economic Census, or a 
decrease of 20%. In the m ean time, the number of private ente rprises was 3.596 million, up by 81.4% 
with an addition of 1.614 million. This indicated  that the non-public sector had been developing 
steadily and had already become an important component of the national economy. 
49. In addition to the issuing of Opinions on Further Promoting the Development of SMEs as 
mentioned earlier, the State Council on 24 March 2010 held an executive meeting to specifically 
study policies and measures to further encourage private investment, including to develop infrastructure and public utilities such as transpor t, telecommunications and energy, to establish 
financial institutions; to participate in social program s in culture, education, sports, health etc; and to 
participate in the reshuffle and restructuring of state-owned enterprises by means of equity 
participation or control or assets acquisitions. 
(v) Reform in specific sectors 
50. With respect to the reform in various sectors, restructuring of the telecommunication industry 
was launched in May 2008, ushering in a competiti ve market with the restructured China Mobile, 
China Telecom and China Unicom being three major suppliers capable of offering the full line of 
services. Structural reform in the postal service wa s further advanced with the amended Postal Law 
coming into effect on 1 October 2009. A new postal service system is in place whereby enterprises 
operate independently and the gove rnment takes up the supervision responsibilities in accordance 
with the law. Reform in the banking sector also progressed. The first policy bank or China 
Development Bank was commercialized and transfor med into a joint-stock commercial bank at the 
end of 2008, and the last wholly state-owned bank,  Agricultural Bank of China, was also transformed 
into a joint-stock company at the beginning of 2009. 
(vi) Reform in the financial sector and the capital market 
51. With respect to the capital market, the new sh ares issuance system was further reformed and 
improved. The Growth Enterprise Board was launche d in October 2009, which was a significant step 
taken to develop multi-level capital market in China.  Construction of a system of the futures market 
was further strengthened with the launch of the classified supervision over futures companies. China WT/TPR/G/230 
 Page 15 
 
 
Preparations for the introduction of stock index futu res market were basically completed in terms of 
both the administrative system and technical support. Corporate bond market also developed rapidly, as the pilot program of the issuance of convertible  corporate bonds by listed companies was pushed 
forward. Relevant systems concerning supervisi on of securities companies and listed companies as 
well as protection of investors' rights and in terests were also further consolidated. 
52. With respect to the foreign exchange administration, Regulations on the Administration of 
Foreign Exchange was amended in  August 2008 to further improve  the managed floating foreign 
exchange rate system based on market demand and s upply and in reference to a basket of currencies. 
The RMB exchange rate has basi cally been stable at an adap tive and equilibrium level. In 
August 2008 a pilot program of domestic and fore ign currency exchange franchise business to serve 
individual customers began to be implemented in  Beijing and Shanghai, and in November 2009 it was 
expanded to include more cities. In July 2009 settle ment of cross-border trade in RMB also began on 
an experimental basis in 5 cities including Shanghai. 
(vii) Reform in the social security system 
53. In 2009, the reform of medical and health care system began to be impl emented nationwide. It 
is planned that by 2011 a basic medical insurance system would cover both urban and rural residents, 
and a national system of basic medicines woul d be put in place. Also, both urban and rural 
community-level medical and health care system would be improved, and a national system of basic items of public health service would be formulated a nd implemented. It is estimated that central and 
local governments will spend 850 billion Yuan  for the reform in three years time. 
54. In other areas of the social security syst em, a new rural pension insurance program was 
launched in 2009 in more than 300 counties nationwide. It is planned that the program would cover all 
eligible rural residents by 2020. For workers of urban enterprises, a nati onwide pension planning 
system pooling at the provincial level was basical ly established, and the method for transferring 
pension accounts across different provinces was also in troduced. In domestic securities market part of 
the state-owned shares of listed co mpanies has been required to be tr ansferred to the National Social 
Security Fund. In 2010, the social insurance fund budget began pilot implementation. 
III. TRADE DEVELOPMENT AND TRADE POLICIES 
(1) T
RADE DEVELOPMENT AND BASIC CHARACTERISTIC  
(i) Declines in both foreign trade and in ward foreign direct investment (FDI) 
55. China has encountered great difficulties in fore ign trade and foreign direct investment as a 
result of the global financial crisis. In 2009, China's merchandise export amounted to 
1.2015 trillion USD, down by 16% over the previous  year; and the import amounted to 1.0058 trillion 
USD, down by 11.2% over the previous year. In cont rast, in 2008, despite the growing impact of the 
crisis in the latter half of the year, China's e xport still reached 1.4307 trillion USD, up by 17.3% over 
the previous year, and the import reached 1.1326 tr illion USD, up by 18.4% over the previous year. It 
is worth noting that the average annual growth rate  in China's total import and export was 23.7% for 
2005-2007.  
56. With respect to foreign direct investment, in  non-financial sectors, China's inward foreign 
direct investment amounted to 90 billion USD, down by 2.6% from 2008, where the figure was 92.4 billion USD, up by 23.6% over 2007. In 2007, the figure was 74.8 billion USD, a 13.6% increase 
over the previous year. WT/TPR/G/230 Trade Policy Review 
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(ii) Basic characteristic of China's foreign trade 
57. The crisis has had severe impact on Ch ina mainly because alongside the economic 
globalization and the global redeployment of the manufacturing sectors, China has become one of the most important production bases in the world with its firm commitment to the policy of opening up. 
Of China's total export of 2008 (1.4307 trillion USD) and 2009 (1.2015 trillion USD), processing 
trade represented 675.1 billion USD and 586.9 bi llion USD, or 47.2% and 48.8% of the total 
respectively; exports of foreign-invested enterp rises amounted to 790.5 billion USD and 672.1 billion 
USD, or 55.3% and 55.9% of the total respectivel y. Of China's total import of 2008 (1.1326 trillion 
USD) and 2009 (1.0058 trillion USD), processing trade represented 378.4 billion USD and 
322.3 billion USD, or 33.4% and 32% of the total resp ectively; imports of foreign-invested enterprises 
amounted to 619.4 billion USD and 545.3 billion USD, or 54.7% and 54.2% of the total respectively. 
(See Charts 3 and 4.) 
58. It is easy to tell that both the import of raw ma terials and the export of end products are highly 
dependent on foreign markets, and foreign-inv ested enterprises account for a large proportion of 
China's foreign trade. This important characteristic  is essentially determined by China's position in the 
global industrial chain and its comparative advant ages. China has a huge labour force of high quality, 
high efficiency and low cost. In addition, Ch ina has a relatively well developed system of 
manufacturing industry, strong supporting capabilities and sound infrastructure.  
59. Currently China's main exports are concen trated in those of middle and lower end 
manufacturing industries with low added value, while  a large amount of capital, technologies, designs, 
management, and even raw materials, components and parts come from abroad. This is why China 
maintains large trade surplus with  some WTO members and large trade deficits with some others. 
Many Chinese exports contain very limited added va lue during their production in China, which to a 
large extent only reflects the input through labour of the Chinese workers. 
Total exports
USD 1,430.7 bn
Processing trade
USD 675.1 bn,
or 47.2%Chart 3:  Share of processing trade in  total exports and imports, 2008 and 2009
Share of Processing Trade in Total Exports 2008
Share of Processing Trade in Total Imports 2009Share of Processing Trade in Total Exports 2009
Share of Processing Trade in Total Imports 2008
Processing trade
USD 322.3 bn,
or 32%Processing trade
USD 378.4 bn,
or 33.4%Processing trade
USD 586.9 bn,
or 48.8%
Total imports
USD 1,005.8 bnTotal imports
USD 1,132.6 bnTotal exports
USD 1,201.5 bn
 China WT/TPR/G/230 
 Page 17 
 
 
Total exports
USD 1,430.7 bn
FIEs
USD 790.5 bn,
or 55.3%Chart 4:  Share of FIEs in total exports and imports, 2008 and 2009
Share of FIEs in Total Exports 2008
Share of FIEs in Total Imports 2009Share of FIEs in Total Exports 2009
Share of FIEs in Total Imports 2008
FIEs
USD 545.3 bn,
or 54.2%FIEs
USD 619.4 bn,
or 54.7%FIEs
USD 672.1 bn,
or 55.9%
Total imports
USD 1,005.8 bnTotal imports
USD 1,132.6 bnTotal exports
USD 1,201.5 bn
 
 
60. Such a characteristic of China's foreign trade is  a manifestation of the international division of 
labour brought about as economic globalization furthe r deepens. It has not only benefited China, but 
also foreign investors and consumers of  Chinese products all around the world. 
(iii) Mounting risks of global protectionism 
61. China remains the most targeted country of various trade remedy measures. Statistics from 
the WTO show that in 2008, WTO members initiated a total of 71 anti-dumping investigations against 
China, accounting for 33.7% of the total in that year; the number of countervailing investigations 
against China was 11 in 2008, accoun ting for 68.8% of the total.  
62. The global financial crisis increased the risk of protectionism against China. Exports from 
China, including the products of many foreign-i nvested enterprises, are facing a growing number of 
protectionist measures; trade volume affected keeps growing. There is also a tendency of rising trade frictions between China and some of its trading part ners, particularly those major developed countries. 
63. Statistics from the Chinese Government show that  in 2008 and 2009, China was the target of 
210 trade remedy investigations, among which 141 cases were filed after September 2008, when the 
global financial crisis went into fu ll gear. In 2009 in particular, the number of investigations against 
China reached 116, involving a total trade volum e of 12.7 billion USD, up by 23% and 102% 
respectively over the same period of 2008, a record high in history.   
(2) P
ROMOTING TRADE AND INVESTMENT  
64. In the face of the precarious trade situation br ought about by the global financial crisis, the 
Chinese Government, while working hard to main tain a stable and rapid economic growth, has WT/TPR/G/230 Trade Policy Review 
Page 18 
 
 
managed to pursue the goal of boosting domestic  demand and stabilizing external demand. With 
boosting domestic demand as priority, China strives to mitigate the effect of rapidly shrinking external 
demand through various facilitation and promoti on measures to stabilize trade and investment. 
(i) Launching the pilot program of settlement of cross-border trade in RMB 
65. In April 2009, the State Council decided to la unch a pilot program to settle the cross-border 
trade in RMB in Shanghai and other four c ities of Guangdong Province, namely Guangzhou, 
Shenzhen, Zhuhai and Dongguan. The implementa tion measures followed up in July that year. 
Settlement in RMB for cross-border trade can facilitate trade and i nvestment, and help enterprises 
avoid the risk of fluctuations in the exchange ra te of major currencies for international settlements. 
Currently, the Chinese Government is taking stock of  the pilot work through case studies and trying to 
improve the supporting policies and measures so as to advance the pilot program. 
(ii) Improving trade financing 
66. With regard to trade financing, China Export Credit Insurance Company expanded its 
coverage of short-term export credit insurance to 90.3 billion USD in 2009. The Chinese Government 
also supported, with the fund from the central budget, credit guarantee institutions for SMEs to 
expand their services and to facilitate these enterpri ses including trading enterprises to obtain loans 
from banks. 
67. With respect to the international cooperation re lated to trade financing, China bought bonds in 
the value of 1.5 billion USD from International Fi nance Corporation of the World Bank Group; the 
People's Bank of China signed bilateral currency swap  agreements valued at a total of 650 billion 
Yuan with central banks or currency authorities of Argentina, Belarus, Indonesia, Malaysia, 
Hong Kong, China, and Korea; China participated  in the establishment of the Chiang Mai Initiative 
Multilateralization, and signed the Chiang Mai Initiative Multilateralization (CMIM) Agreement 
valued at a total of 120 billion USD together with the 10 ASEAN count ries, Japan, Korea and 
Hong Kong, China on 24 December 2009. China also  announced the program to provide loans of 
15 billion USD to ASEAN countries, loans of 10 billion USD to African countries and other member 
countries of Shanghai Cooperation Organization (SCO ) respectively, and to establish China-ASEAN 
Investment Cooperation Fund in an amount of 10 billion USD. 
68. The Export-Import Bank of China (China Exim Ba nk) has launched a series of international 
cooperation programs in trade financing, including a joint statement with the Export-Import Bank of 
the United States to provide trade financing facilities of 20 billion USD. It provided trade financing of 
up to 3 billion USD to banks in Russia, Turkey, In dia, Chile and multinational financial institutions 
such as the Afri-Exim Bank. 
(iii) Streamlining procedures to facilitate trade and investment 
69. The Chinese Government has continued to impr ove vigorously the facilitation of trade and 
investment in terms of procedures. The Chinese Customs adopted a series of Customs clearance 
facilitation measures to reduce costs of, inter alia , logistics and warehousing, such as inspection and 
release of goods upon arrival with advance declara tion, inspection and release at port Customs with 
declaration made at local Customs, 7-day/24-hour  appointment for Customs clearance, etc. More 
authorities for examination and approval of foreig n investment projects were delegated to local 
administrations, with relevant procedures further simplified, and the number of items subject to 
examination and approval further reduced. On- line application and administrative licensing 
concerning foreign investment bega n to be implemented nationwide. China WT/TPR/G/230 
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70. Among the trade facilitation measures, those to facilitate the domestic sales of processing 
trade products are of considerable significance fo r enterprises trapped in difficulties as a result of 
shrinking external demand. Processing trade is a trade practice which is subject to special supervision 
of the Customs. Under such practice, raw materi als are imported in bond and the processed products 
will be re-exported. If the processed products are sold  at home, the enterprises are required to re-do 
the Customs import procedures for the imported raw materials and pay the import duties. In face of the shrinking external demand due to the global financial crisis, the Chinese Customs simplified the 
procedures for enterprises engaged in such business, thus facilitating a large number of enterprises to 
sell export products in the domestic market , and helping them out of difficulties. 
(iv) Committed to balanced develo pment of import and export 
71. While endeavouring to stabilize export, the Chin ese Government has kept its market open and 
made efforts in expanding importation so as to achie ve a much more balanced development of import 
and export. 
72. In 2009, the Chinese Government organized 13 trade and investment promotion missions to 
purchase goods and expand investment cooperation in over 30 countries and regions. Despite 
substantial decline in both Chinese imports and exports  due to the global financial crisis, the year-on-
year decrease in import (11.2%) was much lower than that in export (16.0%). In 2009, China's surplus of merchandise trade declined 34.2% from the previous year. 
73. Export to China from many countries performed much better than the overall export of these 
countries. For example, in 2009, while the EU's overall export decreased year on year by 20.6%, its 
export to China decreased by 1.5% only. The same year saw an 18.1% year-o n-year decrease in the 
overall export of the United States, while its e xport to China decreased by merely 0.2%. Among 
China's neighbouring countries, Thailand, Indonesi a and Malaysia experi enced overall export 
decrease of 14.6%, 15.0% and 21.1% respectively in  2009, while their export to China remained 
stable. Overall export of Australia and New Zeal and decreased 17.3% and 18.3%, while their export 
to China increased 21.7% and 29.2% respectively. 
74. China has also imported a great amount of products from least-developed countries and 
regions, which contributed to the economic de velopment of these countries and regions. In 
February 2010, the WTO Secretariat circulated a document titled Market Access for Products and 
Services of Export Interest to Least-developed Countries (WT/COMTD/LDC/W/46/Rev.1), noting that China became the largest export market for LDCs in 2008, purchasing 23% of the LDC's export, 
and the share of China's market  for LDCs has been increasing. 
(v) Continuing to Implement the Going Global Strategy 
75. To continue the Going Global strategy, the Chinese Government continues to encourage 
qualified enterprises to go abroad and engage in multinational operation to achieve mutual 
development. Rules on Administration of Overseas I nvestment was promulgated in March 2009, and 
came into force on 1 May 2009. The department rule  delegates 85% of the examination and approval 
related items of outbound investment to the co mpetent authorities of provincial governments. The 
procedures for examining and approving outbound investment are also significantly simplified. 
76. By the end of 2009, Chinese enterprises had already established 18 overseas economic and 
trade cooperation zones in 14 countries and regions, which facilitated outbound investment of Chinese 
enterprises, especially SMEs. These cooperation zo nes should benefit the economy of host countries 
as they build up local production capacities accordi ng to local conditions with relatively complete 
industrial chains and are supported by the developm ent at the same time of sound infrastructure.  WT/TPR/G/230 Trade Policy Review 
Page 20 
 
 
77. In 2008, China's overseas direct investment  totalled 55.91 billion USD, up by 111% 
compared with the previous year. Among this, in vestment in non-financial sectors amounted to 
41.86 billion USD, up by 68.5% compared with the previous year. In 2009, China's overseas 
investment also increased in spite of the advers e situation. The overseas direct investment in non-
financial sectors reached 43.3 billion USD, up by 6.5% on a year-on-year basis.  
78. In 2008, the top three industries with the larg est outbound direct investment were business 
services, financial sector and wholesale and retail sector. The investment outflow into these three 
industries accounted for 75.6% of the total outflow of direct investment. They were also the top three industries with the largest stocks of outbound direct investment as of the end of 2008. 
(vi) Continuing to promote the transformation of the pattern of foreign trade 
79. While making efforts to stabilize the internati onal trade and investment environment, the 
Chinese Government has remained committed to optim izing and transforming the pattern of foreign 
trade. Measures restraining production and consumpti on of certain products have been implemented at 
home aiming to achieve energy-saving, emission reduction and the protection of ecological environment. As commensurate measures, the Chinese Government has continued to rigorously 
control the export of products of high energy consumption or high emission and products of 
exhaustible natural resources, to advance the tr ansformation and upgrading of processing trade, to 
enhance the added-value of export products, and to promote the development of services trade. 
(3) A
DHERING TO FURTHER OPENING UP TO THE OUTSIDE WORLD  
80. Opening up to the outside world is one of the basic state policies that China has long been 
pursuing. Since the last review, the Chinese Governme nt's efforts to further promote opening up have 
continued and not been affected by the global financ ial crisis. In many fields, the level of opening up 
has been further raised. 
(i) New vehicle and new fields for foreign investment 
81. Measures for Administration of Establishment of Partnership Business in China by Foreign 
Enterprises or Individuals was promulgated on 25 November 2009 and came into effect as of 
1 March 2010. The administrative regulation provides foreign investors with a new form of business 
set-up in addition to wholly foreign-owned enterp rise, equity joint venture and contractual joint 
venture.   
82. The amended Catalogue of Advant aged Industries for Foreign In vestment in Mid-West China 
(2008) came into force in 2009. Foreign investment projects listed in the Catalogue are regarded as 
encouraged foreign investment projects as provided in the Catalogue for the Guidance of Industries 
for Foreign Investment. Central and western regions of China have opened up mo re fields to foreign 
investment on larger scales. 
(ii) Financial services 
83. In January 2008, the newly amended Measure s on Administration of Auto Financing 
Companies was promulgated, expanding the financ ing channels and the business scope of auto 
financing companies including wholly foreign- owned and joint venture service providers, and 
allowing auto financing companies to issue financia l bonds and engage in financial leasing business.   
84. Since August 2008, the Chinese Government has launched the pilot program in Beijing and 
Shanghai to allow establishment of domestic and foreign currency exchange franchise businesses to China WT/TPR/G/230 
 Page 21 
 
 
serve individual customers, and the entities perm itted to engage in the business include foreign-
invested enterprises having independe nt legal-person status. Since N ovember 2009, the pilot program 
has been expanded to a dozen of provinces and municipalities. 
85. Rules on Administration of Provision of Financia l Information Services in China by Foreign 
Institutions was promulgated in April 2009, which outlined the application procedures, rights and 
obligations applicable to the establishment of fi nancial information services enterprises by foreign 
institutions in China. 
86. In July 2009 pilot program on consumer fi nancing companies was launched in Beijing, 
Tianjin, Shanghai and Chengdu. According to the newly-promulgated Measures on Administration of 
Consumer Financing Companies on Pilot Basis, the investors of a consumer financing company may 
include overseas financial institutions. 
87. In September 2009 Rules on Foreign Exchange  Administration of Domestic Securities 
Investment by Qualified Foreign Institutional Investors (QFII) was promulgated. Following the 
increase in the total investment quota of QFII from 10 billion USD to 30 billion USD in 2007, the 
department rule raised the quota for a single QFII from 800 million USD to 1 billion USD. 
(iii) Tourism service 
88. In May 2009 Regulations on Travel Agencies came  into effect and substantially raised the 
level of liberalization in the tourism service sector in China. The administrative regulation eliminated 
the prohibition on the establishment of wholly fo reign-owned travel agencies, and also permitted 
foreign-invested travel agencies already established to further set up branches. It also removed the 
special requirements applicable to foreign-invested tr avel agencies in terms of registered capital and 
qualification of the investors. The administrative re gulation also unified the market access threshold 
for operating domestic travel and inbound travel business, and reduced the minimum registered capital of operating inbound travel business from the original 1.5 million Yuan to 300,000 Yuan. The 
unified market access requirements apply equall y to both Chinese and foreign-invested travel 
agencies. 
89. The requirements in the earlier regulations a nd rules that the establishment of foreign-
invested travel agencies "should be in compliance with the development planning of tourism" and "should be in line with the needs of the tourist mark et" were also phased out with the repeal of these 
regulations and rules. 
(iv) Telecommunication services 
90. In September 2008, Regulations on Administra tion of Foreign-Invested Telecommunications 
Enterprises was amended. The minimum registered capital requirement of a foreign-invested telecommunications enterprise providing basic teleco mmunications services was reduced by half. The 
approval procedures for telecommuni cation enterprises in China to be listed overseas were further 
simplified. 
(v) Distribution service of chemical fertilizers 
91. In August 2009, the State Council issued Decision on Further Deepening the Reform of the 
Circulation System of Chemical Fertilizers, lifting the restriction on ownership of the enterprises that may engage in the business of chemical fertilizers,  allowing all qualified enterprises, regardless of 
their ownership, foreign-invested enterprises included,  to participate in the distribution of chemical 
fertilizers and compete in the market. WT/TPR/G/230 Trade Policy Review 
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(4) STRENGTHENING AND ENHANCING THE MULTILATERAL TRADING SYSTEM  
92. As always, China is a staunch supporter of th e multilateral trading system represented by the 
World Trade Organization. The WTO is the most important multilateral institutional arrangement regulating trade policies and measures among various countries in the world and laying foundation for 
maintaining stable international trade environment.  Confronted with the severe challenges posed by 
the global financial crisis, the multilateral trading system is facing two most significant tasks. One is to conclude the Doha Round negotiations at an earl y date and the other is to fight hard against 
protectionism. 
(i) Doha Development Agenda (DDA) 
93. The DDA negotiation is essential to global trade lib eralization. Under the circumstances that 
the global economy has suffered severely during the global financial crisis, concluding the DDA as 
soon as possible will bring more opportunities and cr eate an open environment for trade. It will 
further strengthen the multilateral trading system and contribute to recovery and growth of the world 
economy. 
94. The Chinese leaders attach great importance to  the Doha Round Negotiation. Given the push 
and pull effect exerted by the global financial crisis  upon the negotiation process, top leaders of China 
have called for joint efforts of all members on nu merous occasions during various World Summits to 
push for the conclusion of negotiation at an early da te with a comprehensive and balanced outcome to 
achieve the development goal. 
95. China has always been an active supporter of the DDA, playing a constructive role in the 
negotiations in order to achieve fruitful results as ea rly as possible. China has actively participated in 
various consultations and negotiations at Ministeria l as well as Senior Official levels. At the Mini-
Ministerial meeting in July 2008, China, taking the inte rests of all into account, tried its best to bridge 
the differences between members and spared no effo rts in pushing forward the negotiation to reach a 
consensus. The negotiation failed in the end. Howe ver, all members were aware of the role China 
played. At the 7th WTO Ministerial Meeting at the end of 2009, China called for improvement and 
strengthening of the multilateral trading system a nd encouraged all members to send a positive signal 
to the world, a signal to "open up, advance and reform". 
96. It has been nearly nine years since the DDA ne gotiation was launched. What is on the table is 
hard won, and cannot be unravelled for any excuse.  China will join efforts with other members to 
push forward negotiation on the basis of the three principles, namely, to respect the mandate for 
development, lock in achieved outcomes, and b ase the negotiations on Agriculture and NAMA Chairs' 
texts of December 2008. In so doing, we can reso lve the remaining issues expeditiously and secure a 
comprehensive and balanced outcome that will bene fit all members particularly developing members 
and LDCs among them, ultimately ach ieving the development goal.  
97. On agriculture, developed members and de veloping members are facing fundamentally 
different pressures. China's agriculture tariff is al ready very low. China h as eliminated agricultural 
export subsidies and only provides a very limited amount  of domestic support at de minimis level. As 
a large developing country with nearly more th an 700 million rural population, China upholds the 
position to substantially reduce trade-distor ting domestic support by developed members, 
substantially reduce high tariffs and tariff escalation,  and provide sufficient and effective special and 
differential treatment to developing members, so  as to address their concerns on food security, 
livelihood of rural populati on and rural development. China WT/TPR/G/230 
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98. With respect to NAMA, China supports the mu ltilateral negotiation process led by the Chair 
to achieve progress as soon as possible. According to the Hong Kong Ministerial Declaration, the participation in sector arrangement should be on a voluntary basis. 
99. The Rules negotiations should contribute to furt her clarifying and improving the WTO rules, 
tightening disciplines on investigation in trade re medy, increasing transparen cy, and preventing and 
reducing the abuse of trade remedy measures, especially the abuse by developed members against developing ones. 
100. On trade in services, China expects the nego tiation to reflect the export interests of 
developing members. In particular, market access sh ould be expanded substantially for the movement 
of natural persons. The GATS rules negotiations shoul d be conducted in line with the mandate with 
the aim of achieving a balanced result. 
101. The negotiation of trade facilitation will play a positive role in further expanding the world 
trade.  However, quite a number of developing memb ers are concerned with their capacity for future 
implementation, calling for technical assistance, capacity building and special and differential treatment. Such concerns should be properly addressed in the negotiation.  
(ii) Opposing protectionism 
102. The Chinese Government opposes protectionism in  any form.  Since the outbreak of the 
global financial crisis, the Chinese leaders unambi guously declared China's position on this issue at 
various international fora. President Hu Jintao  joined leaders from other G20 members in the 
commitment to refrain from raising new barriers to  investment or to trade in goods and services, 
imposing new export restrictions, or implementing WTO inconsistent  measures to stimulate exports. 
They were also committed to promptly rectify any such measures. 
103. As proven by history, protectioni sm can only aggravate trade disputes and deepen crises.  It 
never helps to turn around economic recession but inst ead delays the process of recovery.  Therefore, 
the international community has learnt the lessons  from history and expeditiously formed a solid 
common understanding to fight against protectionism, which is of great significance in keeping 
protectionism from spreading around the world. 
104. With impact of the global financial crisis in tensifying, protectionism is taking increasingly 
diversified forms with disguised cover.  Each and every country of the world need not only remain 
fully vigilant against protectionism proliferating in many forms, but also endeavour to translate their 
serious pledge of combating protec tionism into concrete actions.  
105. China firmly supports the work carried out by the WTO through its monitoring of 
protectionism. As required by the monitoring mechan ism, China notifies on a regular basis its latest 
trade-related measures and verifies carefully all the information regarding China gathered and 
transmitted by the WTO Secretariat, for the sake of transparency of China's trade-related measures 
adopted since the global financial crisis. 
106. In formulating and implementing various polici es and measures in response to the crisis, the 
Chinese Government attaches great importance to combining and taking into account international 
factors and possible impact of such measures upon ot her members, making reference to international 
practices and fully respecting the WTO rules coupled  with assessment of WTO consistency of such 
policies and measures. WT/TPR/G/230 Trade Policy Review 
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(5) DEVELOPING REGIONAL AND BILATERAL ECONOMIC AND TRADE RELATIONS  
107. China has continued to develop its economic and trade relations with other countries and 
regions since the last review under bot h regional and bilateral frameworks.  
(i) Free trade agreements 
108. In April 2008, China and New Zealand signed the China-New Zealand Free Trade 
Agreement, which entered into force in October 2008. 
109. In April 2008, the Supplementary Agreement on Trade in Services for the China-Chile Free 
Trade Agreement was signed. The negotiation of the agreement on the investment in the China-Chile 
Free Trade Agreement started in January 2009. Six rounds of negotiations have taken place so far.  
110. In July 2008, China signed CEPA Supplementary Agreement V with Hong Kong, China and 
Macao, China, respectively. 
111. In October 2008, China and Singapore signed th e China-Singapore Free Trade Agreement, 
which entered into force in January 2009. 
112. In February 2009, the Agreement on Trade in Services under the China-Pakistan Free Trade 
Agreement was signed, which became effective in October 2009. 
113. In April 2009, China and Peru signed the Chin a-Peru Free Trade Agreement, which took 
effect in March 2010.  
114. On 9 and 11 May 2009, China signed the CEPA  Supplementary Agreement VI with Hong 
Kong, China and Macao, China, respectively.  
115. In August 2009, China and ASEAN signed the Investment Agreement of the China-ASEAN 
Free Trade Agreement. In January 2010, the Ch ina-ASEAN Free Trade Area was fully established. 
116. In April 2010, China and Costa Rica signed the China-Costa Rica Free Trade Agreement.  
(ii) Aid for Trade 
117. China has all along attached great importance to  the Aid for Trade initiative of the WTO. In 
2009, China responded to the South-South Cooperation Questionnaire and participated actively in the 
three regional reviews held in Zambia, Jamaica and Cambodia. China has also made financial 
contributions to the DDA Global Trust Fund within the framework of Aid for Trade to help other 
developing members, LDCs in particular, fully be nefit from the multilateral trading system and better 
integrate into the global economy. 
(iii) Assistance under South-South Cooperation 
118. Under bilateral, regional and global cooperation framework, China continues to attach great 
importance to the South-South Cooperation with othe r developing countries. This includes providing 
economic and technical assistance within its best abil ity to help other developing countries build their 
development capacity and promote their economic and social development. China's assistance in the areas of infrastructure, agriculture and human r esource development and the duty-free treatment and 
debt exemption granted to LDCs play a positive role in improving the trade capacities of other 
developing members, LDCs in particular. China WT/TPR/G/230 
 Page 25 
 
 
119. Since the last review, Premier Wen Jiabao annou nced a series of concrete measures to support 
other developing countries in their pursuit of economic  and social development at the UN High-Level 
Meeting on Millennium Development Goals in September 2008 and the Fourth Ministerial 
Conference of the Forum on China-Africa Coope ration in November 2009. These measures are 
currently under implementation. 
120. China will continue to grant duty-free treatment to products exported to China from LDCs. It 
will also exempt LDCs and heavily indebted poor countries interest-free loans due. The phased 
implementation plan will start in 2010 for duty-free treatment covering up to 95% products of these 
countries. Debt exemption agreements have been  signed with 50 countries with 380 overdue debts 
exempted. 
121. China is helping developing countries in Africa and Asia to build agricultural technology 
demonstration centres. It will also dispatch many more agricultural experts and technical personnel to 
other developing countries so that the total numbe r will increase to 2,000. China will also provide 
agriculture training courses in China for 3,000 person/times. 
122. In order to assist the recipient countries to develop renewable energy, improve their 
production and living conditions and promote sust ainable development, China will help other 
developing countries to build more than 100 small clean energy projects by 2013, such as small hydropower, solar power and biogas projects. 
123. An agreement was signed in March 2009 in wh ich China contributed 30 million USD to the 
Food and Agriculture Organization of the United Nations  to establish a trust fund. The first instalment 
of 10 million USD was made in 2009. The fund will be used in South-South Cooperation projects 
under the framework of the FAO Special Program for Food Security and human resources training. 
124. China has also provided food aid and assistance in the areas of healthcare, education and 
science and technology.  
IV. THE WAY FORWARD 
(1) M
AINTAINING THE CONSISTENCY AND STABILITY OF THE MACROECONOMIC POLICIES  
125. A V-shape growth has been witnessed in China's GDP performance between 2008 and 2009 
on a year-on-year comparison, indicating an emergi ng sign of economic recovery.  However, given 
the amount of uncertainties in the current interna tional and domestic economy, the situation faced by 
China's economy is complicated, with interweavi ng of the short-term and long-term issues, and 
interaction of domestic and international factors.  Such situation poses mounting difficulties for China 
to maintain a stable and fairly fast economic de velopment and promote tran sformation of the pattern 
of economic growth. 
126. Under such circumstances, the Chinese Govern ment will continue to implement proactive 
fiscal policy and moderately easy monetary policy, wh ile keeping the continuity and stability of such 
policies, fine-tuning the specificity and flexibility of these policies in light of new situations and 
conditions and ultimately keeping the pace, steps and priorities in the implementation of these 
policies.  In this regard, China needs to properl y balance the relations between achieving steady and 
faster economic development, ad justing economic structure, and managing the inflation pressures. 
Specifically, on the one hand, China needs to retain  sufficient policy strengths and consolidate the 
positive signs of the economy towards recovery. On  the other hand, China needs to accelerate the 
adjustment of economic structure to make subs tantive progress in transforming the pattern of WT/TPR/G/230 Trade Policy Review 
Page 26 
 
 
economic development. At the same time, it also n eeds to manage inflation expectation and stabilize 
the general level of prices. 
(2) ACCELERATING THE TRANSFORMATION OF THE PATTERN OF ECONOMIC DEVELOPMENT  
127. The transformation of the pattern of economic development refers to transforming China's 
economic growth from overwhelmi ngly dependent on investment and export to a coordinated 
boosting of consumption, investment and export, from mainly depending on the secondary industry to 
mobilizing a driving force of synergy of the primar y, secondary and tertiary industries, and finally, 
from mainly depending on consumption of physical and natural resources to depending on scientific 
and technological innovation, tapping potentials  of human resources, and improvement in 
management innovation.    
128. It seems that the impact of the global financ ial crisis has constituted a blow to China's 
economic growth. However, as a matter of fact, it h as affected truly the pattern of China's economic 
development, making the issue of economic transfor mation more pronounced.  For the next step, the 
Chinese Government will accelerate the transformati on of the pattern of ec onomic development and 
quicken the pace in adjusting the pattern of nationa l income distribution, balancing the development 
in the urban and rural areas, pushing forward scientific and technological innovation and 
advancement, building an energy-saving and e nvironment-friendly society, and coordinating 
economic development and social affairs. 
(3) REFORM AND OPENING UP REMAINING THE THEME OF CHINA 'S DEVELOPMENT  
129. China began the new development era of reform  and opening to the outside world in 1978. 
After taking the path for more than 30 years, Ch ina has achieved a great historical transformation 
from a highly-centralized planned economy to a vibrant socialist market economy and from a closed and semi-closed economy to all-round opening up. In  the past two years, despite the unprecedented 
global financial crisis sweeping across the globe and inflicting upon the world economy, the Chinese 
Government's resolution to reform and open up stay unchanged and its steps have not stopped at all. 
130. Only by adhering to reform and opening up can China continue to survive and thrive. The 
policies and measures adopted by the Chinese Governme nt in order to speed up the transformation of 
the pattern of economic development are not in confli ct with the general policy of reform and opening 
up. Instead, the process of accelerating the transformation of the pattern of economic development will be reenergized and driven by further d eepening reform and intensifying opening up. 
131. China will follow the road of peaceful developm ent and adhere to the basic principle of 
seeking mutual benefits and win-win results in the grand course of its opening up. China will continue 
to commit itself to maintaining a stable internati onal trade environment and opposing protectionism.  
China will spare no efforts in strengthening the multilateral trading system, calling for an early conclusion of the DDA with a balanced outcome.  Ch ina stands ready to continue its economic and 
trade relations with all other countries and regions  through bilateral, regi onal and multilateral trade 
and investment liberalization, so as to bring welf are and benefits to both the Chinese people and the 
people of other countries and regions in the world. 
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